nvcsr

STATEMENT OF INVESTMENTS December 31, 2009


	Shares		Value

Common Stocks98.2%
Consumer Discretionary9.4%
Diversified Consumer Services1.1%
Apollo Group, Inc., Cl. A¹		267,450	$	16,202,121
Hotels, Restaurants & Leisure0.6%
McDonalds Corp.		145,140		9,062,542
Internet & Catalog Retail1.2%
Amazon.com, Inc.¹		133,073		17,900,980
Media2.5%
Cablevision Systems Corp. New York
Group, Cl. A		629,575		16,255,627
McGraw-Hill Cos., Inc. (The)		298,360		9,998,044
Walt Disney Co. (The)		350,670		11,309,108

				37,562,779

Specialty Retail1.4%
Bed Bath & Beyond, Inc.¹		235,410		9,093,888
Staples, Inc.		502,050		12,345,410

				21,439,298

Textiles, Apparel & Luxury Goods2.6%
Coach, Inc.		543,300		19,846,749
Nike, Inc., Cl. B		169,440		11,194,901
Polo Ralph Lauren Corp., Cl. A		114,700		9,288,406

				40,330,056

Consumer Staples8.5%
Beverages1.8%
PepsiCo, Inc.		437,050		26,572,640
Food & Staples Retailing2.0%
Wal-Mart Stores, Inc.		438,700		23,448,515
Walgreen Co.		186,240		6,838,733

				30,287,248

Food Products2.9%
Cadbury plc		940,340		12,112,695
Nestle SA		591,921		28,724,863
Unilever NV CVA		116,900		3,812,485

				44,650,043

Household Products0.9%
Colgate-Palmolive Co.		166,370		13,667,296
Tobacco0.9%
Philip Morris International, Inc.		282,570		13,617,048
Energy8.0%
Energy Equipment & Services3.1%
Cameron International Corp.¹		300,170		12,547,106
Halliburton Co.		467,140		14,056,243
Schlumberger Ltd.		324,410		21,115,847

				47,719,196

Oil, Gas & Consumable Fuels4.9%
Apache Corp.		151,080		15,586,924
Cobalt International Energy, Inc.¹		312,110		4,319,602
EOG Resources, Inc.		66,900		6,509,370
Occidental Petroleum Corp.		353,410		28,749,904
Range Resources Corp.		211,720		10,554,242
Southwestern Energy Co.¹		175,310		8,449,942

				74,169,984

Financials8.4%
Capital Markets3.8%
Charles Schwab Corp. (The)		718,990		13,531,392
Credit Suisse Group AG		299,181		14,735,005
Goldman Sachs Group, Inc. (The)		99,600		16,816,464
Julius Baer Group Ltd.		171,872		6,002,725
T. Rowe Price Group, Inc.		123,960		6,600,870

				57,686,456

Commercial Banks0.7%
Wells Fargo & Co.		368,080		9,934,479
Diversified Financial Services3.4%
BM&F BOVESPA SA		1,667,360		11,587,906
IntercontinentalExchange, Inc.¹		190,370		21,378,551
JPMorgan Chase & Co.		230,100		9,588,267
MSCI, Inc., Cl. A¹		291,913		9,282,833

				51,837,557

Real Estate Management & Development0.5%
Jones Lang LaSalle, Inc.		135,080		8,158,832
Health Care15.9%
Biotechnology3.9%
Amgen, Inc.¹		229,240		12,968,107
Celgene Corp.¹		344,260		19,168,397
Gilead Sciences, Inc.¹		474,620		20,541,554
Vertex Pharmaceuticals, Inc.¹		161,540		6,921,989

				59,600,047

Health Care Equipment & Supplies3.7%
Baxter International, Inc.		509,980		29,925,626
Dentsply International, Inc.		319,430		11,234,353
St. Jude Medical, Inc.¹		167,350		6,155,133
Stryker Corp.		181,940		9,164,318

				56,479,430

Health Care Providers & Services3.3%
Express Scripts, Inc.¹		308,660		26,683,657
Medco Health Solutions, Inc.¹		210,720		13,467,115
Schein (Henry), Inc.¹		191,130		10,053,438

				50,204,210

STATEMENT OF INVESTMENTS December 31, 2009 (continued)


	Shares			Value

Life Sciences Tools & Services—1.7%
Illumina, Inc.¹		189,280		$	5,801,432
Thermo Fisher Scientific, Inc.¹		409,700			19,538,593

					25,340,025

Pharmaceuticals—3.3%
Allergan, Inc.		282,530			17,802,215
Novo Nordisk AS, Cl. B		132,810			8,494,354
Roche Holding AG		85,146			14,470,169
Shire plc		473,370			9,251,481

					50,018,219

Industrials—5.9%
Aerospace & Defense—2.2%
General Dynamics Corp.		128,740			8,776,206
Goodrich Corp.		131,832			8,470,206
Lockheed Martin Corp.		208,480			15,708,968

					32,955,380

Construction & Engineering—0.5%
Quanta Services, Inc.¹		383,870			7,999,851
Electrical Equipment—1.9%
ABB Ltd.		1,026,207			19,626,598
First Solar, Inc.¹		67,260			9,107,004

					28,733,602

Machinery—0.7%
Joy Global, Inc.		186,007			9,596,101
Professional Services—0.3%
Verisk Analytics, Inc., Cl. A¹		159,583			4,832,173
Road & Rail—0.3%
Union Pacific Corp.		78,270			5,001,453
Information Technology—35.0%
Communications Equipment—6.0%
F5 Networks, Inc.¹		149,220			7,905,676
Juniper Networks, Inc.¹		484,160			12,912,547
QUALCOMM, Inc.		1,072,590			49,618,013
Research in Motion Ltd.¹		315,370			21,300,090

					91,736,326

Computers & Peripherals—7.1%
Apple, Inc.¹		204,100			43,036,526
Dell, Inc.¹		763,550			10,964,578
Hewlett-Packard Co.		735,100			37,865,001
NetApp, Inc.¹		478,800			16,465,932

					108,332,037

Electronic Equipment & Instruments—0.5%
Corning, Inc.		382,050			7,377,386
Internet Software & Services—5.6%
eBay, Inc.¹		844,530			19,880,236
Google, Inc., Cl. A¹		103,900			64,415,922

					84,296,158

IT Services—5.3%
Accenture plc, Cl. A		281,800			11,694,700
MasterCard, Inc., Cl. A		111,830			28,626,243
Visa, Inc., Cl. A		367,197			32,115,050
Western Union Co.		416,900			7,858,565

					80,294,558

Semiconductors & Semiconductor Equipment—4.6%
Broadcom Corp., Cl. A¹		588,940			18,522,163
MEMC Electronic Materials, Inc.¹		824,000			11,222,880
NVIDIA Corp.¹		1,294,180			24,175,282
Texas Instruments, Inc.		615,100			16,029,506

					69,949,831

Software—5.9%
Adobe Systems, Inc.¹		624,930			22,984,925
Microsoft Corp.		682,350			20,804,852
Nintendo Co. Ltd.		42,800			10,128,437
Oracle Corp.		1,047,290			25,700,497
Salesforce.com, Inc.¹		126,975			9,366,946

					88,985,657

Materials—4.7%
Chemicals—4.3%
Monsanto Co.		363,240			29,694,870
Potash Corp. of Saskatchewan, Inc.		143,210			15,538,285
Praxair, Inc.		245,642		19,727,509
					64,960,664
Metals & Mining—0.4%
Xstrata plc¹		406,480			7,159,598
Telecommunication Services—2.4%
Wireless Telecommunication Services—2.4%
Crown Castle International Corp.¹		531,080			20,733,363
NII Holdings, Inc.¹		457,400			15,359,492

					36,092,855

Total Common Stocks (Cost $1,110,578,450)					1,490,744,116

Investment Companies—0.5%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^2,3		442,202			442,202
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^2,4		7,898,767			7,898,767


Total Investment Companies (Cost $8,340,969)					8,340,969

Total Investments, at Value (Cost $1,118,919,419)		98.7	%		1,499,085,085
Other Assets Net of Liabilities		1.3			19,274,845

Net Assets		100.0	%	$	1,518,359,930

Footnotes to Statement of Investments

1.		Non-income producing security.

2.		Rate shown is the 7-day yield as of December 31, 2009.

3.		Interest rate is less than 0.0005%.

4.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

Oppenheimer Institutional Money Market Fund, Cl. E		22,383,442		253,801,901		268,286,576		7,898,767

					Value		Income

Oppenheimer Institutional Money Market Fund, Cl. E					$	7,898,767	$	130,800

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

	1) Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2) Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


						Level 3—
	Level 1—		Level 2—			Significant
	Unadjusted		Other Significant			Unobservable
	Quoted Prices		Observable Inputs			Inputs		Value

Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	142,497,776	$	—		$	—	$	142,497,776
Consumer Staples		128,794,275		—			—		128,794,275
Energy		121,889,180		—			—		121,889,180
Financials		95,291,688		32,325,636			—		127,617,324
Health Care		241,641,931		—			—		241,641,931
Industrials		69,491,962		19,626,598			—		89,118,560
Information Technology		530,971,953		—			—		530,971,953
Materials		64,960,664		7,159,598			—		72,120,262
Telecommunication Services		36,092,855		—			—		36,092,855
Investment Companies		8,340,969		—			—		8,340,969

Total Investments, at Value		1,439,973,253		59,111,832			—		1,499,085,085
Other Financial Instruments:
Foreign currency exchange contracts		—		13,611			—		13,611

Total Assets	$	1,439,973,253	$	59,125,443		$	—	$	1,499,098,696


Liabilities Table
Other Financial Instruments:
Foreign currency exchange contracts	$	—	$	(9,216	)	$	—	$	(9,216	)

Total Assets	$	—	$	(9,216	)	$	—	$	(9,216	)

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation methodologies, if any, during the reporting period.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Foreign Currency Exchange Contracts as of December 31, 2009 are as follows:


		Contract
		Amount		Expiration				Unrealized		Unrealized
Counterparty/Contract Description	Buy/Sell	(000s)		Date		Value		Appreciation		Depreciation

Brown Brothers Harriman
Euro (EUR)	Buy	2,665	EUR		1/5/10	$	3,819,849	$	—	$	143
JP Morgan Chase:
British Pound Sterling (GBP)	Buy	4	GBP		1/4/10		6,482		92		—
British Pound Sterling (GBP)	Sell	213	GBP		1/4/10		344,257		—		4,876
Swiss Franc (CHF)	Sell	2,090	CHF		1/5/10		2,020,824		—		4,197

									92		9,073
UBS Investment Bank:
Danish Krone (DKK)	Sell	469	DKK		1/5/10		90,319		69		—
Japanese Yen (JPY)	Sell	144,114	JPY		1/5/10		1,547,410		13,450		—

									13,519		—

Total unrealized appreciation and depreciation								$	13,611	$	9,216

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $1,111,020,652)	$	1,491,186,318
Affiliated companies (cost $7,898,767)		7,898,767

		1,499,085,085
Unrealized appreciation on foreign currency exchange contracts		13,611
Receivables and other assets:
Investments sold		37,053,301
Dividends		2,266,109
Other		30,046

Total assets		1,538,448,152

Liabilities
Unrealized depreciation on foreign currency exchange contracts		9,216
Payables and other liabilities:
Investments purchased		11,710,320
Shares of beneficial interest redeemed		7,727,407
Distribution and service plan fees		268,064
Shareholder communications		183,899
Transfer and shareholder servicing agent fees		127,636
Trustees’ compensation		25,838
Other		35,842

Total liabilities		20,088,222

Net Assets	$	1,518,359,930


Composition of Net Assets
Par value of shares of beneficial interest	$	41,205
Additional paid-in capital		1,583,968,415
Accumulated net investment income		434,803
Accumulated net realized loss on investments and foreign currency transactions		(446,342,810	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		380,258,317

Net Assets	$	1,518,359,930


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,074,190,198 and 29,082,392 shares of beneficial interest outstanding)	$	36.94
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $444,169,732 and 12,122,685 shares of beneficial interest outstanding)	$	36.64

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $261,942)	$	13,722,325
Affiliated companies		130,800
Interest		4,365

Total investment income		13,857,490

Expenses
Management fees		8,611,318
Distribution and service plan fees — Service shares		922,244
Transfer and shareholder servicing agent fees:
Non-Service shares		666,427
Service shares		269,819
Shareholder communications:
Non-Service shares		346,404
Service shares		138,166
Trustees’ compensation		44,550
Custodian fees and expenses		22,658
Other		70,132

Total expenses		11,091,718
Less waivers and reimbursements of expenses		(27,531	)

Net expenses		11,064,187

Net Investment Income		2,793,303


Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(40,506,486	)
Foreign currency transactions		(2,789,837	)

Net realized loss		(43,296,323	)
Net change in unrealized appreciation on:
Investments		510,382,835
Translation of assets and liabilities denominated in foreign currencies		10,917,248

Net change in unrealized appreciation		521,300,083

Net Increase in Net Assets Resulting from Operations	$	480,797,063

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	2,793,303		$	3,204,095
Net realized loss		(43,296,323	)		(264,875,837	)
Net change in unrealized appreciation (depreciation)		521,300,083			(676,764,840	)

Net increase (decrease) in net assets resulting from operations		480,797,063			(938,436,582	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(2,975,281	)		(1,851,681	)
Service shares		(24,236	)		—

		(2,999,517	)		(1,851,681	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(97,375,095	)		(114,814,298	)
Service shares		(5,924,734	)		20,286,295

		(103,299,829	)		(94,528,003	)

Net Assets
Total increase (decrease)		374,497,717			(1,034,816,266	)
Beginning of period		1,143,862,213			2,178,678,479

End of period (including accumulated net investment income of $434,803 and $1,288,398, respectively)	$	1,518,359,930		$	1,143,862,213

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	25.67		$	47.18		$	41.43		$	38.52		$	36.99

Income (loss) from investment operations:
Net investment income¹		.09			.10			.07			.07			.18
Net realized and unrealized gain (loss)		11.27			(21.55	)		5.78			2.98			1.68

Total from investment operations		11.36			(21.45	)		5.85			3.05			1.86

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.09	)		(.06	)		(.10	)		(.14	)		(.33	)

Net asset value, end of period	$	36.94		$	25.67		$	47.18		$	41.43		$	38.52


Total Return, at Net Asset Value²		44.52	%		(45.52	)%		14.15	%		7.95	%		5.10	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,074,190		$	829,931		$	1,631,791		$	1,598,967		$	1,652,282

Average net assets (in thousands)	$	927,670		$	1,256,525		$	1,631,686		$	1,615,352		$	1,658,910

Ratios to average net assets:³
Net investment income		0.29	%		0.25	%		0.15	%		0.17	%		0.47	%
Total expenses		0.78	%⁴		0.66	%⁴		0.65	%⁴		0.67	%⁴		0.66	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.78	%		0.66	%		0.65	%		0.67	%		0.66	%

Portfolio turnover rate		46	%		67	%		59	%		47	%		70	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.78	%
Year Ended December 31, 2008	0.66	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.67	%

See accompanying Notes to Financial Statements.


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	25.42		$	46.78		$	41.09		$	38.23		$	36.73

Income (loss) from investment operations:
Net investment income (loss)¹		.01			—²			(.05	)		(.03	)		.08
Net realized and unrealized gain (loss)		11.21			(21.36	)		5.74			2.96			1.69

Total from investment operations		11.22			(21.36	)		5.69			2.93			1.77

Dividends and/or distributions to shareholders:
Dividends from net investment income		—²			—			—²			(.07	)		(.27	)

Net asset value, end of period	$	36.64		$	25.42		$	46.78		$	41.09		$	38.23


Total Return, at Net Asset Value³		44.15	%		(45.66	)%		13.86	%		7.68	%		4.87	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	444,170		$	313,931		$	546,887		$	463,140		$	381,852

Average net assets (in thousands)	$	368,634		$	454,558		$	510,874		$	426,539		$	301,780

Ratios to average net assets:⁴
Net investment income (loss)		0.03	%		0.00	%⁵		(0.10	)%		(0.08	)%		0.20	%
Total expenses		1.04	%⁶		0.91	%⁶		0.91	%⁶		0.92	%⁶		0.91	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.03	%		0.91	%		0.91	%		0.92	%		0.91	%

Portfolio turnover rate		46	%		67	%		59	%		47	%		70	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Less than $0.005 per share.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Less than 0.005%.

6.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.04	%
Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.91	%
Year Ended December 31, 2006	0.92	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Capital Appreciation Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation by investing in securities of well-known, established companies. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

Each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability, are classified as “Level 3.” The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which it is traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

“Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value.

In the absence of a readily available unadjusted quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as unadjusted quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

There have been no significant changes to the fair valuation methodologies during the period.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

NOTES TO FINANCIAL STATEMENTS Continued

Significant Accounting Policies Continued

Net Unrealized

Appreciation

Based on Cost of

Undistributed

Accumulated

Securities and Other

Net Investment

Long-Term

Loss

Investments for Federal

Income

Gain

Carryforward^1,2,3,4

Income Tax Purposes

$1,787,208

—

425,223,481

358,995,026

1. As of December 31, 2009, the Fund had $425,219,652 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2011	$	96,270,872
2013		34,677,838
2016		113,637,770
2017		180,633,172

Total	$	425,219,652

2. The Fund had $3,829 of post-October foreign currency losses which were deferred.

3. During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

4. During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


	Reduction
Reduction	to Accumulated Net
to Accumulated Net	Realized Loss
Investment Income	on Investments

$647,381	$	647,381

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	2,999,517	$	1,851,681

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2009 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.


Federal tax cost of securities	$	1,140,178,385
Federal tax cost of other investments		(176,547	)

Total federal tax cost	$	1,140,001,838


Gross unrealized appreciation	$	377,729,269
Gross unrealized depreciation		(18,734,243	)

Net unrealized appreciation	$	358,995,026

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		2,978,928		$	88,352,509			5,158,989		$	168,163,089
Dividends and/or distributions reinvested		134,506			2,975,281			45,642			1,851,681
Redeemed		(6,361,581	)		(188,702,885	)		(7,457,105	)		(284,829,068	)

Net decrease		(3,248,147	)	$	(97,375,095	)		(2,252,474	)	$	(114,814,298	)


Service Shares
Sold		2,097,785		$	61,332,284			2,605,573		$	92,870,576
Dividends and/or distributions reinvested		1,099			24,157			—			—
Redeemed		(2,325,106	)		(67,281,175	)		(1,946,810	)		(72,584,281	)

Net increase (decrease)		(226,222	)	$	(5,924,734	)		658,763		$	20,286,295

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	580,921,828	$	662,865,939

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. For the year ended December 31, 2009, the Fund paid $810,330 to OFS for services to the Fund.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the daily net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $5,625 and $3,973 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2009, the Manager waived $17,933 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

Additional associated risk to the Fund includes counterparty credit risk. Counterparty credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

6. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

7. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

NOTES TO FINANCIAL STATEMENTS Continued

7. Pending Litigation Continued

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff “) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Core Bond Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Core Bond Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Core Bond Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Principal
	Amount		Value

Asset-Backed Securities—8.1%
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.711%, 5/25/34¹	$	1,538,283	$	1,139,813
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through Certificates, Series 2006-M3, Cl. A2B, 0.331%, 9/25/36¹		23,782		8,608
Bank of America Auto Trust, Automobile Asset-Backed Certificates, Series 2009-2A, Cl. A4, 3.03%, 10/15/16²		2,025,000		2,054,678
Bank of America Credit Card Trust, Credit Card Asset-Backed Certificates, Series 2006-A16, Cl. A16, 4.72%, 5/15/13		730,000		752,631
Chase Issuance Trust, Credit Card Asset-Backed Certificates, Series 2007-A15, Cl. A, 4.96%, 9/17/12		1,730,000		1,782,517
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2003-C4, Cl. C4, 5%, 6/10/15		310,000		305,017
CNH Equipment Trust, Asset-Backed Certificates, Series 2009-B, Cl. A3, 2.97%, 3/15/13		900,000		913,492
Countrywide Home Loans, Asset-Backed Certificates:
Series 2002-4, Cl. A1, 0.971%, 2/25/33¹		35,747		28,335
Series 2005-16, Cl. 2AF2, 5.382%, 5/1/36¹		627,505		514,106
Series 2005-17, Cl. 1AF2, 5.362%, 5/1/36¹		351,607		289,921
CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.351%, 6/25/47¹		40,000		31,203
DT Auto Owner Trust, Automobile Receivables Nts., Series 2009-1, Cl. A1, 2.98%, 10/15/15		490,000		488,398
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates, Series 2006-FF10, Cl. A3, 0.321%, 7/25/36¹		32,854		31,363
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates, Series 2006-FF9, Cl. 2A2, 0.341%, 7/7/36^1,3		16,129		12,968
Ford Credit Auto Owner Trust, Automobile Receivables Nts.:
Series 2009-B, Cl. A2, 2.10%, 11/15/11		545,000		548,473
Series 2009-E, Cl. A2, 0.80%, 3/15/12		980,000		978,934
Harley-Davidson Motorcycle Trust 2009-2, Motorcycle Contract-Backed Nts., Series 2009-2, Cl. A2, 2%, 7/15/12		1,495,000		1,505,235
Honda Auto Receivables 2009-3 Owner Trust, Automobile Asset-Backed Nts., Series 2009-3, Cl. A2, 1.50%, 8/15/11³		650,000		653,287
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2005-3, Cl. A1, 0.493%, 1/20/35¹		526,463		455,974
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.343%, 3/20/36¹		24,810		23,911
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35		96,284		95,581
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates, Series 2001-1A, Cl. A1, 8.33%, 4/25/31³		637,827		638,962
Mastr Asset-Backed Securities Trust 2006-WMC3, Mtg. Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 0.331%, 8/25/36¹		70,000		24,690
MBNA Credit Card Master Note Trust, Credit Card Receivables, Series 2005-A6, Cl. A6, 4.50%, 1/15/13		1,740,000		1,775,520
NC Finance Trust, Collateralized Mtg. Obligation Pass-Through Certificates, Series 1999-I, Cl. ECFD, 3.035%, 1/25/29^1,3		3,370,016		505,502
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass- Through Certificates, Series 2006-KS7, Cl. A2, 0.331%, 9/25/36¹		23,310		22,407
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates, Series 2006-BNC3, Cl. A2, 0.271%, 9/25/36¹		79,540		78,915
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 0.331%, 7/25/36¹		7,317		7,251


Total Asset-Backed Securities (Cost $19,121,300)				15,667,692

Mortgage-Backed Obligations—75.3%
Government Agency—64.4%
FHLMC/FNMA/FHLB/Sponsored—60.3%
Federal Home Loan Bank, Mtg.-Backed Obligations, Series 5G-2012, Cl. 1, 4.97%, 2/24/12		434,695		452,407
Federal Home Loan Mortgage Corp.:
5%, 8/15/33-12/15/34		3,366,182		3,466,291
5.50%, 9/1/39		1,880,706		1,972,292
6%, 5/15/18-10/15/29		4,602,808		4,944,939

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

FHLMC/FNMA/FHLB/Sponsored Continued
Federal Home Loan Mortgage Corp.:
Continued
6.50%, 4/15/18-4/1/34	$	957,805	$	1,033,392
7%, 8/15/16-10/1/37		847,146		923,587
7%, 10/1/31⁴		567,974		625,487
8%, 4/1/16		335,410		366,193
9%, 8/1/22-5/1/25		98,248		109,438
10.50%, 11/14/20		4,451		5,037
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 151, Cl. F, 9%, 5/15/21		21,429		23,528
Series 1674, Cl. Z, 6.75%, 2/15/24		71,978		78,494
Series 2006-11, Cl. PS, 23.719%, 3/25/36¹		537,910		719,682
Series 2034, Cl. Z, 6.50%, 2/15/28		9,519		10,316
Series 2042, Cl. N, 6.50%, 3/15/28		26,171		27,475
Series 2043, Cl. ZP, 6.50%, 4/15/28		854,288		910,163
Series 2046, Cl. G, 6.50%, 4/15/28		74,812		80,190
Series 2053, Cl. Z, 6.50%, 4/15/28		10,666		11,501
Series 2066, Cl. Z, 6.50%, 6/15/28		1,452,510		1,555,089
Series 2195, Cl. LH, 6.50%, 10/15/29		865,887		927,046
Series 2220, Cl. PD, 8%, 3/15/30		4,058		4,476
Series 2326, Cl. ZP, 6.50%, 6/15/31		263,516		283,534
Series 2435, Cl. EQ, 6%, 5/15/31		10,171		10,268
Series 2461, Cl. PZ, 6.50%, 6/15/32		1,285,415		1,395,828
Series 2470, Cl. LF, 1.233%, 2/15/32¹		12,278		12,354
Series 2500, Cl. FD, 0.733%, 3/15/32¹		232,548		231,027
Series 2526, Cl. FE, 0.633%, 6/15/29¹		349,480		344,552
Series 2538, Cl. F, 0.833%, 12/15/32¹		1,830,232		1,828,535
Series 2551, Cl. FD, 0.633%, 1/15/33¹		249,908		248,410
Series 2638, Cl. KG, 4%, 11/1/27		1,900,000		1,955,731
Series 2641, Cl. CE, 3.50%, 9/15/25		2,067		2,070
Series 2648, Cl. JE, 3%, 2/1/30		1,377,371		1,375,619
Series 2663, Cl. BA, 4%, 8/1/16		718,354		737,940
Series 2686, Cl. CD, 4.50%, 2/1/17		739,460		761,670
Series 2750, Cl. XG, 5%, 2/1/34		130,000		131,942
Series 2890, Cl. PE, 5%, 11/1/34		130,000		131,868
Series 2907, Cl. GC, 5%, 6/1/27		436,537		454,188
Series 2929, Cl. PC, 5%, 1/1/28		390,000		406,474
Series 2936, Cl. PE, 5%, 2/1/35		69,000		69,984
Series 2939, Cl. PE, 5%, 2/15/35		247,000		250,806
Series 2952, Cl. GJ, 4.50%, 12/1/28		229,647		236,068
Series 3019, Cl. MD, 4.75%, 1/1/31		717,525		746,224
Series 3025, Cl. SJ, 23.895%, 8/15/35¹		110,569		139,008
Series 3035, Cl. DM, 5.50%, 11/15/25		17,151		17,323
Series 3094, Cl. HS, 23.529%, 6/15/34¹		312,412		404,693
Series 3157, Cl. MC, 5.50%, 2/1/26		1,397,682		1,428,812
Series 3279, Cl. PH, 6%, 2/1/27		1,030,000		1,063,846
Series 3291, Cl. NA, 5.50%, 10/1/27		254,142		263,565
Series 3306, Cl. PA, 5.50%, 10/1/27		754,419		780,682
Series R001, Cl. AE, 4.375%, 4/1/15		476,768		489,210
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 14.65%, 6/1/26⁵		56,871		12,723
Series 202, Cl. IO, 0%, 4/1/29^5,6		418,324		97,285
Series 205, Cl. IO, 8.946%, 9/1/29⁵		29,947		6,718
Series 206, Cl. IO, 0%, 12/1/29^5,6		369,155		70,428
Series 2074, Cl. S, 51.416%, 7/17/28⁵		6,030		1,010
Series 2079, Cl. S, 62.292%, 7/17/28⁵		10,105		1,740
Series 2130, Cl. SC, 52.25%, 3/15/29⁵		427,248		63,282
Series 224, Cl. IO, 0%, 3/1/33^5,6		732,771		162,644
Series 243, Cl. 6, 0%, 12/15/32^5,6		447,913		91,959
Series 2526, Cl. SE, 40.201%, 6/15/29⁵		15,783		2,423
Series 2527, Cl. SG, 31.633%, 2/15/32⁵		1,397,406		82,788
Series 2531, Cl. ST, 38.255%, 2/15/30⁵		448,125		29,183
Series 2796, Cl. SD, 66.149%, 7/15/26⁵		671,710		85,465
Series 2802, Cl. AS, 99.999%, 4/15/33⁵		603,512		53,595
Series 2819, Cl. S, 54.304%, 6/15/34⁵		136,664		16,276
Series 2920, Cl. S, 78.263%, 1/15/35⁵		2,624,671		305,566
Series 3000, Cl. SE, 99.999%, 7/15/25⁵		2,752,007		256,840
Series 3004, Cl. SB, 99.999%, 7/15/35⁵		147,366		16,816
Series 3045, Cl. DI, 40.938%, 10/15/35⁵		1,722,791		204,527
Series 3110, Cl. SL, 99.999%, 2/15/26⁵		412,274		36,663
Series 3399, Cl. SC, 19.734%, 12/15/37⁵		1,657,690		181,848
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security,
Series 176, Cl. PO, 4.464%, 6/1/26⁷		160,849		131,461
Federal National Mortgage Assn.:
4.50%, 1/1/25-1/1/40⁸		7,035,000		7,107,370
5%, 2/25/22-7/25/22		32,943		34,485
5%, 1/1/25-1/1/40⁸		10,944,000		11,243,777
5.305%, 10/1/36		378,263		396,748
5.50%, 1/1/25-1/1/40⁸		14,955,000		15,661,427
6%, 1/1/25-1/1/40⁸		13,859,000		14,730,437
6.50%, 3/25/11-1/1/34		1,734,375		1,881,841
6.50%, 8/25/17⁴		278,245		302,108
6.50%, 1/1/40⁸		2,816,000		3,016,201
7%, 11/1/17-7/25/35		1,053,762		1,138,719
7.50%, 1/1/33		16,323		18,417
8.50%, 7/1/32		46,280		51,818
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Trust 1989-17, Cl. E, 10.40%, 4/25/19		24,754		27,549
Trust 1993-87, Cl. Z, 6.50%, 6/25/23		868,783		947,774
Trust 1998-58, Cl. PC, 6.50%, 10/25/28		729,840		789,351
Trust 1998-61, Cl. PL, 6%, 11/25/28		387,457		416,394
Trust 1999-54, Cl. LH, 6.50%, 11/25/29		575,444		619,261
Trust 2001-44, Cl. QC, 6%, 9/25/16		40,231		43,124
Trust 2001-51, Cl. OD, 6.50%, 10/25/31		43,599		46,923
Trust 2001-74, Cl. QE, 6%, 12/25/31		1,141,641		1,221,886
Trust 2002-12, Cl. PG, 6%, 3/25/17		20,349		21,849
Trust 2003-28, Cl. KG, 5.50%, 4/25/23		3,964,000		4,145,005
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,975,000		2,096,182
Trust 2004-81, Cl. KC, 4.50%, 4/1/17		546,644		562,529
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25		1,160,000		1,208,312
Trust 2005-117, Cl. LA, 5.50%, 12/25/27		66,618		67,839


	Principal
	Amount		Value

FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Continued
Trust 2005-12, Cl. JC, 5%, 6/1/28	$	933,141	$	972,963
Trust 2005-22, Cl. EC, 5%, 10/1/28		345,000		360,250
Trust 2005-30, Cl. CU, 5%, 4/1/29		313,308		327,606
Trust 2005-57, Cl. PA, 5.50%, 5/1/27		565,787		572,306
Trust 2006-110, Cl. PW, 5.50%, 5/25/28		107,167		110,999
Trust 2006-46, Cl. SW, 23.351%, 6/25/36¹		406,529		538,332
Trust 2006-50, Cl. KS, 23.352%, 6/25/36¹		795,798		1,040,208
Trust 2006-57, Cl. PA, 5.50%, 8/25/27		1,006,087		1,035,952
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-61, Cl. SH, 48.054%, 11/18/31⁵		46,532		7,175
Trust 2001-63, Cl. SD, 37.778%, 12/18/31⁵		14,253		2,432
Trust 2001-65, Cl. S, 45.098%, 11/25/31⁵		1,167,484		183,346
Trust 2001-68, Cl. SC, 29.533%, 11/25/31⁵		9,817		1,506
Trust 2001-81, Cl. S, 37.157%, 1/25/32⁵		311,287		48,248
Trust 2002-28, Cl. SA, 39.046%, 4/25/32⁵		7,940		1,199
Trust 2002-38, Cl. SO, 59.356%, 4/25/32⁵		18,593		2,547
Trust 2002-39, Cl. SD, 44.22%, 3/18/32⁵		12,294		1,637
Trust 2002-47, Cl. NS, 34.189%, 4/25/32⁵		790,082		108,956
Trust 2002-48, Cl. S, 36.323%, 7/25/32⁵		13,330		1,801
Trust 2002-51, Cl. S, 34.498%, 8/25/32⁵		725,298		98,917
Trust 2002-52, Cl. SD, 40.697%, 9/25/32⁵		865,302		117,786
Trust 2002-52, Cl. SL, 36.797%, 9/25/32⁵		8,206		1,114
Trust 2002-53, Cl. SK, 41.622%, 4/25/32⁵		42,837		5,866
Trust 2002-56, Cl. SN, 39.068%, 7/25/32⁵		18,175		2,461
Trust 2002-60, Cl. SM, 47.256%, 8/25/32⁵		161,645		22,439
Trust 2002-7, Cl. SK, 47.997%, 1/25/32⁵		75,985		9,667
Trust 2002-77, Cl. BS, 38.854%, 12/18/32⁵		97,162		12,830
Trust 2002-77, Cl. IS, 52.089%, 12/18/32⁵		31,677		4,317
Trust 2002-77, Cl. JS, 37.391%, 12/18/32⁵		163,977		21,348
Trust 2002-77, Cl. SA, 38.553%, 12/18/32⁵		154,576		20,451
Trust 2002-77, Cl. SH, 44.588%, 12/18/32⁵		394,404		61,233
Trust 2002-84, Cl. SA, 46.464%, 12/25/32⁵		1,043,696		136,164
Trust 2002-9, Cl. MS, 35.879%, 3/25/32⁵		15,395		2,061
Trust 2002-90, Cl. SN, 49.355%, 8/25/32⁵		83,158		11,786
Trust 2002-90, Cl. SY, 50.458%, 9/25/32⁵		52,235		7,075
Trust 2003-26, Cl. DI, 11.083%, 4/25/33⁵		32,789		6,267
Trust 2003-33, Cl. SP, 56.393%, 5/25/33⁵		1,133,970		160,090
Trust 2003-4, Cl. S, 44.369%, 2/25/33⁵		746,438		106,518
Trust 2003-89, Cl. XS, 70.432%, 11/25/32⁵		858,405		106,586
Trust 2004-54, Cl. DS, 51.503%, 11/25/30⁵		615,040		69,407
Trust 2005-14, Cl. SE, 43.159%, 3/25/35⁵		524,451		58,646
Trust 2005-40, Cl. SA, 74.25%, 5/25/35⁵		1,459,451		171,168
Trust 2005-40, Cl. SB, 87.935%, 5/25/35⁵		66,424		7,831
Trust 2005-6, Cl. SE, 86.18%, 2/25/35⁵		1,903,113		210,784
Trust 2005-71, Cl. SA, 72.441%, 8/25/25⁵		1,794,163		213,142
Trust 2005-87, Cl. SE, 79.001%, 10/25/35⁵		5,689,541		646,141
Trust 2005-87, Cl. SG, 93.949%, 10/25/35⁵		3,933,904		531,616
Trust 2006-60, Cl. DI, 40.599%, 4/25/35⁵		376,456		46,659
Trust 221, Cl. 2, 22.926%, 5/1/23⁵		10,465		2,400
Trust 222, Cl. 2, 16.787%, 6/1/23⁵		1,242,137		243,067
Trust 240, Cl. 2, 22.048%, 9/1/23⁵		1,588,927		354,777
Trust 252, Cl. 2, 23.444%, 11/1/23⁵		1,039,576		246,718
Trust 273, Cl. 2, 15.872%, 8/1/26⁵		296,548		67,207
Trust 294, Cl. 2, 8.459%, 2/1/28⁵		114,793		26,649
Trust 301, Cl. 2, 0%, 4/1/29^5,6		14,009		3,172
Trust 303, Cl. IO, 0%, 11/1/29^5,6		176,169		33,491
Trust 320, Cl. 2, 7.987%, 4/1/32⁵		837,544		219,167
Trust 321, Cl. 2, 0%, 4/1/32^5,6		2,726,999		668,993
Trust 324, Cl. 2, 0%, 7/1/32^5,6		29,057		6,839
Trust 331, Cl. 5, 0%, 2/1/33^5,6		40,902		7,797
Trust 331, Cl. 9, 9.147%, 2/1/33⁵		712,349		153,423
Trust 334, Cl. 12, 0%, 2/1/33^5,6		71,403		13,177
Trust 334, Cl. 17, 16.202%, 2/1/33⁵		488,783		94,378
Trust 338, Cl. 2, 0%, 7/1/33^5,6		1,436,465		306,763
Trust 339, Cl. 12, 0%, 7/1/33^5,6		964,465		181,384
Trust 339, Cl. 7, 0%, 7/1/33^5,6		2,422,799		394,671

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued
Trust 343, Cl. 13, 8.30%, 9/1/33⁵	$	836,548	$	140,270
Trust 343, Cl. 18, 4.244%, 5/1/34⁵		248,676		45,899
Trust 345, Cl. 9, 2.736%, 1/1/34⁵		1,115,482		200,330
Trust 351, Cl. 10, 1.924%, 4/1/34⁵		345,428		66,649
Trust 351, Cl. 8, 2.248%, 4/1/34⁵		538,506		103,806
Trust 356, Cl. 10, 0.169%, 6/1/35⁵		461,985		87,275
Trust 356, Cl. 12, 0%, 2/1/35^5,6		234,561		43,956
Trust 362, Cl. 12, 0%, 8/1/35^5,6		1,398,445		267,754
Trust 362, Cl. 13, 0%, 8/1/35^5,6		768,683		147,294
Trust 364, Cl. 15, 0%, 9/1/35^5,6		51,299		9,356
Trust 364, Cl. 16, 0%, 9/1/35^5,6		987,603		166,476
Trust 365, Cl. 16, 10.067%, 3/1/36⁵		1,665,759		308,752
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 5.242%, 9/25/23⁷		379,889		296,611

				117,254,154

GNMA/Guaranteed—4.1%
Government National Mortgage Assn.:
4.50%, 1/1/40⁸		6,430,000		6,436,031
7%, 12/29/23-3/15/26		33,899		37,612
8.50%, 8/1/17-12/15/17		155,950		170,683
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates, Series 1999-32, Cl. ZB, 8%, 9/16/29		97,330		106,974
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2000-7, Cl. Z, 8%, 1/16/30		42,613		46,410
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 1998-19, Cl. SB, 49.191%, 7/16/28⁵		20,618		3,550
Series 2001-21, Cl. SB, 81.024%, 1/16/27⁵		761,971		108,503
Series 2002-15, Cl. SM, 70.84%, 2/16/32⁵		803,758		99,849
Series 2004-11, Cl. SM, 58.689%, 1/17/30⁵		576,225		95,121
Series 2006-47, Cl. SA, 81.998%, 8/16/36⁵		7,042,279		783,958

				7,888,691

Non-Agency—10.9%
Commercial—7.9%
Asset Securitization Corp., Commercial Interest-Only Stripped Mtg.-Backed Security, Series 1997-D4, Cl. PS1, 0.608%, 4/14/29⁵		8,660,993		342,105
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2006-1, Cl. AM, 5.421%, 9/1/45		4,070,000		3,221,582
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed Pass-Through Certificates, Series 1997-CTL1, 0%, 6/22/24^5,6		7,319,719		299,450
CHL Mortgage Pass-Through Trust 2005-17, Mtg. Pass-Through Certificates, Series 2005-17, Cl. 1A8, 5.50%, 9/1/35		80,000		61,269
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates, Series 2008-C7, Cl. AM, 6.092%, 12/1/49¹		1,920,000		1,455,147
Citigroup, Inc./Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49		380,000		388,490
CWALT Alternative Loan Trust 2007-8CB, Mtg. Pass-Through Certificates, Series 2007-8CB, Cl. A1, 5.50%, 5/25/37		116,628		84,936
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		634,845		590,840
First Horizon Mortgage Pass-Through Trust 2007-AR3, Mtg. Pass-Through Certificates, Series 2007-AR3, Cl. 1A1, 6.104%, 11/1/37¹		547,586		386,987
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39		21,171		21,213
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2001-LIBA, Cl. B, 6.733%, 2/10/16²		605,000		640,851
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP4, Cl. AM, 4.999%, 10/1/42		1,110,000		937,829
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		3,950,000		3,822,538
JPMorgan Mortgage Trust 2007-S3, Mtg. Pass-Through Certificates, Series 2007-S3, Cl. 1A90, 7%, 7/1/37		849,995		660,628


	Principal
	Amount		Value

Commercial Continued
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 0%, 2/18/30^5,6	$	4,052,832	$	124,101
Lehman Structured Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 2002-GE1, Cl. A, 2.514%, 7/1/24²		197,329		141,543
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		1,181,193		1,016,054
Salomon Brothers Mortgage Securities VII, Inc., Interest-Only Commercial Mtg. Pass-Through Certificates, Series 1999-C1, Cl. X, 0%, 5/18/32^5,6		56,213,297		279,689
Structured Asset Securities Corp., Mtg. Pass-Through Certificates, Series 2002-AL1, Cl. B2, 3.45%, 2/25/32		1,947,175		840,854

				15,316,106

Manufactured Housing—1.2%
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A5, 5.01%, 3/25/36¹		3,009,037		2,426,578
Multifamily—1.2%
Merrill Lynch Mortgage Investors Trust 2005-A2, Mtg. Pass-Through Certificates, Series 2005-A2, Cl. A2, 4.258%, 2/1/35¹		126,933		110,360
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 5A1, 5.589%, 7/1/36¹		715,108		557,652
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg. Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.979%, 12/25/34¹		594,240		575,148
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through Certificates, Series 2004-S, Cl. A1, 3.105%, 9/25/34¹		513,966		475,747
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.096%, 3/25/36¹		696,031		564,359

				2,283,266

Other—0.0%
Salomon Brothers Mortgage Securities VI, Inc., Interest-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. B, 47.878%, 10/23/17⁵		1,606		137
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. A, 3.994%, 10/23/17⁷		2,377		2,248

				2,385

Residential—0.6%
CHL Mortgage Pass-Through Trust 2005-J4, Mtg. Pass-Through Certificates, Series 2005-J4, Cl. A7, 5.50%, 11/1/35		40,000		28,074
Merrill Lynch Mortgage Investors Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 6.064%, 10/25/36¹		72,867		62,469
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33		399,849		396,793
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A5, 6%, 9/25/36		81,025		53,434
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		10,918		9,944
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A28, 5.75%, 4/25/37		31,145		18,007
Structured Adjustable Rate Mortgage Loan Trust, Mtg. Pass-Through Certificates, Series 2004-5, Cl. 3 A1, 2.963%, 5/1/34¹		283,913		249,253
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates, Series 2007-HY1, Cl. 4A1, 5.387%, 2/1/37¹		74,119		52,519
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 3.003%, 9/1/34¹		329,691		312,700

				1,183,193

Total Mortgage-Backed Obligations (Cost $145,790,334)				146,354,373

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

U.S. Government Obligations—1.8%
Federal Home Loan Mortgage Corp. Nts., 2.50%, 4/23/14	$	2,020,000	$	2,020,867
Federal National Mortgage Assn. Nts., 3%, 9/16/14		1,555,000		1,576,431


Total U.S. Government Obligations (Cost $3,580,579)				3,597,298

Corporate Bonds and Notes—31.7%
Consumer Discretionary—3.8%
Automobiles—0.7%
Daimler Finance North America LLC, 6.50% Sr. Unsec. Unsub. Nts., 11/15/13		455,000		499,215
Ford Motor Credit Co. LLC, 9.75% Sr. Unsec. Nts., 9/15/10		880,000		908,179

				1,407,394

Hotels, Restaurants & Leisure—0.2%
Hyatt Hotels Corp., 5.75% Sr. Unsec. Unsub. Nts., 8/15/15²		468,000		471,364
Household Durables—0.3%
Fortune Brands, Inc., 3% Sr. Unsec. Unsub. Bonds, 6/1/12		490,000		485,923
Leisure Equipment & Products—0.2%
Mattel, Inc., 6.125% Sr. Unsec. Nts., 6/15/11		455,000		479,894
Media—1.8%
CBS Corp., 8.875% Sr. Unsec. Nts., 5/15/19		425,000		509,280
Comcast Cable Communications Holdings, Inc., 9.455% Sr. Unsec. Nts., 11/15/22		290,000		373,737
DirecTV Holdings LLC/DirecTV Financing Co., Inc.:
5.875% Sr. Unsec. Unsub. Nts., 10/1/19²		383,000		390,266
7.625% Sr. Unsec. Unsub. Nts., 5/15/16³		350,000		382,863
DISH DBS Corp., 7.875% Sr. Unsec. Nts., 9/1/19		405,000		426,769
Grupo Televisa SA, 6.625% Sr. Unsec. Bonds, 1/15/40²		393,000		390,613
Time Warner Cos., Inc., 9.125% Debs., 1/15/13		320,000		371,556
Time Warner Entertainment Co. LP, 8.375% Sr. Nts., 7/15/33		255,000		305,698
Viacom, Inc., 7.875% Sr. Unsec. Debs., 7/30/30		280,000		302,785

				3,453,567

Specialty Retail—0.6%
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		413,000		399,971
Staples, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/1/11		680,000		730,953

				1,130,924

Consumer Staples—2.0%
Beverages—0.7%
Anheuser-Busch InBev Worldwide, Inc., 7.75% Sr. Unsec. Unsub. Nts., 1/15/19²		725,000		850,246
Constellation Brands, Inc., 8.375% Sr. Nts., 12/15/14³		445,000		476,150

				1,326,396

Food & Staples Retailing—0.2%
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31		250,000		320,935
Food Products—0.6%
Bunge Ltd. Finance Corp.:
5.35% Sr. Unsec. Unsub. Nts., 4/15/14		210,000		214,880
8.50% Sr. Unsec. Nts., 6/15/19		200,000		228,361
Heinz (H.J.) Finance Co., 7.125% Sr. Unsec. Nts., 8/1/39²		345,000		391,325
Sara Lee Corp., 6.25% Sr. Unsec. Unsub. Nts., 9/15/11		420,000		448,277

				1,282,843

Tobacco—0.5%
Altria Group, Inc., 9.70% Sr. Unsec. Nts., 11/10/18		785,000		971,907
Energy—4.3%
Energy Equipment & Services—0.5%
Pride International, Inc., 8.50% Sr. Nts., 6/15/19		530,000		614,800
Weatherford International Ltd., 6.50% Sr. Unsec. Bonds, 8/1/36		320,000		306,548
Weatherford International, Inc., 6.625% Sr. Unsec. Unsub. Nts., Series B, 11/15/11		81,000		86,712

				1,008,060

Oil, Gas & Consumable Fuels—3.8%
Anadarko Petroleum Corp., 6.45% Sr. Unsec. Nts., 9/15/36		385,000		403,387
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		430,000		432,150
DCP Midstream LLC, 6.75% Sr. Unsec. Nts., 9/15/37²		74,000		73,386
Duke Energy Field Services LLC, 7.875% Unsec. Nts., 8/16/10		425,000		441,907
El Paso Corp., 8.25% Sr. Unsec. Nts., 2/15/16		490,000		525,525


	Principal
	Amount		Value

Oil, Gas & Consumable Fuels Continued
Energy Transfer Partners LP, 7.50% Sr. Unsec. Unsub. Bonds, 7/1/38	$	184,000	$	202,229
Enterprise Products Operating LLP, 7.50% Sr. Unsec. Unsub. Nts., 2/1/11		515,000		545,821
Kaneb Pipe Line Operating Partnership LP, 5.875% Sr. Unsec. Nts., 6/1/13		840,000		869,902
Kerr-McGee Corp., 6.875% Sr. Unsec. Unsub. Nts., 9/15/11		343,000		368,919
Kinder Morgan Energy Partners LP, 9% Sr. Unsec. Nts., 2/1/19		400,000		493,000
Nexen, Inc., 6.40% Sr. Unsec. Unsub. Bonds, 5/15/37		450,000		454,847
Peabody Energy Corp., 6.875% Sr. Unsec. Nts., Series B, 3/15/13		450,000		457,313
Pipeline Funding Co. LLC, 7.50% Sr. Sec. Nts., 1/15/30²		325,000		308,083
Plains All American Pipeline LP, 6.50% Sr. Unsec. Unsub. Nts., 5/1/18		550,000		589,112
Ras Laffan Liquefied Natural Gas Co. Ltd. III, 5.50% Sr. Sec. Nts., 9/30/14²		270,000		284,214
Williams Cos., Inc. (The), 8.75% Unsec. Nts., 3/15/32		360,000		431,959
Woodside Finance Ltd., 4.50% Nts., 11/10/14²		410,000		414,102

				7,295,856

Financials—9.3%
Capital Markets—1.6%
Blackstone Holdings Finance Co. LLC, 6.625% Sr. Unsec. Nts., 8/15/19²		728,000		713,791
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		890,000		835,749
Morgan Stanley:
5.55% Sr. Unsec. Unsub. Nts., Series F, 4/27/17		215,000		216,273
7.30% Sr. Unsec. Nts., 5/13/19		1,180,000		1,327,345

				3,093,158

Commercial Banks—2.2%
Barclays Bank plc, 6.278% Perpetual Bonds^3,9		1,060,000		789,700
City National Capital Trust I, 9.625% Jr. Sub. Bonds, 2/1/40		490,000		521,767
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/35¹		890,000		738,700
PNC Funding Corp., 5.25% Gtd. Unsec. Sub. Nts., 11/15/15		535,000		550,865
Wachovia Corp., 5.625% Sub. Nts., 10/15/16		240,000		245,742
Wells Fargo & Co., 7.98% Jr. Sub. Perpetual Bonds, Series K⁹		1,415,000		1,425,613

				4,272,387

Consumer Finance—0.5%
Capital One Capital IV, 8.875% Jr. Sub. Nts., 5/15/40		815,000		874,088
Diversified Financial Services—2.6%
Citigroup, Inc., 8.125% Sr. Unsec. Nts., 7/15/39		1,215,000		1,375,444
JPMorgan Chase & Co., 7.90% Perpetual Bonds, Series 1⁹		1,775,000		1,836,830
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		1,730,000		1,906,579

				5,118,853

Insurance—1.9%
AXA SA, 6.379% Sub. Perpetual Bonds^2,9		665,000		538,650
Hartford Financial Services Group, Inc. (The):
5.375% Sr. Unsec. Nts., 3/15/17		400,000		381,864
6% Sr. Unsec. Nts., 1/15/19		545,000		531,618
Lincoln National Corp.:
7% Jr. Sub. Bonds, 5/17/66¹		615,000		516,600
8.75% Sr. Unsec. Nts., 7/1/19		278,000		318,170
Marsh & McLennan Cos., Inc., 5.15% Sr. Unsec. Nts., 9/15/10		455,000		466,526
Principal Life Global Funding I, 4.40% Sr. Sec. Nts., 10/1/10²		455,000		464,326
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23²		470,000		504,165

				3,721,919

Real Estate Investment Trusts—0.5%
Simon Property Group LP, 5.375% Sr. Unsec. Unsub. Nts., 6/1/11		447,000		464,173
WEA Finance LLC/WT Finance Aust Pty Ltd., 5.75% Nts., 9/2/15²		485,000		512,020

				976,193

Health Care—1.2%
Health Care Equipment & Supplies—0.4%
Boston Scientific Corp., 6% Sr. Unsec. Unsub. Nts., 1/15/20		752,000		769,817
Health Care Providers & Services—0.2%
WellPoint, Inc., 5% Sr. Unsec. Unsub. Nts., 1/15/11		435,000		449,886
Life Sciences Tools & Services—0.4%
Fisher Scientific International, Inc., 6.125% Sr. Unsec. Sub. Nts., 7/1/15		705,000		727,119
Pharmaceuticals—0.2%
Watson Pharmaceuticals, Inc., 6.125% Sr. Unsec. Nts., 8/15/19		460,000		475,485
Industrials—2.9%
Aerospace & Defense—1.0%
BAE Systems Holdings, Inc., 6.375% Nts., 6/1/19²		450,000		484,913

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Aerospace & Defense Continued
L-3 Communications Corp., 5.875% Sr. Sub. Nts., 1/15/15	$	485,000	$	486,819
Meccanica Holdings USA, Inc.:
6.25% Sr. Nts., 1/15/40²		95,000		95,435
6.25% Sr. Unsec. Unsub. Nts., 7/15/19²		265,000		283,266
7.375% Sr. Unsec. Unsub. Nts., 7/15/39²		440,000		495,563

				1,845,996

Commercial Services & Supplies—0.4%
Browning-Ferris Industries, Inc., 7.40% Sr. Unsec. Debs., 9/15/35		375,000		415,021
Republic Services, Inc., 6.75% Sr. Unsec. Unsub. Nts., 8/15/11		295,000		311,315

				726,336

Electrical Equipment—0.2%
Roper Industries, Inc., 6.25% Sr. Nts., 9/1/19		475,000		495,401
Industrial Conglomerates—0.6%
General Electric Capital Corp., 5.875% Unsec. Unsub. Nts., 1/14/38		350,000		325,124
Tyco International Ltd./Tyco International Finance SA, 6.875% Sr. Unsec. Unsub. Nts., 1/15/21		820,000		921,813

				1,246,937

Machinery—0.3%
SPX Corp., 7.625% Sr. Unsec. Nts., 12/15/14		510,000		527,850
Road & Rail—0.4%
CSX Corp., 7.375% Sr. Unsec. Nts., 2/1/19		685,000		783,879
Information Technology—0.7%
Electronic Equipment & Instruments—0.4%
Agilent Technologies, Inc., 5.50% Sr. Unsec. Unsub. Nts., 9/14/15		759,000		796,556
Software—0.3%
CA, Inc., 5.375% Sr. Unsec. Unsub. Nts., 12/1/19		570,000		574,290
Materials—2.4%
Chemicals—0.7%
Airgas, Inc., 4.50% Sr. Unsec. Unsub. Nts., 9/15/14		242,000		245,925
Terra Capital, Inc., 7.75% Sr. Nts., 11/1/19²		620,000		666,500
Yara International ASA, 7.875% Nts., 6/11/19²		402,000		459,775

				1,372,200

Containers & Packaging—0.3%
Ball Corp., 7.125% Sr. Unsec. Nts., 9/1/16		480,000		494,400
Metals & Mining—1.4%
Freeport-McMoRan Copper & Gold, Inc., 8.25% Sr. Unsec. Nts., 4/1/15		725,000		791,095
Teck Resources Ltd., 9.75% Sr. Sec. Nts., 5/15/14		535,000		619,931
Vale Overseas Ltd., 6.875% Sr. Unsec. Nts., 11/10/39		495,000		500,803
Xstrata Canada Corp.:
5.375% Sr. Unsec. Unsub. Nts., 6/1/15		245,000		253,886
6% Sr. Unsec. Unsub. Nts., 10/15/15		347,000		371,038
Xstrata Finance Canada Ltd., 6.90% Nts., 11/15/37²		231,000		236,297

				2,773,050

Telecommunication Services—3.0%
Diversified Telecommunication Services—2.7%
AT&T, Inc., 6.30% Sr. Unsec. Bonds, 1/15/38		540,000		550,310
British Telecommunications plc, 9.625% Bonds, 12/15/30		290,000		370,468
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		455,000		458,413
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/10¹		427,000		441,322
Embarq Corp., 6.738% Sr. Unsec. Nts., 6/1/13		430,000		467,544
Telecom Italia Capital SA, 4.875% Sr. Unsec. Unsub. Nts., 10/1/10		880,000		900,841
Telefonica Europe BV, 7.75% Unsec. Nts., 9/15/10		420,000		439,441
Telus Corp., 8% Nts., 6/1/11		690,000		747,247
Verizon Communications, Inc., 6.40% Sr. Unsec. Nts., 2/15/38		350,000		367,111
Windstream Corp., 8.625% Sr. Unsec. Unsub. Nts., 8/1/16		530,000		541,925

				5,284,622

Wireless Telecommunication Services—0.3%
American Tower Corp., 7% Sr. Unsec. Nts., 10/15/17		360,000		400,500
Rogers Wireless, Inc., 9.625% Sr. Sec. Nts., 5/1/11		179,000		196,473

				596,973

Utilities—2.1%
Electric Utilities—0.4%
Allegheny Energy Supply Co. LLC, 8.25% Bonds, 4/15/12²		350,000		383,125
Exelon Corp., 5.625% Sr. Unsec. Bonds, 6/15/35		325,000		294,836

				677,961


	Principal
	Amount			Value

Energy Traders—0.8%
Constellation Energy Group, Inc., 7.60% Unsec. Nts., 4/1/32	$	465,000		$	506,362
NRG Energy, Inc., 7.375% Sr. Nts., 2/1/16		455,000			456,706
Oncor Electric Delivery Co., 6.375% Sr. Sec. Nts., 1/15/15		589,000			643,198

					1,606,266

Multi-Utilities—0.9%
CMS Energy Corp., 6.55% Sr. Unsec. Unsub. Nts., 7/17/17		535,000			531,020
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10		432,000			452,987
Sempra Energy:
6.50% Sr. Unsec. Nts., 6/1/16		250,000			271,484
9.80% Sr. Unsec. Nts., 2/15/19		390,000			487,546

					1,743,037


Total Corporate Bonds and Notes (Cost $58,331,451)					61,659,722

	Units			Value

Rights, Warrants and Certificates—0.0%
Pathmark Stores, Inc. Wts., Strike Price $22.31, Exp. 9/19/10¹⁰ (Cost $14,872)		5,408		$	—

	Shares

Investment Companies—12.7%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^11,12		795,482			795,482
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^11,13		23,853,396			23,853,396


Total Investment Companies (Cost $24,648,878)					24,648,878

Total Investments, at Value (Cost $251,487,414)		129.6	%		251,927,963
Liabilities in Excess of Other Assets		(29.6	)		(57,614,046	)

Net Assets		100.0	%	$	194,313,917

Footnotes to Statement of Investments


1.		Represents the current interest rate for a variable or increasing rate security.

2.		Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $12,248,497 or 6.30% of the Fund’s net assets as of December 31, 2009.

3.		Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $3,459,432, which represents 1.78% of the Fund’s net assets. See Note 6 of accompanying Notes.

4.		All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $699,315. See Note 5 of accompanying Notes.

5.		Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $11,757,349 or 6.05% of the Fund’s net assets as of December 31, 2009.

6.		The current amortization rate of the security’s cost basis exceeds the future interest payments currently estimated to be received. Both the amortization rate and interest payments are contingent on future mortgage pre-payment speeds and are therefore subject to change.

7.		Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. These securities amount to $430,320 or 0.22% of the Fund’s net assets as of December 31, 2009.

8.		When-issued security or delayed delivery to be delivered and settled after December 31, 2009. See Note 1 of accompanying Notes.

9.		This bond has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. Rate reported represents the current interest rate for this variable rate security.

10.		Non-income producing security.

11.		Rate shown is the 7-day yield as of December 31, 2009.

12.		Interest rate is less than 0.0005%.

13.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

OFI Liquid Assets Fund, LLC		—		810,000		810,000		—
Oppenheimer Institutional Money Market Fund, Cl. E		13,605,218		215,704,781		205,456,603		23,853,396


	Value		Income

OFI Liquid Assets Fund, LLC	$	—	$	1,106	^a
Oppenheimer Institutional Money Market Fund, Cl. E		23,853,396		129,358

	$	23,853,396	$	130,464


a.		Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

Valuation Inputs

	1)		Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2)		Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3)		Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


							Level 3–
	Level 1–			Level 2–			Significant
	Unadjusted			Other Significant			Unobservable
	Quoted Prices			Observable Inputs			Inputs		Value

Assets Table
Investments, at Value:
Asset-Backed Securities	$	—		$	15,667,692		$	—	$	15,667,692
Mortgage-Backed Obligations		—			146,354,373			—		146,354,373
U.S. Government Obligations		—			3,597,298			—		3,597,298
Corporate Bonds and Notes		—			61,659,722			—		61,659,722
Rights, Warrants and Certificates		—			—			—		—
Investment Companies		24,648,878			—			—		24,648,878

Total Investments, at Value		24,648,878			227,279,085			—		251,927,963

Other Financial Instruments:
Futures margins		38,427			—			—		38,427

Total Assets	$	24,687,305		$	227,279,085		$	—	$	251,966,390


Liabilities Table
Other Financial Instruments:
Depreciated swaps, at value	$	—		$	(65,987	)	$	—	$	(65,987	)
Futures margins		(105,716	)		—			—		(105,716	)

Total Liabilities	$	(105,716	)	$	(65,987	)	$	—	$	(171,703	)

Futures Contracts as of December 31, 2009 are as follows:


								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)

U.S. Long Bonds	Buy		125		3/22/10	$	14,421,875	$	(615,480	)
U.S. Treasury Nts., 2 yr.	Sell		101		3/31/10		21,842,828		113,868
U.S. Treasury Nts., 5 yr.	Sell		67		3/31/10		7,663,648		134,160
U.S. Treasury Nts., 10 yr.	Buy		118		3/22/10		13,623,469		(371,592	)

								$	(739,044	)

Credit Default Swap Contracts as of December 31, 2009 are as follows:


	Buy/Sell	Notional		Pay/
Reference Entity/	Credit	Amount		Receive			Termination					Unrealized
Swap Counterparty	Protection	(000’s)		Fixed Rate			Date		Value			Depreciation

Vale Inco Ltd.:
Morgan Stanley Capital Services, Inc.	Buy	$	1,030		0.70	%		3/20/17	$	(27,000	)	$	27,000
Morgan Stanley Capital Services, Inc.	Buy		1,015		0.63			3/20/17		(21,966	)		21,966

	Total		2,045							(48,966	)		48,966
Vale Overseas:
Morgan Stanley Capital Services, Inc.	Sell		1,030		1.17			3/20/17		(6,287	)		6,287
Morgan Stanley Capital Services, Inc.	Sell		1,015		1.10			3/20/17		(10,734	)		10,734

	Total		2,045							(17,021	)		17,021

	Grand Total Buys									(48,966	)		48,966
	Grand Total Sells									(17,021	)		17,021

	Total Credit Default Swaps								$	(65,987	)	$	65,987

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps:

Type of Reference

Total Maximum Potential

Asset on which the

Payments for Selling Credit

Reference Asset

Fund Sold Protection

Protection (Undiscounted)

Amount Recoverable*

Rating Range**

Investment Grade Single

Name Corporate Debt

2,045,000

—

BBB+


*		The Fund has no amounts recoverable from related purchased protection. In addition, the Fund has no recourse provisions under the credit derivatives and holds no collateral which can offset or reduce potential payments under a triggering event.

**		The period end reference asset security ratings, as rated by any rating organization, are included in the equivalent Standard & Poor’s rating category. The reference asset rating represents the likelihood of a potential credit event on the reference asset which would result in a related payment by the Fund.

The following table aggregates, as of period end, the amount receivable from/(payable to) each counterparty with whom the Fund has entered into a swap agreement. Swaps are individually disclosed in the preceding tables.

Swap Summary as of December 31, 2009 is as follows:


		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value

Morgan Stanley
Capital Services, Inc.:
	Credit Default Buy Protection	$	2,045	$	(48,966	)
	Credit Default Sell Protection		2,045		(17,021	)

		Total Swaps		$	(65,987	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $227,634,018)	$	228,074,567
Affiliated companies (cost $23,853,396)		23,853,396

		251,927,963
Receivables and other assets:
Interest, dividends and principal paydowns		1,676,036
Shares of beneficial interest sold		89,102
Futures margins		38,427
Other		19,279

Total assets		253,750,807

Liabilities
Depreciated swaps, at value		65,987
Payables and other liabilities:
Investments purchased on a when-issued or delayed delivery basis		58,841,938
Futures margins		105,716
Shares of beneficial interest redeemed		61,349
Shareholder communications		35,619
Distribution and service plan fees		35,236
Transfer and shareholder servicing agent fees		16,557
Trustees’ compensation		12,758
Other		261,730

Total liabilities		59,436,890

Net Assets	$	194,313,917


Composition of Net Assets
Par value of shares of beneficial interest	$	27,582
Additional paid-in capital		316,302,733
Accumulated net investment income		3,511,374
Accumulated net realized loss on investments		(125,163,290	)
Net unrealized depreciation on investments		(364,482	)

Net Assets	$	194,313,917


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $137,597,247 and 19,473,425 shares of beneficial interest outstanding)	$	7.07
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $56,716,670 and 8,108,411 shares of beneficial interest outstanding)	$	6.99

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Interest (net of foreign withholding taxes of $376)	$	13,270,100
Fee income		1,838,875
Dividends:
Unaffiliated companies		4,934
Affiliated companies		129,358
Income from investment of securities lending cash collateral, net—affliated companies		1,106

Total investment income		15,244,373

Expenses
Management fees		1,142,088
Distribution and service plan fees—Service shares		131,620
Transfer and shareholder servicing agent fees:
Non-Service shares		95,088
Service shares		38,325
Shareholder communications:
Non-Service shares		88,823
Service shares		34,552
Trustees’ compensation		12,855
Custodian fees and expenses		1,524
Other		25,249

Total expenses		1,570,124
Less waivers and reimbursements of expenses		(285,188	)

Net expenses		1,284,936

Net Investment Income		13,959,437

Realized and Unrealized Gain (Loss)
Net realized loss on:
Investment from unaffiliated companies		(51,573,877	)
Closing and expiration of futures contracts		(1,374,632	)
Swap contracts		(16,366,593	)

Net realized loss		(69,315,102	)
Net change in unrealized appreciation (depreciation) on:
Investments		69,934,926
Futures contracts		(645,574	)
Swap contracts		596,596

Net change in unrealized depreciation		69,885,948

Net Increase in Net Assets Resulting from Operations	$	14,530,283

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	13,959,437		$	25,010,517
Net realized loss		(69,315,102	)		(108,962,092	)
Net change in unrealized depreciation		69,885,948			(67,980,167	)

Net increase (decrease) in net assets resulting from operations		14,530,283			(151,931,742	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		—			(12,773,902	)
Service shares		—			(4,423,158	)

		—			(17,197,060	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(29,962,563	)		(47,839,123	)
Service shares		(9,685,378	)		7,196,319

		(39,647,941	)		(40,642,804	)

Net Assets
Total decrease		(25,117,658	)		(209,771,606	)
Beginning of period		219,431,575			429,203,181

End of period (including accumulated net investment income (loss) of $3,511,374 and $(466,070), respectively)	$	194,313,917		$	219,431,575

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	6.45		$	11.06		$	11.16		$	11.19		$	11.50

Income (loss) from investment operations:
Net investment income¹		.48			.66			.55			.53			.51
Net realized and unrealized gain (loss)		.14			(4.82	)		(.08	)		.03			(.23	)

Total from investment operations		.62			(4.16	)		.47			.56			.28

Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.45	)		(.57	)		(.59	)		(.59	)

Net asset value, end of period	$	7.07		$	6.45		$	11.06		$	11.16		$	11.19


Total Return, at Net Asset Value²		9.61	%		(39.05	)%		4.39	%		5.28	%		2.59	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	137,597		$	156,339		$	325,661		$	367,106		$	430,642

Average net assets (in thousands)	$	137,631		$	271,355		$	345,723		$	391,750		$	466,033

Ratios to average net assets:³
Net investment income		7.40	%		6.76	%		5.07	%		4.83	%		4.56	%
Total expenses		0.75	%⁴	0.63		%⁴	0.68		%⁴	0.77		%⁴		0.76	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.61	%		0.62	%		0.68	%		0.77	%		0.76	%

Portfolio turnover rate⁵		143	%		51	%		89	%		114	%		111	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods of less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.76	%
Year Ended December 31, 2008	0.63	%
Year Ended December 31, 2007	0.68	%
Year Ended December 31, 2006	0.77	%


5.		The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2009	$	977,840,247	$	1,009,549,121
Year Ended December 31, 2008	$	1,019,711,829	$	963,377,934
Year Ended December 31, 2007	$	662,784,931	$	678,316,693
Year Ended December 31, 2006	$	1,168,229,255	$	1,270,329,129
Year Ended December 31, 2005	$	2,420,041,493	$	2,423,498,913

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	6.41		$	10.98		$	11.10		$	11.15		$	11.47

Income (loss) from investment operations:
Net investment income¹		.46			.63			.52			.49			.47
Net realized and unrealized gain (loss)		.12			(4.77	)		(.08	)		.03			(.22	)

Total from investment operations		.58			(4.14	)		.44			.52			.25

Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.43	)		(.56	)		(.57	)		(.57	)

Net asset value, end of period	$	6.99		$	6.41		$	10.98		$	11.10		$	11.15


Total Return, at Net Asset Value²		9.05	%		(39.07	)%		4.09	%		4.93	%		2.33	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	56,717		$	63,093		$	103,542		$	41,191		$	11,110

Average net assets (in thousands)	$	52,648		$	101,597		$	70,116		$	21,265		$	7,213

Ratios to average net assets:³
Net investment income		7.16	%		6.55	%		4.85	%		4.56	%		4.29	%
Total expenses		1.01	%⁴	0.88		%⁴	0.92		%⁴		1.06	%⁴	1.03		%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.86	%		0.87	%		0.92	%		1.06	%		1.03	%

Portfolio turnover rate⁵		143	%		51	%		89	%		114	%		111	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.02	%
Year Ended December 31, 2008	0.88	%
Year Ended December 31, 2007	0.92	%
Year Ended December 31, 2006	1.06	%


5.		The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	PurchaseTransactions		Sale Transactions

Year Ended December 31, 2009	$	977,840,247	$	1,009,549,121
Year Ended December 31, 2008	$	1,019,711,829	$	963,377,934
Year Ended December 31, 2007	$	662,784,931	$	678,316,693
Year Ended December 31, 2006	$	1,168,229,255	$	1,270,329,129
Year Ended December 31, 2005	$	2,420,041,493	$	2,423,498,913

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Core Bond Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s main investment objective is to seek a high level of current income. As a secondary objective, the Fund seeks capital appreciation when consistent with its primary objective. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as unadjusted quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

There have been no significant changes to the fair valuation methodologies during the period.

Securities on a When-Issued or Delayed Delivery Basis. The Fund may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis normally takes place within six months and possibly as long as two years or more after the trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The purchase of securities on a when-issued basis may increase the volatility of the Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When the Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield it considers advantageous. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase.

As of December 31, 2009, the Fund had purchased securities issued on a when-issued or delayed delivery basis and sold securities issued on a delayed delivery basis as follows:


	When-Issued or Delayed
	Delivery Basis Transactions

Purchased securities	$	58,841,938

The Fund may enter into “forward roll” transactions with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (same type, coupon and maturity) at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund records the incremental difference between the forward purchase and sale of each forward roll as realized gain (loss) on investments or as fee income in the case of such transactions that have an associated fee in lieu of a difference in the forward purchase and sale price.

Forward roll transactions may be deemed to entail embedded leverage since the Fund purchases mortgage-related securities with extended settlement dates rather than paying for the securities under a normal settlement cycle. This embedded leverage increases the Fund’s market value of investments relative to its net assets which can incrementally increase the volatility of the Fund’s performance. Forward roll transactions can be replicated over multiple settlement periods.

Risks of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities at redelivery as compared to the securities sold to the counterparty; and counterparty credit risk. To assure its future payment of the purchase price, the Fund maintains internally designated assets with a market value equal to or greater than the payment obligation under the roll.

Investment in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Net Unrealized

Appreciation Based

on Cost of Securities

Undistributed

Accumulated

and Other Investments

Net Investment

Long-Term

Loss

for Federal Income

Income

Gain

Carryforward^1,2,3,4

Tax Purposes

$3,458,140

—

125,758,383

296,600


1.		As of December 31, 2009, the Fund had $125,312,251 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2010	$	29,885,554
2013		226,262
2014		6,107,275
2015		1,245,459
2016		12,777,851
2017		75,069,850

Total	$	125,312,251


2.		As of December 31, 2009, the Fund had $446,132 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2018.

3.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

4.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


	Reduction		Reduction
	to Accumulated		to Accumulated Net
Increase	Net Investment		Realized Loss
to Paid-in Capital	Income		on Investments

$226,161	$	9,981,993	$	9,755,832

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	—	$	17,197,060


Federal tax cost of securities	$	251,631,364
Federal tax cost of other investments		(1,527,120	)

Total federal tax cost	$	250,104,244


Gross unrealized appreciation	$	9,214,141
Gross unrealized depreciation		(8,917,541	)

Net unrealized appreciation	$	296,600

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		1,228,549		$	7,870,664			1,056,698		$	9,889,610
Dividends and/or distributions reinvested		—			—			1,288,991			12,773,902
Acquisition-Note 10		—			—			1,626,777			17,178,762
Redeemed		(5,976,436	)		(37,833,227	)		(9,205,898	)		(87,681,397	)

Net decrease		(4,747,887	)	$	(29,962,563	)		(5,233,432	)	$	(47,839,123	)


Service Shares
Sold		1,841,099		$	11,758,361			4,464,539		$	42,884,220
Dividends and/or distributions reinvested		—			—			449,051			4,423,158
Redeemed		(3,581,065	)		(21,443,739	)		(4,496,387	)		(40,111,059	)

Net increase (decrease)		(1,739,966	)	$	(9,685,378	)		417,203		$	7,196,319

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF and LAF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	182,651,304	$	192,850,959
U.S. government and government agency obligations		17,713,548		14,516,064
To Be Announced (TBA) mortgage-related securities		977,840,247		1,009,549,121

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $1 billion	0.60	%
Over $1 billion	0.50

Waivers and Reimbursements of Expenses. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.75% for Non-Service shares and 1.00% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed $3,182 and $2,460 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.18% of the Fund’s average annual net assets. During the year ended December 31, 2009, the Manager waived $254,480. This voluntary waiver will be applied after all other waivers and may be withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

5. Risk Exposures and the Use of Derivative Instruments

The Fund’s investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors defined below:

Commodity Risk. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Volatility Risk. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument’s price over a defined time period. Large increases or decreases in a financial instrument’s price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund’s performance.

Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. In addition, the Fund may require that certain counterparties post cash and/or securities in collateral accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

As of December 31, 2009 the Fund has not required certain counterparties to post collateral.

Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $65,987 for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counter-parties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contracts, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:

Asset Derivatives

Liability Derivatives

Statement

Derivatives not

of Assets

Accounted for as

and Liabilities

Hedging Instruments

Location

Value

Location

Value

Credit contracts

Depreciated
swaps, at value

65,987

Interest rate contracts

Futures margins

38,427

Futures margins

105,716

Total

38,427

171,703


*		Includes only the current day’s variation margin. Prior variation margin movements have been reflected in cash on the Statement of Assets and Liabilities upon receipt or payment.

The effect of derivative instruments on the Statement of Operations is as follows:


Amount of Realized Gain or Loss Recognized on Derivatives
Derivatives not	Closing and
Accounted for as	expiration of
Hedging Instruments	futures contracts			Swap contracts			Total

Credit contracts	$	—		$	(12,469,071	)	$	(12,469,071	)
Interest rate contracts		(1,374,632	)		(3,897,522	)		(5,272,154	)

Total	$	(1,374,632	)	$	(16,366,593	)	$	(17,741,225	)


Amount of Change in Unrealized Gain or Loss Recognized on Derivatives
Derivatives not
Accounted for as
Hedging Instruments	Futures contracts			Swap contracts			Total

Credit contracts	$	—		$	(458,039	)	$	(458,039	)
Interest rate contracts		(645,574	)		1,054,635			409,061

Total	$	(645,574	)	$	596,596		$	(48,978	)

Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a financial instrument at a negotiated price on a stipulated future date. The Fund may buy and sell futures contracts and may also buy or write put or call options on these futures contracts.

Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund’s assets are valued.

Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses.

Futures contracts are reported on a schedule following the Statement of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted in the Statement of Assets and Liabilities. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Realized gains (losses) are reported in the Statement of Operations at the closing or expiration of futures contracts.

The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

NOTES TO FINANCIAL STATEMENTS Continued

Risk Exposures and the Use of Derivative Instruments Continued

The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

Additional associated risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.

Swap Contracts

The Fund may enter into swap contract agreements with a counterparty to exchange a series of cash flows based on either specified reference rates, or the occurrence of a credit event, over a specified period. Such contracts may include interest rate, equity, debt, index, total return, credit and currency swaps.

Swaps are marked to market daily using primarily quotations from pricing services, counterparties and brokers. Swap contracts are reported on a schedule following the Statement of Investments. The values of swap contracts are aggregated by positive and negative values and disclosed separately on the Statement of Assets and Liabilities by contracts in unrealized appreciation and depreciation positions. Upfront payments paid or received, if any, affect the value of the respective swap. Therefore, to determine the unrealized appreciation (depreciation) on swaps, upfront payments paid should be subtracted from, while upfront payments received should be added to, the value of contracts reported as an asset on the Statement of Assets and Liabilities. Conversely, upfront payments paid should be added to, while upfront payments received should be subtracted from the value of contracts reported as a liability. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is combined with the accrued interest due to (owed by) the Fund at termination or settlement. The net change in this amount during the period is included on the Statement of Operations. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations.

Swap contract agreements are exposed to the market risk factor of the specific underlying reference asset. Swap contracts are typically more attractively priced compared to similar investments in related cash securities because they isolate the risk to one market risk factor and eliminate the other market risk factors. Investments in cash securities (for instance bonds) have exposure to multiple risk factors (credit and interest rate risk). Because swaps require little or no initial cash investment, they can expose the Fund to substantial risk in the isolated market risk factor.

Credit Default Swap Contracts. A credit default swap is a bilateral contract that enables an investor to buy or sell protection on a debt security against a defined-issuer credit event, such as the issuer’s failure to make timely payments of interest or principal on the debt security, bankruptcy or restructuring. The Fund may enter into credit default swaps either by buying or selling protection on a single security or a basket of securities (the “reference asset”).

The buyer of protection pays a periodic fee to the seller of protection based on the notional amount of debt securities underlying the swap contract. The seller of protection agrees to compensate the buyer of protection for future potential losses as a result of a credit event on the reference asset. The contract effectively transfers the credit event risk of the reference asset from the buyer of protection to the seller of protection.

The ongoing value of the contract will fluctuate throughout the term of the contract based primarily on the credit risk of the reference asset. If the credit quality of the reference asset improves relative to the credit quality at contract initiation, the buyer of protection may have an unrealized loss greater than the anticipated periodic fee owed. This unrealized loss would be the result of current credit protection being cheaper than the cost of credit protection at contract initiation. If the buyer elects to terminate the contract prior to its maturity, and there has been no credit event, this unrealized loss will become realized. If the contract is held to maturity, and there has been no credit event, the realized loss will be equal to the periodic fee paid over the life of the contract.

If there is a credit event, the buyer of protection can exercise its rights under the contract and receive a payment from the seller of protection equal to the notional amount of the reference asset less the market value of the reference asset. Upon exercise of the contract the difference between the value of the underlying reference asset and the notional amount is recorded as realized gain (loss) and is included on the Statement of Operations.

The Fund has sold credit protection through credit default swaps to increase exposure to the credit risk of individual securities and, or, indexes that are either unavailable or considered to be less attractive in the bond market.

The Fund has purchased credit protection through credit default swaps to decrease exposure to the credit risk of individual securities and, or, indexes.

The Fund has also engaged in pairs trades by purchasing protection through a credit default swap referenced to the debt of an issuer, and simultaneously selling protection through a credit default swap referenced to the debt of a different issuer with the intent to realize gains from the pricing differences of the two issuers who are expected to have similar market risks. Pairs trades attempt to gain exposure to credit risk while hedging or offsetting the effects of overall market movements.

The Fund has engaged in spread curve trades by simultaneously purchasing and selling protection through credit default swaps referenced to the same issuer but with different maturities. Spread curve trades attempt to gain exposure to credit risk on a forward basis by realizing gains on the expected differences in spreads.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

Interest Rate Swap Contracts. An interest rate swap is an agreement between counterparties to exchange periodic payments based on interest rates. One cash flow stream will typically be a floating rate payment based upon a specified interest rate while the other is typically a fixed interest rate.

The Fund has entered into interest rate swaps in which it pays a floating interest rate and receives a fixed interest rate in order to increase exposure to interest rate risk. Typically, if relative interest rates rise, payments made by the Fund under a swap agreement will be greater than the payments received by the Fund.

The Fund has entered into interest rate swaps in which it pays a fixed interest rate and receives a floating interest rate in order to decrease exposure to interest rate risk. Typically, if relative interest rates rise, payments received by the Fund under the swap agreement will be greater than the payments made by the Fund.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

As of December 31, 2009, the Fund had no such interest rate swap agreements outstanding.

Total Return Swap Contracts. A total return swap is an agreement between counterparties to exchange periodic payments based on asset or non-asset references. One cash flow is typically based on a non-asset reference (such as an interest rate or index) and the other on the total return of a reference asset (such as a security or a basket of securities). The total return of the reference asset typically includes appreciation or depreciation on the reference asset, plus any interest or dividend payments.

Total return swap contracts are exposed to the market risk factor of the specific underlying financial instrument or index. Total return swaps are less standard in structure than other types of swaps and can isolate and, or, include multiple types of market risk factors including equity risk, credit risk, and interest rate risk.

The Fund has entered into total return swaps to increase exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the Fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

The Fund has entered into total return swaps to decrease exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

As of December 31, 2009, the Fund had no such total return swap agreements outstanding.

6. Illiquid Securities

As of December 31, 2009, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

NOTES TO FINANCIAL STATEMENTS Continued

7. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand

As of December 31, 2009, the Fund had no securities on loan.

8. Subsequent Events Evaluation

9. Pending Litigation

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

10. Acquisition of Government Securities Portfolio

On April 30, 2008, the Fund acquired all of the net assets of Government Securities Portfolio, pursuant to an Agreement and Plan of Reorganization approved by the Government Securities Portfolio shareholders on April 25, 2008. The exchange qualified as a tax-free reorganization for federal income tax purposes.

Details of the merger are shown in the following table:

Exchange Ratio to One

Shares of Beneficial

Value of Issued

Combined

Share of Government

Interest Issued by

Shares of

Net Assets on

Securities Portfolio

the Fund

Beneficial Interest

April 30, 2008¹

Non-Service

0.0979

1,626,777

17,178,762

321,759,067


1.		The net assets acquired included net unrealized appreciation of $284,900 and an unused capital loss carryforward of $194,746, potential utilization subject to tax limitations.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Global Securities Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Global Securities Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Global Securities Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp
Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Shares		Value

Common Stocks—98.7%
Consumer Discretionary—15.5%
Automobiles—1.1%
Bayerische Motoren Werke (BMW) AG		236,412	$	10,845,054
Bayerische Motoren Werke (BMW) AG, Preference		538,031		17,554,633

				28,399,687

Hotels, Restaurants & Leisure—3.3%
Carnival Corp.¹		1,187,126		37,620,023
Lottomatica SpA		232,100		4,650,525
McDonald’s Corp.		620,700		38,756,508
Shuffle Master, Inc.¹		597,400		4,922,576

				85,949,632

Household Durables—1.4%
Sony Corp.		1,327,800		38,488,246
Media—3.6%
Grupo Televisa SA, Sponsored GDR		1,543,096		32,034,673
Sirius XM Radio, Inc.¹		12,973,910		7,784,346
Walt Disney Co. (The)		1,306,300		42,128,175
Wire & Wireless India Ltd.¹		2,212,100		423,073
Zee Entertainment Enterprises Ltd.		2,140,210		11,763,554

				94,133,821

Specialty Retail—2.6%
Industria de Diseno Textil SA		521,200		32,295,426
Tiffany & Co.		842,400		36,223,200

				68,518,626

Textiles, Apparel & Luxury Goods—3.5%
Bulgari SpA		1,892,478		15,613,072
LVMH Moet Hennessy Louis Vuitton SA		510,030		57,307,727
Tod’s SpA		276,497		20,484,612

				93,405,411

Consumer Staples—11.5%
Beverages—3.5%
Companhia de Bebidas das Americas, Sponsored ADR, Preference		199,315		20,148,753
Diageo plc		802,645		13,997,581
Fomento Economico Mexicano SA de CV, UBD		7,658,100		36,739,211
Grupo Modelo SA de CV, Series C¹		3,786,000		21,010,824

				91,896,369

Food & Staples Retailing—2.9%
Seven & I Holdings Co. Ltd.		420,453		8,533,975
Tesco plc		4,521,385		31,065,498
Wal-Mart Stores, Inc.		676,400		36,153,580

				75,753,053

Food Products—2.7%
Cadbury plc		2,089,801		26,919,116
Nestle SA		368,332		17,874,490
Unilever plc		875,503		28,024,056

				72,817,662

Household Products—2.4%
Colgate-Palmolive Co.		428,500		35,201,275
Reckitt Benckiser Group plc		508,418		27,559,291

				62,760,566

Energy—4.8%
Energy Equipment & Services—2.6%
Technip SA		521,580		36,548,996
Transocean Ltd.¹		368,172		30,484,642

				67,033,638

Oil, Gas & Consumable Fuels—2.2%
Husky Energy, Inc.		682,830		19,639,075
Total SA		607,820		38,949,995

				58,589,070

Financials—14.5%
Capital Markets—3.7%
3i Group plc		2,497,728		11,291,137
Credit Suisse Group AG		1,185,416		58,383,087
UBS AG¹		1,808,659		27,784,473

				97,458,697

Commercial Banks—3.3%
HDFC Bank Ltd.		137,100		4,988,086
HSBC Holdings plc		3,720,973		42,360,803
Societe Generale, Cl. A		310,782		21,503,738
Sumitomo Mitsui Financial Group, Inc.		637,100		18,163,465

				87,016,092

Consumer Finance—1.2%
SLM Corp.¹		2,785,550		31,393,149
Diversified Financial Services—1.1%
Investor AB, B Shares		1,535,154		28,378,833
Insurance—5.2%
AFLAC, Inc.		673,000		31,126,250
Allianz SE		296,619		37,124,317
Fidelity National Financial, Inc., Cl. A		913,700		12,298,402
Prudential plc		2,790,297		28,424,844

STATEMENT OF INVESTMENTS Continued


	Shares		Value

Insurance Continued
XL Capital Ltd., Cl. A		1,472,600	$	26,992,758

				135,966,571

Health Care—6.9%
Biotechnology—1.2%
Amylin Pharmaceuticals, Inc.¹		360,968		5,122,136
Basilea Pharmaceutica AG¹		29,923		1,849,494
InterMune, Inc.¹		324,300		4,228,872
NicOx SA¹		201,870		1,686,277
Regeneron Pharmaceuticals, Inc.¹		200,802		4,855,392
Seattle Genetics, Inc.¹		731,028		7,427,244
Theravance, Inc.¹		551,800		7,212,026

				32,381,441

Health Care Providers & Services—2.4%
Aetna, Inc.		982,600		31,148,420
WellPoint, Inc.¹		537,035		31,303,770

				62,452,190

Pharmaceuticals—3.3%
Bayer AG		143,664		11,529,539
Roche Holding AG		294,603		50,066,419
Sanofi-Aventis SA		307,205		24,080,756

				85,676,714

Industrials—13.6%
Aerospace & Defense—3.6%
Boeing Co. (The)		220,400		11,930,252
Empresa Brasileira de Aeronautica SA, ADR		873,583		19,314,920
European Aeronautic Defense & Space Co.		1,394,530		27,856,565
Lockheed Martin Corp.		179,900		13,555,465
Raytheon Co.		426,600		21,978,432

				94,635,634

Air Freight & Logistics—1.0%
TNT NV		907,427		27,775,249
Building Products—1.6%
Assa Abloy AB, Cl. B		2,149,185		41,155,018
Commercial Services & Supplies—0.7%
Secom Co. Ltd.		391,600		18,522,663
Electrical Equipment—1.1%
Emerson Electric Co.		465,900		19,847,340
Prysmian SpA		488,000		8,527,775

				28,375,115

Industrial Conglomerates—5.2%
3M Co.		468,500		38,730,895
Koninklijke (Royal) Philips Electronics NV		1,125,400		33,363,350
Siemens AG		691,081		63,545,844

				135,640,089

Machinery—0.4%
Fanuc Ltd.		126,300		11,744,046

Information Technology—28.7%
Communications Equipment—6.5%
Juniper Networks, Inc.¹		1,987,600		53,009,292
Tandberg ASA		641,750		18,288,844
Telefonaktiebolaget LM Ericsson,B Shares		10,806,080		99,532,566

				170,830,702

Electronic Equipment & Instruments—5.1%
Corning, Inc.		1,640,800		31,683,848
Hoya Corp.		1,003,500		26,603,550
Keyence Corp.		92,374		19,043,118
Kyocera Corp.		156,800		13,828,747
Murata Manufacturing Co. Ltd.		562,300		27,772,373
Nidec Corp.		168,600		15,459,752

				134,391,388

Internet Software & Services—2.0%
eBay, Inc.¹		2,278,400		53,633,536
IT Services—3.3%
Automatic Data Processing, Inc.		835,000		35,754,700
Infosys Technologies Ltd.		934,126		51,985,900

				87,740,600

Semiconductors & Semiconductor Equipment—4.4%
Altera Corp.		1,280,900		28,986,767
Linear Technology Corp.		231,296		7,063,780
Maxim Integrated Products, Inc.		1,301,365		26,417,710
MediaTek, Inc.		1,549,696		26,911,945
Taiwan Semiconductor Manufacturing Co. Ltd.		13,162,184		26,402,511

				115,782,713

Software—7.2%
Adobe Systems, Inc.¹		944,363		34,733,671
Intuit, Inc.¹		1,461,100		44,870,381
Microsoft Corp.		1,755,800		53,534,342
Nintendo Co. Ltd.		58,700		13,891,104
SAP AG		939,069		44,397,510

				191,427,008


	Shares			Value

Materials—0.3%
Chemicals—0.3%
Linde AG		59,430		$	7,143,664
Telecommunication Services—2.0%
Wireless Telecommunication Services—2.0%
KDDI Corp.		5,485			28,924,502
Vodafone Group plc		10,569,572			24,532,360

					53,456,862

Utilities—0.9%
Electric Utilities—0.9%
Fortum OYJ		910,500			24,666,340

Total Common Stocks (Cost $2,204,670,375)					2,595,390,095

	Principal
	Amount

Convertible Corporate Bonds and Notes—0.1%
Theravance, Inc., 3% Cv. Sub. Nts., 1/15/15 (Cost $2,882,889)	$	2,882,000		$	2,283,984

	Shares

Investment Company—1.2%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^2,3		396,461			396,461
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^2,4		30,907,869			30,907,869


Total Investment Companies (Cost $31,304,330)					31,304,330

Total Investments, at Value (Cost $2,238,857,594)		100.0	%	$	2,628,978,409
Other Assets Net of Liabilities		0.0			502,142

Net Assets		100.0	%	$	2,629,480,551

Footnotes to Statement of Investments


1.		Non-income producing security.

2.		Rate shown is the 7-day yield as of December 31, 2009.

3.		Interest rate is less than 0.0005%.

4.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

OFI Liquid Assets Fund, LLC		—		342,533,185		342,533,185		—
Oppenheimer Institutional Money Market Fund, Cl. E		24,247,807		375,467,281		368,807,219		30,907,869

					Value		Income

OFI Liquid Assets Fund, LLC					$	—	$	935,043	^a
Oppenheimer Institutional Money Market Fund, Cl. E						30,907,869		132,230

					$	30,907,869	$	1,067,273


a.		Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

Valuation Inputs

	1) Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2) Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value

Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	301,213,060	$	107,682,363	$	—	$	408,895,423
Consumer Staples		221,606,540		81,621,110		—		303,227,650
Energy		50,123,717		75,498,991		—		125,622,708
Financials		101,810,559		278,402,783		—		380,213,342
Health Care		143,050,556		37,459,789		—		180,510,345
Industrials		167,248,429		190,599,385		—		357,847,814
Information Technology		563,675,784		190,130,163		—		753,805,947
Materials		7,143,664		—		—		7,143,664
Telecommunication Services		24,532,360		28,924,502		—		53,456,862
Utilities		—		24,666,340		—		24,666,340
Convertible Corporate Bonds and Notes		—		2,283,984		—		2,283,984
Investment Companies		31,304,330		—		—		31,304,330

Total Assets	$	1,611,708,999	$	1,017,269,410	$	—	$	2,628,978,409

Distribution of investments representing geographic holdings, as a percentage of total investments at value, is as follows:


Geographic Holdings	Value		Percent

United States	$	944,708,711		36.0	%
Japan		240,975,541		9.2
United Kingdom		234,174,686		8.9
France		207,934,054		7.9
Germany		192,140,561		7.3
Sweden		169,066,417		6.4
Switzerland		155,957,963		5.9
Mexico		89,784,708		3.4
India		69,160,613		2.6
The Netherlands		61,138,599		2.3
Taiwan		53,314,456		2.0
Italy		49,275,984		1.9
Brazil		39,463,673		1.5
Spain		32,295,426		1.2
Cayman Islands		26,992,758		1.0
Finland		24,666,340		1.0
Canada		19,639,075		0.8
Norway		18,288,844		0.7

Total	$	2,628,978,409		100.0	%

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $2,207,949,725)	$	2,598,070,540
Affiliated companies (cost $30,907,869)		30,907,869

		2,628,978,409
Cash—foreign currencies (cost$46)		46
Receivables and other assets:
Interest and dividends		3,386,479
Shares of beneficial interest sold		44,216
Other		211,314

Total assets		2,632,620,464

Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		1,608,254
Distribution and service plan fees		651,168
Foreign capital gains tax		273,651
Shareholder communications		242,201
Transfer and shareholder servicing agent fees		223,182
Trustees’ compensation		40,309
Other		101,148

Total liabilities		3,139,913

Net Assets	$	2,629,480,551


Composition of Net Assets
Par value of shares of beneficial interest	$	99,512
Additional paid-in capital		2,319,628,804
Accumulated net investment income		30,325,856
Accumulated net realized loss on investments and foreign currency transactions		(110,598,803	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		390,025,182

Net Assets	$	2,629,480,551


Net Asset Value Per Share

Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,364,596,653 and 51,501,209 shares of beneficial interest outstanding)	$	26.50

Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $980,484,749 and 37,307,622 shares of beneficial interest outstanding)	$	26.28

Class 3 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $206,356,296 and 7,737,375 shares of beneficial interest outstanding)	$	26.67

Class 4 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $78,042,853 and 2,965,387 shares of beneficial interest outstanding)	$	26.32

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $3,105,080)	$	50,162,670
Affiliated companies		132,230
Income from investment of securities lending cash collateral, net—affiliated companies		935,043
Interest		94,891

Total investment income		51,324,834

Expenses
Management fees		14,552,153
Distribution and service plan fees:
Service shares		2,073,540
Class 4 shares		166,600
Transfer and shareholder servicing agent fees:
Non-Service shares		865,222
Service shares		603,583
Class 3 shares		134,020
Class 4 shares		51,653
Shareholder communications:
Non-Service shares		313,432
Service shares		217,238
Class 3 shares		47,451
Class 4 shares		17,467
Custodian fees and expenses		215,032
Trustees’ compensation		50,856
Other		84,279

Total expenses		19,392,526
Less waivers and reimbursements of expenses		(21,125	)

Net expenses		19,371,401

Net Investment Income		31,953,433

Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (net of foreign capital gains tax of $384,799)		(79,868,953	)
Foreign currency transactions		14,766,593

Net realized loss		(65,102,360	)
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $267,772)		779,227,777
Translation of assets and liabilities denominated in foreign currencies		27,371,041

Net change in unrealized appreciation		806,598,818

Net Increase in Net Assets Resulting from Operations	$	773,449,891

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	31,953,433		$	57,466,025
Net realized gain (loss)		(65,102,360	)		24,747,758
Net change in unrealized appreciation (depreciation)		806,598,818			(1,596,274,756	)

Net increase (decrease) in net assets resulting from operations		773,449,891			(1,514,060,973	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(27,800,589	)		(26,708,494	)
Service shares		(16,163,769	)		(13,401,398	)
Class 3 shares		(4,130,611	)		(4,326,225	)
Class 4 shares		(1,262,683	)		(1,190,079	)

		(49,357,652	)		(45,626,196	)

Distributions from net realized gain:
Non-Service shares		(26,507,538	)		(117,354,093	)
Service shares		(17,924,453	)		(71,861,924	)
Class 3 shares		(3,946,570	)		(19,045,871	)
Class 4 shares		(1,437,851	)		(6,614,741	)

		(49,816,412	)		(214,876,629	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(140,936,466	)		(78,197,928	)
Service shares		(37,527,816	)		71,375,736
Class 3 shares		(22,954,318	)		(30,841,100	)
Class 4 shares		(4,666,393	)		(6,272,856	)

		(206,084,993	)		(43,936,148	)

Net Assets
Total increase (decrease)		468,190,834			(1,818,499,946	)
Beginning of period		2,161,289,717			3,979,789,663

End of period (including accumulated net investment income of $30,325,856 and $47,532,805, respectively)	$	2,629,480,551		$	2,161,289,717

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	20.21		$	36.60		$	36.79		$	33.38		$	29.51

Income (loss) from investment operations:
Net investment income¹		.33			.55			.45			.43			.32
Net realized and unrealized gain (loss)		6.94			(14.46	)		1.69			5.20			3.85

Total from investment operations		7.27			(13.91	)		2.14			5.63			4.17

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.50	)		(.46	)		(.50	)		(.36	)		(.30	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—

Total dividends and/or distributions to shareholders		(.98	)		(2.48	)		(2.33	)		(2.22	)		(.30	)


Net asset value, end of period	$	26.50		$	20.21		$	36.60		$	36.79		$	33.38


Total Return, at Net Asset Value²		39.77	%		(40.19	)%		6.32	%		17.69	%		14.31	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,364,597		$	1,150,113		$	2,193,638		$	2,297,315		$	2,124,413

Average net assets (in thousands)	$	1,206,240		$	1,679,720		$	2,302,726		$	2,189,511		$	2,123,523

Ratios to average net assets:³
Net investment income		1.51	%		1.95	%		1.21	%		1.27	%		1.08	%
Total expenses		0.75	%⁴		0.65	%⁴		0.65	%⁴		0.66	%⁴		0.67	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.75	%		0.65	%		0.65	%		0.66	%		0.67	%

Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.75	%
Year Ended December 31, 2008	0.65	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

See accompanying Notes to Financial Statements.


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	20.02		$	36.27		$	36.49		$	33.16		$	29.33

Income (loss) from investment operations:
Net investment income¹		.27			.47			.33			.33			.24
Net realized and unrealized gain (loss)		6.90			(14.32	)		1.72			5.16			3.84

Total from investment operations		7.17			(13.85	)		2.05			5.49			4.08

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.43	)		(.38	)		(.44	)		(.30	)		(.25	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—

Total dividends and/or distributions to shareholders		(.91	)		(2.40	)		(2.27	)		(2.16	)		(.25	)


Net asset value, end of period	$	26.28		$	20.02		$	36.27		$	36.49		$	33.16


Total Return, at Net Asset Value²		39.36	%		(40.33	)%		6.08	%		17.36	%		14.06	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	980,485		$	772,107		$	1,300,989		$	983,558		$	557,284

Average net assets (in thousands)	$	830,887		$	1,051,239		$	1,180,656		$	750,499		$	413,849

Ratios to average net assets:³
Net investment income		1.23	%		1.70	%		0.91	%		0.98	%		0.79	%
Total expenses		1.00	%⁴		0.90	%⁴		0.89	%⁴		0.91	%⁴		0.92	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.00	%		0.90	%		0.89	%		0.91	%		0.92	%

Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.00	%
Year Ended December 31, 2008	0.90	%
Year Ended December 31, 2007	0.89	%
Year Ended December 31, 2006	0.91	%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued


Class 3 Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	20.34		$	36.82		$	36.99		$	33.55		$	29.65

Income (loss) from investment operations:
Net investment income¹		.33			.56			.45			.43			.32
Net realized and unrealized gain (loss)		6.98			(14.56	)		1.71			5.23			3.88

Total from investment operations		7.31			(14.00	)		2.16			5.66			4.20

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.50	)		(.46	)		(.50	)		(.36	)		(.30	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—

Total dividends and/or distributions to shareholders		(.98	)		(2.48	)		(2.33	)		(2.22	)		(.30	)


Net asset value, end of period	$	26.67		$	20.34		$	36.82		$	36.99		$	33.55


Total Return, at Net Asset Value²		39.70	%		(40.19	)%		6.34	%		17.69	%		14.34	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	206,356		$	175,971		$	361,621		$	395,901		$	346,064

Average net assets (in thousands)	$	182,553		$	269,650		$	391,270		$	369,406		$	296,252

Ratios to average net assets:³
Net investment income		1.49	%		1.95	%		1.22	%		1.26	%		1.06	%
Total expenses		0.75	%⁴		0.65	%⁴		0.65	%⁴		0.66	%⁴		0.67	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.75	%		0.65	%		0.65	%		0.66	%		0.67	%

Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.75	%
Year Ended December 31, 2008	0.65	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

See accompanying Notes to Financial Statements.


Class 4 Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	20.03		$	36.28		$	36.49		$	33.15		$	29.35

Income (loss) from investment operations:
Net investment income¹		.27			.47			.34			.34			.24
Net realized and unrealized gain (loss)		6.92			(14.34	)		1.70			5.16			3.84

Total from investment operations		7.19			(13.87	)		2.04			5.50			4.08

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.42	)		(.36	)		(.42	)		(.30	)		(.28	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—

Total dividends and/or distributions to shareholders		(.90	)		(2.38	)		(2.25	)		(2.16	)		(.28	)


Net asset value, end of period	$	26.32		$	20.03		$	36.28		$	36.49		$	33.15


Total Return, at Net Asset Value²		39.38	%		(40.35	)%		6.06	%		17.40	%		14.05	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	78,043		$	63,099		$	123,542		$	114,232		$	90,604

Average net assets (in thousands)	$	66,965		$	93,909		$	122,385		$	100,973		$	61,380

Ratios to average net assets:³
Net investment income		1.22	%		1.69	%		0.93	%		1.00	%		0.79	%
Total expenses		1.00	%⁴		0.91	%⁴		0.90	%⁴		0.91	%⁴		0.93	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.00	%		0.91	%		0.90	%		0.91	%		0.93	%

Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.00	%
Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.90	%
Year Ended December 31, 2006	0.91	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Global Securities Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, “growth-type” companies, cyclical industries and special situations that are considered to have appreciation possibilities. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The Fund offers Non-Service, Service, Class 3 and Class 4 shares. All classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares being designated as Service shares and Class 4 shares are subject to a distribution and service plan. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. The Fund assesses a 1% fee on the proceeds of Class 3 and Class 4 shares that are redeemed (either by selling or exchanging to another Oppenheimer fund or other investment option offered through your variable life insurance or variable annuity contract) within 60 days of their purchase. The fee, which is retained by the Fund, is accounted for as an addition to paid-in capital.

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

There have been no significant changes to the fair valuation methodologies during the period.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Net Unrealized

Appreciation

Based on Cost of

Undistributed

Accumulated

Securities and Other

Net Investment

Long-Term

Loss

Investments for Federal

Income

Gain

Carryforward^1,2,3,4

Income Tax Purposes

$34,903,868

—

79,276,953

354,165,473


1.		As of December 31, 2009, the Fund had $79,199,153 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforward(s) were as follows:


Expiring

2017	$	79,199,153


2.		The Fund had $77,800 of post-October foreign currency losses which were deferred.

3.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

4.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


Increase	Increase to
to Accumulated	Accumulated Net
Net Investment	Realized Loss
Income	on Investments

$197,270	$	197,270

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	49,392,293	$	52,262,946
Long-term capital gain		49,781,773		208,239,879

Total	$	99,174,066	$	260,502,825


Federal tax cost of securities	$	2,274,717,303


Gross unrealized appreciation	$	563,157,124
Gross unrealized depreciation		(208,991,651	)

Net unrealized appreciation	$	354,165,473

Certain foreign countries impose a tax on capital gains which is accrued by the Fund based on unrealized appreciation, if any, on affected securities. The tax is paid when the gain is realized.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		4,700,539		$	96,201,259			9,646,046		$	259,758,983
Dividends and/or distributions reinvested		3,644,841			54,308,127			4,840,813			144,062,587
Redeemed		(13,740,529	)		(291,445,852	)		(17,521,140	)		(482,019,498	)

Net decrease		(5,395,149	)	$	(140,936,466	)		(3,034,281	)	$	(78,197,928	)


Service Shares
Sold		2,545,715		$	56,464,839			6,325,047		$	162,252,325
Dividends and/or distributions reinvested		2,301,703			34,088,222			2,887,346			85,263,322
Redeemed		(6,110,959	)		(128,080,877	)		(6,514,971	)		(176,139,911	)

Net increase (decrease)		(1,263,541	)	$	(37,527,816	)		2,697,422		$	71,375,736


Class 3 Shares
Sold		250,961		$	5,397,159			277,654		$	8,012,360
Dividends and/or distributions reinvested		538,120			8,077,181			780,370			23,372,096
Redeemed		(1,702,099	)		(36,428,658	)¹		(2,229,618	)		(62,225,556	)²

Net decrease		(913,018	)	$	(22,954,318	)		(1,171,594	)	$	(30,841,100	)


Class 4 Shares
Sold		131,734		$	2,846,292			101,469		$	2,904,870
Dividends and/or distributions reinvested		181,977			2,700,534			264,033			7,804,820
Redeemed		(497,765	)		(10,213,219	)¹		(621,183	)		(16,982,546	)²

Net decrease		(184,054	)	$	(4,666,393	)		(255,681	)	$	(6,272,856	)


1.		Net of redemption fees of $5,426 and $4,411 for Class 3 and Class 4, respectively.

2.		Net of redemption fees of $7,921 and $5,109 for Class 3 and Class 4, respectively.

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF and LAF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities		$258,561,763		$528,944,568

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Distribution and Service Plan for Service Shares and Class 4 Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares and Class 4 shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares and Class 4 shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the daily net assets of Service shares and Class 4 shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares and Class 4 shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares and Class 4 shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 1.00% for Non-Service and Class 3 shares and 1.25% for Service and Class 4 shares. This voluntary undertaking may be amended or withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

NOTES TO FINANCIAL STATEMENTS Continued

5. Foreign Currency Exchange Contracts Continued

the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

As of December 31, 2009, the Fund held no outstanding forward contracts.

6. Securities Lending

As of December 31, 2009, the Fund had no securities on loan.

7. Subsequent Events Evaluation

8. Pending Litigation

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Strategic Bond Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Strategic Bond Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Strategic Bond Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 18, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Principal
	Amount		Value

Asset-Backed Securities—0.6%
AmeriCredit Prime Automobile Receivables Trust 2007-1, Automobile Receivables Nts., Series 2007-1, Cl. D, 5.62%, 9/8/14	$	1,319,000	$	1,175,662
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.711%, 5/25/34¹		924,857		685,286
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through Certificates, Series 2006-M3, Cl. A2B, 0.331%, 9/25/36¹		420,140		152,072
Bank of America Credit Card Trust, Credit Card Asset-Backed Certificates, Series 2006-A16, Cl. A16, 4.72%, 5/15/13		1,805,000		1,860,958
Capital Auto Receivables Asset Trust 2007-1, Automobile Asset-Backed Securities, Series 2007-1, Cl. B, 5.15%, 9/17/12		262,000		268,007
Capital One Auto Finance Trust, Automobile Receivables, Series 2006-C, Cl. A4, 0.263%, 5/15/13¹		1,180,886		1,166,909
Citigroup Mortgage Loan Trust, Inc. 2006-WFH3, Asset-Backed Pass-Through Certificates, Series 2006-WFH3, Cl. A2, 0.331%, 10/25/36¹		255,141		243,071
CNH Equipment Trust, Asset-Backed Certificates, Series 2009-B, Cl. A3, 2.97%, 3/15/13		1,890,000		1,918,333
Countrywide Home Loans, Asset-Backed Certificates:
Series 2005-16, Cl. 2AF2, 5.382%, 5/1/36¹		1,371,546		1,123,689
Series 2005-17, Cl. 1AF2, 5.362%, 5/1/36¹		191,091		157,566
CWABS Asset-Backed Certificates Trust 2006-25,
Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.351%, 6/25/47¹		1,050,000		819,083
CWHEQ Revolving Home Equity Loan Trust, Asset-Backed Certificates:
Series 2005-G, Cl. 2A, 0.463%, 12/15/35¹		218,912		62,143
Series 2006-H, Cl. 2A1A, 0.383%, 11/15/36¹		77,123		22,312
Embarcadero Aircraft Securitization Trust, Airplane Receivable Nts., Series 2000-A, Cl. B, 8/15/25^2,3,4		1,820,063		—
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates, Series 2006-FF10, Cl. A3, 0.321%, 7/25/36¹		657,087		627,267
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates, Series 2006-FF9, Cl. 2A2, 0.341%, 7/7/36^1,3		231,188		185,872
First Franklin Mortgage Loan Trust 2006-FFA, Mtg. Pass-Through Certificates, Series 2006-FFA, Cl. A3, 0.351%, 9/25/36¹		903,495		150,324
Ford Credit Auto Owner Trust, Automobile Receivables Nts., Series 2009-B, Cl. A2, 2.10%, 11/15/11		1,380,000		1,388,794
Home Equity Mortgage Trust 2005-1, Mtg. Pass-Through Certificates, Series 2005-1, Cl. M6, 5.363%, 6/1/35		1,046,000		243,557
Home Equity Mortgage Trust 2006-5, Mtg. Pass-Through Certificates, Series 2006-5, Cl. A1, 5.50%, 1/25/37		416,507		41,703
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2005-3, Cl. A1, 0.493%, 1/20/35¹		212,547		184,089
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.343%, 3/20/36¹		436,649		420,842
Ice Em CLO, Collateralized Loan Obligations:
Series 2007-1A, Cl. B, 2.551%, 8/15/22^1,3		7,870,000		4,722,000
Series 2007-1A, Cl. C, 3.851%, 8/15/22^1,3		5,270,000		2,635,000
Series 2007-1A, Cl. D, 5.851%, 8/15/22^1,3		5,270,000		2,108,000
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35		36,176		35,912

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Asset-Backed Securities Continued
Mastr Asset-Backed Securities Trust 2006-WMC3, Mtg. Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 0.331%, 8/25/36¹	$	1,310,000	$	462,049
NC Finance Trust, Collateralized Mtg. Obligation Pass-Through Certificates, Series 1999-I, Cl. ECFD, 3.035%, 1/25/29^1,3		66,744		10,012
Option One Mortgage Loan Trust 2006-2, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.331%, 7/1/36¹		2,134,404		1,495,993
Popular ABS Mortgage Pass-Through Trust 2005-6, Mtg. Pass-Through Certificates, Series 2005-6, Cl. A3, 5.68%, 1/25/36¹		277,462		257,341
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through Certificates, Series 2006-KS7, Cl. A2, 0.331%, 9/25/36¹		512,819		492,958
Securitized Asset-Backed Receivables LLC Trust 2007-BR2, Asset-Backed Securities, Series 2007-BR2, Cl. A2, 0.461%, 2/25/37¹		656,382		290,905
SLM Student Loan Trust, Student Loan Receivables, Series 2005-B, Cl. B, 0.699%, 6/15/39¹		2,487,000		844,266
Start CLO Ltd., Asset-Backed Credit Linked Securities, Series 2006-3A, Cl. F, 17.255%, 6/7/11^1,3		1,630,000		1,445,549
Terwin Mortgage Trust, Home Equity Asset-Backed Securities, Series 2006-4SL, Cl. A1, 4.50%, 5/1/37		195,528		30,931
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 0.331%, 7/25/36¹		146,348		145,029

Total Asset-Backed Securities (Cost $41,704,856)				27,873,484

Mortgage-Backed Obligations—14.4%
Government Agency—6.9%
FHLMC/FNMA/FHLB/Sponsored—6.4%
Federal Home Loan Mortgage Corp.:
5%, 8/15/33-9/15/33		3,407,840		3,509,187
5.50%, 9/1/39		4,094,453		4,293,844
6%, 5/15/18-10/15/29		1,401,120		1,505,991
6.50%, 3/15/18-6/15/35		4,125,460		4,467,207
7%, 10/1/31-10/1/37		1,085,616		1,186,246
7.50%, 4/25/36		1,068,548		1,204,300
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 1360, Cl. PZ, 7.50%, 9/15/22		1,244,675		1,359,096
Series 151, Cl. F, 9%, 5/15/21		32,143		35,292
Series 1674, Cl. Z, 6.75%, 2/15/24		971,703		1,059,662
Series 1897, Cl. K, 7%, 9/15/26		2,278,499		2,513,269
Series 2006-11, Cl. PS, 23.719%, 3/25/36¹		623,111		833,674
Series 2043, Cl. ZP, 6.50%, 4/15/28		759,367		809,034
Series 2106, Cl. FG, 0.683%, 12/15/28¹		1,605,756		1,598,982
Series 2122, Cl. F, 0.683%, 2/15/29¹		51,808		51,590
Series 2135, Cl. OH, 6.50%, 3/15/29		973,743		1,054,539
Series 2148, Cl. ZA, 6%, 4/15/29		1,462,049		1,565,091
Series 2195, Cl. LH, 6.50%, 10/15/29		692,249		741,144
Series 2326, Cl. ZP, 6.50%, 6/15/31		101,352		109,051
Series 2344, Cl. FP, 1.183%, 8/15/31¹		494,913		498,274
Series 2368, Cl. PR, 6.50%, 10/15/31		449,043		485,110
Series 2412, Cl. GF, 1.183%, 2/15/32¹		1,058,651		1,063,781
Series 2415, Cl. ZA, 6.50%, 2/15/32		1,265,181		1,367,927
Series 2435, Cl. EQ, 6%, 5/15/31		305,128		308,034
Series 2449, Cl. FL, 0.783%, 1/15/32¹		638,399		637,297
Series 2451, Cl. FD, 1.233%, 3/15/32¹		346,795		349,423
Series 2453, Cl. BD, 6%, 5/15/17		174,092		186,886
Series 2461, Cl. PZ, 6.50%, 6/15/32		1,548,372		1,681,371
Series 2464, Cl. FI, 1.233%, 2/15/32¹		339,699		341,577
Series 2470, Cl. AF, 1.233%, 3/15/32¹		595,015		600,788
Series 2470, Cl. LF, 1.233%, 2/15/32¹		347,633		349,776
Series 2471, Cl. FD, 1.233%, 3/15/32¹		598,416		601,863
Series 2477, Cl. FZ, 0.783%, 6/15/31¹		1,318,140		1,313,887
Series 2500, Cl. FD, 0.733%, 3/15/32¹		39,057		38,802
Series 2517, Cl. GF, 1.233%, 2/15/32¹		302,249		304,014
Series 2526, Cl. FE, 0.633%, 6/15/29¹		77,224		76,135
Series 2551, Cl. FD, 0.633%, 1/15/33¹		38,663		38,431


	Principal
	Amount		Value

FHLMC/FNMA/FHLB/Sponsored Continued
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Continued
Series 2638, Cl. KG, 4%, 11/1/27⁵	$	4,000,000	$	4,117,328
Series 2641, Cl. CE, 3.50%, 9/15/25		59,943		60,016
Series 2648, Cl. JE, 3%, 2/1/30		2,894,027		2,890,346
Series 2676, Cl. KY, 5%, 9/15/23⁵		3,843,000		4,018,762
Series 2750, Cl. XG, 5%, 2/1/34⁵		6,037,000		6,127,202
Series 2857, Cl. MG, 5%, 9/1/34		2,045,000		2,077,793
Series 2890, Cl. PE, 5%, 11/1/34		6,120,000		6,207,932
Series 2907, Cl. GC, 5%, 6/1/27		1,961,966		2,041,293
Series 2929, Cl. PC, 5%, 1/1/28		2,370,000		2,470,109
Series 2934, Cl. NA, 5%, 4/15/24		84,961		85,109
Series 2936, Cl. PE, 5%, 2/1/35		4,858,000		4,927,295
Series 2947, Cl. HE, 5%, 3/1/35		1,650,000		1,676,307
Series 2952, Cl. GJ, 4.50%, 12/1/28		2,049,159		2,106,455
Series 3019, Cl. MD, 4.75%, 1/1/31		1,688,294		1,755,820
Series 3025, Cl. SJ, 23.895%, 8/15/35¹		739,064		929,158
Series 3035, Cl. DM, 5.50%, 11/15/25		723,767		731,043
Series 3094, Cl. HS, 23.529%, 6/15/34¹		416,549		539,590
Series 3157, Cl. MC, 5.50%, 2/1/26		2,699,524		2,759,649
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 177, Cl. IO, 14.232%, 7/1/26⁶		139,599		29,922
Series 192, Cl. IO, 8.449%, 2/1/28⁶		35,465		8,362
Series 205, Cl. IO, 8.868%, 9/1/29⁶		185,009		41,501
Series 2074, Cl. S, 50.008%, 7/17/28⁶		46,226		7,741
Series 2079, Cl. S, 60.657%, 7/17/28⁶		75,972		13,084
Series 2136, Cl. SG, 91.764%, 3/15/29⁶		2,139,556		257,839
Series 224, Cl. IO, 0%, 3/1/33^6,7		1,246,253		276,615
Series 2399, Cl. SG, 77.791%, 12/15/26⁶		1,234,814		197,910
Series 243, Cl. 6, 0%, 12/15/32^6,7		543,894		111,664
Series 2437, Cl. SB, 91.269%, 4/15/32⁶		3,621,764		539,016
Series 2526, Cl. SE, 38.874%, 6/15/29⁶		96,953		14,882
Series 2802, Cl. AS, 99.999%, 4/15/33⁶		790,313		70,184
Series 2920, Cl. S, 77.953%, 1/15/35⁶		855,358		99,581
Series 3000, Cl. SE, 99.999%, 7/15/25⁶		871,923		81,375
Series 3045, Cl. DI, 39%, 10/15/35⁶		3,945,230		468,371
Series 3110, Cl. SL, 99.999%, 2/15/26⁶		522,884		46,500
Federal National Mortgage Assn.:
4.50%, 1/1/25-1/1/40⁸		8,180,000		8,344,397
5%, 11/25/21-1/1/24		536,224		562,509
5%, 8/25/33⁵		6,367,222		6,561,555
5%, 1/1/25-1/1/40⁸		30,145,000		31,238,802
5%, 7/25/33⁹		3,436,210		3,541,086
5.305%, 10/1/36		8,757,668		9,185,659
5.50%, 4/25/21-7/1/22		663,774		703,703
5.50%, 1/1/25-1/1/40⁸		28,383,000		29,733,614
6%, 10/25/16-9/25/21		1,561,672		1,672,527
6%, 1/1/25-1/1/40⁸		30,790,000		32,698,189
6.50%, 3/25/17-1/1/34		7,823,524		8,483,601
7%, 11/1/17-6/25/34		8,108,982		8,988,461
7.50%, 2/25/27-3/25/33		3,861,739		4,356,424
8.50%, 7/1/32		6,778		7,589
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Trust 1999-54, Cl. LH, 6.50%, 11/25/29		692,881		745,641
Trust 2001-44, Cl. QC, 6%, 9/25/16		1,202,211		1,288,632
Trust 2001-51, Cl. OD, 6.50%, 10/25/31		370,593		398,842
Trust 2001-69, Cl. PF, 1.231%, 12/25/31¹		783,995		789,865
Trust 2001-74, Cl. QE, 6%, 12/25/31⁵		3,970,183		4,249,247
Trust 2001-80, Cl. ZB, 6%, 1/25/32		848,262		910,899
Trust 2002-12, Cl. PG, 6%, 3/25/17		551,447		592,117
Trust 2002-29, Cl. F, 1.231%, 4/25/32¹		381,692		384,583
Trust 2002-56, Cl. KW, 6%, 4/25/23		1,153,963		1,170,001
Trust 2002-60, Cl. FH, 1.231%, 8/25/32¹		792,155		797,192
Trust 2002-64, Cl. FJ, 1.231%, 4/25/32¹		117,535		117,808
Trust 2002-68, Cl. FH, 0.733%, 10/18/32¹		262,206		261,262
Trust 2002-71, Cl. UB, 5%, 11/25/15		44,454		44,440
Trust 2002-84, Cl. FB, 1.231%, 12/25/32¹		1,556,002		1,567,874
Trust 2002-9, Cl. PC, 6%, 3/25/17		563,475		605,247
Trust 2002-9, Cl. PR, 6%, 3/25/17		689,948		741,096
Trust 2002-90, Cl. FH, 0.731%, 9/25/32¹		870,588		864,536
Trust 2003-11, Cl. FA, 1.231%, 9/25/32¹		1,556,038		1,567,884
Trust 2003-116, Cl. FA, 0.631%, 11/25/33¹		109,233		108,596
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,825,000		1,936,978
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25		571,000		594,781

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Continued
Trust 2005-109, Cl. AH, 5.50%, 12/25/25	$	2,160,000	$	2,252,854
Trust 2005-12, Cl. JC, 5%, 6/1/28		2,065,884		2,154,045
Trust 2005-22, Cl. EC, 5%, 10/1/28		2,000,000		2,088,408
Trust 2005-25, Cl. PS, 27.143%, 4/25/35¹		646,455		885,901
Trust 2005-30, Cl. CU, 5%, 4/1/29		3,605,375		3,769,918
Trust 2005-31, Cl. PB, 5.50%, 4/25/35		560,000		573,691
Trust 2005-71, Cl. DB, 4.50%, 8/25/25		480,000		491,748
Trust 2006-46, Cl. SW, 23.351%, 6/25/36¹		1,071,638		1,419,079
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-61, Cl. SH, 46.78%, 11/18/31⁶		427,519		65,924
Trust 2001-63, Cl. SD, 36.795%, 12/18/31⁶		102,363		17,469
Trust 2001-68, Cl. SC, 29.217%, 11/25/31⁶		70,356		10,794
Trust 2001-81, Cl. S, 37.132%, 1/25/32⁶		84,686		13,126
Trust 2002-28, Cl. SA, 38.673%, 4/25/32⁶		50,441		7,617
Trust 2002-38, Cl. SO, 58.867%, 4/25/32⁶		261,737		35,857
Trust 2002-48, Cl. S, 35.969%, 7/25/32⁶		80,492		10,874
Trust 2002-52, Cl. SL, 36.513%, 9/25/32⁶		50,685		6,882
Trust 2002-56, Cl. SN, 38.683%, 7/25/32⁶		110,607		14,978
Trust 2002-77, Cl. IS, 50.989%, 12/18/32⁶		445,923		60,766
Trust 2002-77, Cl. SH, 44.553%, 12/18/32⁶		113,256		17,583
Trust 2002-9, Cl. MS, 35.592%, 3/25/32⁶		108,180		14,481
Trust 2003-117, Cl. KS, 56.31%, 8/25/33⁶		8,416,674		1,236,694
Trust 2003-13, Cl. IO, 10.462%, 3/25/33⁶		844,996		172,156
Trust 2003-26, Cl. DI, 11.185%, 4/25/33⁶		664,977		127,104
Trust 2003-33, Cl. SP, 56.422%, 5/25/33⁶		738,947		104,322
Trust 2003-38, Cl. SA, 40.283%, 3/25/23⁶		1,281,310		162,054
Trust 2003-4, Cl. S, 44.351%, 2/25/33⁶		223,097		31,836
Trust 2005-14, Cl. SE, 43.159%, 3/25/35⁶		2,838,877		317,452
Trust 2005-40, Cl. SA, 74.229%, 5/25/35⁶		2,376,956		278,775
Trust 2005-40, Cl. SB, 98.037%, 5/25/35⁶		3,795,082		447,434
Trust 2005-63, Cl. SA, 89.64%, 10/25/31⁶		170,696		20,560
Trust 2005-71, Cl. SA, 72.42%, 8/25/25⁶		571,592		67,904
Trust 2005-85, Cl. SA, 99.999%, 10/25/35⁶		9,101,265		987,801
Trust 2005-87, Cl. SE, 61.053%, 10/25/35⁶		29,095,826		3,304,308
Trust 2005-87, Cl. SG, 85.069%, 10/25/35⁶		3,063,395		413,978
Trust 2006-60, Cl. DI, 40.599%, 4/25/35⁶		2,655,272		329,100
Trust 2006-90, Cl. SX, 99.999%, 9/25/36⁶		2,361,741		304,655
Trust 2007-88, Cl. XI, 25.543%, 6/25/37⁶		9,917,351		1,117,584
Trust 214, Cl. 2, 26.406%, 3/1/23⁶		558,641		126,561
Trust 221, Cl. 2, 22.794%, 5/1/23⁶		62,697		14,381
Trust 240, Cl. 2, 27.47%, 9/1/23⁶		120,091		26,814
Trust 254, Cl. 2, 17.134%, 1/1/24⁶		1,026,894		244,370
Trust 2682, Cl. TQ, 99.999%, 10/15/33⁶		914,207		108,643
Trust 2981, Cl. BS, 99.999%, 5/15/35⁶		1,624,165		192,366
Trust 301, Cl. 2, 0%, 4/1/29^6,7		256,590		58,097
Trust 313, Cl. 2, 28.167%, 6/1/31⁶		2,850,800		627,913
Trust 319, Cl. 2, 4.592%, 2/1/32⁶		82,526		18,935
Trust 321, Cl. 2, 4.104%, 4/1/32⁶		331,745		81,384
Trust 324, Cl. 2, 0%, 7/1/32^6,7		354,741		83,495
Trust 328, Cl. 2, 0%, 12/1/32^6,7		4,579,657		1,015,940
Trust 331, Cl. 5, 0%, 2/1/33^6,7		1,337,937		255,045
Trust 334, Cl. 12, 0%, 2/1/33^6,7		1,147,053		211,677
Trust 339, Cl. 15, 7.447%, 7/1/33⁶		3,256,623		563,786
Trust 339, Cl. 7, 0%, 7/1/33^6,7		5,512,698		898,011
Trust 345, Cl. 9, 2.695%, 1/1/34⁶		1,561,804		280,486
Trust 351, Cl. 10, 1.924%, 4/1/34⁶		678,181		130,851
Trust 351, Cl. 8, 2.248%, 4/1/34⁶		1,097,363		211,535
Trust 351, Cl. 9, 0%, 10/1/34^6,7		13,395,770		2,379,827
Trust 356, Cl. 10, 0.169%, 6/1/35⁶		944,874		178,499
Trust 356, Cl. 12, 0%, 2/1/35^6,7		480,851		90,110
Trust 362, Cl. 12, 0%, 8/1/35^6,7		898,148		171,964
Trust 362, Cl. 13, 0%, 8/1/35^6,7		531,273		101,802

				283,150,170

GNMA/Guaranteed—0.5%
Government National Mortgage Assn.:
4.125%, 12/9/25¹		6,252		6,392
4.50%, 1/1/40⁸		17,650,000		17,666,556
7%, 3/29/28-7/29/28		291,170		324,052
7.50%, 3/1/27		14,745		16,593
8%, 11/29/25-5/29/26		99,162		113,709


	Principal
	Amount		Value

GNMA/Guaranteed Continued
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 1999-32, Cl. ZB, 8%, 9/16/29	$	1,228,790	$	1,350,546
Series 2000-12, Cl. ZA, 8%, 2/16/30		2,869,104		3,125,066
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 1998-19, Cl. SB, 47.847%, 7/16/28⁶		154,809		26,656
Series 1998-6, Cl. SA, 68.192%, 3/16/28⁶		95,374		13,772
Series 2001-21, Cl. SB, 80.768%, 1/16/27⁶		713,353		101,580
Series 2006-47, Cl. SA, 73.774%, 8/16/36⁶		3,450,796		384,148

				23,129,070

Non-Agency—7.5%
Commercial—2.7%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates:
Series 2007-1, Cl. AMFX, 5.482%, 1/1/49		4,159,386		2,929,091
Series 2008-1, Cl. A4, 6.166%, 12/1/17¹		3,670,000		3,306,280
Series 2008-1, Cl. AM, 6.209%, 2/10/51¹		3,415,000		2,372,705
CHL Mortgage Pass-Through Trust 2005-17, Mtg. Pass-Through Certificates, Series 2005-17, Cl. 1A8, 5.50%, 9/1/35		3,740,000		2,864,338
CHL Mortgage Pass-Through Trust 2005-HYB8, Mtg. Pass-Through Certificates, Series 2005-HYB8, Cl. 4A1, 5.492%, 12/20/35¹		196,126		148,799
Citigroup Commercial Mortgage Trust 2006-C4, Commercial Mtg. Pass-Through Certificates, Series 2006-C4, Cl. A3, 5.913%, 3/1/49¹		3,050,000		2,927,032
Citigroup, Inc./Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49		9,170,000		9,374,882
Credit Suisse Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-C3, Cl. A4, 5.912%, 6/1/39¹		1,560,000		1,251,896
CWALT Alternative Loan Trust 2007-8CB, Mtg. Pass-Through Certificates, Series 2007-8CB, Cl. A1, 5.50%, 5/25/37		4,153,238		3,024,673
Deutsche Alt-A Securities, Inc., Mtg. Pass-Through Certificates:
Series 2006-AB1, Cl. A2A, 5.50%, 2/25/36		211,283		205,589
Series 2006-AB2, Cl. A1, 5.888%, 6/25/36		758,812		717,129
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		986,843		543,677
Series 2007-RS1, Cl. A2, 0.731%, 1/27/37^1,13		1,529,415		463,604
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		851,903		605,466
First Horizon Mortgage Pass-Through Trust 2007-AR3, Mtg. Pass-Through Certificates, Series 2007-AR3, Cl. 1A1, 6.104%, 11/1/37¹		4,789,725		3,384,973
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39		903,984		905,778
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Pass-Through Certificates, Series 1998-C1, Cl. F, 6.984%, 5/15/30^1,3		1,567,000		1,573,108
Greenwich Capital Commercial Funding Corp./Commercial Mortgage Trust 2007-GG11, Commercial Mtg. Pass-Through Certificates, Series 2007-GG11, Cl. A4, 5.736%, 8/1/17		7,325,000		6,519,397
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2006-GG8, Cl. A4, 5.56%, 11/1/39		1,960,000		1,720,656
Indymac Index Mortgage Loan Trust 2005-AR31, Mtg. Pass-Through Certificates, Series 2005-AR31, Cl. 2 A2, 5.236%, 1/1/36¹		541,502		93,890
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2007-CB18, Cl. A4, 5.44%, 6/1/47		5,600,000		4,891,463
Series 2007-CB18, Cl. AM, 5.466%, 6/1/47		6,400,000		4,611,036

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Commercial Continued
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates: Continued
Series 2007-LD12, Cl. A2, 5.827%, 2/15/51	$	5,682,000	$	5,831,079
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		2,380,000		2,303,200
Series 2007-LDPX, Cl. A3, 5.42%, 1/15/49		4,410,000		3,730,769
Series 2008-C2, Cl. A4, 6.068%, 2/1/51		8,390,000		6,622,978
Series 2008-C2, Cl. AM, 6.579%, 2/1/51¹		4,990,000		2,780,081
JPMorgan Mortgage Trust 2006-A2, Mtg. Pass-Through Certificates, Series 2006-A2, Cl. 3A4, 5.673%, 4/1/36¹		2,427,435		713,400
JPMorgan Mortgage Trust 2006-A7, Mtg. Pass-Through Certificates, Series 2006-A7, Cl. 2A2, 5.762%, 1/1/37¹		760,535		563,651
LB-UBS Commercial Mortgage Trust 2008-C1, Commercial Mtg. Pass-Through Certificates, Series 2008-C1, Cl. AM, 6.149%, 4/11/41¹		2,610,000		1,977,766
Lehman Structured Securities Corp., Mtg.-Backed Security, 6%, 5/1/29		128,361		34,674
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		338,767		291,405
Morgan Stanley Capital I Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-IQ16, Cl. A4, 5.809%, 12/1/49		3,420,000		2,922,659
Morgan Stanley Capital I, Commercial Mtg. Pass-Through Certificates, Series 2006-HQ10, Cl. AM, 5.36%, 11/1/41		8,500,000		7,018,814
RALI Series 2005-QA4 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2005-QA4, Cl. A32, 5.358%, 4/25/35¹		143,882		30,473
Residential Asset Securitization Trust 2006-A12, Mtg. Pass-Through Certificates, Series 2006-A12, Cl. 1A, 6.25%, 11/1/36		980,712		633,433
STARM Mortgage Loan Trust 2007-1, Mtg. Pass-Through Certificates, Series 2007-1, Cl. 2A1, 5.828%, 2/1/37¹		12,625,973		9,163,120
Structured Asset Mortgage Investments, Inc., Mtg. Pass-Through Certificates, Series 2002-AR3, Cl. A2, 0.733%, 9/19/32¹		655,292		290,376
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial Mtg. Pass-Through Certificates, Series 2006-C29, Cl. A2, 5.275%, 11/15/48		2,997,000		3,056,518
Wachovia Bank Commercial Mortgage Trust 2007-C33, Commercial Mtg. Pass-Through Certificates, Series 2007-C33, Cl. A4, 5.902%, 2/1/51¹		5,790,000		4,770,384
Wachovia Bank Commercial Mortgage Trust 2007-C34, Commercial Mtg. Pass-Through Certificates, Series 2007-C34, Cl. AJ, 5.952%, 5/1/46¹		2,610,000		1,302,805
WaMu Mortgage Pass-Through Certificates 2006-AR15 Trust, Mtg. Pass-Through Certificates, Series 2006-AR15, Cl. 1A, 1.384%, 11/1/46¹		1,418,206		710,664
WaMu Mortgage Pass-Through Certificates 2007-OA3 Trust, Mtg. Pass-Through Certificates, Series 2007-OA3, Cl. 5A, 1.481%, 4/1/47¹		1,009,393		490,243
Wells Fargo Mortgage-Backed Securities 2004-W Trust, Mtg. Pass-Through Certificates, Series 2004-W, Cl. B2, 2.995%, 11/1/34¹		1,101,019		358,283
Wells Fargo Mortgage-Backed Securities 2005-AR1 Trust, Mtg. Pass-Through Certificates, Series 2005-AR1, Cl. 1A1, 4.233%, 2/1/35¹		4,989,539		4,474,176
Wells Fargo Mortgage-Backed Securities 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 1A3, 3.212%, 4/25/36¹		3,157,180		2,546,545

				117,052,958

Manufactured Housing—0.1%
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.10%, 9/25/36¹		5,205,005		4,358,178


	Principal
	Amount		Value

Manufactured Housing Continued
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A5, 5.01%, 3/25/36¹	$	1,604,820	$	1,294,175

				5,652,353

Multifamily—0.2%
Merrill Lynch Mortgage Investors Trust 2005-A2, Mtg. Pass-Through Certificates, Series 2005-A2, Cl. A2, 4.258%, 2/1/35¹		1,157,041		1,005,973
Wells Fargo Mortgage Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 5A1, 5.589%, 7/1/36¹		2,175,119		1,696,192
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 2A1, 5.605%, 7/25/36¹		4,076,887		2,744,228
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.096%, 3/25/36¹		4,541,599		3,682,444

				9,128,837

Residential—4.5%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2007-4, Cl. AM, 5.811%, 8/1/17¹		6,560,000		4,753,678
Bear Stearns ARM Trust 2004-2, Mtg. Pass-Through Certificates, Series 2004-2, Cl. 12A2, 3.916%, 5/1/34¹		4,280,831		3,438,029
Bear Stearns ARM Trust 2004-9, Mtg. Pass-Through Certificates, Series 2004-9, Cl. 23A1, 4.983%, 11/1/34¹		1,937,691		1,781,875
Chase Mortgage Finance Trust 2006-S3, Multiclass Mtg. Pass-Through Certificates, Series 2006-S3, Cl. 1A2, 6%, 11/1/36		4,210,000		3,168,014
Chase Mortgage Finance Trust 2007-A1, Multiclass Mtg. Pass-Through Certificates, Series 2007-A1, Cl. 9A1, 4.559%, 2/1/37¹		2,793,850		2,573,882
CHL Mortgage Pass-Through Trust 2005-26, Mtg. Pass-Through Certificates, Series 2005-26, Cl. 1A8, 5.50%, 11/1/35		3,158,353		2,900,213
CHL Mortgage Pass-Through Trust 2005-27, Mtg. Pass-Through Certificates, Series 2005-27, Cl. 2A1, 5.50%, 12/1/35³		2,904,955		2,319,406
CHL Mortgage Pass-Through Trust 2005-31, Mtg. Pass-Through Certificates, Series 2005-31, Cl. 2A4, 5.418%, 1/1/36¹		1,263,247		281,882
CHL Mortgage Pass-Through Trust 2005-J4, Mtg. Pass-Through Certificates, Series 2005-J4, Cl. A7, 5.50%, 11/1/35		2,110,000		1,480,889
CHL Mortgage Pass-Through Trust 2006-6, Mtg. Pass-Through Certificates, Series 2006-6, Cl. A3, 6%, 4/1/36		1,525,068		1,304,859
CHL Mortgage Pass-Through Trust 2007-HY3, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 1A1, 5.638%, 6/1/47^1,3		2,668,532		1,758,096
CHL Mortgage Pass-Through Trust 2007-HY4, Mtg. Pass-Through Certificates:
Series 2007-HY4, Cl. 1A1, 6.049%, 9/1/47¹		15,454,659		10,787,607
Series 2007-HY4, Cl. 1A2, 6.049%, 9/1/47^1,3		3,333,652		600,057
Series 2007-HY4, Cl. 2A2, 6.214%, 11/1/37^1,3		734,945		132,290
Series 2007-HY4, Cl. 3A2, 6.393%, 11/1/37^1,3		812,525		122,641
CHL Mortgage Pass-Through Trust 2007-HY5, Mtg. Pass-Through Certificates:
Series 2007-HY5, Cl. 1A2, 5.905%, 9/1/37^1,3		3,662,451		937,237
Series 2007-HY5, Cl. 2A2, 5.95%, 9/1/37^1,3		992,451		175,166
Series 2007-HY5, Cl. 3A2, 6.129%, 9/1/37^1,3		2,496,539		570,416
Citigroup Commercial Mortgage Trust 2007-C6, Commercial Mtg. Pass-Through Certificates, Series 2007-C6, Cl. A2, 5.70%, 8/1/12¹		1,110,000		1,129,820

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Residential Continued
Citigroup Mortgage Loan Trust, Inc. 2005-2, Mtg. Pass-Through Certificates, Series 2005-2, Cl. 1A3, 4.952%, 5/1/35¹	$	3,420,583	$	2,810,138
Citigroup Mortgage Loan Trust, Inc. 2005-3, Mtg. Pass-Through Certificates, Series 2005-3, Cl. 2A4, 5.194%, 8/1/35¹		6,965,663		4,254,229
Citigroup Mortgage Loan Trust, Inc. 2006-AR1, Mtg.-Backed Nts., Series 2006-AR1, Cl. 3A2, 5.50%, 3/1/36¹		3,792,030		837,694
Citigroup Mortgage Loan Trust, Inc. 2006-AR2, Mtg. Pass-Through Certificates:
Series 2006-AR2, Cl. 1A2, 5.528%, 3/1/36¹		8,207,410		6,468,830
Series 2006-AR2, Cl. 1AB, 5.591%, 3/1/36		3,343,023		874,089
Citigroup, Inc./Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. AMFX, 5.366%, 12/1/49		5,700,000		3,774,396
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2006-A5, Cl. 2A1, 5.50%, 10/1/21		2,569,868		2,206,866
CWALT Alternative Loan Trust 2006-43CB, Mtg. Pass-Through Certificates, Series 2006-43CB, Cl. 1A10, 6%, 2/1/37		12,765,670		8,304,720
GSR Mortgage Loan Trust 2004-5, Mtg. Pass-Through Certificates, Series 2004-5, Cl. 2A1, 3.761%, 5/1/34¹		3,270,032		2,686,533
GSR Mortgage Loan Trust 2005-AR6, Mtg. Pass-Through Certificates:
Series 2005-AR6, Cl. 1A4, 3.262%, 9/1/35¹		8,738,084		7,823,604
Series 2005-AR6, Cl. 3A1, 4.555%, 9/25/35¹		3,909,979		3,350,469
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates, Series 2005-AR7, Cl. 4A1, 5.335%, 11/1/35¹		4,180,925		3,235,714
GSR Mortgage Loan Trust 2006-5F, Mtg. Pass-Through Certificates, Series 2006-5F, Cl. 2A1, 6%, 6/1/36		2,499,740		2,168,973
GSR Mortgage Loan Trust 2007-AR1, Mtg. Pass-Through Certificates, Series 2007-AR1, Cl. 4A1, 5.809%, 3/1/37¹		3,264,840		2,451,836
JPMorgan Mortgage Trust 2007-A1, Mtg. Pass-Through Certificates, Series 2007-A1, Cl. 7A1, 5.291%, 7/1/35¹		5,133,163		4,670,011
JPMorgan Mortgage Trust 2007-A3, Mtg. Pass-Through Certificates, Series 2007-A3, Cl. 3A3, 6.002%, 5/1/37^1,3		1,514,821		333,261
LB-UBS Commercial Mortgage Trust 2007-C7, Commercial Mtg. Pass-Through Certificates, Series 2007-C7, Cl. AM, 6.166%, 9/11/45¹		10,430,000		7,681,768
Mastr Adjustable Rate Mortgages Trust 2006-2, Mtg. Pass-Through Certificates, Series 2006-2, Cl. 1A1, 4.035%, 4/1/36¹		2,824,194		1,838,550
Merrill Lynch Mortgage Investors Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 6.064%, 10/25/36¹		4,599,375		3,943,039
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A5, 6%, 9/25/36		2,841,295		1,873,750
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		218,357		198,885
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A28, 5.75%, 4/25/37		1,214,637		702,260
Residential Asset Securitization Trust 2005-A14, Mtg. Pass-Through Certificates, Series 2005-A14, Cl. A1, 5.50%, 12/1/35		3,720,000		2,684,509
Residential Asset Securitization Trust 2005-A6CB, Mtg. Pass-Through Certificates, Series 2005-A6CB, Cl. A7, 6%, 6/1/35		5,562,894		4,119,705


	Principal
	Amount		Value

Residential Continued
Residential Funding Mortgage Securities I, Inc., Mtg. Pass-Through Certificates, 5.738%, 7/1/37^1,3	$	2,273,381	$	196,420
WaMu Mortgage Pass-Through Certificates 2005-AR12 Trust, Mtg. Pass-Through Certificates, Series 2007-AR12, Cl. 1A8, 4.826%, 10/1/35¹		3,206,468		2,567,570
WaMu Mortgage Pass-Through Certificates 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 1A2, 5.92%, 9/1/36¹		3,294,951		2,735,087
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates:
Series 2007-HY1, Cl. 4A1, 5.387%, 2/1/37¹		17,284,500		12,247,334
Series 2007-HY1, Cl. 5A1, 5.737%, 2/1/37¹		10,311,405		7,020,704
WaMu Mortgage Pass-Through Certificates 2007-HY2 Trust, Mtg. Pass-Through Certificates, Series 2007-HY2, Cl. 1A1, 5.565%, 12/1/36¹		12,544,822		8,396,094
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 4A1, 5.314%, 3/1/37¹		10,705,383		8,534,506
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 4A1, 5.512%, 9/25/36¹		9,906,407		7,001,497
WaMu Mortgage Pass-Through Certificates 2007-HY6 Trust, Mtg. Pass-Through Certificates, Series 2007-HY6, Cl. 2A1, 5.668%, 6/25/37¹		5,182,706		3,651,183
WaMu Mortgage Pass-Through Certificates 2007-HY7 Trust, Mtg. Pass-Through Certificates, Series 2007-HY7, Cl. 2A1, 5.792%, 7/1/37¹		2,791,878		1,893,104
Wells Fargo Mortgage-Backed Securities 2005-AR16 Trust, Mtg. Pass-Through Certificates, Series 2005-AR16, Cl. 2A1, 3.363%, 10/1/35¹		1,978,516		1,674,107
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates:
Series 2006-AR10, Cl. 2A2, 5.605%, 7/1/36^1,3		2,111,031		459,663
Series 2006-AR10, Cl. 3A2, 4.306%, 7/1/36^1,3		795,007		179,265
Series 2006-AR10, Cl. 4A2, 5.556%, 7/1/36^1,3		2,963,484		592,697
Series 2006-AR10, Cl. 5A3, 5.589%, 7/1/36¹		1,373,546		1,057,046
Series 2006-AR10, Cl. 5A6, 5.589%, 7/1/36¹		15,273,918		11,693,147
Wells Fargo Mortgage-Backed Securities 2006-AR13 Trust, Mtg. Pass-Through Certificates, Series 2006-AR13, Cl. A4, 5.753%, 9/1/36¹		11,440,000		7,231,623
Wells Fargo Mortgage-Backed Securities 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 2A1, 5.24%, 4/1/36¹		2,247,653		1,821,079

				198,462,012

Total Mortgage-Backed Obligations (Cost $695,555,125)				636,575,400

U.S. Government Obligations—2.1%
Federal Home Loan Bank Unsec. Bonds, 3.625%, 10/18/13		9,795,000		10,269,715
Federal Home Loan Mortgage Corp. Nts., 2.50%, 4/23/14¹⁰		18,400,000		18,407,894
Federal National Mortgage Assn. Nts.:
3%, 9/16/14¹⁰		15,625,000		15,840,344
4.375%, 10/15/15¹⁰		5,570,000		5,933,181
5.375%, 7/15/16		2,950,000		3,288,985
U.S. Treasury Bills, 0.07%, 1/14/10¹¹		35,800,000		35,799,030
U.S. Treasury Bonds:
STRIPS, 4.201%, 2/15/11¹²		900,000		893,219
STRIPS, 4.833%, 2/15/16¹²		2,116,000		1,735,109

Total U.S. Government Obligations (Cost $91,593,047)				92,167,477

Foreign Government Obligations—42.6%
Argentina—0.6%
Argentina (Republic of) Bonds:
0.943%, 8/3/12¹		5,203,125		4,777,252
2.50%, 12/31/38¹		4,540,000		1,600,350
Series GDP, 2.724%, 12/15/35¹		7,580,000		525,294
Series V, 7%, 3/28/11		4,090,000		3,993,771
Series VII, 7%, 9/12/13		1,505,000		1,331,716
Argentina (Republic of) Sr. Unsec. Nts., 7%, 10/3/15		18,040,000		15,188,444

				27,416,827

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value
Australia—0.1%
New South Wales Treasury Corp. Bonds:
Series 12, 6%, 5/1/12		1,230,000	AUD	$	1,128,697
Series 14, 5.50%, 8/1/14		1,795,000	AUD		1,608,064

					2,736,761

Belgium—0.1%
Belgium (Kingdom of) Bonds, Series 44, 5%, 3/28/35		2,395,000	EUR		3,691,411
Brazil—5.4%
Banco Nacional de Desenvolvimento Economico e Social Nts., 6.369%, 6/16/18¹³		3,550,000			3,820,688
Brazil (Federal Republic of) Bonds:
6%, 1/17/17		19,770,000			21,450,450
8%, 1/15/18		10,903,611			12,495,538
8.875%, 10/14/19		4,610,000			5,969,950
Brazil (Federal Republic of) Nota Do Tesouro Nacional Nts.:
10%, 1/10/10		3,322,000	BRR		1,902,304
10%, 1/1/12		82,581,000	BRR		45,874,244
10%, 1/1/14		8,370,000	BRR		4,416,923
10%, 1/1/17		274,031,000	BRR		135,228,083
10.95%, 5/15/45		4,545,000	BRR		4,621,891
Brazil (Federal Republic of) Nts., 7.875%, 3/7/15		130,000			152,620
Brazil (Federal Republic of) Sr. Nts., 5.875%, 1/15/19		2,680,000			2,867,600

					238,800,291

Canada—0.2%
Canada Housing Trust Sec. Bonds, 4.10%, 12/15/18		5,245,000	CAD		5,112,753
Quebec (Province of) Nts., 4.50%, 12/1/18		5,285,000	CAD		5,167,915

					10,280,668

Colombia—0.9%
Bogota Distrio Capital Sr. Bonds, 9.75%, 7/26/28¹³		3,058,000,000	COP		1,605,558
Colombia (Republic of) Bonds:
7.375%, 9/18/37		2,845,000			3,115,275
12%, 10/22/15		37,816,000,000	COP		22,778,992
Colombia (Republic of) Sr. Nts., 7.375%, 3/18/19		4,330,000			4,925,375
Colombia (Republic of) Sr. Unsec. Bonds, 6.125%, 1/18/41		5,350,000			4,988,875
Colombia (Republic of) Unsec. Nts., 7.375%, 1/27/17		2,690,000			3,046,425
Colombia (Republic of) Unsec. Unsub. Bonds, 9.85%, 6/28/27		1,002,000,000	COP		569,983

					41,030,483

Denmark—0.1%
Denmark (Kingdom of) Bonds, 4%, 11/15/17		18,290,000	DKK		3,656,259
Egypt—0.9%
Egypt (The Arab Republic of) Treasury Bills:
9.758%, 2/2/10¹²		8,900,000	EGP		1,609,659
9.817%, 2/2/10¹²		27,650,000	EGP		5,000,795
Series 91, 9.656%, 3/9/10^3,12		17,750,000	EGP		3,183,495
Series 182, 9.699%, 1/19/10¹²		38,850,000	EGP		7,052,464
Series 273, 9.839%, 1/12/10¹²		54,520,000	EGP		9,908,679
Series 273, 9.78%, 2/9/10¹²		8,725,000	EGP		1,574,835
Series 273, 9.912%, 2/16/10¹²		17,900,000	EGP		3,223,322
Series 273, 9.878%, 2/23/10¹²		13,125,000	EGP		2,360,454
Egypt (The Arab Republic of) Unsec. Unsub. Bonds, 8.75%, 7/15/12¹³		22,870,000	EGP		4,253,138

					38,166,841

France—4.8%
France (Government of) Bonds:
3.75% 10/25/19		5,185,000	EUR		7,499,099
4%, 10/25/38		5,170,000	EUR		7,128,111
France (Government of) Treasury Bills:
0.350%, 2/18/10¹²		25,900,000	EUR		37,113,185
0.415%, 3/4/10¹²		100,000,000	EUR		142,974,182
France (Government of) Treasury Nts., 1.50%, 9/12/11		11,865,000	EUR		17,092,781

					211,807,358

Germany—9.1%
Germany (Federal Republic of) Bonds:
3.50%, 7/4/19		17,690,000	EUR		25,741,274
Series 03, 3.75%, 7/4/13		4,256,000	EUR		6,461,174
Series 08, 4.75%, 7/4/40		5,415,000	EUR		8,613,271
Germany (Federal Republic of) Treasury Bills:
Series 011, 0.475%, 1/27/10¹²		31,350,000	EUR		44,937,771
Series 26, 0.497%, 1/13/10¹²		221,700,000	EUR		317,801,994

					403,555,484

Ghana—0.1%
Ghana (Republic of) Bonds, 8.50%, 10/4/17¹³		3,735,000			3,837,713
Hungary—2.1%
Hungary (Republic of) Bonds:
Series 10/C, 6.75%, 4/12/10		345,000,000	HUF		1,834,129
Series 11/B, 6%, 10/12/11		94,000,000	HUF		492,974
Series 11/C, 6.75%, 4/22/11		5,231,900,000	HUF		27,808,493
Series 11/A, 7.50%, 2/12/11		47,000,000	HUF		252,402
Series 12/C, 6%, 10/24/12		4,045,000,000	HUF		20,851,911
Series 12/B, 7.25%, 6/12/12		1,000,000,000	HUF		5,328,869
Series 13/D, 6.75%, 2/12/13		560,000,000	HUF		2,927,303
Series 14/C, 5.50%, 2/12/14		503,700,000	HUF		2,491,997


	Principal
	Amount			Value
Hungary Continued
Hungary (Republic of) Bonds: Continued
Series 15/A, 8%, 2/12/15		3,991,000,000	HUF	$	21,456,958
Series 17/B, 6.75%, 2/24/17		235,700,000	HUF		1,163,106
Series 19/A, 6.50%, 6/24/19		1,410,000,000	HUF		6,778,419

					91,386,561

Indonesia—0.8%
Indonesia (Republic of) Nts.:
6.875%, 1/17/18¹³		9,000,000			9,945,000
7.25%, 4/20/15¹³		3,385,000			3,808,125
Indonesia (Republic of) Sr. Unsec. Nts.:
7.75%, 1/17/38¹³		4,875,000			5,533,125
10.375%, 5/4/14¹³		3,050,000			3,774,375
11.625%, 3/4/19¹³		2,410,000			3,470,400
Indonesia (Republic of) Unsec. Nts., 8.50%, 10/12/35¹³		6,920,000			8,355,900

					34,886,925

Israel—0.5%
Israel (State of) Bonds:
5.50%, 2/28/17		37,270,000	ILS		10,687,232
6%, 2/28/19		16,250,000	ILS		4,830,381
Series 2682, 7.50%, 3/31/14		25,080,000	ILS		7,862,561

					23,380,174

Italy—1.7%
Italy (Repubic of) Treasury Bonds, 5%, 9/1/40		24,070,000	EUR		35,723,093
Italy (Republic of) Treasury Bonds:
Buoni del Tesoro Poliennali, 3.75%, 12/15/13		20,557,000	EUR		30,638,055
Buoni del Tesoro Poliennali, 5.25%, 8/1/11		7,420,000	EUR		11,254,824

					77,615,972

Japan—2.9%
Japan (Government of) Bonds:
2 yr., 0.20%, 10/15/11		797,000,000	JPY		8,568,381
5 yr., Series 72, 1.50%, 6/20/13		3,026,000,000	JPY		33,841,652
10 yr., Series 284, 1.70%, 12/20/16		2,996,000,000	JPY		34,177,079
10 yr., Series 301, 1.50%, 6/20/19		1,979,000,000	JPY		21,799,003
20 yr., Series 112, 2.10%, 6/20/29		2,781,000,000	JPY		30,076,723

					128,462,838

Mexico—2.7%
United Mexican States Bonds:
5.625%, 1/15/17		8,220,000			8,610,450
Series A, 6.375%, 1/16/13		2,230,000			2,475,300
Series M10, 7.75%, 12/14/17¹		191,930,000	MXN		14,612,619
Series MI10, 8%, 12/19/13		453,000,000	MXN		35,690,804
Series M10, 8%, 12/17/15		94,000,000	MXN		7,313,706
Series MI10, 9.50%, 12/18/14¹		84,600,000	MXN		7,021,761
Series M20, 10%, 12/5/24¹		457,500,000	MXN		40,160,470
United Mexican States Sr. Unsec. Bonds, 6.05%, 1/11/40		790,000			763,377
United Mexican States Sr. Unsec. Nts., 5.875%, 2/17/14		2,045,000			2,234,163

					118,882,650

Norway—0.0%
Norway (Kingdom of) Bonds, 6.50%, 5/15/13		6,375,000	NOK		1,217,483
Panama—0.4%
Panama (Republic of) Bonds:
7.25%, 3/15/15		6,970,000			7,963,225
8.875%, 9/30/27		1,375,000			1,794,375
9.375%, 4/1/29		2,860,000			3,818,100
Panama (Republic of)
Unsec. Bonds, 7.125%, 1/29/26		2,275,000			2,576,438

					16,152,138

Peru—1.2%
Peru (Republic of) Bonds:
7.35%, 7/21/25		5,380,000			6,187,000
7.84%, 8/12/20		38,180,000	PEN		15,232,617
9.91%, 5/5/15		22,090,000	PEN		9,631,576
Series 7, 8.60%, 8/12/17		42,800,000	PEN		18,100,148
Peru (Republic of) Sr. Nts., 4.533%, 2/28/16¹²		363,871			290,296
Peru (Republic of) Sr. Unsec. Nts., 7.125%, 3/30/19		2,670,000			3,083,850

					52,525,487

Philippines—0.2%
Philippines (Republic of the) Bonds, 8%, 1/15/16		1,760,000			2,050,400
Philippines (Republic of the) Unsec. Bonds, 7.75%, 1/14/31		4,710,000			5,334,075

					7,384,475

Poland—0.4%
Poland (Republic of) Bonds:
Series 0414, 5.75%, 4/25/14¹³		25,085,000	PLZ		8,786,369
Series 0511, 4.25%, 5/24/11		23,900,000	PLZ		8,310,466

					17,096,835

Portugal—0.1%
Portugal (Republic of) Obrigacoes Do Tesouro Bonds, 5%, 6/15/12		2,720,000	EUR		4,164,317
South Africa—0.7%
South Africa (Republic of) Bonds:
7.50%, 1/15/14		50,790,000	ZAR		6,654,103
Series R157, 13.50%, 9/15/15		153,140,000	ZAR		25,485,775

					32,139,878

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value
Spain—0.3%
Spain (Government of) Bonos Y Oblig Del Estado, 4.25% 1/31/14		8,075,000	EUR	$	12,217,679
Sweden—0.1%
Sweden (Kingdom of) Bonds, Series 1050, 3%, 7/12/16		19,420,000	SEK		2,718,786
The Netherlands—0.1%
Netherlands (Kingdom of the) Bonds, 5%, 7/15/11		3,730,000	EUR		5,657,904
Turkey—4.3%
Turkey (Republic of) Bonds:
6.75%, 4/3/18		6,790,000			7,401,100
7%, 9/26/16		6,480,000			7,192,800
7%, 3/11/19		2,710,000			2,967,450
10.622%, 8/6/14		19,170,000	TRY		13,114,525
10.673%, 5/11/11¹²		21,580,000	TRY		12,924,740
12.032%, 2/2/11¹²		4,115,000	TRY		2,530,885
16%, 3/7/12¹		160,285,000	TRY		120,847,245
Series CPI, 10%, 2/15/12¹		6,810,000	TRY		6,343,019
Series CPI, 12%, 8/14/13¹		6,930,000	TRY		6,266,206
Turkey (Republic of) Nts.:
7.25%, 3/15/15		3,180,000			3,577,500
7.50%, 7/14/17		3,480,000			3,967,200
Turkey (Republic of) Sr. Unsec. Nts., 7.50%, 11/7/19		4,220,000			4,779,150

					191,911,820

Ukraine—0.2%
Ukraine (Republic of) Sr. Unsec. Nts., 6.75%, 11/14/17¹³		2,710,000			2,086,700
Ukraine (Republic of) Unsec. Bonds, 6.385%, 6/26/12¹³		7,200,000			6,192,000

					8,278,700

United Arab Emirates—0.1%
Dubai DOF Sukuk Ltd. Sr. Unsec. Unsub. Nts., 6.396%, 11/3/14		3,020,000			2,884,100
United Kingdom—0.7%
United Kingdom Treasury Bonds:
2.25%, 3/7/14		5,620,000	GBP		8,920,597
4.25%, 3/7/11		5,375,000	GBP		9,030,333
4.75%, 12/7/38		6,950,000	GBP		11,837,889

					29,788,819

Uruguay—0.3%
Uruguay (Oriental Republic of) Bonds, 7.625%, 3/21/36		3,445,000			3,746,438
Uruguay (Oriental Republic of) Sr. Nts., 6.875%, 9/28/25		3,850,000			4,061,750
Uruguay (Oriental Republic of) Unsec. Bonds, 8%, 11/18/22		6,875,000			7,906,250

					15,714,438

Venezuela—0.5%
Venezuela (Republic of) Bonds, 9%, 5/7/23		3,495,000			2,367,863
Venezuela (Republic of) Nts., 8.50%, 10/8/14		3,740,000			2,963,950
Venezuela (Republic of) Unsec. Bonds, 7.65%, 4/21/25		12,685,000			7,515,863
Venezuela (Republic of) Unsec. Nts.:
6%, 12/9/20		7,040,000			3,889,600
13.625%, 8/15/18¹³		5,080,000			4,629,150

					21,366,426


Total Foreign
Government Obligations (Cost $1,836,184,447)					1,880,814,501

Loan Participations—2.1%
Bayerische Hypo-und Vereinsbank AG for the City of Kiev, Ukraine Nts., 8.625%, 7/15/11¹³		5,520,000			4,457,400
CIT Group, Inc., Sr. Sec. Credit Facilities Term Loan, 7.50%, 1/18/12^1,8		6,305,000			6,478,388
Credit Suisse First Boston International:
Export-Import Bank of Ukraine, 7.65% Sr. Sec. Bonds, 9/7/11		1,400,000			1,190,000
Export-Import Bank of Ukraine, 8.40% Sec. Nts., 2/9/16		4,610,000			3,411,400
Gaz Capital SA:
6.212% Sr. Unsec. Unsub. Nts., 11/22/16¹³		3,760,000			3,619,000
7.288% Sr. Sec. Nts., 8/16/37¹³		10,140,000			9,404,850
8.125% Nts., 7/31/14¹³		3,030,000			3,226,950
8.146% Sr. Sec. Nts., 4/11/18¹³		5,280,000			5,590,200
8.625% Sr. Sec. Nts., 4/28/34¹³		3,330,000			3,654,675
9.25% Sr. Unsec. Unsub. Nts., 4/23/19¹³		1,510,000			1,691,200
Kuznetski Capital SA/Bank of Moscow, 7.375% Nts., 11/26/10¹³		1,510,000			1,574,175
Nuveen Investments, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan, 12.50%, 7/20/15^1,3		6,840,000			7,156,350
RSHB Capital SA/OJSC Russian Agricultural Bank, 7.75% Nts., 5/29/18¹³		2,250,000			2,470,500
Steel Capital SA for OAO Severstal, 9.75% Sec. Nts., 7/29/13¹³		6,030,000			6,105,375
TransCapitalInvest Ltd. for OJSC AK Transneft:
5.67% Sec. Bonds, 3/5/14¹³		2,760,000			2,783,344
8.70% Sec. Nts., 8/7/18¹³		1,500,000			1,721,534


	Principal
	Amount		Value

Loan Participations Continued
VIP Finance Ireland Ltd., 9.125% Bonds, 4/30/18¹³	$	8,290,000	$	8,891,025
VTB Capital SA:
6.25% Sr. Nts., 6/30/35¹³		760,000		712,500
6.315% Sub. Unsec. Nts., 2/4/15		16,470,000		16,416,258
6.875% Sr. Sec. Nts., 5/29/18¹³		3,030,000		3,030,000

Total Loan Participations (Cost $93,029,860)				93,585,124

Corporate Bonds and Notes—24.1%
Consumer Discretionary—4.1%
Auto Components—0.2%
Allison Transmission, Inc., 11% Sr. Nts., 11/1/15¹³		5,245,000		5,533,475
American Axle & Manufacturing Holdings, Inc., 9.25% Sr. Sec. Nts., 1/15/17¹³		3,460,000		3,529,200
Goodyear Tire & Rubber Co. (The), 9% Sr. Unsec. Nts., 7/1/15		1,225,000		1,280,125

				10,342,800

Automobiles—0.3%
Case New Holland, Inc., 7.125% Sr. Unsec. Nts., 3/1/14		4,420,000		4,508,400
Ford Motor Co., 7.45% Bonds, 7/16/31		5,680,000		5,048,100
Ford Motor Credit Co. LLC:
7.50% Sr. Unsec. Unsub. Nts., 8/1/12		3,150,000		3,178,473
8.125% Sr. Unsec. Nts., 1/15/20		2,435,000		2,396,904

				15,131,877

Diversified Consumer
Services—0.1%
Service Corp. International:
6.75% Sr. Unsec. Nts., 4/1/15		1,720,000		1,694,200
7% Sr. Unsec. Unsub. Nts., 6/15/17		840,000		819,000
StoneMor Operating LLC/Cornerstone Family Service of West Virginia, Inc./Osiris Holdings of Maryland Subsidiary, Inc., 10.25% Sr. Nts., 12/1/17¹³		1,875,000		1,917,188

				4,430,388

Hotels, Restaurants & Leisure—1.1%
CCM Merger, Inc., 8% Unsec. Nts., 8/1/13¹³		1,725,000		1,408,031
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/13^2,13		4,560,000		712,500
Harrah’s Operating Co., Inc., 10% Sr. Sec. Nts., 12/15/18¹³		5,887,000		4,753,753
Harrah’s Operating Escrow LLC/Harrah’s Escrow Group, 11.25% Sr. Sec. Nts., 6/1/17¹³		1,610,000		1,692,513
Isle of Capri Casinos, Inc., 7% Sr. Unsec. Sub. Nts., 3/1/14		2,890,000		2,586,550
Landry’s Restaurant, Inc., 11.625% Sr. Sec. Nts., 12/1/15¹³		2,500,000		2,662,500
Las Vegas Sands Corp., 6.375% Sr. Unsec. Nts., 2/15/15		3,295,000		2,932,550
Mashantucket Pequot Tribe, 8.50% Bonds, Series A, 11/15/15^2,13		7,090,000		1,772,500
MGM Mirage, Inc.:
6.75% Sr. Unsec. Nts., 4/1/13		1,135,000		984,613
8.50% Sr. Unsec. Nts., 9/15/10		845,000		845,000
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13		1,630,000		1,314,188
11.50% Sr. Sec. Nts., 11/1/17¹³		2,580,000		2,644,500
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10		2,900,000		2,900,000
Peninsula Gaming LLC:
8.375% Sr. Sec. Nts., 8/15/15¹³		460,000		461,150
10.75% Sr. Unsec. Nts., 8/15/17¹³		1,150,000		1,161,500
Penn National Gaming, Inc., 8.75% Sr. Unsec. Sub. Nts., 8/15/19¹³		2,825,000		2,902,688
Pinnacle Entertainment, Inc.:
8.25% Sr. Unsec. Sub. Nts., 3/15/12		1,198,000		1,203,990
8.625% Sr. Nts., 8/1/17¹³		455,000		466,375
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/14¹³		1,795,000		1,875,775
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08^2,3,4		250,000		—
Station Casinos, Inc., 6.50% Sr. Unsec. Sub. Nts., 2/1/14²		10,465,000		104,650
Travelport LLC, 11.875% Sr. Unsec. Sub. Nts., 9/1/16		3,845,000		4,094,925
Wendy’s/Arby’s Restaurants LLC, 10% Sr. Unsec. Unsub. Nts., 7/15/16¹³		4,060,000		4,445,700
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		3,410,000		3,311,963

				47,237,914

Household Durables—0.3%
Beazer Homes USA, Inc.:
8.375% Sr. Nts., 4/15/12		675,000		637,875
8.625% Sr. Unsec. Nts., 5/15/11		1,425,000		1,396,500

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Household Durables Continued
Jarden Corp., 7.50% Sr. Unsec. Sub. Nts., 5/1/17	$	4,695,000	$	4,706,738
K. Hovnanian Enterprises, Inc.:
7.75% Sr. Unsec. Sub. Nts., 5/15/13		1,005,000		768,825
8.875% Sr. Sub. Nts., 4/1/12		3,325,000		2,809,625
Lennar Corp., 12.25% Sr. Unsec. Unsub. Nts., 6/1/17³		915,000		1,107,150

				11,426,713

Internet & Catalog Retail—0.0%
NetFlix, Inc., 8.50% Sr. Unsec. Nts., 11/15/17¹³		990,000		1,032,075
Leisure Equipment & Products—0.1%
Colt Defense LLC, 8.75% Sr. Unsec. Nts., 11/15/17¹³		2,750,000		2,853,125
Easton-Bell Sports, Inc., 9.75% Sr. Sec. Nts., 12/1/16¹³		500,000		520,625

				3,373,750

Media—1.5%
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12		3,905,000		3,861,069
AMC Entertainment, Inc., 8% Sr. Unsec. Sub. Nts., 3/1/14		3,415,000		3,278,400
American Media Operations, Inc.:
9% Sr. Unsec. Nts., 5/1/13^13,14		309		199
12.02% Sr. Sub. Nts., 11/1/13^13,14		8,628,552		5,565,416
Belo Corp., 7.75% Sr. Unsec. Unsub. Debs., 6/1/27		2,260,000		1,819,300
Cequel Communications Holdings I LLC, 8.625% Sr. Unsec. Nts., 11/15/17¹³		2,480,000		2,517,200
Charter Communications, Inc., 13.50% Sr. Nts., 11/30/16		1,349,415		1,595,683
Clear Channel Worldwide Holdings, Inc.:
9.25% Sr. Nts., 12/15/17¹³		780,000		807,300
9.25% Sr. Unsec. Nts., 12/15/17¹³		195,000		199,875
Fisher Communications, Inc., 8.625% Sr. Unsec. Nts., 9/15/14		670,000		645,713
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13		7,735,000		7,502,950
Marquee Holdings, Inc., 9.505% Sr. Nts., 8/15/14¹		1,615,000		1,350,544
Mediacom LLC/Mediacom Capital Corp., 9.125% Sr. Nts., 8/15/19¹³		4,925,000		5,048,125
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/14^2,3		1,330,000		3,458
6.875% Sr. Unsec. Sub. Nts., 10/1/13^2,3		2,870,000		7,462
News America, Inc., 6.15% Sr. Unsec. Unsub. Nts., 3/1/37		1,451,000		1,448,317
NTL Cable plc, 9.125% Sr. Nts., 8/15/16		2,150,000		2,276,313
Radio One, Inc., 6.375% Sr. Unsec. Sub. Nts., 2/15/13		705,000		520,819
Reynolds Group, 7.75% Sr. Sec. Nts., 10/15/16¹³		2,935,000		3,015,713
Salem Communications Corp., 9.625% Sr. Sec. Nts., 12/15/16¹³		1,000,000		1,052,500
Sinclair Broadcast Group, Inc., 8% Sr. Unsec. Sub. Nts., 3/15/12		6,250,000		6,125,000
Sinclair Television Group, Inc., 9.25% Sr. Sec. Nts., 11/1/17¹³		675,000		705,375
Time Warner Cable, Inc., 8.75% Sr. Unsub. Nts., 2/14/19		993,000		1,212,228
Time Warner, Inc., 6.50% Sr. Unsec. Debs., 11/15/36		2,193,000		2,297,214
TL Acquisitions, Inc., 10.50% Sr. Nts., 1/15/15¹³		3,505,000		3,369,181
Valassis Communications, Inc., 8.25% Sr. Unsec. Unsub. Nts., 3/1/15		4,325,000		4,335,813
Virgin Media Finance plc, 8.75% Sr. Unsec. Nts., 4/15/14		209,000		216,838
Warner Music Group Corp., 7.375% Sr. Sub. Bonds, 4/15/14		4,260,000		4,137,525

				64,915,530

Multiline Retail—0.1%
Bon-Ton Stores, Inc. (The), 10.25% Sr. Unsec. Unsub. Nts., 3/15/14		3,620,000		3,357,550

Specialty Retail—0.3%
Burlington Coat Factory Warehouse Corp., 11.125% Sr. Unsec. Nts., 4/15/14		3,315,000		3,439,313
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		2,664,000		2,579,959
Leslie’s Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13		2,430,000		2,454,300
Michaels Stores, Inc., 10% Sr. Unsec. Unsub. Nts., 11/1/14		5,115,000		5,319,600
Sally Holdings LLC, 10.50% Sr. Unsec. Sub. Nts., 11/15/16		1,280,000		1,382,400

				15,175,572


	Principal
	Amount			Value
Textiles, Apparel & Luxury
Goods—0.1%
Levi Strauss & Co., 9.75% Sr. Unsec. Unsub. Nts., 1/15/15	$	3,765,000		$	3,972,075
Consumer Staples—1.2%
Beverages—0.1%
AmBev International Finance Co. Ltd., 9.50% Sr. Unsec. Unsub. Nts., 7/24/17^1,13		4,470,000	BRR		2,516,140
Cott Beverages, Inc., 8.375% Sr. Nts., 11/15/17¹³		2,850,000			2,949,750

					5,465,890

Food & Staples Retailing—0.3%
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		4,505,000			4,110,813
Pantry, Inc. (The), 7.75% Sr. Unsec. Sub. Nts., 2/15/14		1,805,000			1,741,825
Real Time Data Co., 11% Nts., 5/31/09^2,3,4,14		142,981			—
Rite Aid Corp.:
7.50% Sr. Sec. Nts., 3/1/17		5,620,000			5,310,900
9.50% Sr. Unsec. Unsub. Nts., 6/15/17		1,990,000			1,741,250

					12,904,788

Food Products—0.6%
ASG Consolidated LLC/Finance, Inc., 11.50% Sr. Unsec. Nts., 11/1/11		5,130,000			5,168,475
Bumble Bee Foods LLC, 7.75% Sr. Sec. Nts., 12/15/15¹³		1,220,000			1,226,100
Chiquita Brands International, Inc.:
7.50% Sr. Unsec. Nts., 11/1/14		890,000			885,550
8.875% Sr. Unsec. Unsub. Nts., 12/1/15		2,255,000			2,311,375
Dean Foods Co., 7% Sr. Unsec. Unsub. Nts., 6/1/16		3,060,000			3,014,100
JBS USA LLC/JBS USA Finance, Inc., 11.625% Sr. Nts., 5/1/14³		2,730,000			3,105,375
MHP SA, 10.25% Sr. Sec. Sub. Bonds, 11/30/11¹³		1,500,000			1,380,000
Pinnacle Foods Finance LLC, 9.25% Sr. Unsec. Nts., 4/1/15¹³		975,000			994,500
Pinnacle Foods Finance LLC/Pinnacle Foods Finance Corp., 10.625% Sr. Sub. Nts., 4/1/17		6,610,000			6,907,450
Smithfield Foods, Inc., 7% Sr. Nts., 8/1/11		4,515,000			4,526,288

					29,519,213

Personal Products—0.1%
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14		2,725,000			2,697,750
Revlon Consumer Products Corp., 9.75% Sr. Sec. Nts., 11/15/15¹³		1,000,000			1,037,500

					3,735,250

Tobacco—0.1%
Altria Group, Inc., 9.70% Sr. Unsec. Nts., 11/10/18		2,248,000			2,783,244
Energy—3.6%
Energy Equipment & Services—0.2%
Helix Energy Solutions Group, Inc., 9.50% Sr. Unsec. Nts., 1/15/16¹³		3,490,000			3,594,700
Key Energy Services, Inc., 8.375% Sr. Unsec. Nts., 12/1/14		2,830,000			2,851,225
North American Energy Alliance LLC, 10.875% Sr. Sec. Nts., 6/1/16¹³		1,600,000			1,708,000

					8,153,925

Oil, Gas & Consumable
Fuels—3.4%
Alon Refining Krotz Springs, Inc., 13.50% Sr. Sec. Nts., 10/15/14¹³		3,665,000			3,435,938
Antero Resources Finance Corp., 9.375% Sr. Nts., 12/7/17¹³		2,130,000			2,183,250
Arch Coal, Inc., 8.75% Sr. Nts., 8/1/16¹³		4,810,000			5,110,625
Atlas Energy Resources LLC, 10.75% Sr. Unsec. Nts., 2/1/18		4,650,000			5,161,500
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15		2,285,000			2,033,650
Berry Petroleum Co.:
8.25% Sr. Sub. Nts., 11/1/16		1,940,000			1,920,600
10.25% Sr. Unsec. Nts., 6/1/14		2,485,000			2,714,863
Bill Barrett Corp., 9.875% Sr. Nts., 7/15/16		2,365,000			2,530,550
Bumi Capital Pte. Ltd., 12% Sr. Sec. Nts., 11/10/16¹³		2,700,000			2,720,250
Canadian Natural Resources Ltd., 6.75% Sr. Unsec. Unsub. Nts., 2/1/39		1,663,000			1,844,344
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		1,780,000			1,788,900

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value
Oil, Gas & Consumable Fuels Continued
Cimarex Energy Co., 7.125% Sr. Nts., 5/1/17	$	1,260,000		$	1,278,900
Cloud Peak Energy Resources LLC, 8.25% Sr. Unsec. Nts., 12/15/17¹³		3,505,000			3,522,525
Concho Resources, Inc., 8.625% Sr. Unsec. Nts., 10/1/17		2,635,000			2,779,925
Continental Resources, Inc., 8.25% Sr. Unsec. Nts., 10/1/19¹³		1,415,000			1,492,825
Denbury Resources, Inc., 7.50% Sr. Sub. Nts., 12/15/15		2,670,000			2,676,675
Enterprise Products Operating LLP, 8.375% Jr. Sub. Nts., 8/1/66¹		5,385,000			5,256,875
Forest Oil Corp.:
7.25% Sr. Unsec. Nts., 6/15/19¹³		1,900,000			1,885,750
8.50% Sr. Nts., 2/15/14¹³		4,790,000			5,029,500
Kazmunaigaz Finance Sub BV:
9.125% Nts., 7/2/18¹³		5,330,000			5,942,950
11.75% Sr. Unsec. Nts., 1/23/15¹³		16,600,000			20,086,000
Kinder Morgan Energy Partners LP, 6% Sr. Unsec. Nts., 2/1/17		2,121,000			2,230,072
Mariner Energy, Inc., 11.75% Sr. Unsec. Nts., 6/30/16		3,045,000			3,410,400
Murray Energy Corp., 10.25% Sr. Sec. Nts., 10/15/15¹³		3,490,000			3,490,000
Nak Naftogaz Ukraine, 9.50% Unsec. Nts., 9/30/14		2,570,000			2,184,474
OPTI Canada, Inc., 9% Sr. Sec. Nts., 12/15/12¹³		1,755,000			1,803,263
Pemex Project Funding Master Trust, 6.625% Sr. Unsec. Unsub. Nts., 6/15/38¹³		5,360,000			5,014,457
Petrobras International Finance Co., 7.875% Sr. Unsec. Nts., 3/15/19		3,090,000			3,577,639
Petrohawk Energy Corp., 10.50% Sr. Unsec. Nts., 8/1/14		3,400,000			3,731,500
Petroleos Mexicanos, 8% Unsec. Unsub. Nts., 5/3/19		2,130,000			2,476,125
Petroleum Co. of Trinidad & Tobago Ltd., 9.75% Sr. Unsec. Nts., 8/14/19¹³		3,880,000			4,360,150
Petroleum Export Ltd. Cayman SPV, 5.265% Sr. Nts., Cl. A3, 6/15/11¹³		1,733,653			1,690,424
Plains Exploration & Production Co., 10% Sr. Unsec. Nts., 3/1/16		5,030,000			5,533,000
PT Adaro Indonesia, 7.625% Nts., 10/22/19¹³		3,050,000			3,030,938
Quicksilver Resources, Inc.:
8.25% Sr. Unsec. Nts., 8/1/15		3,675,000			3,785,250
11.75% Sr. Nts., 1/1/16		2,260,000			2,576,400
SandRidge Energy, Inc.:
8.75% Sr. Nts., 1/15/20¹³		2,825,000			2,839,125
9.875% Sr. Unsec. Nts., 5/15/16¹³		4,000,000			4,230,000
Southwestern Energy Co., 7.50% Sr. Nts., 2/1/18		2,050,000			2,183,250
Tengizchevroil LLP, 6.124% Nts., 11/15/14¹³		1,516,980			1,524,565
TGI International Ltd., 9.50% Nts., 10/3/17¹³		2,692,000			2,920,820
Western Refining, Inc., 11.25% Sr. Sec. Nts., 6/15/17¹³		3,005,000			2,734,550
Williams Cos., Inc. (The), 8.75% Unsec. Nts., 3/15/32		1,996,000			2,394,974

					149,117,771

Financials—4.5%
Capital Markets—0.6%
Banco de Credito del Peru, 9.75% Jr. Sub. Nts., 11/6/69³		1,550,000			1,639,125
Goldman Sachs Group, Inc. (The):
6.15% Sr. Unsec. Nts., 4/1/18		6,610,000			7,087,487
7.50% Sr. Unsec. Nts., 2/15/19		1,740,000			2,031,939
Morgan Stanley, 6% Sr. Unsec. Unsub. Nts., Series F, 4/28/15		10,970,000			11,698,781
RailAmerica, Inc., 9.25% Sr. Sec. Nts., 7/1/17		1,455,000			1,555,031
UBS AG Stamford CT, 5.75% Sr. Unsec. Nts., 4/25/18		1,471,000			1,499,949

					25,512,312

Commercial Banks—1.6%
Banco BMG SA, 9.15% Nts., 1/15/16¹³		3,520,000			3,643,200
Banco de Credito del Peru, 6.95% Sub. Nts., 11/7/21^1,13		1,510,000			1,472,250
Banco do Brasil SA, 8.50% Jr. Sub. Perpetual Bonds^13,15		4,250,000			4,547,500
Bank of Scotland plc:
4.375% Sr. Sec. Nts., 7/13/16		8,035,000	EUR		11,579,951
4.50% Sr. Sec. Nts., 7/13/21		5,504,000	EUR		7,514,309
Corparacion Adina de Fomento, 8.125% Nts., 6/4/19		1,980,000			2,295,608


	Principal
	Amount			Value
Commercial Banks Continued
Depfa ACS Bank, 4.375% Sr. Sec. Nts., 1/15/15		5,550,000	EUR	$	7,985,971
HSBC Finance Corp.:
4.75% Sr. Unsec. Nts., 7/15/13		1,378,000			1,435,993
5.70% Sr. Unsec. Nts., 6/1/11		1,557,000			1,627,171
HSBK Europe BV:
7.25% Unsec. Unsub. Nts., 5/3/17¹³		1,360,000			1,251,200
9.25% Sr. Nts., 10/16/13¹³		13,170,000			13,565,100
ICICI Bank Ltd.:
5.50% Sr. Unsec. Nts., 3/25/15¹³		6,050,000			6,028,317
6.375% Bonds, 4/30/22^1,13		6,060,000			5,455,509
Inter-American Development Bank, 8.729% Nts., 1/25/12¹		441,785,730	COP		203,338
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/10^2,3,4		90,000			—
Salisbury International Investments Ltd., 4.434% Sec. Nts., Series 2006-003, Tranche E, 7/20/11^1,3		1,100,000			902,990

					69,508,407

Consumer Finance—0.2%
American Express Credit Corp.:
5.875% Sr. Unsec. Nts., 5/2/13		2,045,000			2,196,271
7.30% Sr. Unsec. Nts., Series C, 8/20/13		2,196,000			2,470,028
Capital One Bank USA NA, 8.80% Sub. Nts., 7/15/19		1,296,000			1,534,004
JSC Astana Finance, 9.16% Nts., 3/14/12^2,3		7,200,000			1,224,000
SLM Corp., 8.45% Sr. Unsec. Nts., Series A, 6/15/18		2,145,000			2,119,725

					9,544,028

Diversified Financial Services—1.4%
Autopistas del Nordeste Cayman Ltd., 9.39% Nts., 1/15/26¹³		5,344,092			4,008,069
BA Covered Bond Issuer, 4.25% Sec. Nts., 4/5/17		1,655,000	EUR		2,314,917
Banco Invex SA, 27.981% Mtg.-Backed Certificates, Series 062U, 3/13/34^1,16		4,830,734	MXN		1,248,118
Bank of America Corp.:
4.90% Sr. Unsec. Nts., 5/1/13		2,750,000			2,853,133
5.65% Sr. Unsec. Nts., 5/1/18		7,280,000			7,405,849
Citigroup, Inc.:
5.50% Sr. Unsec. Nts., 4/11/13		10,816,000			11,222,000
6.50% Sr. Nts., 8/19/13		2,944,000			3,138,457
Cloverie plc, 4.503% Sec. Nts., Series 2005-93, 12/20/10^1,3		1,100,000			1,021,900
Export-Import Bank of Korea (The), 5.875% Sr. Unsec. Nts., 1/14/15		3,100,000			3,333,898
GMAC LLC, 8% Sr. Unsec. Unsub. Nts., 11/1/31¹³		7,960,000			7,243,600
JPMorgan Hipotecaria su Casita:
6.47% Sec. Nts., 8/26/35³		5,808,600	MXN		391,080
25.825% Mtg.-Backed Certificates, Series 06U, 9/25/35¹		2,213,603	MXN		412,753
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		7,515,000			8,282,049
National Rural Utilities Cooperative Finance Corp., 10.375% Sec. Bonds, 11/1/18		1,153,000			1,530,189
Tiers-BSP, 0%/8.60% Collateralized Trust, Cl. A, 6/15/97^13,17		6,360,000			3,015,263
Universal City Development Partners Ltd., 8.875% Sr. Nts., 11/15/15¹³		2,815,000			2,769,256

					60,190,531

Insurance—0.2%
American International Group, Inc., 8.25% Sr. Unsec. Nts., 8/15/18		3,753,000			3,528,770
International Lease Finance Corp.:
6.375% Sr. Unsec. Nts., 3/25/13		1,676,000			1,378,921
6.625% Sr. Unsec. Nts., Series R, 11/15/13		1,258,000			1,013,484
Multiplan, Inc., 10.375% Sr. Sub. Nts., 4/15/16³		3,975,000			3,895,500
Prudential Financial, Inc., 7.375% Sr. Unsec. Unsub. Nts., 6/15/19		1,086,000			1,219,696

					11,036,371

Real Estate Investment
Trusts—0.1%
DuPont Fabros Technology LP, 8.50% Sr. Unsec. Nts., 12/15/17¹³		1,710,000			1,746,338
Simon Property Group LP, 5.30% Sr. Unsec. Nts., 5/30/13		1,851,000			1,911,348

					3,657,686

Thrifts & Mortgage
Finance—0.4%
Banco Hipotecario SA, 9.75% Sr. Unsec. Nts., 4/27/16¹³		1,370,000			1,191,900
WM Covered Bond Program:
3.875% Sec. Nts., Series 1, 9/27/11		1,704,000	EUR		2,507,628

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value
Thrifts & Mortgage Finance Continued
WM Covered Bond Program: Continued
4% Sec. Mtg. Nts., Series 2, 9/27/16		10,595,000	EUR	$	14,932,925
4.375% Sec. Nts., 5/19/14		1,150,000	EUR		1,688,959

					20,321,412

Health Care—1.3%
Health Care Equipment & Supplies—0.2%
Biomet, Inc., 10.375% Sr. Unsec. Nts., 10/15/17¹⁴		6,360,000			6,932,400
Inverness Medical Innovations, Inc., 7.875% Sr. Nts., 2/1/16¹³		1,630,000			1,605,550
Universal Hospital Services, Inc., 8.50% Sr. Sec. Nts., 6/1/15¹⁴		2,340,000			2,316,600

					10,854,550

Health Care Providers & Services—1.0%
Apria Healthcare Group, Inc.:
11.25% Sr. Sec. Nts., 11/1/14¹³		1,535,000			1,692,338
12.375% Sr. Sec. Nts., 11/1/14¹³		1,345,000			1,486,225
Catalent Pharma Solutions, Inc., 9.50% Sr. Unsec. Nts., 4/15/15¹⁴		1,876,481			1,702,907
Community Health Systems, Inc., 8.875% Sr. Unsec. Nts., 7/15/15		5,380,000			5,581,750
HCA, Inc.:
6.375% Nts., 1/15/15		5,165,000			4,900,294
8.50% Sr. Sec. Nts., 4/15/19¹³		1,135,000			1,228,638
HEALTHSOUTH Corp., 10.75% Sr. Unsec. Nts., 6/15/16		4,975,000			5,435,188
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15		6,205,000			6,049,875
Tenet Healthcare Corp., 7.375% Nts., 2/1/13		1,890,000			1,904,175
UnitedHealth Group, Inc., 6.875% Sr. Unsec. Nts., 2/15/38		2,103,000			2,180,426
US Oncology Holdings, Inc., 6.428% Sr. Unsec. Nts., 3/15/12^1,14		1,815,000			1,706,100
US Oncology, Inc., 9.125% Sr. Sec. Nts., 8/15/17		2,155,000			2,273,525
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Nts., 10/1/15¹⁷		4,840,000			5,118,300
WellPoint, Inc., 6.375% Sr. Unsec. Unsub. Nts., 6/15/37		1,483,000			1,513,986

					42,773,727

Pharmaceuticals—0.1%
DJO Finance LLC/DJO Finance Corp., 10.875% Sr. Unsec. Nts., 11/15/14		2,920,000			3,095,200
Industrials—2.4%
Aerospace & Defense—0.3%
BE Aerospace, Inc., 8.50% Sr. Unsec. Nts., 7/1/18		5,510,000			5,854,375
Hawker Beechcraft Acquisition Co. LLC, 8.50% Sr. Unsec. Nts., 4/1/15		750,000			532,500
TransDigm, Inc., 7.75% Nts., 7/15/14¹³		3,390,000			3,457,800
Vought Aircraft Industries, Inc., 8% Sr. Nts., 7/15/11		4,575,000			4,534,969

					14,379,644

Airlines—0.4%
American Airlines Pass Through Trust 2001-2, 7.858% Pass-Through Certificates, Series 2001-2, Cl. A-2, 10/1/11³		1,490,000			1,490,000
American Airlines Pass Through Trust 2009-1A, 10.375% Pass-Through Certificates, Series 2009-1A, 7/2/19		830,000			917,150
American Airlines, Inc., 10.50% Sr. Sec. Nts., 10/15/12¹³		4,220,000			4,431,000
Delta Air Lines, Inc.:
9.50% Sr. Sec. Nts., 9/15/14¹³		1,010,000			1,054,188
12.25% Sr. Sec. Nts., 3/15/15¹³		6,050,000			6,080,250
United Air Lines, Inc., 10.40% Sr. Sec. Nts., 11/1/16³		3,990,000			4,204,463

					18,177,051

Building Products—0.2%
AMH Holdings, Inc., 11.25% Sr. Unsec. Nts., 3/1/14		1,000,000			970,000
Associated Materials LLC, 9.875% Sr. Sec. Nts., 11/15/16¹³		1,620,000			1,717,200
Goodman Global Group, Inc., 11.843% Sr. Nts., 12/15/14^12,13		4,155,000			2,378,738
USG Corp., 9.75% Sr. Unsec. Nts., 8/1/14¹³		1,370,000			1,469,325

					6,535,263

Commercial Services &
Supplies—0.3%
Acco Brands Corp., 10.625% Sr. Sec. Nts., 3/15/15¹³		1,365,000			1,508,325
Aramark Services, Inc., 8.50% Sr. Unsec. Nts., 2/1/15		2,320,000			2,401,200
Corrections Corp. of America, 7.75% Sr. Nts., 6/1/17		1,975,000			2,044,125
Iron Mountain, Inc., 7.75% Sr. Sub. Nts., 1/15/15		1,040,000			1,050,400


	Principal
	Amount		Value
Commercial Services & Supplies Continued
West Corp., 9.50% Sr. Unsec. Nts., 10/15/14	$	6,895,000	$	7,032,900

				14,036,950

Construction & Engineering—0.2%
IIRSA Norte Finance Ltd., 8.75% Sr. Nts., 5/30/24¹³		6,282,138		6,627,655
Odebrecht Finance Ltd.:
7% Sr. Unsec. Nts., 4/21/20¹³		1,530,000		1,554,863
9.625% Sr. Unsec. Nts., 4/9/14¹³		1,520,000		1,759,400

				9,941,918

Industrial Conglomerates—0.3%
General Electric Capital Corp.:
5.40% Sr. Unsec. Nts., Series A, 9/20/13		3,392,000		3,609,017
6.875% Sr. Unsec. Nts., 1/10/39		4,501,000		4,662,950
Tyco International Finance SA, 8.50% Sr. Unsec. Unsub. Nts., 1/15/19		4,435,000		5,365,148

				13,637,115

Machinery—0.2%
Manitowoc Co., Inc. (The), 7.125% Sr. Nts., 11/1/13		4,540,000		4,290,300
Terex Corp., 8% Sr. Unsec. Sub. Nts., 11/15/17		5,015,000		4,852,013

				9,142,313

Marine—0.0%
Navios Maritime Holdings, Inc., 8.875% Nts., 11/1/17¹³		1,240,000		1,294,250
Professional Services—0.1%
Altegrity, Inc., 10.50% Sr. Unsec. Sub. Nts., 11/1/15¹³		2,680,000		2,405,300
Road & Rail—0.3%
Avis Budget Car Rental LLC, 7.625% Sr. Unsec. Unsub. Nts., 5/15/14		6,095,000		5,820,725
Hertz Corp., 10.50% Sr. Unsec. Sub. Nts., 1/1/16		3,785,000		4,059,413
Panama Canal Railway Co., 7% Sr. Sec. Nts., 11/1/26¹³		2,911,280		2,314,468

				12,194,606

Trading Companies & Distributors—0.1%
Ashtead Capital, Inc., 9% Nts., 8/15/16¹³		610,000		613,813
Ashtead Holdings plc, 8.625% Sr. Sec. Nts., 8/1/15¹³		855,000		863,550
RSC Equipment Rental, Inc., 10% Sr. Sec. Nts., 7/15/17¹³		655,000		715,588
United Rentals North America, Inc., 9.25% Sr. Unsec. Unsub. Nts., 12/15/19		1,495,000		1,551,063
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14		1,710,000		1,556,100

				5,300,114

Information Technology—1.0%
Computers & Peripherals—0.0%
Seagate Technology International, 10% Sr. Sec. Nts., 5/1/14¹³		1,255,000		1,393,050
Electronic Equipment & Instruments—0.3%
NXP BV/NXP Funding LLC, 7.87% Sr. Sec. Nts., 10/18/14		1,940,000		1,770,250
RBS Global, Inc./Rexnord Corp., 11.75% Sr. Unsec. Sub. Nts., 8/1/16		4,975,000		4,950,125
Sanmina-SCI Corp., 8.125% Sr. Sub. Nts., 3/1/16		6,745,000		6,761,863

				13,482,238

IT Services—0.4%
First Data Corp., 9.875% Sr. Unsec. Nts., 9/24/15		6,495,000		6,089,063
Sabre Holdings Corp., 7.35% Sr. Unsec. Unsub. Nts., 8/1/11		2,765,000		2,816,844
SunGard Data Systems, Inc.:
9.125% Sr. Unsec. Nts., 8/15/13		4,460,000		4,593,800
10.25% Sr. Unsec. Sub. Nts., 8/15/15		3,172,000		3,394,040

				16,893,747

Office Electronics—0.1%
Xerox Corp., 5.65% Sr. Unsec. Nts., 5/15/13		1,495,000		1,558,919
Semiconductors & Semiconductor Equipment—0.2%
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13		1,560,000		1,591,200
9.25% Sr. Unsec. Nts., 6/1/16		3,220,000		3,437,350
Freescale Semiconductor, Inc.:
8.875% Sr. Unsec. Nts., 12/15/14		3,700,000		3,413,250
10.125% Sr. Unsec. Sub. Nts., 12/15/16¹³		2,200,000		1,782,000

				10,223,800

Materials—2.6%
Chemicals—0.6%
Braskem Finance Ltd., 7.25% Sr. Unsec. Nts., 6/5/18¹³		4,185,000		4,279,163

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value
Chemicals Continued
Dow Chemical Co. (The), 7.60% Sr. Unsec. Unsub. Nts., 5/15/14	$	2,546,000	$	2,899,797
Hexion US Finance Corp./ Hexion Nova Scota Finance ULC, 9.75% Sr. Sec. Nts., 11/15/14		1,810,000		1,782,850
Huntsman International LLC, 7.375% Sr. Unsub. Nts., 1/1/15		7,080,000		6,832,200
Momentive Performance Materials, Inc., 11.50% Sr. Unsec. Sub. Nts., 12/1/16		10,105,000		8,993,450
Nalco Co., 8.875% Unsec. Sub. Nts., 11/15/13		2,135,000		2,209,725
PolyOne Corp., 8.875% Sr. Unsec. Nts., 5/1/12		1,390,000		1,438,650

				28,435,835

Construction Materials—0.1%
C10 Capital SPV Ltd., 6.722% Unsec. Perpetual Debs.^13,15		2,750,000		1,943,373
CEMEX Finance LLC, 9.50% Sr. Sec. Bonds, 12/14/16¹³		2,270,000		2,389,175

				4,332,548

Containers & Packaging—0.7%
Berry Plastics Holding Corp., 8.875% Sr. Sec. Nts., 9/15/14		7,045,000		6,886,488
Cascades, Inc.:
7.75% Sr. Nts., 12/15/17¹³		1,250,000		1,268,750
7.875% Sr. Nts., 1/15/20¹³		2,435,000		2,483,700
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15		3,710,000		3,858,400
Graham Packaging Co. LP:
8.25% Sr. Nts., 1/1/17¹³		2,250,000		2,233,125
9.875% Sr. Unsec. Sub. Nts., 10/15/14		4,930,000		5,053,250
Graphic Packing International, Inc., 9.50% Sr. Unsec. Unsub. Nts., 6/15/17		5,295,000		5,639,175
Viskase Companies, Inc., 9.875% Sr. Sec. Nts., 1/15/18¹³		1,465,000		1,483,313

				28,906,201

Metals & Mining—0.9%
Alcoa, Inc., 6.75% Sr. Unsec. Unsub. Nts., 7/15/18		961,000		981,865
CSN Islands XI Corp., 6.875% Sr. Unsec. Nts., 9/21/19¹³		1,900,000		1,909,500
Edgen Murray Corp., 12.25% Sr. Sec. Nts., 1/15/15¹³		2,445,000		2,414,438
Freeport-McMoRan Copper & Gold, Inc., 8.375% Sr. Nts., 4/1/17		1,480,000		1,622,821
Novelis, Inc., 7.25% Sr. Unsec. Nts., 2/15/15¹		6,055,000		5,797,663
Rio Tinto Finance (USA) Ltd.:
5.875% Sr. Unsec. Unsub. Nts., 7/15/13		2,052,000		2,215,953
9% Sr. Unsec. Nts., 5/1/19		888,000		1,125,718
Teck Resources Ltd., 10.25% Sr. Sec. Nts., 5/15/16		4,005,000		4,685,850
United Maritime LLC, 11.75% Sr. Sec. Nts., 6/15/15¹³		2,440,000		2,458,300
Vale Overseas Ltd., 6.875% Bonds, 11/21/36		604,000		605,003
Vedanta Resources plc, 9.50% Sr. Unsec. Nts., 7/18/18¹³		13,715,000		13,989,300
Voto-Votorantim Overseas Trading Operations, 6.625% Sr. Unsec. Nts., 9/25/19¹³		2,300,000		2,317,250

				40,123,661

Paper & Forest Products—0.3%
Celulosa Arauco y Constitucion SA, 7.25% Sr. Unsec. Unsub. Nts., 7/29/19		1,860,000		2,028,226
Georgia-Pacific LLC:
7.70% Debs., 6/15/15		1,300,000		1,371,500
8.25% Sr. Unsec. Nts., 5/1/16¹³		3,460,000		3,684,900
PE Paper Escrow GmbH, 12% Sr. Sec. Nts., 8/1/14¹³		1,835,000		2,031,270
Verso Paper Holdings LLC, 9.125% Sr. Sec. Nts., 8/1/14		3,625,000		3,480,000

				12,595,896

Telecommunication Services—1.8%
Diversified Telecommunication Services—0.9%
Axtel SAB de CV, 9% Sr. Unsec. Nts., 9/22/19¹³		1,545,000		1,591,350
Cincinnati Bell, Inc., 8.25% Sr. Nts., 10/15/17		3,260,000		3,325,200
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		1,960,000		1,974,700
Global Crossing Ltd., 12% Sr. Sec. Nts., 9/15/15¹³		1,590,000		1,752,975
Intelsat Subsidiary Holding Co. Ltd., 8.50% Sr. Unsec. Nts., 1/15/13¹³		2,135,000		2,188,375
Level 3 Financing, Inc., 9.25% Sr. Unsec. Unsub. Nts., 11/1/14		1,855,000		1,762,250
PAETEC Holding Corp., 9.50% Sr. Unsec. Unsub. Nts., 7/15/15		7,115,000		6,883,763
Telecom Italia Capital SA, 7.721% Sr. Unsec. Unsub. Nts., 6/4/38		1,900,000		2,194,363


	Principal
	Amount			Value
Diversified Telecommunication Services Continued
Telefonica del Peru SA, 8% Sr. Unsec. Bonds, 4/11/16¹³		3,290,100	PEN	$	1,184,390
Telmar Norte Leste SA, 9.50% Sr. Unsec. Nts., 4/23/19¹³		2,495,000			2,994,000
Verizon Communications, Inc., 8.95% Sr. Unsec. Unsub. Nts., 3/1/39		4,548,000			6,172,996
Windstream Corp.:
7.875% Sr. Nts., 11/1/17¹³		1,710,000			1,697,175
8.625% Sr. Unsec. Unsub. Nts., 8/1/16		5,570,000			5,695,325
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10^2,3,4		250,000			3

					39,416,865

Wireless Telecommunication Services—0.9%
America Movil SAB de CV, 8.46% Sr. Unsec. Unsub. Bonds, 12/18/36		52,700,000	MXN		3,298,060
CC Holdings GS V LLC/Crown Castle GS III Corp., 7.75% Sr. Sec. Nts., 5/1/17¹³		4,720,000			5,050,400
Cricket Communications, Inc.:
7.75% Sr. Sec. Unsub. Nts., 5/15/16		3,510,000			3,518,775
9.375% Sr. Unsec. Nts., 11/1/14		3,610,000			3,646,100
MetroPCS Wireless, Inc., 9.25% Sr. Unsec. Nts., 11/1/14		6,910,000			7,030,925
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15		6,625,000			6,475,938
SBA Telecommunications, Inc.:
8% Sr. Nts., 8/15/16¹³		1,810,000			1,900,500
8.25% Sr. Nts., 8/15/19¹³		4,480,000			4,771,200
Sprint Capital Corp., 8.75% Nts., 3/15/32		6,320,000			5,988,200
Teligent, Inc., 11.50% Sr. Nts., 12/1/08^2,3,4		500,000			—

					41,680,098

Utilities—1.6%
Electric Utilities—0.8%
Centrais Eletricas Brasileiras
SA, 6.857% Sr. Unsec. Unsub. Nts., 7/30/19¹³		2,300,000			2,504,125
Edison Mission Energy, 7% Sr. Unsec. Nts., 5/15/17		7,120,000			5,660,400
Eletropaulo Metropolitana SA, 19.125% Nts., 6/28/10³		1,115,000	BRR		666,054
Empresas Publicas de Medellin ESP, 7.625% Sr. Unsec. Nts., 7/29/19¹³		2,600,000			2,873,000
Energy Future Holdings Corp., 10.875% Sr. Unsec. Nts., 11/1/17		3,320,000			2,730,700
Israel Electric Corp. Ltd., 7.25% Nts., 1/15/19¹³		9,000,000			9,763,281
Majapahit Holding BV:
7.25% Nts., 10/17/11¹³		1,990,000			2,089,500
7.75% Nts., 10/17/16¹³		4,450,000			4,733,910
8% Sr. Unsec. Nts., 8/7/19¹³		900,000			954,000
National Power Corp., 5.875% Unsec. Unsub. Bonds, 12/19/16		109,600,000	PHP		2,145,533
Texas Competitive Electric Holdings Co. LLC, 10.25% Sr. Unsec. Nts., Series A, 11/1/15		1,795,000			1,462,925

					35,583,428

Energy Traders—0.7%
AES Corp. (The), 8% Sr. Unsec. Unsub. Nts., 10/15/17		1,145,000			1,180,781
Dynegy Holdings, Inc., 8.375% Sr. Unsec. Nts., 5/1/16		6,885,000			6,575,175
Electric Power Development Co. Ltd., 1.80% Gtd. Unsec. Nts., 6/28/10		202,000,000	JPY		2,184,662
Mirant North America LLC, 7.375% Sr. Unsec. Nts., 12/31/13		2,950,000			2,931,563
NRG Energy, Inc.:
7.375% Sr. Nts., 1/15/17		5,080,000			5,105,400
7.375% Sr. Nts., 2/1/16		3,740,000			3,754,025
Power Sector Assets & Liabilities Management Corp.:
7.25% Gtd. Sr. Unsec. Nts., 5/27/19¹³		2,280,000			2,456,700
7.39% Sr. Gtd. Unsec. Nts., 12/2/24¹³		2,270,000			2,349,450
Reliant Energy, Inc., 7.625% Sr. Unsec. Unsub. Nts., 6/15/14		5,055,000			5,029,725

					31,567,481

Multi-Utilities—0.1%
Sempra Energy, 9.80% Sr. Unsec. Nts., 2/15/19		1,821,000			2,276,447
Total Corporate Bonds and Notes (Cost $989,954,497)					1,064,085,287

STATEMENT OF INVESTMENTS Continued


	Shares		Value
Preferred Stocks—0.0%
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.^3,4,14		4,253	$	—
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.^3,4		5,000		—
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.^3,4,14		151		—

Total Preferred Stocks (Cost $537,064)				—

Common Stocks—0.2%
American Media, Inc.^3,4		1,562		16
Arco Capital Corp. Ltd.^3,4		690,638		1,726,595
Charter Communications, Inc., Cl. A⁴		110,986		3,940,003
Global Aero Logistics, Inc.^3,4		2,168		2,168
MHP SA, GDR^4,13		56,610		560,439
Orbcomm, Inc.⁴		375		1,013
Premier Holdings Ltd.^3,4		18,514		—

Total Common Stocks (Cost $12,804,011)				6,230,234


	Units
Rights, Warrants and Certificates—0.0%
Global Aero Logistics, Inc. Wts., Strike Price $10, Exp. 2/28/11^3,4 (Cost $2,025)		266	3


	Principal
	Amount
Structured Securities—4.1%
Citigroup Funding, Inc.:
Ghana (Republic of) Credit Linked Nts., 12.08%, 6/9/10³		1,180,000	GHS	802,326
Ghana (Republic of) Credit Linked Nts., 12.08%, 6/9/10³		1,180,000	GHS	802,326
Ghana (Republic of) Credit Linked Nts., 12.08%, 6/9/10³		1,180,000	GHS	802,326
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		31,590,000,000	IDR	3,669,450
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		31,580,000,000	IDR	3,668,288
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		15,590,000,000	IDR	1,810,913
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/17/15		15,790,000,000	IDR	1,709,723
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/17/15		15,670,000,000	IDR	1,696,730
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/17/15		33,010,000,000	IDR	3,574,286
Citigroup Global Markets Holdings, Inc.:
Brazil (Federal Republic of) Credit Linked Nts., 9.762%, 1/3/17³		8,850,000	BRR	4,371,801
Colombia (Republic of) Credit Linked Bonds, 11.25%, 10/25/18³		3,255,000,000	COP	1,830,159
Colombia (Republic of) Credit Linked Nts., 11%, 5/19/11		6,880,000,000	COP	3,649,186
Colombia (Republic of) Credit Linked Nts., 13.041%, 2/26/15^3,16		2,199,000,000	COP	2,235,727
Colombia (Republic of) Credit Linked Nts., Series 01, 13.041%, 2/26/15^3,16		811,000,000	COP	824,545
Colombia (Republic of) Credit Linked Nts., Series 02, 13.041% 12/26/15^3,16		1,345,000,000	COP	1,367,464
Colombia (Republic of) Credit Linked Nts., Series II, 15%, 4/27/12³		552,359,546	COP	324,051
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12³		1,200,000,000	COP	704,000
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12³		1,034,000,000	COP	606,613
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12³		927,000,000	COP	543,840
Dominican Republic Unsec. Credit Linked Nts., 15%, 3/12/12³		49,300,000	DOP	1,357,762
Ghana (Republic of) Credit Linked Nts., 13.50%, 4/2/10³		2,990,000	GHS	2,063,084
Ukraine Hryvnia Unsec. Credit Linked Nts., 11.94%, 1/11/10³		880,000	UAH	113,266
Credit Suisse First Boston International:
Boryspil Airport Total Return Linked Nts., 10%, 4/19/10¹		4,840,000	UAH	574,909
Moitk Total Return Linked Nts., 3/26/11^2,3,4		53,910,000	RUR	179
Oreniz Total Return Linked Nts., 9.24%, 2/21/12^1,3		116,835,000	RUR	3,358,750
Ukraine (Republic of) Credit Linked Nts., Series EMG 13, 11.94%, 1/11/10		2,195,000	UAH	282,105
Vietnam Shipping Industry Group Total Return Linked Nts., 10.50%, 1/19/17³		14,609,000,000	VND	388,537
Credit Suisse First Boston, Inc. (Nassau Branch):
Russian Specialized Construction & Installation Administration Credit Linked Nts., 5/20/10^2,3,4		97,250,000	RUR	32,321
Ukraine (Republic of) Credit Linked Nts., 11.94%, 1/11/10³		5,650,000	UAH	726,148


	Principal
	Amount			Value
Structured Securities Continued
Credit Suisse First Boston, Inc. (Nassau Branch): Continued Ukraine (Republic of) Credit Linked Nts., Series EMG 11, 11.94%, 1/11/10		661,000	UAH	$	84,953
Ukraine (Republic of) Credit Linked Nts., Series NPC 12, 11.94%, 1/11/10³		4,170,000	UAH		535,936
Credit Suisse Group AG, Russian Moscoblgaz Finance Total Return Linked Nts., 9.25%, 6/24/12		106,500,000	RUR		2,902,365
Credit Suisse International:
OAO Gazprom Total Return Linked Nts., 13.12%, 6/26/12¹		41,550,000	RUR		1,513,457
OAO Gazprom Total Return Linked Nts., 13.12%, 6/26/12¹		30,880,000	RUR		1,124,803
OAO Gazprom Total Return Linked Nts., 13.12%, 6/26/12¹		44,460,000	RUR		1,619,454
Deutsche Bank AG:
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.09%, 1/5/11		4,999,216	MXN		357,191
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.65%, 1/5/11		3,320,991	MXN		237,283
Coriolanus Ltd. Sec. Credit Linked Bonds, 3.242%, 4/30/25^3,12		2,843,277			1,616,959
Coriolanus Ltd. Sec. Credit Linked Bonds, 3.269%, 4/30/25^3,12		2,271,446			1,291,761
Coriolanus Ltd. Sec. Credit Linked Bonds, 3.346%, 4/30/25^3,12		2,135,063			1,214,200
Coriolanus Ltd. Sec. Credit Linked Nts., 10.62%, 9/10/10³		3,300,000			1,247,400
Coriolanus Ltd. Sec. Credit Linked Nts., 3.191%, 4/30/25^3,8,12		2,491,157			1,416,710
Coriolanus Ltd. Sec. Credit Linked Nts., 9.545%, 12/31/17^3,16		20,560,000	BRR		6,071,294
Coriolanus Ltd. Sec. Credit Linked Nts., Series 113, 9%, 4/26/11^1,3		655,000			698,276
European Investment Bank, Russian Federation Credit Linked Nts., 5.502%, 1/19/10^3,12		705,000			703,414
Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/22/21		11,690,000,000	IDR		1,468,224
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/22/15		820,000			814,323
Indonesia (Republic of) Credit Linked Nts., Series 02, 12.80%, 6/22/21		29,700,000,000	IDR		3,671,603
JSC Gazprom Total Return Linked Nts., 13.12%, 6/28/12¹		45,990,000	RUR		1,675,261
JSC Gazprom Total Return Linked Nts., 13.12%, 6/28/12¹		38,600,000	RUR		1,406,068
Opic Reforma I Credit Linked Nts., Cl. 1A, 6.958%, 9/24/14^1,3		14,850,000	MXN		1,135,148
Opic Reforma I Credit Linked Nts., Cl. 1B, 6.958%, 9/24/14^1,3		2,970,000	MXN		227,030
Opic Reforma I Credit Linked Nts., Cl. 1C, 6.958%, 9/24/14^1,3		4,950,000	MXN		378,383
Opic Reforma I Credit Linked Nts., Cl. 1D, 6.958%, 9/24/14^1,3		2,475,000	MXN		189,191
Opic Reforma I Credit Linked Nts., Cl. 1E, 6.958%, 9/24/14^1,3		3,465,000	MXN		264,868
Opic Reforma I Credit Linked Nts., Cl. 2A, 8.42%, 5/22/15^1,3		1,417,014	MXN		108,318
Opic Reforma I Credit Linked Nts., Cl. 2B, 8.42%, 5/22/15^1,3		2,479,100	MXN		189,505
Opic Reforma I Credit Linked Nts., Cl. 2C, 8.42%, 5/22/15^1,3		37,378,810	MXN		2,857,270
Opic Reforma I Credit Linked Nts., Cl. 2D, 8.42%, 5/22/15^1,3		2,724,116	MXN		208,234
Opic Reforma I Credit Linked Nts., Cl. 2E, 8.42%, 5/22/15^1,3		1,979,122	MXN		151,286
Opic Reforma I Credit Linked Nts., Cl. 2F, 8.42%, 5/22/15^1,3		1,263,966	MXN		96,619
Opic Reforma I Credit Linked Nts., Cl. 2G, 8.42%, 5/22/15^1,3		232,771	MXN		17,793
Ukraine (Republic of) 5 yr. Credit Linked Nts., 4.05%, 8/27/10		885,000			628,624
Ukraine (Republic of) 5.5 yr. Credit Linked Nts., 4.05%, 3/1/11		885,000			570,409
Ukraine (Republic of) 6 yr. Credit Linked Nts., 4.05%, 8/29/11		885,000			496,981
Ukraine (Republic of) 6.5 yr. Credit Linked Nts., 4.05%, 2/29/12		885,000			445,199
Ukraine (Republic of) 7 yr. Credit Linked Nts., 4.05%, 8/30/12		885,000			411,153
United Mexican States Credit Linked Nts., 9.52%, 1/5/11		3,311,534	MXN		236,607
Dresdner Bank AG, Lukoil Credit Linked Nts., Series 3, 7.04%, 12/12/11^1,13		34,190,000	RUR		1,074,369
Eirles Two Ltd. Sec. Nts.:
Series 324, 3.791%, 4/30/12^1,3		4,100,000			2,640,810
Series 335, 2.241%, 4/30/12^1,3		6,300,000			5,049,450

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value
Structured Securities Continued
Goldman Sachs & Co., Turkey (Republic of) Credit Linked Nts., 14.802%, 3/29/17^12,13		21,980,000	TRY	$	5,622,392
Goldman Sachs Capital Markets LP, Colombia (Republic of) Credit Linked Nts., 10.476%, 2/8/37^3,12		63,720,800,000	COP		1,549,839
Hallertau SPC Credit Linked Nts.:
Series 2007-01, 2.494%, 12/20/17^1,3		12,250,000			9,861,250
Series 2008-01, 9.888%, 8/2/10^2,3,4,12		14,337,604	BRR		823,527
Series 2008-2A, 6.707%, 9/17/13^1,3		18,215,625			18,388,673
ING Bank NV, Ukraine (Republic of) Credit Linked Nts., Series 725, 11.89%, 1/11/10³		4,689,000	UAH		601,441
JPMorgan Chase Bank NA:
Brazil (Federal Republic of) Credit Linked Nts., 11.009%, 5/16/45³		1,445,000	BRR		1,468,406
Colombia (Republic of) Credit Linked Bonds, 10.190%, 1/5/16^3,12		9,020,000,000	COP		2,578,024
Colombia (Republic of) Credit Linked Bonds, 10.218%, 10/31/16^3,12		12,177,000,000	COP		3,209,138
Colombia (Republic of) Credit Linked Bonds, Series A, 10.218%, 10/31/16^3,12		12,125,000,000	COP		3,195,433
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		7,190,000,000	IDR		826,525
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		15,770,000,000	IDR		1,812,837
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		24,160,000,000	IDR		2,777,307
Peru (Republic of) Credit Linked Nts., 8.115%, 9/2/15^12,13		3,470,000	PEN		798,274
Swaziland (Kingdom of) Credit Linked Nts., 7.25%, 6/20/10³		1,120,000			1,145,312
JPMorgan Chase Bank NA London Branch, Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/17/21		25,490,000,000	IDR		3,148,326
Lehman Brothers Treasury Co. BV, Microvest Capital Management LLC Credit Linked Nts., 7.55%, 5/24/12³		5,267,585			5,230,712
Merrill Lynch, Colombia (Republic of) Credit Linked Nts., 10%, 11/17/16³		1,784,000,000	COP		766,140
Morgan Stanley:
Peru (Republic of) Credit Linked Nts., 6.25%, 3/23/17¹³		4,885,000	PEN		1,341,654
Russian Federation Total Return Linked Bonds, Series 007, Cl. VR, 5%, 8/22/34		85,122,158	RUR		1,366,628
Morgan Stanley & Co. International Ltd./Red Arrow International Leasing plc Total Return Linked Nts., Series A, 8.375%, 7/9/12		14,192,567	RUR		466,690
Morgan Stanley Capital Services, Inc.:
Brazil (Federal Republic of) Credit Linked Nts., 12.551%, 1/5/22^12,13		28,914,000	BRR		1,559,679
Ukraine (Republic of) Credit Linked Nts., 2.396%, 10/15/17^1,3		8,300,000			3,984,000
Ukraine (Republic of) Credit Linked Nts., Series 2, 3.266%, 10/15/17^1,3		6,800,000			3,264,000
United Mexican States Credit Linked Nts., 5.64%, 11/20/15³		2,000,000			1,640,000
WTI Trading Ltd. Total Return Linked Nts., Series A, 15%, 3/8/12		5,139,504			4,778,711
WTI Trading Ltd. Total Return Linked Nts., Series C, 15%, 3/8/12		6,876,672			6,395,305
UBS AG, Ghana (Republic of) Credit Linked Nts., 14.47%, 12/28/11³		1,222,052	GHS		768,184

Total Structured Securities (Cost $221,887,024)					182,307,404

Event-Linked Bonds—0.9%
Akibare Ltd. Catastrophe Linked Nts., Cl. A, 3.217%, 5/22/12^1,13		1,888,000			1,830,677
Atlas V Capital Ltd. Catastrophe Linked Nts., Series 2, 11.79%, 2/24/12^1,13		820,000			879,799
East Lane Re III Ltd. Catastrophe Linked Nts., 10.54%, 3/16/12^1,13		3,373,000			3,526,134
Fhu-Jin Ltd. Catastrophe Linked Nts., Cl. B, 4.181%, 8/10/11^1,13		2,880,000			2,863,296


	Principal
	Amount		Value
Event-Linked Bonds Continued
Longpoint RE Ltd. Catastrophe Linked Nts.:
5.40%, 12/18/13^1,13	$	1,915,000	$	1,912,606
5.40%, 12/24/12^1,13		1,033,000		1,031,657
Medquake Ltd. Catastrophe Linked Nts., 5.373%, 5/31/10^1,13		1,500,000		1,486,523
Midori Ltd. Catastrophe Linked Nts., 3.034%, 10/24/12^1,13		1,850,000		1,804,305
Multicat Mexico 2009 Ltd. Catastrophe Linked Nts.:
10.309%, 10/19/12^1,13		599,000		599,599
11.559%, 10/19/12¹		1,790,000		1,793,580
Muteki Ltd. Catastrophe Linked Nts., 4.673%, 5/24/11^1,13		2,100,000		2,049,720
Nelson Re Ltd. Catastrophe Linked Nts., Series 2007-I, Cl. A, 12.173%, 6/21/10^1,13		3,340,000		3,323,133
Osiris Capital plc Catastrophe Linked Combined Mortality Index Nts., Series D, 5.284%, 1/15/10^1,13		890,000		889,964
Redwood Capital XI Ltd. Catastrophe Linked Nts., 0.00%, 1/10/11^1,13,18		1,331,000		1,331,333
Residential Reinsurance 2007 Ltd. Catastrophe Linked Nts.:
Series CL2, 11.756%, 6/6/11^1,13		2,590,000		2,573,877
Series CL3, 12.506%, 6/7/10^1,13		1,000,000		1,025,400
Successor X Ltd. Catastrophe Linked Nts.:
12.941%, 12/9/10^1,12,13		683,000		607,255
23.131%, 12/9/10^12,13		939,000		763,524
Vega Capital Ltd. Catastrophe Linked Nts., Series D, 0%, 6/24/11^12,13		4,205,000		5,713,544
Willow Re Ltd. Catastrophe Linked Nts., 6/16/10^2,3		1,582,000		1,109,378

Total Event-Linked Bonds (Cost $35,996,992)				37,115,304


	Expiration		Strike
	Date		Price			Contracts		Value
Options Purchased—0.0%
Euro (EUR) Call⁴		1/15/10		1.489	EUR		208,545,000	$	—
Mexican Nuevo Peso (MXN) Call⁴		3/18/10	$	12.50			97,000,000		59,364

Total Options Purchased (Cost $7,867,185)									59,364


	Shares
Investment Companies—10.0%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^18,19		4,680,460			4,680,460
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^19,20		76,771,099			76,771,099
Oppenheimer Master Event-Linked Bond Fund, LLC^4,20		1,404,749			14,343,328
Oppenheimer Master Loan Fund, LLC^4,20		33,609,439			347,307,865

Total Investment Companies (Cost $436,559,744)					443,102,752
Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $4,463,675,877)					4,463,916,334

Investments Purchased with Cash Collateral from Securities Loaned—0.9%²¹
OFI Liquid Assets Fund, LLC, 0.33%^19,20 (Cost $37,599,500)		37,599,500			37,599,500

Total Investments, at Value (Cost $4,501,275,377)		102.0	%		4,501,515,834
Liabilities in Excess of Other Assets		(2.0	)		(87,017,808	)

Net Assets		100.0	%	$	4,414,498,026

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments

Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies:


AUD		Australian Dollar
BRR		Brazilian Real
CAD		Canadian Dollar
COP		Colombian Peso
DKK		Danish Krone
DOP		Dominican Republic Peso
EGP		Egyptian Pounds
EUR		Euro
GBP		British Pound Sterling
GHS		Ghana Cedi
HUF		Hungarian Forint
IDR		Indonesia Rupiah
ILS		Israeli Shekel
JPY		Japanese Yen
MXN		Mexican Nuevo Peso
NOK		Norwegian Krone
PEN		Peruvian New Sol
PHP		Philippines Peso
PLZ		Polish Zloty
RUR		Russian Ruble
SEK		Swedish Krona
TRY		New Turkish Lira
UAH		Ukraine Hryvnia
VND		Vietnam Dong
ZAR		South African Rand


1.		Represents the current interest rate for a variable or increasing rate security.

2.		Issue is in default. See Note 1 of accompanying Notes.

3.		Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of December 31, 2009 was $163,931,880, which represents 3.71% of the Fund’s net assets, of which $5,823,645 is considered restricted. See Note 6 of accompanying Notes. Information concerning restricted securities is as follows:


							Unrealized
	Acquisition						Appreciation
Security	Date		Cost		Value		(Depreciation)

Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1A, 6.958%, 9/24/14		12/27/07	$	1,364,764	$	1,135,148	$	(229,616	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1B, 6.958%, 9/24/14		6/12/08		286,334		227,030		(59,304	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1C, 6.958%, 9/24/14		8/12/08		487,085		378,383		(108,702	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1D, 6.958%, 9/24/14		8/6/09		189,935		189,191		(744	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1E, 6.958%, 9/24/14		9/10/09		259,017		264,868		5,851
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2A, 8.42%, 5/22/15		5/21/08		136,622		108,318		(28,304	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2B, 8.42%, 5/22/15		6/12/08		239,007		189,505		(49,502	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2C, 8.42%, 5/22/15		6/18/08		3,626,317		2,857,270		(769,047	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2D, 8.42%, 5/22/15		7/8/08		264,086		208,234		(55,852	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2E, 8.42%, 5/22/15		7/15/08		192,185		151,286		(40,899	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2F, 8.42%, 5/22/15		8/8/08		124,426		96,619		(27,807	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2G, 8.42%, 5/22/15		8/22/08		22,959		17,793		(5,166	)

			$	7,192,737	$	5,823,645	$	(1,369,092	)

4.		Non-income producing security.

5.		A sufficient amount of securities has been designated to cover outstanding foreign currency exchange contracts. See Note 5 of accompanying Notes.

6.		Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $20,563,263 or 0.47% of the Fund’s net assets as of December 31, 2009.

7.		The current amortization rate of the security’s cost basis exceeds the future interest payments currently estimated to be received. Both the amortization rate and interest payments are contingent on future mortgage pre-payment speeds and are therefore subject to change.

8.		When-issued security or delayed delivery to be delivered and settled after December 31, 2009. See Note 1 of accompanying Notes.

9.		A sufficient amount of liquid assets has been designated to cover outstanding written put options. See Note 5 of accompanying Notes.

10.		Partial or fully-loaned security. See Note 7 of accompanying Notes.

11.		All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $24,999,850. See Note 5 of accompanying Notes.

12.		Zero coupon bond reflects effective yield on the date of purchase.

13.		Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $540,855,282 or 12.25% of the Fund’s net assets as of December 31, 2009.

14.		Interest or dividend is paid-in-kind, when applicable.

15.		This bond has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. Rate reported represents the current interest rate for this variable rate security.

16.		Denotes an inflation-indexed security: coupon and principal are indexed to a consumer price index.

17.		Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 18. Interest rate is less than 0.0005%.

18.		Interest rate is less than 0.0005%.

19.		Rate shown is the 7-day yield as of December 31, 2009.

20.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

OFI Liquid Assets Fund, LLC		325,265,870		244,535,280		532,201,650		37,599,500
Oppenheimer Institutional Money Market Fund, Cl. E		314,416,821		3,251,233,591		3,488,879,313		76,771,099
Oppenheimer Master Event-Linked Bond Fund, LLC		1,404,749		—		—		1,404,749
Oppenheimer Master Loan Fund, LLC		14,194,313		19,415,126		—		33,609,439


						Realized
	Value		Income			Loss

OFI Liquid Assets Fund, LLC	$	37,599,500	$	501,092	^a	$	—
Oppenheimer Institutional Money Market Fund, Cl. E		76,771,099		2,500,925			—
Oppenheimer Master Event-Linked Bond Fund, LLC		14,343,328		1,286,057	^b		280,967	^b
Oppenheimer Master Loan Fund, LLC		347,307,865		20,407,379	^c		1,762,842	^c

	$	476,021,792	$	24,695,453		$	2,043,809

a.		Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

b.		Represents the amount allocated to the Fund from Oppenheimer Master Event-Linked Bond Fund, LLC. c. Represents the amount allocated to the Fund from Oppenheimer Master Loan Fund, LLC.

c.		Represents the amount allocated to the Fund from Oppenheimer Master Loan Fund, LLC.

21.		The security/securities have been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 7 of accompanying Notes.

Valuation Inputs

	1)		Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2)		Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3)		Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued


							Level 3—
	Level 1—			Level 2—			Significant
	Unadjusted			Other Significant			Unobservable
	Quoted Prices			Observable Inputs			Inputs		Value

Assets Table
Investments, at Value:
Asset-Backed Securities	$	—		$	26,427,935		$	1,445,549	$	27,873,484
Mortgage-Backed Obligations		—			636,575,400			—		636,575,400
U.S. Government Obligations		—			92,167,477			—		92,167,477
Foreign Government Obligations		—			1,880,524,205			290,296		1,880,814,501
Loan Participations		—			93,585,124			—		93,585,124
Corporate Bonds and Notes		—			1,064,085,287			—		1,064,085,287
Preferred Stocks		—			—			—		—
Common Stocks		4,501,455			1,726,611			2,168		6,230,234
Rights, Warrants and Certificates		—			—			3		3
Structured Securities		—			174,732,843			7,574,561		182,307,404
Event-Linked Bonds		—			37,115,304			—		37,115,304
Options Purchased		—			59,364			—		59,364
Investment Companies		443,102,752			—			—		443,102,752
Investments Purchased with Cash Collateral from Securities Loaned		37,599,500			—			—		37,599,500

Total Investments, at Value		485,203,707			4,006,999,550			9,312,577		4,501,515,834
Other Financial Instruments:
Appreciated swaps, at value		—			13,432,301			—		13,432,301
Futures margins		2,104,699			—			—		2,104,699
Foreign currency exchange contracts		—			29,623,669			—		29,623,669

Total Assets	$	487,308,406		$	4,050,055,520		$	9,312,577	$	4,546,676,503

Liabilities Table
Other Financial Instruments:
Appreciated swaps, at value	$	—		$	(1,195,988	)	$	—	$	(1,195,988	)
Depreciated swaps, at value		—			(7,663,287	)				(7,663,287	)
Appreciated options written, at value		—			(94,558	)		—		(94,558	)
Futures margins		(3,112,305	)		—			—		(3,112,305	)
Foreign currency exchange contracts		—			(11,995,141	)		—		(11,995,141	)
Unfunded purchase agreements		—			(354,545	)		—		(354,545	)

Total Liabilities	$	(3,112,305	)	$	(21,303,519	)	$	—	$	(24,415,824	)

Currency contracts, unfunded purchase agreements and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table are reported at their market value at measurement date.

Foreign Currency Exchange Contracts as of December 31, 2009 are as follows:


		Contract
Counterparty/		Amount			Expiration				Unrealized		Unrealized
Contract Description	Buy/Sell	(000’s)			Dates		Value		Appreciation		Depreciation

Banc of America:
Australian Dollar (AUD)	Sell		30,900	AUD		2/10/10	$	27,639,799	$	156,435	$	202,132
Chinese Renminbi (Yuan) (CNY)	Sell		58,800	CNY		2/4/10		8,615,911		5,790		—
Indonesia Rupiah (IDR)	Buy		217,849,000	IDR		1/29/10-2/25/10		22,987,362		189,726		—
Japanese Yen (JPY)	Buy		3,133,000	JPY		5/10/10		33,669,336		—		995,074
New Zealand Dollar (NZD)	Buy		23,740	NZD		2/10/10		17,184,548		87,370		—

										439,321		1,197,206

Bank Paribas Asia—FGN:
New Turkish Lira (TRY)	Buy		21,650	TRY		11/3/10		14,471,531		133,308		—
Norwegian Krone (NOK)	Buy		81,700	NOK		2/10/10		14,085,177		—		495,013
Norwegian Krone (NOK)	Sell		55,100	NOK		2/10/10		9,499,306		102,502		3,061
Polish Zloty (PLZ)	Buy		142,710	PLZ		1/7/10-2/10/10		49,798,305		784,176		216,263
Polish Zloty (PLZ)	Sell		24,790	PLZ		5/10/10		8,580,854		6,520		—

										1,026,506		714,337

Barclay’s Capital:
Euro (EUR)	Sell		174,850	EUR		1/21/10-3/4/10		250,638,618		8,829,428		1,087,269
Hungarian Forint (HUF)	Sell		5,568,000	HUF		2/8/10		29,450,355		1,361,443		—
Japanese Yen (JPY)	Sell		3,484,500	JPY		2/2/10-4/5/10		37,427,468		1,577,043		—
Mexican Nuevo Peso (MXN)	Buy		51,410	MXN		1/29/10		3,916,300		—		8,727
Philippines Peso (PHP)	Buy		414,000	PHP		2/2/10		8,919,559		160,750		—

										11,928,664		1,095,996

Citigroup:
Colombian Peso (COP)	Sell		14,711,000	COP		1/29/10		7,184,852		103,233		—
Euro (EUR)	Sell		31,810	EUR		2/10/10-3/18/10		45,597,041		946,303		—
New Taiwan Dollar (TWD)	Sell		280,000	TWD		2/4/10		8,868,500		—		104,121
Peruvian New Sol (PEN)	Sell		14,600	PEN		1/19/10-1/21/10		5,051,919		17,741		—
Singapore Dollar (SGD)	Buy		2,070	SGD		5/10/10		1,471,739		—		12,017
Swedish Krona (SEK)	Buy		14,400	SEK		2/10/10		2,013,138		—		83,641
Swedish Krona (SEK)	Sell		4,700	SEK		2/10/10		657,066		3,032		—

										1,070,309		199,779

Credit Suisse:
British Pound Sterling (GBP)	Buy		4,500	GBP		2/10/10		7,266,617		—		258,531
New Turkish Lira (TRY)	Sell		75,780	TRY		1/13/10-2/16/10		50,514,864		—		268,410
Russian Ruble (RUR)	Buy		199,860	RUR		10/7/10		6,319,466		—		132,300
South African Rand (ZAR)	Buy		261,675	ZAR		1/20/10		35,319,752		474,498		—
Swedish Krona (SEK)	Buy		22,800	SEK		2/10/10		3,187,469		16,927		—
Swedish Krona (SEK)	Sell		105,220	SEK		2/10/10		14,709,889		335,017		8,637

										826,442		667,878

Deutsche Bank Capital Corp.:
Australian Dollar (AUD)	Sell		1,200	AUD		1/21/10		1,075,545		—		14,577
British Pound Sterling (GBP)	Sell		2,625	GBP		1/21/10		4,239,362		—		8,649
Euro (EUR)	Sell		22,010	EUR		5/10/10		31,542,442		875,503		35,376
Indian Rupee (INR)	Buy		764,000	INR		2/22/10		16,353,045		—		11,955
Japanese Yen (JPY)	Sell		4,737,000	JPY		1/21/10-5/10/10		50,872,062		2,534,788		—
Norwegian Krone (NOK)	Buy		49,700	NOK		2/10/10		8,568,339		—		11,188
Norwegian Krone (NOK)	Sell		83,590	NOK		2/10/10		14,411,016		252,495		2,904
Russian Ruble (RUR)	Buy		331,200	RUR		10/7/10		10,472,366		—		442,118
Swiss Franc (CHF)	Buy		2,640	CHF		2/10/10		2,552,713		59		—
Swiss Franc (CHF)	Sell		36,038	CHF		1/21/10-2/10/10		34,846,333		—		15,053

										3,662,845		541,820

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Foreign Currency Exchange Contracts: Continued


		Contract
Counterparty/		Amount			Expiration				Unrealized		Unrealized
Contract Description	Buy/Sell	(000’s)			Dates		Value		Appreciation		Depreciation

Goldman, Sachs & Co.:
Brazilian Real (BRR)	Buy		63,000	BRR		2/2/10	$	35,926,494	$	924,610	$	—
Brazilian Real (BRR)	Sell		8,680	BRR		2/2/10		4,949,872		—		114,757
Mexican Nuevo Peso (MXN)	Buy		224,250	MXN		1/19/10-1/29/10		17,101,397		—		319,972
South African Rand (ZAR)	Buy		231,040	ZAR		2/17/10		31,022,462		483,341		—
South Korean Won (KRW)	Buy		14,046,000	KRW		1/19/10		12,054,881		—		23,543

										1,407,951		458,272

Hong Kong & Shanghai Bank Corp.:
Israeli Shekel (ILS)	Buy		37,870	ILS		1/29/10		9,998,319		13,908		2,932
Mexican Nuevo Peso (MXN)	Sell		75,010	MXN		1/29/10		5,714,096		64,127		—
New Turkish Lira (TRY)	Buy		12,925	TRY		2/8/10		8,602,856		6,820		—
Polish Zloty (PLZ)	Buy		35,980	PLZ		1/7/10		12,559,621		—		515,628

										84,855		518,560

JP Morgan Chase:
Chilean Peso (CLP)	Sell		4,554,000	CLP		2/8/10		8,987,747		102,073		—
Euro (EUR)	Sell		23,740	EUR		1/13/10-11/8/10		34,028,251		56,986		859,105
Indian Rupee (INR)	Buy		1,030,000	INR		1/19/10		22,101,569		—		58,500
Indonesia Rupiah (IDR)	Buy		236,102,000	IDR		1/13/10-3/29/10		24,872,017		81,526		16,960
Japanese Yen (JPY)	Sell		724,000	JPY		4/5/10		7,777,765		74,048		—
Malaysian Ringgit (MYR)	Buy		7,010	MYR		5/10/10		2,036,596		—		13,651
Mexican Nuevo Peso (MXN)	Buy		70,490	MXN		1/19/10		5,376,168		—		135,932
Mexican Nuevo Peso (MXN)	Sell		51,180	MXN		1/29/10		3,898,779		42,237		—
Russian Ruble (RUR)	Buy		391,780	RUR		1/18/10		12,329,997		1,140		142,176
South Korean Won (KRW)	Buy		26,853,000	KRW		1/19/10		23,046,399		—		58,918

										358,010		1,285,242

RBS Greenwich Capital:
Polish Zloty (PLZ)	Buy		135,830	PLZ		1/7/10		47,414,489		583,619		697,460
South African Rand (ZAR)	Buy		47,270	ZAR		3/18/10		6,311,442		117,141		—
Swiss Franc (CHF)	Buy		27,730	CHF		2/10/10-5/10/10		26,814,962		12,367		341,145
Swiss Franc (CHF)	Sell		53,480	CHF		2/2/10-2/10/10		51,711,358		788,759		17,826

										1,501,886		1,056,431

Santander Investments:
Argentine Peso (ARP)	Buy		32,900	ARP		2/9/10		8,538,630		28,542		—
Colombian Peso (COP)	Buy		7,737,000	COP		1/19/10		3,778,751		—		130,799
Mexican Nuevo Peso (MXN)	Sell		198,910	MXN		2/8/10		15,135,279		—		372,226

										28,542		503,025

Standard New York Securities, Inc.
South African Rand (ZAR)	Buy		68,600	ZAR		2/8/10		9,226,217		12,227		—

State Street:
British Pound Sterling (GBP)	Buy		5,190	GBP		2/10/10		8,380,831		11,101		8,813
British Pound Sterling (GBP)	Sell		7,630	GBP		2/10/10		12,320,952		323,112		—
Canadian Dollar (CAD)	Buy		30,070	CAD		2/10/10		28,752,155		409,790		10
Canadian Dollar (CAD)	Sell		25,600	CAD		1/21/10-2/10/10		24,478,081		5		486,705
Euro (EUR)	Buy		3,410	EUR		2/10/10		4,888,155		—		231,607
Euro (EUR)	Sell		200,070	EUR		1/13/10-2/10/10		286,806,359		6,379,483		1,647,006

										7,123,491		2,374,141

Foreign Currency Exchange Contracts: Continued

Contract

Counterparty/

Amount

Expiration

Unrealized

Contract Description

Buy/Sell

(000’s)

Dates

Value

Appreciation

Depreciation

Westpac:

Australian Dollar (AUD)

Buy

87,750

AUD

2/10/10

78,491,663

22,855

1,382,454

British Pound Sterling (GBP)

Buy

2,560

GBP

3/18/10

4,132,941

48,410

—

New Zealand Dollar (NZD)

Buy

10,730

NZD

2/10/10

7,767,068

81,355

—

152,620

1,382,454

Total unrealized appreciation and depreciation

29,623,669

11,995,141

Futures Contracts as of December 31, 2009 are as follows:


								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)

CAC40 10 Euro Index	Sell		166		1/15/10	$	9,379,546	$	(176,656	)
DAX Index	Buy		34		3/19/10		7,261,744		93,395
DAX Index	Sell		44		3/19/10		9,397,552		(120,878	)
Euro-BOBL	Sell		450		3/8/10		74,611,867		727,938
Euro-Bundesobligation	Buy		120		3/8/10		20,847,800		(327,405	)
FTSE 100 Index	Sell		17		3/19/10		1,472,178		(29,081	)
Japan (Government of) Bonds, 10 yr.	Sell		21		3/11/10		31,499,436		(65,353	)
Japan (Government of) E-Mini Bonds, 10 yr.	Buy		50		3/10/10		7,501,476		20,710
NASDAQ 100 E-Mini Index	Buy		409		3/19/10		15,204,575		520,493
NIKKEI 225 Index	Buy		22		3/11/10		1,243,088		52,992
NIKKEI 225 Index	Sell		104		3/11/10		11,769,582		(505,173	)
Standard & Poor’s 500 E-Mini	Sell		982		3/19/10		54,535,370		(332,800	)
United Kingdom Long Gilt	Buy		11		3/29/10		2,033,451		(7,111	)
U.S. Long Bonds	Buy		2,002		3/22/10		230,980,750		(9,450,662	)
U.S. Long Bonds	Sell		614		3/22/10		70,840,250		1,379,260
U.S. Treasury Nts., 2 yr.	Buy		169		3/31/10		36,548,891		(93,587	)
U.S. Treasury Nts., 2 yr.	Sell		711		3/31/10		153,764,860		552,336
U.S. Treasury Nts., 5 yr.	Buy		1,491		3/31/10		170,544,774		(2,878,778	)
U.S. Treasury Nts., 5 yr.	Sell		1,205		3/31/10		137,831,290		2,329,188
U.S. Treasury Nts., 10 yr.	Buy		3,793		3/22/10		437,913,703		(10,497,683	)
U.S. Treasury Nts., 10 yr.	Sell		1,913		3/22/10		220,861,828		5,629,934

								$	(13,178,921	)

Written Option as of December 31, 2009 is as follows:

Number of

Exercise

Expiration

Premiums

Unrealized

Description

Type

Contracts

Price

Date

Received

Value

Appreciation

Mexican Nuevo Peso (MXN)

Put

108,600,000

3/18/10

106,195

(94,558

)

11,637

Credit Default Swap Contracts as of December 31, 2009 are as follows:


				Pay/					Upfront
	Buy/Sell	Notional		Receive					Payment					Unrealized
Reference Entity/	Credit	Amount		Fixed			Termination		Received/					Appreciation
Swap Counterparty	Protection	(000’s)		Rate			Date		(Paid)		Value			(Depreciation)

Baxter International, Inc.
UBS AG	Buy	$	7,068		1.00	%		12/20/14	$	198,497	$	(190,739	)	$	7,758

	Total		7,068							198,497		(190,739	)		7,758

Bolivarian Republic of Venezuela:
Barclays Bank plc	Sell		1,360		30.50			1/20/10		—		203,927			203,927
Morgan Stanley Capital Services, Inc.	Sell		1,360		30.00			1/20/10		—		200,453			200,453

	Total		2,720							—		404,380			404,380

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap Contracts: Continued


				Pay/					Upfront
	Buy/Sell	Notional		Receive					Payment					Unrealized
Reference Entity/	Credit	Amount		Fixed			Termination		Received/					Appreciation
Swap Counterparty	Protection	(000’s)		Rate			Date		(Paid)		Value			(Depreciation)

CBS Corp.
Credit Suisse International	Sell	$	7,068		1.00	%		12/20/14	$	120,990	$	(140,988	)	$	(19,998	)

	Total		7,068							120,990		(140,988	)		(19,998	)

CDX North America High Yield
Index, Series 12:
Credit Suisse International	Sell		5,922		5.00			6/20/14		704,471		23,921			728,392
JPMorgan Chase Bank NA, NY Branch	Sell		4,418		5.00			6/20/14		527,706		17,846			545,552

	Total		10,340							1,232,177		41,767			1,273,944

CDX North America High Yield
Index, Series 13:
Barclays Bank plc	Sell		15,993		5.00			12/20/14		1,517,897		(69,734	)		1,448,163
Goldman Sachs International	Sell		9,593		5.00			12/20/14		831,725		(41,827	)		789,898
Goldman Sachs International	Sell		15,993		5.00			12/20/14		1,507,800		(69,734	)		1,438,066
JPMorgan Chase Bank NA, NY Branch	Sell		4,950		5.00			12/20/14		259,875		(31,965	)		227,910

	Total		46,530							4,117,297		(213,260	)		3,904,037

Development Bank of Kazakhstan JSC
Credit Suisse International	Sell		7,500		3.75			2/20/13		—		22,463			22,463

	Total		7,500							—		22,463			22,463

Devon Energy
Credit Suisse International	Buy		7,068		1.00			12/20/14		135,511		(126,857	)		8,654

	Total		7,068							135,511		(126,857	)		8,654
Hartford Financial Services Group, Inc.
Credit Suisse International	Sell		6,726		1.00			12/20/14		444,443		(148,982	)		295,461

	Total		6,726							444,443		(148,982	)		295,461

HSBK Europe BV:
Morgan Stanley Capital Services, Inc.	Sell		600		4.78			3/20/13		—		(14,129	)		(14,129	)
Morgan Stanley Capital Services, Inc.	Sell		3,200		4.88			3/20/13		—		(66,495	)		(66,495	)

	Total		3,800							—		(80,624	)		(80,624	)

International Paper Co.
JPMorgan Chase Bank NA, NY Branch	Sell		7,068		1.00			12/20/14		67,738		(78,079	)		(10,341	)

	Total		7,068							67,738		(78,079	)		(10,341	)

Islamic Republic of Pakistan
Citibank NA, New York	Sell		1,570		5.10			3/20/13		—		(108,565	)		(108,565	)

	Total		1,570							—		(108,565	)		(108,565	)

Istanbul Bond Co. SA for Finansbank AS
Morgan Stanley Capital Services, Inc.	Sell		5,180		1.30			3/24/13		—		(478,804	)		(478,804	)

	Total		5,180							—		(478,804	)		(478,804	)

Lockheed Martin Corp.
Morgan Stanley Capital Services, Inc.	Buy		6,726		1.00			12/20/14		228,472		(213,882	)		14,590

	Total		6,726							228,472		(213,882	)		14,590

Credit Default Swap Contracts: Continued


				Pay/					Upfront
	Buy/Sell	Notional		Receive					Payment						Unrealized
Reference Entity/	Credit	Amount		Fixed			Termination		Received/						Appreciation
Swap Counterparty	Protection	(000’s)		Rate			Date		(Paid)			Value			(Depreciation)

Nordstrom, Inc.
Deutsche Bank AG	Sell	$	7,005		1.00	%		12/20/14	$	72,759		$	1,982		$	74,741

	Total		7,005							72,759			1,982			74,741

Republic of Hellenic:
Barclays Bank plc	Buy		2,120		1.00			12/20/14		(106,433	)		151,656			45,223

	Total		2,120							(106,433	)		151,656			45,223
Barclays Bank plc	Sell		16,630		1.00			12/20/14		1,087,616			(1,189,638	)		(102,022	)

	Total		16,630							1,087,616			(1,189,638	)		(102,022	)

Republic of Hungary
Credit Suisse International	Sell		4,600		2.70			9/20/10		—			43,231			43,231

	Total		4,600							—			43,231			43,231

Republic of Peru
Deutsche Bank AG	Buy		1,900		1.71			12/20/16		—			(50,774	)		(50,774	)

	Total		1,900							—			(50,774	)		(50,774	)

Republic of the Philippines:
Barclays Bank plc	Buy		3,270		1.76			12/20/14		—			4,153			4,153
JPMorgan Chase Bank NA, London Branch	Buy		4,900		1.74			12/20/14		—			10,594			10,594

	Total		8,170							—			14,747			14,747

The Kroger Co.
UBS AG	Buy		7,068		1.00			12/20/14		68,420			(47,554	)		20,866

	Total		7,068							68,420			(47,554	)		20,866

Troy Capital SA for Yasar Holdings SA
Morgan Stanley Capital Services, Inc.	Sell		1,340		8.75			6/20/10		—			(253,192	)		(253,192	)

	Total		1,340							—			(253,192	)		(253,192	)

United Mexican States
Goldman Sachs International	Buy		3,080		1.35			9/20/14		—			(2,546	)		(2,546	)

	Total		3,080							—			(2,546	)		(2,546	)

Wal-Mart Stores, Inc.
Morgan Stanley Capital Services, Inc.	Buy		6,726		1.00			12/20/14		157,160			(149,398	)		7,762

	Total		6,726							157,160			(149,398	)		7,762

XL Capital Ltd.
Deutsche Bank AG	Sell		6,420		1.00			12/20/14		177,397			(105,316	)		72,081

	Total		6,420							177,397			(105,316	)		72,081

				Grand Total Buys						681,627			(615,347	)		66,280
				Grand Total Sells						7,320,417			(2,283,625	)		5,036,792

				Total Credit Default Swaps					$	8,002,044		$	(2,898,972	)	$	5,103,072

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps:


Type of Reference	Total Maximum Potential
Asset on which the	Payments for Selling Credit				Reference Asset
Fund Sold Protection	Protection (Undiscounted)		Amount Recoverable*		Rating Range**

Non-Investment Grade Corporate Debt Indexes	$	56,870,000	$	—		B
Investment Grade Single Name Corporate Debt		34,287,000		—	BBB+ to BBB
Investment Grade Sovereign Debt		33,910,000		—	BBB+ to BBB-
Non-Investment Grade Sovereign Debt		9,430,000		—	BB- to B-

Total	$	134,497,000	$	—


*		The Fund has no amounts recoverable from related purchased protection. In addition, the Fund has no recourse provisions under the credit derivatives and holds no collateral which can offset or reduce potential payments under a triggering event.

**		The period end reference asset security ratings, as rated by any rating organization, are included in the equivalent Standard & Poor’s rating category. The reference asset rating represents the likelihood of a potential credit event on the reference asset which would result in a related payment by the Fund.

Interest Rate Swap Contracts as of December 31, 2009 are as follows:


	Notional
Interest Rate/	Amount			Paid by			Received by			Termination
Swap Counterparty	(000’s)			the Fund			the Fund			Date	Value

BZDI:
Banco Santander Central Hispano SA		4,420	BRR	BZDI				14.000	%	1/3/12	$	211,162
Goldman Sachs Group, Inc. (The)		43,800	BRR	BZDI				10.670		1/2/12		(462,781	)
Goldman Sachs Group, Inc. (The)		6,910	BRR	BZDI				12.260		1/2/15		(1,744	)
Goldman Sachs Group, Inc. (The)		3,160	BRR	BZDI				12.260		1/2/15		(830	)
Goldman Sachs Group, Inc. (The)		4,420	BRR	BZDI				14.050		1/2/12		211,119
Goldman Sachs Group, Inc. (The)		30,100	BRR	BZDI				12.800		1/2/17		38,036
Goldman Sachs Group, Inc. (The)		4,390	BRR	BZDI				12.870		1/2/14		64,166
Goldman Sachs Group, Inc. (The)		4,035	BRR	BZDI				14.160		1/2/17		98,643
Goldman Sachs Group, Inc. (The)		8,790	BRR	BZDI				12.920		1/2/14		140,372
Goldman Sachs Group, Inc. (The)		7,700	BRR	BZDI				14.300		1/2/17		203,928
Goldman Sachs Group, Inc. (The)		19,400	BRR	BZDI				12.870		1/2/14		217,657
Goldman Sachs International		2,640	BRR	BZDI				14.100		1/2/17		59,862
Goldman Sachs International		17,000	BRR	BZDI				13.900		1/2/17		385,913
JPMorgan Chase Bank NA		15,800	BRR	BZDI				13.900		1/2/17		286,868
Morgan Stanley		12,300	BRR	BZDI				12.810		1/2/17		50,337
Morgan Stanley		17,000	BRR	BZDI				12.050		1/2/12		190,798
Morgan Stanley		12,860	BRR	BZDI				15.000		1/2/17		340,513
Morgan Stanley		32,000	BRR	BZDI				13.900		1/2/17		581,128

Total		246,725	BRR									2,615,147

MXN TIIE BANXICO:
Banco Santander SA, Inc.		97,800	MXN	BANXICO				8.060		2/6/14		199,637
Banco Santander SA, Inc.		90,600	MXN	BANXICO				8.540		9/27/13		334,615
Citibank NA		175,200	MXN	BANXICO				8.920		11/24/11		608,084
Credit Suisse International		35,800	MXN	BANXICO				8.560		9/27/13		143,714
Goldman Sachs Group, Inc. (The)		54,800	MXN	BANXICO				8.540		9/27/13		202,394
Goldman Sachs Group, Inc. (The)		174,000	MXN	BANXICO				9.350		11/18/11		687,740
Goldman Sachs Group, Inc. (The)		211,300	MXN	BANXICO				9.080		11/22/11		760,176
Goldman Sachs Group, Inc. (The)		212,800	MXN	BANXICO				9.270		11/21/11		805,995
Goldman Sachs Group, Inc. (The)		563,000	MXN	BANXICO				10.000		11/11/11		953,984
JPMorgan Chase Bank NA		171,100	MXN	BANXICO				8.920		11/24/11		593,854
JPMorgan Chase Bank NA		560,000	MXN	BANXICO				10.000		11/11/11		948,901

Total		2,346,400	MXN									6,239,094

Six-Month AUD BBR BBSW
							Six-Month AUD
Westpac Banking Corp.		24,000	AUD		6.215	%	BBR BBSW			11/4/19		18,949

Interest Rate Swap Contracts: Continued


	Notional
Interest Rate/	Amount			Paid by		Received by			Termination
Swap Counterparty	(000’s)			the Fund		the Fund			Date		Value

Six-Month HUF BUBOR Reuters:
Barclays Bank plc		866,000	HUF	Six-Month HUF BUBOR Reuters			7.180	%		10/8/18	$	(35,800	)
Barclays Bank plc		1,433,000	HUF	Six-Month HUF BUBOR Reuters			7.820			9/19/13		227,841
Citibank NA		852,000	HUF	Six-Month HUF BUBOR Reuters			7.200			10/8/18		(17,756	)
Citibank NA		853,000	HUF	Six-Month HUF BUBOR Reuters			7.180			10/3/18		(17,631	)
Goldman Sachs Group, Inc. (The)		3,722,000	HUF	Six-Month HUF BUBOR Reuters			6.500			12/7/11		(71,359	)
JPMorgan Chase Bank NA		866,000	HUF	Six-Month HUF BUBOR Reuters			7.200			10/6/18		(18,047	)
JPMorgan Chase Bank NA		753,000	HUF	Six-Month HUF BUBOR Reuters			7.880			8/12/13		94,389
JPMorgan Chase Bank NA		666,000	HUF	Six-Month HUF BUBOR Reuters			7.890			9/12/13		111,736
JPMorgan Chase Bank NA		1,142,000	HUF	Six-Month HUF BUBOR Reuters			8.480			6/6/13		489,245
Morgan Stanley		3,092,000	HUF	Six-Month HUF BUBOR Reuters			6.570			12/1/11		(60,835	)


Total		14,245,000	HUF									701,783

Six-Month JPY BBA LIBOR:
Citibank NA		553,000	JPY		1.391	Six-Month JPY BBA LIBOR				10/6/19		(15,256	)
JPMorgan Chase Bank NA		796,100	JPY		1.484	Six-Month JPY BBA LIBOR				8/7/19		(125,511	)
JPMorgan Chase Bank NA		611,000	JPY		1.563	Six-Month JPY BBA LIBOR				11/9/19		(110,783	)


Total		1,960,100	JPY									(251,550	)

Six-Month PLZ WIBOR WIBO:
Goldman Sachs Group, Inc. (The)		13,700	PLZ	Six-Month PLZ WIBOR WIBO			5.320			10/3/18		(124,012	)
Goldman Sachs Group, Inc. (The)		21,640	PLZ	Six-Month PLZ WIBOR WIBO			5.330			10/6/18		(187,556	)
JPMorgan Chase Bank NA		1,400	PLZ	Six-Month PLZ WIBOR WIBO			5.600			9/10/19		(2,827	)
JPMorgan Chase Bank NA		8,475	PLZ	Six-Month PLZ WIBOR WIBO			5.650			9/11/19		(5,604	)
JPMorgan Chase Bank NA		12,700	PLZ	Six-Month PLZ WIBOR WIBO			5.690			9/14/19		4,617


Total		57,915	PLZ									(315,382	)

Three-Month ILS TELBOR01 Reuters:
Credit Suisse International		6,640	ILS	Three-Month ILS TELBOR01 Reuters			4.940			12/15/18		(59,282	)
Credit Suisse International		6,220	ILS	Three-Month ILS TELBOR01 Reuters			4.650			12/22/18		(87,416	)
UBS AG		16,930	ILS	Three-Month ILS TELBOR01 Reuters			5.036			12/12/18		(82,369	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Interest Rate Swap Contracts: Continued

Notional

Interest Rate/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

Date

Value

Three-Month ILS TELBOR01 Reuters: Continued

Three-Month ILS

UBS AG

17,164

ILS

TELBOR01 Reuters

4.780

1/7/19

17,566

Three-Month ILS

UBS AG

15,550

ILS

TELBOR01 Reuters

5.850

9/4/18

211,859

Total

62,504

ILS

358

Three-Month SEK STIBOR SIDE

Three-Month SEK

Barclays Bank plc

153,255

SEK

STIBOR SIDE

3.470

12/2/19

(160,744

)

Three-Month USD BBA LIBOR

Three-Month

Goldman Sachs Group, Inc. (The)

21,600

USD BBA LIBOR

3.600

11/3/19

(514,000

)

Three-Month ZAR JIBAR SAFEX:

Three-Month ZAR

Barclays Bank plc

94,370

ZAR

JIBAR SAFEX

7.450

9/22/11

1,189

Three-Month ZAR

Goldman Sachs Group, Inc. (The)

63,820

ZAR

JIBAR SAFEX

7.500

9/23/11

813

Total

158,190

ZAR

2,002

Total Interest Rate Swaps

8,335,657

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:


AUD		Australian Dollar
BRR		Brazilian Real
HUF		Hungarian Forint
ILS		Israeli Shekel
JPY		Japanese Yen
MXN		Mexican Nuevo Peso
PLZ		Polish Zloty
SEK		Swedish Krona
ZAR		South African Rand

Abbreviations/Definitions are as follows:


BANIXCO		Banco de Mexico
BBA LIBOR		British Bankers’ Association London-Interbank Offered Rate
BBR BBSW		Bank Bill Swap Reference Rate (Australian Financial Market)
BUBOR		Budapest Interbank Offered Rate
BZDI		Brazil Interbank Deposit Rate
JIBAR		South Africa Johannesburg Interbank Agreed Rate
SAFEX		South African Futures Exchange
STIBOR SIDE		Stockholm Interbank Offered Rate
TIIE		Interbank Equilibrium Interest Rate
TELBOR01		Tel Aviv Interbank Offered Rate 1 Month
WIBOR WIBO		Poland Warsaw Interbank Offer Bid Rate

Total Return Swap Contracts as of December 31, 2009 are as follows:

Notional

Reference Entity/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

Date

Value

AMEX Cyclical/Transportation Select Index

One-Month BBA

LIBOR plus 10 basis

points and if negative,

the absolute value of the

Total Return of the AMEX

If positive, the Total Return of the AMEX

Cyclical/Transportation

Morgan Stanley

3,710

Select Index

12/9/10

99,929

AMEX Health Care Select Index

One-Month LIBOR plus 10

basis points and if negative,

the absolute value of

If positive, the

the Total Return of the

Total Return of

AMEX Health Care

the AMEX Health

Deutsche Bank AG

3,669

Select Index

Care Select Index

10/8/10

18,407

AMEX Tech Select Index

One-Month BBA

LIBOR plus 10 basis

points and if negative,

the absolute value of the

Total Return of the AMEX

If positive, the Total Return of the AMEX

Citibank NA

3,670

Tech Select Index

12/8/10

127,079

Custom basket of securities:

One-Month JPY BBA

LIBOR plus 40 basis

points and if negative,

the absolute value of the

Total Return of a custom

If positive, the Total Return of a custom

Citibank NA, New York

1,048,490

JPY

basket of securities

4/14/10

420,552

One-Month EUR BBA

LIBOR plus 25 basis

points and if negative,

the absolute value of the

Total Return of a custom

If positive, the Total Return of a custom

Morgan Stanley

5,896

EUR

basket of securities

3/5/10

324,603

One-Month EUR BBA

LIBOR plus 30 basis

points and if negative,

the absolute value of the

Total Return of a custom

If positive, the Total Return of a custom

Morgan Stanley International

5,894

EUR

basket of securities

10/8/10

90,909

One-Month BBA

LIBOR plus 25 basis

points and if negative,

the absolute value of the

Total Return of a custom

If positive, the Total Return of a custom

UBS AG

44,215

basket of securities

12/6/10

680,593

Reference Entity Total

1,516,657

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Total Return Swap Contracts: Continued

Notional

Reference Entity/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

Date

Value

MSCI Daily TR EAFE Standard Gross USD Index:

One-Month LIBOR

plus 15 basis points

and if negative the

absolute value of the

If positive, the Total

Total Return of the

Return of the MSCI

MSCI Daily EAFE

Daily EAFE Standard

Standard Gross

Citibank NA

8,285

Gross USD Index

USD Index

10/7/10

(122,756

)

One-Month BBA

LIBOR minus 5 basis

points and if negative

the absolute value of

the Total Return of

If positive, the Total Return

the MSCI Daily EAFE

of the MSCI Daily EAFE

Standard Gross

Goldman Sachs Group, Inc. (The)

6,466

Standard Gross USD Index

USD Index

10/7/10

100,007

One-Month BBA

LIBOR minus 35 basis

points and if negative,

the absolute value of

the Total Return of the

If positive, the Total Return

MSCI Daily EAFE

of the MSCI Daily EAFE

Standard Gross

Morgan Stanley

4,970

Standard Gross USD Index

USD Index

10/7/10

52,249

One-Month LIBOR

minus 10 basis points

and if negative, the

absolute value of the

Total Return of the

If positive, the Total Return

MSCI Daily EAFE

of the MSCI Daily EAFE

Standard Gross

UBS AG

6,463

Standard Gross USD Index

USD Index

10/11/10

81,262

Reference Entity Total

110,762

MSCI Daily TR Net Australia USD Index

One-Month BBA

LIBOR plus 20 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of the MSCI

Return of the MSCI

Daily Net Australia

Goldman Sachs Group, Inc. (The)

4,012

USD Index

10/11/10

(56,265

)

MSCI Daily TR Net Brazil USD Index

One-Month BBA LIBOR

plus 25 basis points

and if negative, the absolute

If positive, the Total

value of the Total Return

Return of the MSCI

of the MSCI Daily Net

Daily Net Brazil

Goldman Sachs Group, Inc. (The)

3,909

Brazil USD Index

USD Index

10/6/10

(77,512

)

Total Return Swap Contracts: Continued

Notional

Reference Entity/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

Date

Value

MSCI Daily TR Net Emerging Markets South Africa USD Index

One-Month LIBOR

plus 40 basis points

and if negative the

absolute value of the

If positive, the Total

Total Return of the

Return of the MSCI

MSCI Daily Net

Daily Net Emerging

Emerging Markets South

Markets South Africa

Deutsche Bank AG

4,536

Africa USD Index

USD Index

12/6/10

54,422

MSCI Daily TR Net Emerging Markets USD Index

One-Month BBA LIBOR

plus 100 basis points

and if negative, the absolute

If positive, the Total

value of the Total Return of

Return of the MSCI

the MSCI Daily Net Emerging

Daily Net Emerging

UBS AG

8,106

Markets USD Index

5/12/10

125,961

MSCI Daily TR Net Singapore USD Index

One-Month BBA LIBOR

plus 10 basis points and

if negative, the absolute value

If positive, the Total

of the Total Return of the

Return of the MSCI

MSCI Daily Net Singapore

Daily Net Singapore

Citibank NA

4,341

USD Index

11/3/10

78,173

MSCI Daily TR Net Spain USD Index

One-Month LIBOR

minus 25 basis points

and if negative, the

If positive, the Total

absolute value of the

Return of the MSCI

Total Return of the MSCI

Daily Net Spain

Morgan Stanley

4,116

Daily Net Spain USD Index

USD Index

10/6/10

(179,709

)

S&P SmallCap 600 Index

One-Month BBA

LIBOR minus 50 basis

If positive, the Total

points and if negative,

Return of the S&P

the Total Return of the

Goldman Sachs Group, Inc. (The)

10,856

SmallCap 600 Index

S&P SmallCap 600 Index

11/5/10

(651,684

)

Total of Total Return Swaps

1,166,220

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:


EUR		Euro
JPY		Japanese Yen

Abbreviations/Definitions are as follows:


BBA LIBOR		British Bankers’ Association London-Interbank Offered Rate
LIBOR		London-Interbank Offered Rate
MSCI		Morgan Stanley Capital International
MSCI EAFE		Morgan Stanley Capital International Europe, Australia and Far East. A stock market index of foreign stocks from the perspective of a North American investor
S&P		Standard & Poor’s
TR		Total Return

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Currency Swaps as of December 31, 2009 are as follows:

Notional

Reference Entity/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

Date

Value

COP TRM (COP02)

Deutsche Bank AG

3,360,000

COP

6.44% of the USD

equivalent notional at

12.51% of the

inception of trade

COP notional

3/18/19

129

Each of JSC “Rushydro” (Open Joint Stock Company, Federal Hydrogeneration Company) and OJSC Saratovskaya HPP and any Successor(s) to these Reference Entities

7.75% from debt

obligations of JSC

Morgan Stanley Capital

Three-Month USD

Rushydro and OJSC

Services, Inc.

271,430

RUR

BBA LIBOR

Saratovskaya HPP

12/26/13

(2,030,008

)

Total Currency Swaps

(2,029,879

)

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:


COP		Colombian Peso
RUR		Russian Ruble

Abbreviations are as follows:


BBA LIBOR		British Bankers’ Association London-Interbank Offered Rate
TRM		Tasa Representativa del Mercado

Swap Summary as of December 31, 2009 is as follows:


		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)			Value

Banco Santander Central Hispano SA	Interest Rate		4,420	BRR	$	211,162
Banco Santander SA, Inc.	Interest Rate		188,400	MXN		534,252
Barclays Bank plc:
	Credit Default Buy Protection		5,390			155,809
	Credit Default Sell Protection		33,983			(1,055,445	)
	Interest Rate		2,299,000	HUF		192,041
	Interest Rate		153,255	SEK		(160,744	)
	Interest Rate		94,370	ZAR		1,189

						(867,150	)
Citibank NA:
	Interest Rate		1,705,000	HUF		(35,387	)
	Interest Rate		553,000	JPY		(15,256	)
	Interest Rate		175,200	MXN		608,084
	Total Return		16,296			82,496

						639,937
Citibank NA, New York:
	Credit Default Sell Protection		1,570			(108,565	)
	Total Return		1,048,490	JPY		420,552

						311,987
Credit Suisse International:
	Credit Default Buy Protection		7,068			(126,857	)
	Credit Default Sell Protection		31,816			(200,355	)
	Interest Rate		12,860	ILS		(146,698	)
	Interest Rate		35,800	MXN		143,714

						(330,196	)
Deutsche Bank AG:
	Credit Default Buy Protection		1,900			(50,774	)
	Credit Default Sell Protection		13,425			(103,334	)
	Currency		3,360,000	COP		129
	Total Return		8,205			72,829

						(81,150	)

Swap Summary: Continued


		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)				Value

Goldman Sachs Group, Inc. (The):
	Interest Rate		132,705	BRR	$	508,566
	Interest Rate		3,722,000	HUF		(71,359	)
	Interest Rate		1,215,900	MXN		3,410,289
	Interest Rate		35,340	PLZ		(311,568	)
	Interest Rate		21,600			(514,000	)
	Interest Rate		63,820	ZAR		813
	Total Return		25,243			(685,454	)

						2,337,287
Goldman Sachs International:
	Credit Default Buy Protection		3,080			(2,546	)
	Credit Default Sell Protection		25,586			(111,561	)
	Interest Rate		19,640	BRR		445,775

						331,668
JPMorgan Chase Bank NA:
	Interest Rate		15,800	BRR		286,868
	Interest Rate		3,427,000	HUF		677,323
	Interest Rate		1,407,100	JPY		(236,294	)
	Interest Rate		731,100	MXN		1,542,755
	Interest Rate		22,575	PLZ		(3,814	)

						2,266,838
JPMorgan Chase Bank NA, London Branch	Credit Default Buy Protection		4,900			10,594
JPMorgan Chase Bank NA, NY Branch	Credit Default Sell Protection		16,436			(92,198	)
Morgan Stanley:
	Interest Rate		74,160	BRR		1,162,776
	Interest Rate		3,092,000	HUF		(60,835	)
	Total Return		5,896	EUR		324,603
	Total Return		12,796			(27,531	)

						1,399,013
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection		13,452			(363,280	)
	Credit Default Sell Protection		11,680			(612,167	)
	Currency		271,430	RUR		(2,030,008	)

						(3,005,455	)
Morgan Stanley International	Total Return		5,894	EUR		90,909
UBS AG:
	Credit Default Buy Protection		14,136			(238,293	)
	Interest Rate		49,644	ILS		147,056
	Total Return		58,784			887,816

						796,579

Westpac Banking Corp.	Interest Rate		24,000	AUD		18,949

		Total Swaps			$	4,573,026

Notional amount is reported in U.S.Dollars (USD), except for those denoted in the following currencies:


AUD		Australian Dollar
BRR		Brazilian Real
COP		Colombian Peso
EUR		Euro
HUF		Hungarian Forint
ILS		Israeli Shekel
JPY		Japanese Yen
MXN		Mexican Nuevo Peso
PLZ		Polish Zloty
RUR		Russian Ruble
SEK		Swedish Krona
ZAR		South African Rand

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $4,031,796,593)	$	4,025,494,042
Affiliated companies (cost $469,478,784)		476,021,792

		4,501,515,834
Cash—foreign currencies (cost $843,367)		824,284
Unrealized appreciation on foreign currency exchange contracts		29,623,669
Appreciated swaps, at value (upfront payments received $1,198,503)		13,432,301
Receivables and other assets:
Interest, dividends and principal paydowns		65,915,991
Investments sold		6,764,602
Shares of beneficial interest sold		6,435,798
Closed foreign currency contracts		5,637,045
Futures margins		2,104,699
Other		36,664

Total assets		4,632,290,887

Liabilities
Appreciated options written, at value (premiums received $106,195)		94,558
Return of collateral for securities loaned		37,599,500
Unrealized depreciation on foreign currency exchange contracts		11,995,141
Appreciated swaps, at value (upfront payments received $5,527,197)		1,195,988
Depreciated swaps, at value (upfront payments received $1,276,344)		7,663,287
Unrealized depreciation on unfunded purchase agreements		354,545
Payables and other liabilities:
Investments purchased (including $128,956,625 purchased on a when-issued or delayed delivery basis)		134,769,516
Closed foreign currency contracts		15,973,278
Futures margins		3,112,305
Distribution and service plan fees		2,258,260
Shares of beneficial interest redeemed		1,697,795
Transfer and shareholder servicing agent fees		373,226
Shareholder communications		254,579
Trustees’ compensation		24,507
Other		426,376

Total liabilities		217,792,861

Net Assets	$	4,414,498,026


Composition of Net Assets
Par value of shares of beneficial interest	$	822,436
Additional paid-in capital		4,323,808,202
Accumulated net investment income		241,824,892
Accumulated net realized loss on investments and foreign currency transactions		(168,796,267	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		16,838,763


Net Assets	$	4,414,498,026


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $757,771,738 and 142,961,655 shares of beneficial interest outstanding)	$	5.30
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $3,656,726,288 and 679,474,371 shares of beneficial interest outstanding)	$	5.38

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Allocation of Income and Expenses from master funds¹
Net investment income allocated from Oppenheimer Master Event-Linked Bond Fund:
Dividends	$	2,405
Interest		1,283,652
Expenses²		(81,775	)

Net investment income from Oppenheimer Master Event-Linked Bond Fund, LLC		1,204,282
Net investment income allocated from Oppenheimer Master Loan Fund, LLC:
Dividends		115,935
Interest		20,291,444
Expenses³		(820,154	)

Net investment income from Oppenheimer Master Loan Fund, LLC		19,587,225

Investment Income
Interest (net of foreign withholding taxes of $100,137)		232,896,664
Fee income		4,161,424
Dividends:
Unaffiliated companies		13,185
Affiliated companies		2,500,925
Income from investment of securities lending cash collateral, net—affiliated companies		501,092

Total investment income		240,073,290

Expenses
Management fees		20,955,987
Distribution and service plan fees—Service shares		7,869,295
Transfer and shareholder servicing agent fees:
Non-Service shares		479,075
Service shares		2,237,664
Shareholder communications:
Non-Service shares		83,089
Service shares		386,747
Custodian fees and expenses		316,628
Trustees’ compensation		70,337
Other		241,596

Total expenses		32,640,418
Less waivers and reimbursements of expenses		(1,095,780	)

Net expenses		31,544,638

Net Investment Income		229,320,159


1.		The Fund invests in certain affiliated mutual funds that expect to be treated as partnerships for tax purposes. See Note 1 of accompanying Notes.

2.		Net of expense waivers and/or reimbursements of $732.

3.		Net of expense waivers and/or reimbursements of $28,146.

STATEMENT OF OPERATIONS Continued


Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies (including premiums on options exercised)	$	(69,026,713	)
Closing and expiration of option contracts written		1,114,876
Closing and expiration of futures contracts		(14,871,760	)
Foreign currency transactions		(4,556,821	)
Short positions		(45,916	)
Swap contracts		(70,005,356	)
Allocated from Oppenheimer Master Event-Linked Bond Fund, LLC		(280,967	)
Allocated from Oppenheimer Master Loan Fund, LLC		(1,762,842	)

Net realized loss		(159,435,499	)
Net change in unrealized appreciation (depreciation) on:
Investments		448,766,507
Translation of assets and liabilities denominated in foreign currencies		81,034,364
Futures contracts		(19,040,820	)
Option contracts written		(1,086	)
Short positions		27,270
Swap contracts		29,708,154
Unfunded purchase agreements		(2,073,502	)
Allocated from Oppenheimer Master Event-Linked Bond Fund, LLC		(341,896	)
Allocated from Oppenheimer Master Loan Fund, LLC		54,116,973

Net change in unrealized appreciation		592,195,964

Net Increase in Net Assets Resulting from Operations	$	662,080,624

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008


Operations
Net investment income	$	229,320,159		$	218,155,192
Net realized loss		(159,435,499	)		(197,517,639	)
Net change in unrealized appreciation (depreciation)		592,195,964			(643,679,330	)

Net increase (decrease) in net assets resulting from operations		662,080,624			(623,041,777	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(3,468,223	)		(36,989,595	)
Service shares		(7,263,543	)		(140,242,199	)

		(10,731,766	)		(177,231,794	)
Distributions from net realized gain:
Non-Service shares		(522,726	)		(8,547,484	)
Service shares		(2,276,448	)		(33,595,865	)

		(2,799,174	)		(42,143,349	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(5,135,048	)		73,339,965
Service shares		312,198,649			617,334,287

		307,063,601			690,674,252

Net Assets
Total increase (decrease)		955,613,285			(151,742,668	)
Beginning of period		3,458,884,741			3,610,627,409

End of period (including accumulated net investment income of $241,824,892 and $54,184,535, respectively)	$	4,414,498,026		$	3,458,884,741

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	4.49		$	5.56		$	5.26		$	5.11		$	5.21

Income (loss) from investment operations:
Net investment income¹		.30			.30			.28			.26			.25
Net realized and unrealized gain (loss)		.53			(1.04	)		.21			.11			(.12	)

Total from investment operations		.83			(.74	)		.49			.37			.13

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.02	)		(.27	)		(.19	)		(.22	)		(.23	)
Distributions from net realized gain		—²			(.06	)		—			—			—

Total dividends and distributions to shareholders		(.02	)		(.33	)		(.19	)		(.22	)		(.23	)

Net asset value, end of period	$	5.30		$	4.49		$	5.56		$	5.26		$	5.11


Total Return, at Net Asset Value³		18.83	%		(14.21	)%		9.69	%		7.49	%		2.67	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	757,772		$	648,570		$	734,611		$	606,632		$	538,141

Average net assets (in thousands)	$	681,926		$	753,062		$	664,668		$	564,248		$	550,201

Ratios to average net assets:^4,5
Net investment income		6.20	%		5.78	%		5.34	%		5.05	%		4.91	%
Total expenses		0.67	%⁶		0.59	%⁶		0.59	%⁶		0.64	%⁶		0.71	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.64	%		0.57	%		0.57	%		0.63	%		0.71	%

Portfolio turnover rate⁷		110	%		86	%		76	%		93	%		98	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Less than $0.005 per share.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Includes the Fund’s share of the allocated expenses and/or net investment income from the master funds.

6.		Total expenses including indirect expenses from affiliated funds, excluding investments in master funds, were as follows:


Year Ended December 31, 2009	0.68	%
Year Ended December 31, 2008	0.60	%
Year Ended December 31, 2007	0.61	%
Year Ended December 31, 2006	0.64	%

The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2009	$	1,909,574,925	$	1,836,038,328
Year Ended December 31, 2008	$	634,319,548	$	594,845,589
Year Ended December 31, 2007	$	1,061,009,472	$	1,120,098,096
Year Ended December 31, 2006	$	742,785,501	$	749,719,239
Year Ended December 31, 2005	$	890,029,144	$	873,786,459

See accompanying Notes to Financial Statements.


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	4.56		$	5.65		$	5.34		$	5.19		$	5.29

Income (loss) from investment operations:
Net investment income¹		.29			.29			.28			.25			.21
Net realized and unrealized gain (loss)		.54			(1.06	)		.22			.11			(.08	)

Total from investment operations		.83			(.77	)		.50			.36			.13

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.01	)		(.26	)		(.19	)		(.21	)		(.23	)
Distributions from net realized gain		—²			(.06	)		—			—			—

Total dividends and distributions to shareholders		(.01	)		(.32	)		(.19	)		(.21	)		(.23	)

Net asset value, end of period	$	5.38		$	4.56		$	5.65		$	5.34		$	5.19


Total Return, at Net Asset Value³		18.41	%		(14.49	)%		9.55	%		7.23	%		2.48	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	3,656,726		$	2,810,315		$	2,876,016		$	1,396,188		$	658,107

Average net assets (in thousands)	$	3,143,836		$	3,152,967		$	2,075,028		$	1,016,582		$	408,515

Ratios to average net assets:^4,5
Net investment income		5.95	%		5.54	%		5.08	%		4.83	%		4.20	%
Total expenses		0.92	%⁶		0.84	%⁶		0.84	%⁶		0.89	%⁶		0.96	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.89	%		0.82	%		0.82	%		0.88	%		0.96	%

Portfolio turnover rate⁷		110	%		86	%		76	%		93	%		98	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Less than $0.005 per share.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Includes the Fund’s share of the allocated expenses and/or net investment income from the master funds.

6.		Total expenses including indirect expenses from affiliated funds, excluding investments in master funds, were as follows:


Year Ended December 31, 2009	0.93	%
Year Ended December 31, 2008	0.85	%
Year Ended December 31, 2007	0.86	%
Year Ended December 31, 2006	0.89	%

The portfolio turnover rate excludes purchases and sales of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2009	$	1,909,574,925	$	1,836,038,328
Year Ended December 31, 2008	$	634,319,548	$	594,845,589
Year Ended December 31, 2007	$	1,061,009,472	$	1,120,098,096
Year Ended December 31, 2006	$	742,785,501	$	749,719,239
Year Ended December 31, 2005	$	890,029,144	$	873,786,459

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Strategic Bond Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek a high level of current income principally derived from interest on debt securities. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

There have been no significant changes to the fair valuation methodologies during the period.

Structured Securities. The Fund invests in structured securities whose market values, interest rates and/or redemption prices are linked to the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured securities are often leveraged, increasing the volatility of each note’s market value relative to the change in the underlying linked financial element or event. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying Statement of Operations. The Fund records a realized gain or loss when a structured security is sold or matures.

Event-Linked Bonds. The Fund may invest in “event-linked” bonds. Event-linked bonds, which are sometimes referred to as “catastrophe” bonds, are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific trigger event, such as a hurricane, earthquake, or other occurrence that leads to physical or economic loss. If the trigger event occurs prior to maturity, the Fund may lose all or a portion of its principal in addition to interest otherwise due from the security. Event-linked bonds may expose the Fund to certain other risks, including issuer default, adverse regulatory or jurisdictional interpretations, liquidity risk and adverse tax consequences. The Fund records the net change in market value of event-linked bonds on the Statement of Operations as a change in unrealized appreciation or depreciation on investments. The Fund records a realized gain or loss on the Statement of Operations upon the sale or maturity of such securities.

As of December 31, 2009, the Fund had purchased securities issued on a when-issued or delayed delivery basis and sold securities issued on a delayed delivery basis as follows:


	When-Issued or Delayed
	Delivery Basis Transactions

Purchased securities	$	128,956,625

Securities Sold Short. The Fund may short sell when-issued securities for future settlement. The value of the open short position is recorded as a liability, and the Fund records an unrealized gain or loss for the change in value of the open short position. The Fund records a realized gain or loss when the short position is closed out.

As of December 31, 2009, the Fund held no short sales.

Credit Risk. The Fund invests in high-yield, non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. Information concerning securities in default as of December 31, 2009 is as follows:


Cost	$	37,402,347
Market Value	$	5,789,978
Market Value as a % of Net Assets		0.13	%

As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investment in Oppenheimer Master Funds. The Fund is permitted to invest in entities sponsored and/or advised by the Manager or an affiliate. Certain of these entities in which the Fund invests are mutual funds registered under the Investment Company Act of 1940 that expect to be treated as partnerships for tax purposes, specifically Oppenheimer Master Loan Fund, LLC and Oppenheimer Master Event-Linked Bond Fund, LLC (the “master funds”). Each master fund has its own investment risks, and those risks can affect the value of the Fund’s investments and therefore the value of the Fund’s shares. To the extent that the Fund invests more of its assets in one master fund than in another, the Fund will have greater exposure to the risks of that master fund.

The investment objective of Oppenheimer Master Loan Fund, LLC is to seek as high a level of current income and preservation of capital as is consistent with investing primarily in loans and other debt securities. The investment objective of Oppenheimer Master Event-Linked Bond Fund, LLC is to seek a high level of current income principally derived from interest on debt securities. The Fund’s investments in the master funds are included in the Statement of Investments. The Fund recognizes income and gain/(loss) on its investments in each master fund according to its allocated pro-rata share, based on its relative proportion of total outstanding master fund shares held, of the total net income earned and the net gain/(loss) realized on investments sold by the master funds. As a shareholder, the Fund is subject to its proportional share of the master funds’ expenses, including their management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in the master funds.

Net Unrealized

Appreciation

Based on Cost of

Securities and

Undistributed

Accumulated

Other Investments

Net Investment

Long-Term

Loss

for Federal Income

Income

Gain

Carryforward^1,2,3,4,5,6

Tax Purposes

258,724,787

—

177,955,454

12,542,065


1.		As of December 31, 2009, the Fund had $164,592,749 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforward were as follows:


Expiring

2017	$	164,592,749

2.		As of December 31, 2009, the Fund had $12,994,641 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2018.

3.		The Fund had $26,214 of post-October passive foreign investment company losses which were deferred.

4.		The Fund had $341,850 of straddle losses which were deferred.

5.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

6.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


Reduction		Reduction
to Accumulated		to Accumulated Net
Net Investment		Realized Loss
Income		on Investments

$	30,948,036	$	30,948,036

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	13,530,940	$	184,452,300
Long-term capital gain		—		34,922,843

Total	$	13,530,940	$	219,375,143


Federal tax cost of securities	$	4,496,787,657
Federal tax cost of other investments		(235,406,728	)

Total federal tax cost	$	4,261,380,929


Gross unrealized appreciation	$	244,278,300
Gross unrealized depreciation		(231,736,235	)

Net unrealized appreciation	$	12,542,065

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		24,677,592		$	117,209,141			44,736,337		$	230,966,547
Dividends and/or distributions reinvested		952,494			3,990,949			8,575,721			45,537,079
Redeemed		(27,020,460	)		(126,335,138	)		(40,970,673	)		(203,163,661	)

Net increase (decrease)		(1,390,374	)	$	(5,135,048	)		12,341,385		$	73,339,965


Service Shares
Sold		88,989,960		$	433,996,423			147,318,126		$	805,889,322
Dividends and/or distributions reinvested		2,234,190			9,539,991			32,192,234			173,838,064
Redeemed		(28,146,787	)		(131,337,765	)		(72,462,189	)		(362,393,099	)

Net increase		63,077,363		$	312,198,649			107,048,171		$	617,334,287

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, LAF and the master funds, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	2,371,879,746	$	1,871,718,033
U.S. government and government agency obligations		495,036,638		829,374,901
To Be Announced (TBA) mortgage-related securities		1,909,574,925		1,836,038,328

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $200 million	0.60
Over $1 billion	0.50

Waivers and Reimbursements of Expenses. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as a percentage of daily net assets will not exceed the annual rate of 0.75% for Non-Service shares and 1.00% for Service shares. This voluntary undertaking may be amended or withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investments in IMMF and the master funds. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $1,095,780 for management fees.

5. Risk Exposures and the Use of Derivative Instruments

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. As of December 31, 2009, the maximum amount of loss that the Fund would incur if the counterparties to its derivative transactions failed to perform would be $43,115,334, which represents gross payments to be received by the Fund on these derivative contracts were they to be unwound as of period end. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. The amount of loss that the Fund would incur taking into account these master netting arrangements would be $26,256,000 as of December 31, 2009. In addition, the Fund may require that certain counterparties post cash and/or securities in collaterial accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

As of December 31, 2009 the Fund has required certain counterparties to post collateral of $1,069,108. Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $4,089,640 for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counterparties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contracts, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:

Asset Derivatives

Liability Derivatives

Statement

Derivatives Not

of Assets

Accounted for as

and Liabilities

Hedging Instruments

Location

Value

Location

Value

Credit contracts

Appreciated swaps, at value

680,226

Appreciated swaps, at value

1,195,988

Credit contracts

Depreciated swaps, at value

2,383,210

Equity contracts

Appreciated swaps, at value

2,254,146

Depreciated swaps, at value

1,087,926

Foreign exchange contracts

Appreciated swaps, at value

129

Depreciated swaps, at value

2,030,008

Interest rate contracts

Appreciated swaps, at value

10,497,800

Depreciated swaps, at value

2,162,143

Equity contracts

Futures margins

559,740

Futures margins

165,504

Interest rate contracts

Futures margins

1,544,959

Futures margins

2,946,801

Foreign exchange contracts

Investments, at value

59,364

Foreign exchange contracts

Unrealized appreciation on foreign currency exchange contracts

29,623,669

Unrealized depreciation on foreign currency exchange contracts

11,995,141

Foreign exchange contracts

Appreciated written options, at value

94,558

Total

45,220,033

24,061,279


*		Includes only the current day’s variation margin. Prior variation margin movements have been reflected in cash on the Statement of Assets and Liabilities upon receipt or payment.

**		Amounts relate to purchased options.

The effect of derivative instruments on the Statement of Operations is as follows:


Amount of Realized Gain or Loss Recognized on Derivatives
	Investments from
	unaffiliated		Closing and
	companies		expiration		Closing and
Derivatives Not	(including		of option		expiration of			Foreign
Accounted for as	premiums on		contracts		futures			currency
Hedging Instruments	options exercised)*		written		contracts			transactions		Swap contracts			Total

Credit contracts	$	—	$	—	$	—		$	—	$	(94,976,540	)	$	(94,976,540	)
Equity contracts		—		—		(15,786,985	)		—		14,499,865			(1,287,120	)
Foreign exchange contracts		173,252		1,114,876		—			2,370,480		2,008,990			5,667,598
Interest rate contracts		474,893		—		915,225			—		8,476,466			9,866,584
Volatility contracts		—		—		—			—		(14,137	)		(14,137	)

Total	$	648,145	$	1,114,876	$	(14,871,760	)	$	2,370,480	$	(70,005,356	)	$	(80,743,615	)


*		Includes purchased option contracts, purchased swaption contracts and written option contracts exercised, if any.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued


Amount of Change in Unrealized Gain or Loss Recognized on Derivatives
										Translation of
										assets and
										liabilities
Derivatives Not				Option						denominated
Accounted for as				contracts			Futures			in foreign
Hedging Instruments	Investments*			written			contracts			currencies		Swap contracts			Total

Credit contracts	$	—		$	—		$	—		$	—	$	38,781,860		$	38,781,860
Equity contracts		—			—			907,439			—		(7,042,355	)		(6,134,916	)
Foreign exchange contracts		(7,807,821	)		(1,086	)		—			24,620,885		1,929,726			18,741,704
Interest rate contracts		—			—			(19,948,259	)		—		(3,961,077	)		(23,909,336	)

Total	$	(7,807,821	)	$	(1,086	)	$	(19,040,820	)	$	24,620,885	$	29,708,154		$	27,479,312


*		Includes purchased option contracts and purchased swaption contracts, if any.

Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

The Fund has entered into forward foreign currency exchange contracts with the obligation to purchase specified foreign currencies in the future at a currently negotiated forward rate in order to take a positive investment perspective on the related currency. These forward foreign currency exchange contracts seek to increase exposure to foreign exchange rate risk.

The Fund has entered into forward foreign currency exchange contracts with the obligation to purchase specified foreign currencies in the future at a currently negotiated forward rate in order to decrease exposure to foreign exchange rate risk associated with foreign currency denominated securities held by the portfolio.

The Fund has entered into forward foreign currency exchange contracts with the obligation to sell specified foreign currencies in the future at a currently negotiated forward rate in order to take a negative investment perspective on the related currency. These forward foreign currency exchange contracts seek to increase exposure to foreign exchange rate risk.

The Fund has entered into forward foreign currency exchange contracts with the obligation to sell specified foreign currencies in the future at a currently negotiated forward rate in order to decrease exposure to foreign exchange rate risk associated with foreign currency denominated securities held by the portfolio.

Futures Contracts

The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

The Fund has purchased futures contracts on various equity indexes to increase exposure to equity risk.

The Fund has sold futures contracts on various equity indexes to decrease exposure to equity risk.

Option Activity

The Fund may buy and sell put and call options, or write put and covered call options. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option.

Options are valued daily based upon the last sale price on the principal exchange on which the option is traded. The difference between the premium received or paid, and market value of the option, is recorded as unrealized appreciation or depreciation. The net change in unrealized appreciation or depreciation is reported in the Statement of Operations. When an option is exercised, the cost of the security purchased or the proceeds of the security sale are adjusted by the amount of premium received or paid. Upon the expiration or closing of the option transaction, a gain or loss is reported in the Statement of Operations.

Securities designated to cover outstanding call or put options are noted in the Statement of Investments where applicable. Options written are reported in a schedule following the Statement of Investments and as a liability in the Statement of Assets and Liabilities.

The Fund has written put options on currencies to increase exposure to foreign exchange rate risk. A written put option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

The Fund has written call options on currencies to decrease exposure to foreign exchange rate risk. A written call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

The Fund has purchased call options on currencies to increase exposure to foreign exchange rate risk. A purchased call option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

The Fund has purchased put options on currencies to decrease exposure to foreign exchange rate risk. A purchased put option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk that there may be an illiquid market where the Fund is unable to close the contract.

Additional associated risks to the Fund include counterparty credit risk for over-the-counter options and liquidity risk.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Written option activity for the year ended December 31, 2009 was as follows:


	Call Options						Put Options
	Number of			Amount of			Number of			Amount of
	Contracts			Premiums			Contracts			Premiums

Options outstanding as of December 31, 2008		4,945,000		$	78,520			4,945,000		$	78,520
Options written		499,200,000			935,729			598,355,000			970,765
Options closed or expired		(496,920,000	)		(876,563	)		(22,775,000	)		(238,313	)
Options exercised		(7,225,000	)		(137,686	)		(471,925,000	)		(704,777	)

Options outstanding as of December 31, 2009		—		$	—			108,600,000		$	106,195

Swap Contracts

Credit Default Swap Contracts. A credit default swap is a bilateral contract that enables an investor to buy or sell protection on a debt security against a defined-issuer credit event, such as the issuer’s failure to make timely payments of interest or principal on the debt security, bankruptcy or restructuring. The Fund may enter into credit default swaps either by buying or selling protection on a single security, sovereign debt, or a basket of securities (the “reference asset”).

The Fund has purchased credit protection through credit default swaps to decrease exposure to the credit risk of individual securities and, or, indexes.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

The Fund has entered into total return swaps on various equity indexes to increase exposure to equity risk. These equity risk related total return swaps require the Fund to pay a floating reference interest rate, or an amount equal to the negative price movement of an index multiplied by the notional amount of the contract. The Fund will receive payments equal to the positive price movement of the same index multiplied by the notional amount of the contract.

The Fund has entered into total return swaps on various equity indexes to decrease exposure to equity risk. These equity risk related total return swaps require the Fund to pay an amount equal to the positive price movement of an index multiplied by the notional amount of the contract. The Fund will receive payments of a floating reference interest rate or an amount equal to the negative price movement of the same index multiplied by the notional amount of the contract.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

Currency Swaps. A currency swap is an agreement between counterparties to exchange different currencies equivalent to the notional value at contract inception and reverse the exchange of the same notional values of those currencies at contract termination. The contract may also include periodic exchanges of cash flows based on a specified index or interest rate.

The Fund has entered into currency swap contracts with the obligation to pay an interest rate on the dollar notional amount and receive an interest rate on various foreign currency notional amounts in order to take a positive investment perspective on the related currencies for which the Fund receives a payment. These currency swap contracts seek to increase exposure to foreign exchange rate risk.

The Fund has entered into currency swap contracts with the obligation to pay an interest rate various foreign currency notional amounts and receive an interest rate on on the dollar notional amount in order to take a negative investment perspective on the related currencies for which the Fund receives a payment. These currency swap contracts seek to decrease exposure to foreign exchange rate risk.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

Swaption Transactions. The Fund may enter into a swaption contract which grants the purchaser the right, but not the obligation, to enter into a swap transaction at preset terms detailed in the underlying agreement within a specified period of time. The purchaser pays a premium to the swaption writer who bears the risk of unfavorable changes in the preset terms on the underlying swap.

Swaptions are marked to market daily using primarily portfolio pricing services or quotations from counterparties and brokers. Purchased swaptions are reported as a component of investments in the Statement of Investments, the Statement of Assets and Liabilities and the Statement of Operations. Written swaptions are reported on a schedule following the Statement of Investments and their value is reported as a separate asset or liability line item in the Statement of Assets and Liabilities. The net change in unrealized appreciation or depreciation on written swaptions is separately reported in the Statement of Operations. When a swaption is exercised, the cost of the swap is adjusted by the amount of premium paid or received. Upon the expiration or closing of an unexercised swaption contract, a gain or loss is reported in the Statement of Operations for the amount of the premium paid or received.

The Fund generally will incur a greater risk when it writes a swaption than when it purchases a swaption. When the Fund writes a swaption it will become obligated, upon exercise of the swaption, according to the terms of the underlying agreement. Swaption contracts written by the Fund do not give rise to counterparty credit risk as they obligate the Fund, not its counterparty, to perform. When the Fund purchases a swaption it only risks losing the amount of the premium it paid if the swaption expires unexercised. However, when the Fund exercises a purchased swaption there is a risk that the counterparty will fail to perform or otherwise default on its obligations under the swaption contract.

The Fund has written swaptions which give it the obligation, if exercised by the purchaser, to sell credit protection through credit default swaps in order to increase exposure to the credit risk of individual securities and, or, indexes. A written swaption of this type becomes more valuable as the likelihood of a credit event on the reference asset decreases.

As of December 31, 2009, the Fund had no written or purchased swaptions outstanding.

6. Illiquid or Restricted Securities

As of December 31, 2009, investments in securities included issues that are illiquid or restricted. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security may have a contractual restriction on its resale and is valued under methods approved by the Board of Directors as reflecting fair value. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid and restricted securities. Certain restricted securities, eligible for resale to qualified institutional purchasers, may not be subject to that limitation. Securities that are illiquid or restricted are marked with an applicable footnote on the Statement of Investments. Restricted securities are reported on a schedule following the Statement of Investments.

7. Securities Lending

8. Unfunded Purchase Agreements

Pursuant to the terms of certain indenture agreements, the Fund has unfunded purchase agreements of $15,121,194 at December 31, 2009. The Fund generally will maintain with its custodian, liquid investments having an aggregate value at least equal to the amount of unfunded purchase agreements. The following agreements are subject to funding based on the borrower’s discretion. The Fund is obligated to fund these agreements at the time of the request by the borrower. These agreements have been excluded from the Statement of Investments.

As of December 31, 2009, the Fund had unfunded purchase agreements as follows:


	Commitment		Unfunded
	Termination Date		Amount

Deutsche Bank AG, Opic Reforma I Credit Linked Nts.		10/23/13	$	9,000,153

Interest

Commitment

Unfunded

Unrealized

Rate

Termination Date

Amount

Depreciation

Deutsche Bank AG; An unfunded commitment that the Fund receives 0.125% quarterly; and will pay out, upon request, up to 6,121,041 USD to a Peruvian Trust through Deutsche Bank’s Global Note Program. Upon funding requests, the unfunded portion decreases and new structured securities will be created and held by the Fund to maintain a consistent exposure level.

0.50

9/20/10

6,121,041

354,545

NOTES TO FINANCIAL STATEMENTS Continued

9. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 18, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

10. Pending Litigation

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer High Income Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer High Income Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer High Income Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Principal
	Amount		Value

Corporate Bonds and Notes—94.2%
Consumer Discretionary—23.5%
Auto Components—1.4%
Allison Transmission, Inc., 11% Sr. Nts., 11/1/15¹	$	1,045,000	$	1,102,475
American Axle & Manufacturing Holdings, Inc., 9.25% Sr. Sec. Nts., 1/15/17¹		690,000		703,800
Goodyear Tire & Rubber Co. (The), 9% Sr. Unsec. Nts., 7/1/15		255,000		266,475

				2,072,750

Automobiles—2.0%
Case New Holland, Inc., 7.125% Sr. Unsec. Nts., 3/1/14		815,000		831,300
Ford Motor Co., 7.45% Bonds, 7/16/31		1,130,000		1,004,288
Ford Motor Credit Co. LLC:
7.50% Sr. Unsec. Unsub. Nts., 8/1/12		580,000		585,243
8.125% Sr. Unsec. Nts., 1/15/20		485,000		477,412

				2,898,243

Diversified Consumer Services—0.7%
Service Corp. International:
6.75% Sr. Unsec. Nts., 4/1/15		285,000		280,725
7% Sr. Unsec. Unsub. Nts., 6/15/17		340,000		331,500
StoneMor Operating LLC/Cornerstone Family Service of West Virginia, Inc./Osiris Holdings of Maryland Subsidiary, Inc., 10.25% Sr. Nts., 12/1/17¹		340,000		347,650

				959,875

Hotels, Restaurants & Leisure—6.5%
CCM Merger, Inc., 8% Unsec. Nts., 8/1/13¹		410,000		334,663
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/13^1,2		1,155,000		180,469
Harrah’s Operating Co., Inc., 10% Sr. Sec. Nts., 12/15/18¹		1,393,000		1,124,848
Harrah’s Operating Escrow LLC/Harrah’s Escrow Group, 11.25% Sr. Sec. Nts., 6/1/17¹		380,000		399,475
Isle of Capri Casinos, Inc., 7% Sr. Unsec. Sub. Nts., 3/1/14		685,000		613,075
Landry’s Restaurant, Inc., 11.625% Sr. Sec. Nts., 12/1/15¹		455,000		484,575
Las Vegas Sands Corp., 6.375% Sr. Unsec. Nts., 2/15/15		415,000		369,350
Mashantucket Pequot Tribe, 8.50% Bonds, Series A, 11/15/15^1,2		1,655,000		413,750
MGM Mirage, Inc.:
6.75% Sr. Unsec. Nts., 4/1/13		375,000		325,313
8.50% Sr. Unsec. Nts., 9/15/10		200,000		200,000
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13		390,000		314,438
11.50% Sr. Sec. Nts., 11/1/17¹		125,000		128,125
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10		685,000		685,000
Peninsula Gaming LLC:
8.375% Sr. Sec. Nts., 8/15/15¹		110,000		110,275
10.75% Sr. Unsec. Nts., 8/15/17¹		280,000		282,800
Pinnacle Entertainment, Inc.:
8.25% Sr. Unsec. Sub. Nts., 3/15/12		391,000		392,955
8.625% Sr. Nts., 8/1/17¹		110,000		112,750
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/14¹		425,000		444,125
Station Casinos, Inc., 6.50% Sr. Unsec. Sub. Nts., 2/1/14²		2,595,000		25,950
Travelport LLC, 11.875% Sr. Unsec. Sub. Nts., 9/1/16		750,000		798,750
Wendy’s/Arby’s Restaurants LLC, 10% Sr. Unsec. Unsub. Nts., 7/15/16¹		750,000		821,250
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		805,000		781,856

				9,343,792

Household Durables—1.6%
Beazer Homes USA, Inc.:
8.375% Sr. Nts., 4/15/12		125,000		118,125
8.625% Sr. Unsec. Nts., 5/15/11		260,000		254,800
Jarden Corp., 7.50% Sr. Unsec. Sub. Nts., 5/1/17		805,000		807,013
K. Hovnanian Enterprises, Inc.:
7.75% Sr. Unsec. Sub. Nts., 5/15/13		285,000		218,025
8.875% Sr. Sub. Nts., 4/1/12		705,000		595,725
Lennar Corp., 12.25% Sr. Unsec. Unsub. Nts., 6/1/17³		210,000		254,100

				2,247,788

Internet & Catalog Retail—0.1%
NetFlix, Inc., 8.50% Sr. Unsec. Nts., 11/15/17¹		180,000		187,650
Leisure Equipment & Products—0.4%
Colt Defense LLC, 8.75% Sr. Unsec. Nts., 11/15/17¹		500,000		518,750
Easton-Bell Sports, Inc., 9.75% Sr. Sec. Nts., 12/1/16¹		90,000		93,713

				612,463

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Media—8.1%
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12	$	780,000	$	771,225
AMC Entertainment, Inc., 8% Sr. Unsec. Sub. Nts., 3/1/14		678,000		650,880
American Media Operations, Inc.:
9% Sr. Unsec. Nts., 5/1/13^1,4		1,853		1,195
12.02% Sr. Sub. Nts., 11/1/13^1,4		1,739,262		1,121,824
Belo Corp., 7.75% Sr. Unsec. Unsub. Debs., 6/1/27		550,000		442,750
Cequel Communications Holdings I LLC, 8.625% Sr. Unsec. Nts., 11/15/17¹		455,000		461,825
Charter Communications, Inc., 13.50% Sr. Nts., 11/30/16		443,694		524,668
Clear Channel Worldwide Holdings, Inc.:
9.25% Sr. Nts., 12/15/17¹		155,000		160,425
9.25% Sr. Unsec. Nts., 12/15/17¹		40,000		41,000
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13		1,540,000		1,493,800
Marquee Holdings, Inc., 9.505% Sr. Nts., 8/15/14⁵		310,000		259,238
Mediacom LLC/Mediacom Capital Corp., 9.125% Sr. Nts., 8/15/19¹		650,000		666,250
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/14^2,3		1,460,000		3,796
6.875% Sr. Unsec. Sub. Nts., 10/1/13^2,3		2,510,000		6,526
NTL Cable plc, 9.125% Sr. Nts., 8/15/16		395,000		418,206
Radio One, Inc., 6.375% Sr. Unsec. Sub. Nts., 2/15/13		140,000		103,425
Reynolds Group, 7.75% Sr. Sec. Nts., 10/15/16¹		585,000		601,088
Salem Communications Corp., 9.625% Sr. Sec. Nts., 12/15/16¹		185,000		194,713
Sinclair Broadcast Group, Inc., 8% Sr. Unsec. Sub. Nts., 3/15/12		1,240,000		1,215,200
Sinclair Television Group, Inc., 9.25% Sr. Sec. Nts., 11/1/17¹		125,000		130,625
TL Acquisitions, Inc., 10.50% Sr. Nts., 1/15/15¹		695,000		668,069
Valassis Communications, Inc., 8.25% Sr. Unsec. Unsub. Nts., 3/1/15		840,000		842,100
Virgin Media Finance plc, 8.75% Sr. Unsec. Nts., 4/15/14		45,000		46,688
Warner Music Group Corp., 7.375% Sr. Sub. Bonds, 4/15/14		845,000		820,706

				11,646,222

Multiline Retail—0.5%
Bon-Ton Stores, Inc. (The), 10.25% Sr. Unsec. Unsub. Nts., 3/15/14		710,000		658,525
Specialty Retail—1.7%
Burlington Coat Factory Warehouse Corp., 11.125% Sr. Unsec. Nts., 4/15/14		640,000		664,000
Leslie’s Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13		515,000		520,150
Michaels Stores, Inc., 10% Sr. Unsec. Unsub. Nts., 11/1/14		1,000,000		1,040,000
Sally Holdings LLC, 10.50% Sr. Unsec. Sub. Nts., 11/15/16		230,000		248,400

				2,472,550

Textiles, Apparel & Luxury Goods—0.5%
Levi Strauss & Co., 9.75% Sr. Unsec. Unsub. Nts., 1/15/15		685,000		722,675
Consumer Staples—6.4%
Beverages—0.4%
Cott Beverages, Inc., 8.375% Sr. Nts., 11/15/17¹		525,000		543,375
Food & Staples Retailing—1.9%
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		1,160,000		1,058,500
Real Time Data Co., 11% Nts., 5/31/09^2,3,4,6		476,601		—
Rite Aid Corp.:
7.50% Sr. Sec. Nts., 3/1/17		1,120,000		1,058,400
9.50% Sr. Unsec. Unsub. Nts., 6/15/17		405,000		354,375
Pantry, Inc. (The), 7.75% Sr. Unsec. Sub. Nts., 2/15/14		355,000		342,575

				2,813,850

Food Products—3.6%
ASG Consolidated LLC/Finance, Inc., 11.50% Sr. Unsec. Nts., 11/1/11		1,025,000		1,032,688
Bumble Bee Foods LLC, 7.75% Sr. Sec. Nts., 12/15/15¹		240,000		241,200
Chiquita Brands International, Inc.:
7.50% Sr. Unsec. Nts., 11/1/14		265,000		263,675
8.875% Sr. Unsec. Unsub. Nts., 12/1/15		560,000		574,000
Dean Foods Co., 7% Sr. Unsec. Unsub. Nts., 6/1/16		565,000		556,525
JBS USA LLC/JBS USA Finance, Inc., 11.625% Sr. Nts., 5/1/14³		590,000		671,125
Pinnacle Foods Finance LLC, 9.25% Sr. Unsec. Nts., 4/1/15¹		195,000		198,900
Pinnacle Foods Finance LLC/ Pinnacle Foods Finance Corp., 10.625% Sr. Sub. Nts., 4/1/17		1,210,000		1,264,450
Smithfield Foods, Inc., 7% Sr. Nts., 8/1/11		360,000		360,900

				5,163,463


	Principal
	Amount		Value

Personal Products—0.5%
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14	$	545,000	$	539,550
Revlon Consumer Products Corp., 9.75% Sr. Sec. Nts., 11/15/15¹		185,000		191,938

				731,488

Energy—13.8%
Energy Equipment & Services—1.3%
Helix Energy Solutions Group, Inc., 9.50% Sr. Unsec. Nts., 1/15/16¹		830,000		854,900
Key Energy Services, Inc., 8.375% Sr. Unsec. Nts., 12/1/14		670,000		675,025
North American Energy Alliance LLC, 10.875% Sr. Sec. Nts., 6/1/16¹		380,000		405,650

				1,935,575

Oil, Gas & Consumable Fuels—12.5%
Alon Refining Krotz Springs, Inc., 13.50% Sr. Sec. Nts., 10/15/14¹		730,000		684,375
Antero Resources Finance Corp., 9.375% Sr. Nts., 12/7/17¹		390,000		399,750
Arch Coal, Inc., 8.75% Sr. Nts., 8/1/16¹		960,000		1,020,000
Atlas Energy Resources LLC, 10.75% Sr. Unsec. Nts., 2/1/18		1,120,000		1,243,200
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15		555,000		493,950
Berry Petroleum Co.:
8.25% Sr. Sub. Nts., 11/1/16		470,000		465,300
10.25% Sr. Unsec. Nts., 6/1/14		620,000		677,350
Bill Barrett Corp., 9.875% Sr. Nts., 7/15/16		585,000		625,950
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		320,000		321,600
Cimarex Energy Co., 7.125% Sr. Nts., 5/1/17		300,000		304,500
Cloud Peak Energy Resources LLC, 8.25% Sr. Unsec. Nts., 12/15/17¹		695,000		698,475
Concho Resources, Inc., 8.625% Sr. Unsec. Nts., 10/1/17		480,000		506,400
Continental Resources, Inc., 8.25% Sr. Unsec. Nts., 10/1/19¹		285,000		300,675
Denbury Resources, Inc., 7.50% Sr. Sub. Nts., 12/15/15		280,000		280,700
Enterprise Products Operating LLP, 8.375% Jr. Sub. Nts., 8/1/66⁵		1,140,000		1,112,876
Forest Oil Corp.:
7.25% Sr. Unsec. Nts., 6/15/19¹		440,000		436,700
8.50% Sr. Nts., 2/15/14¹		955,000		1,002,750
Mariner Energy, Inc., 11.75% Sr. Unsec. Nts., 6/30/16		555,000		621,600
Murray Energy Corp., 10.25% Sr. Sec. Nts., 10/15/15¹		640,000		640,000
OPTI Canada, Inc., 9% Sr. Sec. Nts., 12/15/12¹		320,000		328,800
Petrohawk Energy Corp., 10.50% Sr. Unsec. Nts., 8/1/14		520,000		570,700
Plains Exploration & Production Co., 10% Sr. Unsec. Nts., 3/1/16		1,005,000		1,105,500
Quicksilver Resources, Inc.:
8.25% Sr. Unsec. Nts., 8/1/15		735,000		757,050
11.75% Sr. Nts., 1/1/16		615,000		701,100
SandRidge Energy, Inc.:
8.75% Sr. Nts., 1/15/20¹		560,000		562,800
9.875% Sr. Unsec. Nts., 5/15/16¹		795,000		840,713
Southwestern Energy Co., 7.50% Sr. Nts., 2/1/18		485,000		516,525
Western Refining, Inc., 11.25% Sr. Sec. Nts., 6/15/17¹		740,000		673,400

				17,892,739

Financials—1.8%
Capital Markets—0.2%
RailAmerica, Inc., 9.25% Sr. Sec. Nts., 7/1/17		257,000		274,669
Diversified Financial Services—1.1%
GMAC LLC, 8% Sr. Unsec. Unsub. Nts., 11/1/31¹		1,590,000		1,446,900
Universal City Development Partners Ltd., 8.875% Sr. Nts., 11/15/15¹		155,000		152,481

				1,599,381

Insurance—0.3%
Multiplan, Inc., 10.375% Sr. Sub. Nts., 4/15/16³		400,000		392,000
Real Estate Investment Trusts—0.2%
DuPont Fabros Technology LP, 8.50% Sr. Unsec. Nts., 12/15/17¹		340,000		347,225
Health Care—7.3%
Health Care Equipment & Supplies—1.4%
Biomet, Inc., 10.375% Sr. Unsec. Nts., 10/15/17⁴		1,210,000		1,318,900
Inverness Medical Innovations, Inc., 7.875% Sr. Nts., 2/1/16¹		385,000		379,225
Universal Hospital Services, Inc., 8.50% Sr. Sec. Nts., 6/1/15⁴		350,000		346,500

				2,044,625

Health Care Providers & Services—5.4%
Apria Healthcare Group, Inc., 12.375% Sr. Sec. Nts., 11/1/14¹		335,000		370,175
Catalent Pharma Solutions, Inc., 9.50% Sr. Unsec. Nts., 4/15/15⁴		431,012		391,143

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount		Value

Health Care Providers & Services Continued
Community Health Systems, Inc., 8.875% Sr. Unsec. Nts., 7/15/15	$	1,005,000	$	1,042,688
HCA, Inc., 6.375% Nts., 1/15/15		925,000		877,594
HEALTHSOUTH Corp., 10.75% Sr. Unsec. Nts., 6/15/16		565,000		617,263
Rural/Metro Corp., 0%/12.75% Sr. Unsec. Nts., 3/15/16^3,7		680,000		690,200
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15		1,520,000		1,482,000
Tenet Healthcare Corp., 7.375% Nts., 2/1/13		365,000		367,738
US Oncology Holdings, Inc., 6.428% Sr. Unsec. Nts., 3/15/12^4,5		601,000		564,940
US Oncology, Inc., 9.125% Sr. Sec. Nts., 8/15/17		320,000		337,600
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Nts., 10/1/15⁷		895,000		946,463

				7,687,804

Pharmaceuticals—0.5%
DJO Finance LLC/DJO Finance Corp., 10.875% Sr. Unsec. Nts., 11/15/14		715,000		757,900
Industrials—11.6%
Aerospace & Defense—1.9%
BE Aerospace, Inc., 8.50% Sr. Unsec. Nts., 7/1/18		1,095,000		1,163,438
Hawker Beechcraft Acquisition Co. LLC, 8.50% Sr. Unsec. Nts., 4/1/15		150,000		106,500
TransDigm, Inc., 7.75% Nts., 7/15/14¹		625,000		637,500
Vought Aircraft Industries, Inc., 8% Sr. Nts., 7/15/11		910,000		902,038

				2,809,476

Airlines—2.5%
American Airlines Pass Through Trust 2001-2, 7.858% Pass-Through Certificates, Series 2001-2, Cl. A-2, 10/1/11³		255,000		255,000
American Airlines Pass Through Trust 2009-1A, 10.375% Pass-Through Certificates, Series 2009-1A, 7/2/19		225,000		248,625
American Airlines, Inc., 10.50% Sr. Sec. Nts., 10/15/12¹		840,000		882,000
Delta Air Lines, Inc.:
9.50% Sr. Sec. Nts., 9/15/14¹		185,000		193,094
12.25% Sr. Sec. Nts., 3/15/15¹		1,205,000		1,211,025
United Air Lines, Inc., 10.40% Sr. Sec. Nts., 11/1/16³		730,000		769,238

				3,558,982

Building Products—0.7%
AMH Holdings, Inc., 11.25% Sr. Unsec. Nts., 3/1/14		200,000		194,000
Goodman Global Group, Inc., 11.841% Sr. Nts., 12/15/14^1,8		820,000		469,450
USG Corp., 9.75% Sr. Unsec. Nts., 8/1/14¹		335,000		359,288

				1,022,738

Commercial Services & Supplies—2.2%
Acco Brands Corp., 10.625% Sr. Sec. Nts., 3/15/15¹		270,000		298,350
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05^2,3,6		200,000		—
Aramark Services, Inc., 8.50% Sr. Unsec. Nts., 2/1/15		470,000		486,450
Corrections Corp. of America, 7.75% Sr. Nts., 6/1/17		535,000		553,725
Iron Mountain, Inc., 7.75% Sr. Sub. Nts., 1/15/15		405,000		409,050
West Corp., 9.50% Sr. Unsec. Nts., 10/15/14		1,360,000		1,387,200

				3,134,775

Machinery—1.2%
Manitowoc Co., Inc. (The), 7.125% Sr. Nts., 11/1/13		870,000		822,150
Terex Corp., 8% Sr. Unsec. Sub. Nts., 11/15/17		940,000		909,450

				1,731,600

Marine—0.2%
Navios Maritime Holdings, Inc., 8.875% Nts., 11/1/17¹		225,000		234,844
Professional Services—0.5%
Altegrity, Inc., 10.50% Sr. Unsec. Sub. Nts., 11/1/15¹		755,000		677,613
Road & Rail—1.5%
Avis Budget Car Rental LLC, 7.625% Sr. Unsec. Unsub. Nts., 5/15/14		1,285,000		1,227,175
Hertz Corp., 10.50% Sr. Unsec. Sub. Nts., 1/1/16		910,000		975,975

				2,203,150

Trading Companies & Distributors—0.9%
Ashtead Capital, Inc., 9% Nts., 8/15/16¹		120,000		120,750
Ashtead Holdings plc, 8.625% Sr. Sec. Nts., 8/1/15¹		170,000		171,700
RSC Equipment Rental, Inc., 10% Sr. Sec. Nts., 7/15/17¹		185,000		202,113
United Rentals North America, Inc., 9.25% Sr. Unsec. Unsub. Nts., 12/15/19		275,000		285,313


	Principal
	Amount		Value

Trading Companies & Distributors Continued
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14	$	495,000	$	450,450

				1,230,326

Information Technology—5.7%
Computers & Peripherals—0.2%
Seagate Technology International, 10% Sr. Sec. Nts., 5/1/14¹		225,000		249,750
Electronic Equipment & Instruments—1.8%
NXP BV/NXP Funding LLC, 7.87% Sr. Sec. Nts., 10/18/14		385,000		351,313
RBS Global, Inc., /Rexnord Corp., 11.75% Sr. Unsec. Sub. Nts., 8/1/16		975,000		970,125
Sanmina-SCI Corp., 8.125% Sr. Sub. Nts., 3/1/16		1,345,000		1,348,363

				2,669,801

IT Services—2.3%
First Data Corp., 9.875% Sr. Unsec. Nts., 9/24/15		1,360,000		1,275,000
SunGard Data Systems, Inc.:
9.125% Sr. Unsec. Nts., 8/15/13		1,260,000		1,297,800
10.25% Sr. Unsec. Sub. Nts., 8/15/15		632,000		676,240

				3,249,040

Semiconductors & Semiconductor Equipment—1.4%
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13		275,000		280,500
9.25% Sr. Unsec. Nts., 6/1/16		625,000		667,188
Freescale Semiconductor, Inc.:
8.875% Sr. Unsec. Nts., 12/15/14		735,000		678,038
10.125% Sr. Unsec. Sub. Nts., 12/15/16¹		435,000		352,350

				1,978,076

Materials—11.2%
Chemicals—3.2%
Hexion US Finance Corp./ Hexion Nova Scota Finance ULC, 9.75% Sr. Sec. Nts., 11/15/14		445,000		438,325
Huntsman International LLC, 7.375% Sr. Unsub. Nts., 1/1/15		1,405,000		1,355,825
Momentive Performance Materials, Inc., 11.50% Sr. Unsec. Sub. Nts., 12/1/16		2,390,000		2,127,100
Nalco Co., 8.875% Unsec. Sub. Nts., 11/15/13		375,000		388,125
PolyOne Corp., 8.875% Sr. Unsec. Nts., 5/1/12		295,000		305,325

				4,614,700

Containers & Packaging—4.1%
Berry Plastics Holding Corp., 8.875% Sr. Sec. Nts., 9/15/14		1,400,000		1,368,500
Cascades, Inc.:
7.75% Sr. Nts., 12/15/17¹		230,000		233,450
7.875% Sr. Nts., 1/15/20¹		485,000		494,700
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15		740,000		769,600
Graham Packaging Co. LP:
8.25% Sr. Nts., 1/1/17¹		410,000		406,925
9.875% Sr. Unsec. Sub. Nts., 10/15/14		980,000		1,004,500
Graphic Packing International, Inc., 9.50% Sr. Unsec. Unsub. Nts., 6/15/17		1,290,000		1,373,850
Viskase Companies, Inc., 9.875% Sr. Sec. Nts., 1/15/18¹		290,000		293,625

				5,945,150

Metals & Mining—2.3%
Edgen Murray Corp., 12.25% Sr. Sec. Nts., 1/15/15¹		485,000		478,938
Freeport-McMoRan Copper & Gold, Inc., 8.375% Sr. Nts., 4/1/17		265,000		290,573
Novelis, Inc., 7.25% Sr. Unsec. Nts., 2/15/15⁵		1,205,000		1,153,788
Teck Resources Ltd., 10.25% Sr. Sec. Nts., 5/15/16		800,000		936,000
United Maritime LLC, 11.75% Sr. Sec. Nts., 6/15/15¹		485,000		488,638

				3,347,937

Paper & Forest Products—1.6%
Georgia-Pacific LLC:
7.70% Debs., 6/15/15		315,000		332,325
8.25% Sr. Unsec. Nts., 5/1/16¹		855,000		910,575
PE Paper Escrow GmbH, 12% Sr. Sec. Nts., 8/1/14¹		325,000		359,762
Verso Paper Holdings LLC, 9.125% Sr. Sec. Nts., 8/1/14		665,000		638,400

				2,241,062

Telecommunication Services—8.1%
Diversified Telecommunication Services—3.5%
Cincinnati Bell, Inc., 8.25% Sr. Nts., 10/15/17		610,000		622,200
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		360,000		362,700
Global Crossing Ltd., 12% Sr. Sec. Nts., 9/15/15¹		315,000		347,288
Intelsat Subsidiary Holding Co. Ltd., 8.50% Sr. Unsec. Nts., 1/15/13¹		605,000		620,125
Level 3 Financing, Inc., 9.25% Sr. Unsec. Unsub. Nts., 11/1/14		370,000		351,500

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value

Diversified Telecommunication Services Continued
PAETEC Holding Corp., 9.50% Sr. Unsec. Unsub. Nts., 7/15/15	$	1,410,000		$	1,364,175
Windstream Corp.:
7.875% Sr. Nts., 11/1/17¹		340,000			337,450
8.625% Sr. Unsec. Unsub. Nts., 8/1/16		1,030,000			1,053,175
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10^2,3,6		1,000,000			10

					5,058,623

Wireless Telecommunication Services—4.6%
Cricket Communications, Inc.:
7.75% Sr. Sec. Unsub. Nts., 5/15/16		640,000			641,600
9.375% Sr. Unsec. Nts., 11/1/14		655,000			661,550
MetroPCS Wireless, Inc., 9.25% Sr. Unsec. Nts., 11/1/14		1,375,000			1,399,063
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15		1,320,000			1,290,300
SBA Telecommunications, Inc.:
8% Sr. Nts., 8/15/16¹		445,000			467,250
8.25% Sr. Nts., 8/15/19¹		810,000			862,650
Sprint Capital Corp., 8.75% Nts., 3/15/32		1,270,000			1,203,325
Teligent, Inc., 11.50% Sr. Nts., 12/1/08^2,3,6		400,000			—

					6,525,738

Utilities—4.8%
Electric Utilities—1.4%
Edison Mission Energy, 7% Sr. Unsec. Nts., 5/15/17		1,415,000			1,124,925
Energy Future Holdings Corp., 10.875% Sr. Unsec. Nts., 11/1/17		615,000			505,838
Texas Competitive Electric Holdings Co. LLC, 10.25% Sr. Unsec. Nts., Series A, 11/1/15		510,000			415,650

					2,046,413

Energy Traders—3.4%
AES Corp. (The), 8% Sr. Unsec. Unsub. Nts., 10/15/17		270,000			278,438
Dynegy Holdings, Inc., 8.375% Sr. Unsec. Nts., 5/1/16		1,375,000			1,313,125
Mirant North America LLC, 7.375% Sr. Unsec. Nts., 12/31/13		590,000			586,313
NRG Energy, Inc.:
7.375% Sr. Nts., 1/15/17		1,015,000			1,020,075
7.375% Sr. Nts., 2/1/16		695,000			697,606
Reliant Energy, Inc., 7.625% Sr. Unsec. Unsub. Nts., 6/15/14		925,000			920,375

					4,815,932


Total Corporate Bonds and Notes (Cost $133,636,425)					135,352,353

	Shares			Value

Preferred Stocks—0.0%
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.^3,4,6		13,764		$	—
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.^3,6		8,000			—
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.^3,4,6		342			—


Total Preferred Stocks (Cost $1,097,476)					—

Common Stocks—1.0%
American Media, Inc.^3,6		9,424			94
Charter Communications, Inc., Cl. A⁶		40,830			1,449,447
Global Aero Logistics, Inc.^3,6		4,647			4,647
Orbcomm, Inc.⁶		1,127			3,043


Total Common Stocks (Cost $1,138,376)					1,457,231

	Units

Rights, Warrants and Certificates—0.0%
Global Aero Logistics, Inc. Wts., Strike Price $10, Exp. 2/28/11^3,6 (Cost $4,339)		570			6

	Principal
	Amount

Loan Participations—2.1%
CIT Group, Inc., Sr. Sec. Credit Facilities Term Loan, 7.50%, 1/18/12^5,9	$	1,255,000			1,289,513
Nuveen Investments, Inc., Sr. Sec. Credit Facilities 2nd Lien
Term Loan, 12.50%, 7/20/15^3,5		1,625,000			1,700,156


Total Loan Participations (Cost $2,756,194)					2,989,669

	Shares

Investment Companies—1.5%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^10,11		61,877			61,877
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^10,12		2,092,310			2,092,310


Total Investment Companies (Cost $2,154,187)					2,154,187
Total Investments, at Value (Cost $140,786,997)		98.8	%		141,953,446
Other Assets Net of Liabilities		1.2			1,662,468


Net Assets		100.0	%	$	143,615,914

Footnotes to Statement of Investments


1.		Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $36,919,767 or 25.71% of the Fund’s net assets as of December 31, 2009.

2.		Issue is in default. See Note 1 of accompanying Notes.

3.		Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $4,746,898, which represents 3.31%. See Note 6 of accompanying Notes.

4.		Interest or dividend is paid-in-kind, when applicable.

5.		Represents the current interest rate for a variable or increasing rate security.

6.		Non-income producing security.

7.		Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date.

8.		Zero coupon bond reflects effective yield on the date of purchase.

9.		When-issued security or delayed delivery to be delivered and settled after December 31, 2009. See Note 1 of accompanying Notes.

10.		Rate shown is the 7-day yield as of December 31, 2009.

11.		Interest rate is less than 0.0005%.

12.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

Oppenheimer Institutional Money Market Fund, Cl. E		76,839,590		156,127,613		230,874,893		2,092,310

					Value		Income

Oppenheimer Institutional Money Market Fund, Cl. E					$	2,092,310	$	240,830

Valuation Inputs

	1)		Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2)		Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3)		Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


						Level 3—
	Level 1—		Level 2—			Significant
	Unadjusted		Other Significant			Unobservable
	Quoted Prices		Observable Inputs			Inputs		Value

Assets Table
Investments, at Value:
Corporate Bonds and Notes	$	—	$	135,352,353		$	—	$	135,352,353
Preferred Stocks		—		—			—		—
Common Stocks		1,452,490		94			4,647		1,457,231
Rights, Warrants and Certificates		—		—			6		6
Loan Participations		—		2,989,669			—		2,989,669
Investment Companies		2,154,187		—			—		2,154,187

Total Assets	$	3,606,677	$	138,342,116		$	4,653	$	141,953,446


Liabilities Table
Other Financial Instruments:
Depreciated swaps, at value	$	—	$	(26,579	)	$	—	$	(26,579	)

Total Liabilities	$	—	$	(26,579	)	$	—	$	(26,579	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap Contracts as of December 31, 2009 are as follows:


									Upfront
		Notional		Pay/					Payment
Reference Entity/	Buy/Sell Credit	Amount		Receive			Termination		Received/						Unrealized
Swap Counterparty	Protection	(000’s)		Fixed Rate			Date		(Paid)			Value			Depreciation

CDX North America High Yield Index, Series 12:
Credit Suisse International	Buy	$	2,820		5.00	%		6/20/14	$	(337,225	)	$	(11,391	)	$	348,616
JPMorgan Chase Bank NA, NY Branch	Buy		1,880		5.00			6/20/14		(225,731	)		(7,594	)		233,325
Morgan Stanley & Co. International Ltd.	Buy		1,880		5.00			6/20/14		(227,167	)		(7,594	)		234,761

	Total		6,580							(790,123	)		(26,579	)		816,702

Grand Total Buys										(790,123	)		(26,579	)		816,702
Grand Total Sells										—			—			—

Total Credit Default Swaps									$	(790,123	)	$	(26,579	)	$	816,702

Swap Summary as of December 31, 2009 is as follows:


		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value

Credit Suisse International	Credit Default Buy Protection	$	2,820	$	(11,391	)
JPMorgan Chase Bank NA, NY Branch	Credit Default Buy Protection		1,880		(7,594	)
Morgan Stanley & Co. International Ltd.	Credit Default Buy Protection		1,880		(7,594	)

		Total Swaps		$	(26,579	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $138,694,687)	$	139,861,136
Affiliated companies (cost $2,092,310)		2,092,310

		141,953,446
Receivables and other assets:
Interest, dividends and principal paydowns		2,990,649
Investments sold		496,903
Shares of beneficial interest sold		44,340
Other		12,964

Total assets		145,498,302
Liabilities
Depreciated swaps, at value (upfront payments paid $790,123)		26,579
Payables and other liabilities:
Investments purchased (including $1,287,000 purchased on a when-issued or delayed delivery basis)		1,644,262
Shares of beneficial interest redeemed		67,503
Distribution and service plan fees		43,824
Shareholder communications		43,062
Transfer and shareholder servicing agent fees		12,135
Trustees’ compensation		9,709
Other		35,314

Total liabilities		1,882,388

Net Assets	$	143,615,914


Composition of Net Assets
Par value of shares of beneficial interest	$	72,278
Additional paid-in capital		422,445,355
Accumulated net investment income		10,001,371
Accumulated net realized loss on investments and foreign currency transactions		(289,252,837	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		349,747

Net Assets	$	143,615,914


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $67,385,008 and 34,007,196 shares of beneficial interest outstanding)	$	1.98
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $64,439,840 and 32,387,936 shares of beneficial interest outstanding)	$	1.99
Class 3 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $4,683,987 and 2,349,189 shares of beneficial interest outstanding)	$	1.99
Class 4 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $7,107,079 and 3,533,235 shares of beneficial interest outstanding)	$	2.01

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Interest	$	13,843,257
Dividends:
Unaffiliated companies		3,439
Affiliated companies		240,830
Fee income		2,922

Total investment income		14,090,448

Expenses
Management fees		1,019,105
Distribution and service plan fees:
Service shares		135,505
Class 4 shares		15,712
Transfer and shareholder servicing agent fees:
Non-Service shares		46,963
Service shares		42,650
Class 3 shares		2,928
Class 4 shares		3,302
Shareholder communications:
Non-Service shares		46,699
Service shares		35,736
Class 3 shares		2,324
Class 4 shares		4,275
Trustees’ compensation		10,634
Custodian fees and expenses		903
Other		70,595

Total expenses		1,437,331
Less reduction to custodian expenses		(241	)
Less waivers and reimbursements of expenses		(525,100	)

Net expenses		911,990

Net Investment Income		13,178,458

Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment from unaffiliated companies		(70,636,631	)
Closing and expiration of futures contracts		(46,063	)
Foreign currency transactions		332,428
Swap contracts		(50,484,558	)

Net realized loss		(120,834,824	)
Net change in unrealized appreciation (depreciation) on:
Investments		97,424,857
Translation of assets and liabilities denominated in foreign currencies		(312,520	)
Swap contracts		36,977,935

Net change in unrealized appreciation		134,090,272

Net Increase in Net Assets Resulting from Operations	$	26,433,906

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	13,178,458		$	31,706,472
Net realized loss		(120,834,824	)		(241,823,086	)
Net change in unrealized appreciation (depreciation)		134,090,272			(101,899,131	)

Net increase (decrease) in net assets resulting from operations		26,433,906			(312,015,745	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		—			(16,471,157	)
Service shares		—			(8,570,925	)
Class 3 shares		—			(292,606	)
Class 4 shares		—			(611,268	)

		—			(25,945,956	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(54,571,861	)		19,699,234
Service shares		7,675,335			5,209,593
Class 3 shares		2,128,095			1,808,854
Class 4 shares		1,786,116			4,859,490

		(42,982,315	)		31,577,171

Net Assets
Total decrease		(16,548,409	)		(306,384,530	)
Beginning of period		160,164,323			466,548,853

End of period (including accumulated net investment income of $10,001,371 and $35,234,239, respectively)	$	143,615,914		$	160,164,323

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	1.58		$	7.95		$	8.55		$	8.44		$	8.80

Income (loss) from investment operations:
Net investment income¹		.17			.54			.57			.58			.57
Net realized and unrealized gain (loss)		.23			(6.44	)		(.56	)		.17			(.37	)

Total from investment operations		.40			(5.90	)		.01			.75			.20

Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.47	)		(.61	)		(.64	)		(.56	)

Net asset value, end of period	$	1.98		$	1.58		$	7.95		$	8.55		$	8.44


Total Return, at Net Asset Value²		25.32	%		(78.67	)%		(0.10	)%		9.42	%		2.31	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	67,385		$	111,040		$	294,819		$	361,445		$	384,726

Average net assets (in thousands)	$	71,782		$	211,186		$	335,702		$	365,154		$	444,477

Ratios to average net assets:³
Net investment income		9.78	%		9.30	%		6.96	%		7.05	%		6.79	%
Total expenses		0.94	%⁴		0.80	%⁴		0.75	%⁴		0.74	%⁴		0.75	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.57	%		0.78	%		0.74	%		0.74	%		0.75	%

Portfolio turnover rate		128	%		53	%⁵		67	%⁵		57	%		64	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.96	%
Year Ended December 31, 2008	0.80	%
Year Ended December 31, 2007	0.76	%
Year Ended December 31, 2006	0.74	%


5.		The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Year Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	1.58		$	7.89		$	8.50		$	8.39		$	8.76

Income (loss) from investment operations:
Net investment income¹		.16			.54			.55			.56			.55
Net realized and unrealized gain (loss)		.25			(6.40	)		(.57	)		.17			(.38	)

Total from investment operations		.41			(5.86	)		(.02	)		.73			.17

Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.45	)		(.59	)		(.62	)		(.54	)

Net asset value, end of period	$	1.99		$	1.58		$	7.89		$	8.50		$	8.39


Total Return, at Net Asset Value²		25.95	%		(78.57	)%		(0.47	)%		9.23	%		2.01	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	64,440		$	43,375		$	157,333		$	173,299		$	155,617

Average net assets (in thousands)	$	54,202		$	116,236		$	169,569		$	160,703		$	141,287

Ratios to average net assets:³
Net investment income		9.60	%		9.13	%		6.71	%		6.80	%		6.54	%
Total expenses		1.21	%⁴		1.05	%⁴		1.01	%⁴		1.00	%⁴		1.00	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.80	%		1.03	%		1.00	%		1.00	%		1.00	%

Portfolio turnover rate		128	%		53	%⁵		67	%⁵		57	%		64	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.23	%
Year Ended December 31, 2008	1.05	%
Year Ended December 31, 2007	1.02	%
Year Ended December 31, 2006	1.00	%


5.		The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Year Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued


Class 3 Shares Year Ended December 31,	2009			2008			2007¹

Per Share Operating Data
Net asset value, beginning of period	$	1.57		$	7.98		$	8.26

Income (loss) from investment operations:
Net investment income²		.17			.56			.37
Net realized and unrealized gain (loss)		.25			(6.50	)		(.65	)

Total from investment operations		.42			(5.94	)		(.28	)

Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.47	)		—

Net asset value, end of period	$	1.99		$	1.57		$	7.98


Total Return, at Net Asset Value³		26.75	%		(78.89	)%		(3.39	)%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	4,684		$	1,582		$	4,921

Average net assets (in thousands)	$	3,568		$	5,292		$	3,750

Ratios to average net assets:⁴
Net investment income		9.86	%		9.29	%		6.90	%
Total expenses⁵		0.97	%		0.80	%		0.76	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.53	%		0.78	%		0.75	%

Portfolio turnover rate		128	%		53	%⁶		67	%⁶


1.		For the period from May 1, 2007 (inception of offering) to December 31, 2007.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.99	%
Year Ended December 31, 2008	0.80	%
Period Ended December 31, 2007	0.77	%


6.		The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Period Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.


Class 4 Shares Year Ended December 31,	2009			2008			2007¹

Per Share Operating Data
Net asset value, beginning of period	$	1.59		$	7.97		$	8.26

Income (loss) from investment operations:
Net investment income²		.16			.54			.36
Net realized and unrealized gain (loss)		.26			(6.46	)		(.65	)

Total from investment operations		.42			(5.92	)		(.29	)

Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.46	)		—

Net asset value, end of period	$	2.01		$	1.59		$	7.97


Total Return, at Net Asset Value³		26.42	%		(78.63	)%		(3.51	)%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	7,107		$	4,167		$	9,476

Average net assets (in thousands)	$	6,285		$	10,658		$	7,201

Ratios to average net assets:⁴
Net investment income		9.62	%		9.00	%		6.61	%
Total expenses⁵		1.19	%		1.07	%		1.05	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.80	%		1.05	%		1.04	%

Portfolio turnover rate		128	%		53	%⁶		67	%⁶


1.		For the period from May 1, 2007 (inception of offering) to December 31, 2007.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.21	%
Year Ended December 31, 2008	1.07	%
Period Ended December 31, 2007	1.06	%


6.		The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:


	Purchase Transactions		Sale Transactions

Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Period Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer High Income Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek a high level of current income by investing mainly in a diversified portfolio of high-yield, lower-grade, fixed-income securities that the Fund’s investment manager, OppenheimerFunds, Inc. (the “Manager”), believes does not involve undue risk.

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

There have been no significant changes to the fair valuation methodologies during the period.

Securities on a When-Issued or Delayed Delivery Basis. The Fund may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis.” When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis normally takes place within six months and possibly as long as two years or more after the trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The purchase of securities on a when-issued basis may increase the volatility of the Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When the Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield it considers advantageous. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase.

As of December 31, 2009, the Fund had purchased securities issued on a when-issued or delayed delivery basis and sold securities issued on a delayed delivery basis as follows:


	When-Issued or Delayed
	Delivery Basis Transactions

Purchased securities	$	1,287,000

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued


Cost	$	8,750,458
Market Value	$	630,501
Market Value as a % of Net Assets		0.44	%

Net Unrealized

Depreciation

Based on Cost of

Securities and

Undistributed

Accumulated

Other Investments

Net Investment

Long-Term

Loss

for Federal Income

Income

Gain

Carryforward^1,2,3,4,5

Tax Purposes

$10,367,328

—

288,235,313

712,419


1.		As of December 31, 2009, the Fund had $286,774,366 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2010	$	56,061,391
2011		8,529,303
2012		128,504
2016		48,495,519
2017		173,559,649

Total	$	286,774,366


2.		As of December 31, 2009, the Fund had $1,460,947 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2018.

3.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

4.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

5.		During the fiscal year ended December 31, 2009, $22,696,701 of unused capital loss carryforward expired.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


	Reduction		Reduction
	to Accumulated		to Accumulated Net
Reduction to Paid-in	Net Investment		Realized Loss on
Capital	Income		Investments

$22,697,932	$	38,411,326	$	61,109,258

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	—	$	25,945,956

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued


Federal tax cost of securities	$	141,883,678
Federal tax cost of other investments		755,608

Total federal tax cost	$	142,639,286


Gross unrealized appreciation	$	11,521,425
Gross unrealized depreciation		(12,233,844	)

Net unrealized depreciation	$	(712,419	)

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		20,776,611		$	33,067,312			46,686,845		$	99,443,229
Dividends and/or distributions reinvested		—			—			2,553,668			16,471,157
Redeemed		(56,972,656	)		(87,639,173	)		(16,133,552	)		(96,215,152	)

Net increase (decrease)		(36,196,045	)	$	(54,571,861	)		33,106,961		$	19,699,234


Service Shares
Sold		10,597,049		$	17,230,535			11,108,688		$	27,272,759
Dividends and/or distributions reinvested		—			—			1,335,035			8,570,925
Redeemed		(5,702,302	)		(9,555,200	)		(4,887,160	)		(30,634,091	)

Net increase		4,894,747		$	7,675,335			7,556,563		$	5,209,593


Class 3 Shares
Sold		2,785,296		$	4,527,494			1,353,807		$	7,210,645
Dividends and/or distributions reinvested		—			—			45,225			292,606
Redeemed		(1,445,037	)		(2,399,399	)¹		(1,006,838	)		(5,694,397	)²

Net increase		1,340,259		$	2,128,095			392,194		$	1,808,854


Class 4 Shares
Sold		3,615,090		$	5,889,866			2,743,234		$	12,307,065
Dividends and/or distributions reinvested		—			—			94,331			611,268
Redeemed		(2,698,668	)		(4,103,750	)¹		(1,409,411	)		(8,058,843	)²

Net increase		916,422		$	1,786,116			1,428,154		$	4,859,490


1.		Net of redemption fees of $3,548 and $4,585 for Class 3 and Class 4 shares, respectively.

2.		Net of redemption fees of $3,056 and $11,199 for Class 3 and Class 4 shares, respectively.

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	119,213,984	$	133,605,164

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $200 million	0.60
Over $1 billion	0.50

Waivers and Reimbursements of Expenses. Effective September 1, 2008 through August 31, 2009, the Manager had voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund’s average daily net assets if the Fund’s trailing one-year total return performance was in the fifth quintile of the Fund’s Lipper peer group. During the year ended December 31, 2009, the Manager waived $89,094 in advisory fees as a result of this voluntary arrangement.

Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.26% of the Fund’s average annual net assets. During the year ended December 31, 2009, the Manager waived $259,162. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.75% for Non-Service and Class 3 shares and 1.00% for Service and Class 4 shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $70,878, $69,417, $5,175, and $6,717 for Non-Service, Service, Class 3 and Class 4 shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

Capital Stock Activity. On December 17, 2008, the Manager purchased Non-Service Shares of the Fund for $50,000,000. As of that date, the Manager owned approximately 51% of the Non-Service Shares representing approximately 37% of the Fund’s net assets. The Manager redeemed this investment on February 25, 2009. The proceeds of the redemption were $48,344,371.

5. Risk Exposures and the Use of Derivative Instruments

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

As of December 31, 2009 the Fund has not required certain counterparties to post collateral.

As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $26,579 for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counterparties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contract, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:


	Liability Derivatives
	Statement
Derivatives not	of Assets
Accounted for as	and Liabilities
Hedging Instruments	Location	Value

Credit contracts	Depreciated swaps, at value	$	26,579

The effect of derivative instruments on the Statement of Operations is as follows:


Amount of Realized Gain or Loss Recognized on Derivatives
Derivatives not	Closing and
Accounted for as	expiration of
Hedging Instruments	futures contracts			Swap contracts			Total

Credit contracts	$	—		$	(47,943,630	)	$	(47,943,630	)
Interest rate contracts		(46,063	)		(2,540,928	)		(2,586,991	)

Total	$	(46,063	)	$	(50,484,558	)	$	(50,530,621	)


Amount of Change in Unrealized Gain or Loss Recognized on Derivatives
Derivatives not
Accounted for as
Hedging Instruments	Swap contracts

Credit contracts	$	34,562,372
Interest rate contracts		2,415,563

Total	$	36,977,935

Futures Contracts

The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

As of December 31, 2009, the Fund had no outstanding futures contracts.

Swap Contracts

As of December 31, 2009, the Fund had no such interest rate swap agreements outstanding.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

As of December 31, 2009, the Fund had no such total return swap agreements outstanding.

6. Illiquid Securities

7. Subsequent Events Evaluation

8. Pending Litigation

NOTES TO FINANCIAL STATEMENTS Continued

8. Pending Litigation Continued

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Main Street Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Main Street Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

KPMG llp
Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Shares		Value

Common Stocks—99.0%
Consumer Discretionary—10.9%
Diversified Consumer Services—0.6%
H&R Block, Inc.		438,694	$	9,923,258
Hotels, Restaurants & Leisure—3.1%
Hyatt Hotels Corp., Cl. A¹		294,020		8,764,736
McDonald’s Corp.		686,016		42,834,839

				51,599,575

Media—4.4%
Grupo Televisa SA, Sponsored GDR		360,823		7,490,685
McGraw-Hill Cos., Inc. (The)		941,801		31,559,752
Time Warner Cable, Inc.		509,914		21,105,340
Washington Post Co. (The), Cl. B		25,459		11,191,776

				71,347,553

Specialty Retail—2.8%
Advance Auto Parts, Inc.		48,361		1,957,653
AutoZone, Inc.¹		73,550		11,626,049
Best Buy Co., Inc.		442,271		17,452,014
GameStop Corp., Cl. A¹		651,700		14,298,298

				45,334,014

Consumer Staples—10.3%
Food & Staples Retailing—0.8%
Wal-Mart Stores, Inc.		234,566		12,537,553
Food Products—3.4%
General Mills, Inc.		612,225		43,351,652
Unilever NV, NY Shares		363,900		11,764,887

				55,116,539

Household Products—1.2%
Colgate-Palmolive Co.		240,264		19,737,688
Personal Products—1.0%
Mead Johnson Nutrition Co., Cl. A		371,912		16,252,554
Tobacco—3.9%
Philip Morris International, Inc.		1,334,399		64,304,688
Energy—12.0%
Energy Equipment & Services—1.4%
Schlumberger Ltd.		354,200		23,054,878
Oil, Gas & Consumable Fuels—10.6%
Chevron Corp.		674,229		51,908,891
Enterprise Products Partners LP		534,470		16,787,703
Exxon Mobil Corp.		333,985		22,774,437
Noble Energy, Inc.		236,600		16,850,652
Occidental Petroleum Corp.		621,900		50,591,565
Plains All American Pipeline LP		248,011		13,107,381

				172,020,629

Financials—12.7%
Capital Markets—2.1%
State Street Corp.		764,992		33,307,752
Commercial Banks—2.7%
KeyCorp		890,200		4,940,610
Marshall & Ilsley Corp.		945,400		5,152,430
Regions Financial Corp.		1,170,778		6,193,416
SunTrust Banks, Inc.		248,700		5,046,123
U.S. Bancorp		1,020,686		22,975,642

				44,308,221

Consumer Finance—2.0%
American Express Co.		818,070		33,148,196
Diversified Financial Services—3.0%
Bank of America Corp.		1,053,996		15,873,180
Citigroup, Inc.		7,460,100		24,692,931
Leucadia National Corp.¹		347,829		8,274,852

				48,840,963

Insurance—2.9%
Chubb Corp.		528,708		26,001,859
Hartford Financial Services Group, Inc. (The)		195,600		4,549,656
Lincoln National Corp.		667,802		16,614,914

				47,166,429

Health Care—13.9%
Biotechnology—3.1%
Amgen, Inc.¹		451,122		25,519,972
Celgene Corp.¹		463,852		25,827,279

				51,347,251

Health Care Equipment & Supplies—0.5%
Covidien plc		172,600		8,265,814
Health Care Providers & Services—4.1%
Laboratory Corp. of America Holdings¹		208,949		15,637,743
Medco Health Solutions, Inc.¹		476,558		30,456,822
WellPoint, Inc.¹		351,900		20,512,251

				66,606,816

Pharmaceuticals—6.2%
Abbott Laboratories		644,980		34,822,470
Merck & Co., Inc.		1,204,098		43,997,741
Teva Pharmaceutical Industries Ltd., Sponsored ADR		383,300		21,533,794

				100,354,005

STATEMENT OF INVESTMENTS Continued


	Shares			Value
Industrials—12.8%
Aerospace & Defense—2.6%
Precision Castparts Corp.		240,500		$	26,539,175
United Technologies Corp.		227,588			15,796,883

					42,336,058

Air Freight & Logistics—1.0%
United Parcel Service, Inc., Cl. B		286,800			16,453,716
Commercial Services & Supplies—2.0%
Republic Services, Inc.		1,146,664			32,462,058
Construction & Engineering—0.9%
KBR, Inc.		745,954			14,173,126
Industrial Conglomerates—4.3%
General Electric Co.		2,083,800			31,527,894
Tyco International Ltd.		1,053,850			37,601,368

					69,129,262

Professional Services—1.2%
Verisk Analytics, Inc., Cl. A¹		665,680			20,156,790
Road & Rail—0.8%
Union Pacific Corp.		213,681			13,654,216
Information Technology—18.1%
Communications Equipment—2.7%
QUALCOMM, Inc.		965,431			44,660,838
Computers & Peripherals—3.2%
Apple, Inc.¹		248,982			52,500,345
Internet Software & Services—4.3%
eBay, Inc.¹		1,619,605			38,125,502
Google, Inc., Cl. A¹		52,070			32,282,359

					70,407,861

IT Services—3.5%
Accenture plc, Cl. A		212,100			8,802,150
Hewitt Associates, Inc.¹		410,203			17,335,179
MasterCard, Inc., Cl. A		66,100			16,920,278
Western Union Co.		725,089			13,667,928

					56,725,535

Software—4.4%
Adobe Systems, Inc.¹		408,576			15,027,425
Check Point Software Technologies Ltd.¹		494,280			16,746,206
Microsoft Corp.		1,287,657			39,260,662

					71,034,293

Materials—3.2%
Chemicals—2.3%
Monsanto Co.		193,699			15,834,893
Praxair, Inc.		264,800			21,266,088

					37,100,981

Containers & Packaging—0.9%
Sealed Air Corp.		659,671			14,420,408
Telecommunication Services—1.6%
Wireless Telecommunication Services—1.6%
America Movil SAB de CV, ADR, Series L		566,096			26,595,190
Utilities—3.5%
Energy Traders—2.0%
AES Corp. (The)¹		2,518,300			33,518,573
Multi-Utilities—1.5%
Public Service Enterprise Group, Inc.		717,387			23,853,117

Total Common Stocks (Cost $1,351,924,481)					1,613,756,743

Investment Companies—0.2%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^2,3		239,484			239,484
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^2,4		2,607,806			2,607,806

Total Investment Companies (Cost $2,847,290)					2,847,290

Total Investments, at Value (Cost $1,354,771,771)		99.2	%		1,616,604,033
Other Assets Net of Liabilities		0.8			12,243,213

Net Assets		100.0	%	$	1,628,847,246

Footnotes to Statement of Investments



1.		Non-income producing security.

2.		Rate shown is the 7-day yield as of December 31, 2009.

3.		Interest rate is less than 0.0005%.

4.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

OFI Liquid Assets Fund, LLC		93,229,008		463,250,677		556,479,685		—
Oppenheimer Institutional Money Market Fund, Cl. E		7,043,996		412,189,438		416,625,628		2,607,806


	Value		Income

OFI Liquid Assets Fund, LLC	$	—	$	615,180	^a
Oppenheimer Institutional Money Market Fund, Cl. E		2,607,806		81,831

	$	2,607,806	$	697,011


a.		Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

Valuation Inputs

1) Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value

Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	178,204,400	$	—	$	—	$	178,204,400
Consumer Staples		167,949,022		—		—		167,949,022
Energy		195,075,507		—		—		195,075,507
Financials		206,771,561		—		—		206,771,561
Health Care		226,573,886		—		—		226,573,886
Industrials		208,365,226		—		—		208,365,226
Information Technology		295,328,872		—		—		295,328,872
Materials		51,521,389		—		—		51,521,389
Telecommunication Services		26,595,190		—		—		26,595,190
Utilities		57,371,690		—		—		57,371,690
Investment Companies		2,847,290		—		—		2,847,290

Total Assets	$	1,616,604,033	$	—	$	—	$	1,616,604,033

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $1,352,163,965)	$	1,613,996,227
Affiliated companies (cost $2,607,806)		2,607,806

		1,616,604,033
Receivables and other assets:
Investments sold		23,119,865
Dividends		2,618,784
Shares of beneficial interest sold		30,636
Other		28,233

Total assets		1,642,401,551

Liabilities
Payables and other liabilities:
Investments purchased		12,180,537
Distribution and service plan fees		724,083
Shares of beneficial interest redeemed		268,230
Shareholder communications		184,493
Transfer and shareholder servicing agent fees		139,094
Trustees’ compensation		23,911
Other		33,957

Total liabilities		13,554,305

Net Assets	$	1,628,847,246


Composition of Net Assets
Par value of shares of beneficial interest	$	90,091
Additional paid-in capital		1,909,237,561
Accumulated net investment income		17,048,397
Accumulated net realized loss on investments and foreign currency transactions		(559,361,065	)
Net unrealized appreciation on investments		261,832,262

Net Assets	$	1,628,847,246


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $474,637,621 and 26,104,565 shares of beneficial interest outstanding)	$	18.18
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,154,209,625 and 63,986,124 shares of beneficial interest outstanding)	$	18.04

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $21,803)	$	30,338,186
Affiliated companies		81,831
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		17,130
Affiliated companies		615,180
Interest		5,763

Total investment income		31,058,090

Expenses
Management fees		9,599,661
Distribution and service plan fees—Service shares		2,572,759
Transfer and shareholder servicing agent fees:
Non-Service shares		306,251
Service shares		735,316
Shareholder communications:
Non-Service shares		173,292
Service shares		415,656
Trustees’ compensation		50,027
Custodian fees and expenses		9,102
Other		80,039

Total expenses		13,942,103
Less waivers and reimbursements of expenses		(16,605	)

Net expenses		13,925,498

Net Investment Income		17,132,592

Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(277,466,378	)
Foreign currency transactions		(9,781	)

Net realized loss		(277,476,159	)
Net change in unrealized appreciation on investments		638,505,737

Net Increase in Net Assets Resulting from Operations	$	378,162,170

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	17,132,592		$	24,773,186
Net realized loss		(277,476,159	)		(267,651,680	)
Net change in unrealized appreciation (depreciation)		638,505,737			(632,729,270	)

Net increase (decrease) in net assets resulting from operations		378,162,170			(875,607,764	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(8,430,011	)		(10,725,797	)
Service shares		(16,363,358	)		(15,635,174	)

		(24,793,369	)		(26,360,971	)
Distributions from net realized gain:
Non-Service shares		—			(46,604,473	)
Service shares		—			(82,181,746	)

		—			(128,786,219	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(56,849,676	)		(112,358,225	)
Service shares		(120,134,918	)		223,159,438

		(176,984,594	)		110,801,213

Net Assets
Total increase (decrease)		176,384,207			(919,953,741	)
Beginning of period		1,452,463,039			2,372,416,780

End of period (including accumulated net investment income of $17,048,397 and $24,769,636, respectively)	$	1,628,847,246		$	1,452,463,039

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	14.56		$	25.61		$	24.78		$	21.79		$	20.84

Income (loss) from investment operations:
Net investment income¹		.21			.29			.33			.27			.26
Net realized and unrealized gain (loss)		3.71			(9.64	)		.75			2.98			.97

Total from investment operations		3.92			(9.35	)		1.08			3.25			1.23

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.30	)		(.32	)		(.25	)		(.26	)		(.28	)
Distributions from net realized gain		—			(1.38	)		—			—			—

Total dividends and/or distributions to shareholders		(.30	)		(1.70	)		(.25	)		(.26	)		(.28	)


Net asset value, end of period	$	18.18		$	14.56		$	25.61		$	24.78		$	21.79


Total Return, at Net Asset Value²		28.29	%		(38.47	)%		4.43	%		15.03	%		5.98	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	474,637		$	432,360		$	907,727		$	1,046,146		$	1,121,476

Average net assets (in thousands)	$	430,517		$	670,994		$	1,006,655		$	1,054,522		$	1,156,299

Ratios to average net assets:³
Net investment income		1.35	%		1.42	%		1.28	%		1.19	%		1.26	%
Total expenses		0.78	%⁴		0.66	%⁴		0.65	%⁴		0.66	%⁴		0.67	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.78	%		0.66	%		0.65	%		0.66	%		0.67	%

Portfolio turnover rate		128	%		132	%		111	%		100	%		88	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.78	%
Year Ended December 31, 2008	0.66	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	14.42		$	25.38		$	24.58		$	21.63		$	20.70

Income (loss) from investment operations:
Net investment income¹		.17			.24			.26			.22			.21
Net realized and unrealized gain (loss)		3.70			(9.56	)		.75			2.95			.96

Total from investment operations		3.87			(9.32	)		1.01			3.17			1.17

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.25	)		(.26	)		(.21	)		(.22	)		(.24	)
Distributions from net realized gain		—			(1.38	)		—			—			—

Total dividends and/or distributions to shareholders		(.25	)		(1.64	)		(.21	)		(.22	)		(.24	)


Net asset value, end of period	$	18.04		$	14.42		$	25.38		$	24.58		$	21.63


Total Return, at Net Asset Value²		27.99	%		(38.63	)%		4.15	%		14.76	%		5.74	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,154,210		$	1,020,103		$	1,464,690		$	1,099,293		$	598,348

Average net assets (in thousands)	$	1,029,909		$	1,268,430		$	1,315,488		$	810,181		$	462,272

Ratios to average net assets:³
Net investment income		1.10	%		1.20	%		1.03	%		0.95	%		1.02	%
Total expenses		1.03	%⁴		0.91	%⁴		0.90	%⁴		0.91	%⁴		0.91	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.03	%		0.91	%		0.90	%		0.91	%		0.91	%

Portfolio turnover rate		128	%		132	%		111	%		100	%		88	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.03	%
Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.90	%
Year Ended December 31, 2006	0.91	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Main Street Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek high total return from equity and debt securities. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

There have been no significant changes to the fair valuation methodologies during the period.

Net Unrealized

Appreciation

Based on Cost

Undistributed

Accumulated

of Securities and Other

Net Investment

Long-Term

Loss

Investments for Federal

Income

Gain

Carryforward^1,2,3

Income Tax Purposes

$16,050,093

—

550,173,657

253,667,383


1.		As of December 31, 2009, the Fund had $550,173,657 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2016	$	217,993,206
2017		332,180,451

Total	$	550,173,657


2.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

3.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


	Reduction to
Reduction to	Accumulated Net
Accumulated Net	Realized Loss
Investment Income	on Investments

$60,462	$	60,462

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	24,793,369	$	48,772,351
Long-term capital gain		—		106,374,839

Total	$	24,793,369	$	155,147,190

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued


Federal tax cost of securities	$	1,362,936,650

Gross unrealized appreciation	$	256,880,152
Gross unrealized depreciation		(3,212,769	)

Net unrealized appreciation	$	253,667,383

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		2,817,732		$	41,817,781			4,118,231		$	80,935,200
Dividends and/or distributions reinvested		776,960			8,430,011			2,774,941			57,330,270
Redeemed		(7,176,221	)		(107,097,468	)		(12,645,946	)		(250,623,695	)

Net decrease		(3,581,529	)	$	(56,849,676	)		(5,752,774	)	$	(112,358,225	)


Service Shares
Sold		8,552,121		$	117,291,434			17,273,881		$	299,271,029
Dividends and/or distributions reinvested		1,515,498			16,352,225			4,768,240			97,748,917
Redeemed		(16,800,298	)		(253,778,577	)		(9,024,762	)		(173,860,508	)

Net increase (decrease)		(6,732,679	)	$	(120,134,918	)		13,017,359		$	223,159,438

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF and LAF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	1,834,666,253	$	2,021,625,599

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates Continued

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

As of December 31, 2009, the Fund held no outstanding forward contracts.

6. Securities Lending

As of December 31, 2009, the Fund had no securities on loan.

7. Subsequent Events Evaluation

8. Pending Litigation

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Small Cap Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Main Street Small Cap Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Main Street Small Cap Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Shares		Value

Common Stocks—98.4%
Consumer Discretionary—13.7%
Auto Components—0.2%
Cooper Tire & Rubber Co.		42,520	$	852,526
Spartan Motors, Inc.		21,937		123,505
Standard Motor Products, Inc.¹		28,980		246,910
Superior Industries International, Inc.		17,740		271,422

				1,494,363

Distributors—0.1%
Core-Mark Holding Co., Inc.¹		26,377		869,386
Diversified Consumer Services—1.3%
Capella Education Co.¹		74,220		5,588,766
Career Education Corp.¹		23,930		557,808
Corinthian Colleges, Inc.¹		53,900		742,203
Hillenbrand, Inc.		7,650		144,126
Jackson Hewitt Tax Service, Inc.¹		81,490		358,556
Lincoln Educational Services Corp.¹		20,440		442,935
Pre-Paid Legal Services, Inc.		15,921		654,035
Steiner Leisure Ltd.¹		31,616		1,257,052

				9,745,481

Hotels, Restaurants & Leisure—2.9%
AFC Enterprises, Inc.¹		30,432		248,325
Ambassadors Group, Inc.		29,420		390,992
Ameristar Casinos, Inc.		269,719		4,107,820
Bally Technologies, Inc.¹		109,670		4,528,274
Carrols Restaurant Group, Inc.¹		28,060		198,384
CEC Entertainment, Inc.¹		39,589		1,263,681
Cheesecake Factory, Inc. (The)¹		21,970		474,332
Chipotle Mexican Grill, Inc., Cl. A¹		26,100		2,300,976
International Speedway Corp., Cl. A		7,730		219,919
Jack in the Box, Inc.¹		218,837		4,304,524
P.F. Chang’s China Bistro, Inc.¹		43,140		1,635,437
Papa John’s International, Inc.¹		54,588		1,275,176
Speedway Motorsports, Inc.		29,919		527,173

				21,475,013

Household Durables—0.7%
American Greetings Corp., Cl. A		27,960		609,248
Blyth, Inc.		30,587		1,031,394
CSS Industries, Inc.		10,310		200,426
Helen of Troy Ltd.¹		17,840		436,366
Kid Brands, Inc.¹		36,410		159,476
La-Z-Boy, Inc.¹		46,000		438,380
National Presto Industries, Inc.		13,191		1,440,853
Tempur-Pedic International, Inc.¹		28,423		671,635

				4,987,778

Internet & Catalog Retail—0.5%
HSN, Inc.¹		28,426		573,921
NutriSystem, Inc.		23,038		718,094
Ticketmaster Entertainment, Inc.¹		164,480		2,009,946

				3,301,961

Leisure Equipment & Products—0.7%
Polaris Industries, Inc.		22,390		976,876
Pool Corp.		157,900		3,012,732
Smith & Wesson Holding Corp.¹		32,850		134,357
Sport Supply Group, Inc.		21,050		265,020
Sturm, Ruger & Co., Inc.		116,250		1,127,625

				5,516,610

Media—0.8%
Belo Corp., Cl. A		31,700		172,448
CTC Media, Inc.¹		26,990		402,151
Entercom Communications Corp.¹		24,140		170,670
Gannett Co., Inc.		25,170		373,775
Harte-Hanks, Inc.		61,765		665,827
Journal Communications, Inc.		47,430		184,503
Lee Enterprises, Inc.¹		124,500		432,015
Mediacom Communications Corp.¹		32,480		145,186
National CineMedia, Inc.		17,750		294,118
Scholastic Corp.		37,340		1,113,852
Sinclair Broadcast Group, Inc., Cl. A¹		126,253		508,800
Valassis Communications, Inc.¹		15,740		287,412
Value Line, Inc.		6,707		168,413
Wiley (John) & Sons, Inc., Cl. A		22,030		922,616

				5,841,786

Multiline Retail—0.6%
Big Lots, Inc.¹		44,097		1,277,931
Saks, Inc.¹		528,400		3,466,304

				4,744,235

Specialty Retail—3.9%
Aeropostale, Inc.¹		39,510		1,345,316
Barnes & Noble, Inc.		74,494		1,420,601
Big 5 Sporting Goods Corp.		9,465		162,609
Books-A-Million, Inc.		21,050		141,456
Borders Group, Inc.¹		42,612		50,282
Cabela’s, Inc.¹		85,193		1,214,852
Cato Corp., Cl. A		77,899		1,562,654
Children’s Place Retail Stores, Inc.¹		114,730		3,787,237
Destination Maternity Corp.¹		11,350		215,650
Dress Barn, Inc. (The)¹		59,294		1,369,691
Finish Line, Inc. (The), Cl. A		73,100		917,405
Group 1 Automotive, Inc.¹		28,600		810,810

STATEMENT OF INVESTMENTS Continued


	Shares		Value

Specialty Retail Continued
Gymboree Corp.¹		39,348	$	1,711,245
Jo-Ann Stores, Inc.¹		7,850		284,484
Jos. A. Banks Clothiers, Inc.¹		14,670		618,927
Kirkland’s, Inc.¹		109,573		1,903,283
Men’s Wearhouse, Inc. (The)		29,546		622,239
RadioShack Corp.		70,430		1,373,385
Rent-A-Center, Inc.¹		71,060		1,259,183
Signet Jewelers Ltd.¹		23,120		617,766
Stage Stores, Inc.		129,849		1,604,934
Tractor Supply Co.¹		118,340		6,267,286

				29,261,295

Textiles, Apparel & Luxury Goods—2.0%
Carter’s, Inc.¹		46,200		1,212,750
Deckers Outdoor Corp.¹		8,360		850,379
Fossil, Inc.¹		122,247		4,102,609
Perry Ellis International, Inc.¹		30,109		453,442
Phillips/Van Heusen Corp.		110,190		4,482,529
Steven Madden Ltd.¹		24,087		993,348
Timberland Co., Cl. A¹		91,085		1,633,154
UniFirst Corp.		15,394		740,605

				14,468,816

Consumer Staples—2.3%
Beverages—0.1%
Cott Corp.¹		93,860		769,652
Food & Staples Retailing—0.2%
Nash Finch Co.		8,870		328,988
Pantry, Inc. (The)¹		42,400		576,216
Weis Markets, Inc.		14,766		536,892

				1,442,096

Food Products—1.1%
Agria Corp., ADR¹		70,173		219,641
American Italian Pasta Co.¹		24,450		850,616
Cal-Maine Foods, Inc.		19,150		652,632
Darling International, Inc.¹		167,580		1,404,320
Fresh Del Monte Produce, Inc.¹		18,158		401,292
J&J Snack Foods Corp.		5,830		232,967
Lancaster Colony Corp.		15,250		757,925
Overhill Farms, Inc.¹		33,740		163,976
TreeHouse Foods, Inc.¹		93,160		3,620,198

				8,303,567

Household Products—0.2%
Central Garden & Pet Co., Cl. A¹		123,624		1,228,823
Personal Products—0.4%
American Oriental Bioengineering, Inc.¹		138,700		644,955
Herbalife Ltd.		45,790		1,857,700
Prestige Brands Holdings, Inc.¹		102,040		802,034

				3,304,689

Tobacco—0.3%
Alliance One International, Inc.¹		84,170		410,750
Universal Corp.		36,525		1,665,905

				2,076,655

Energy—4.5%
Energy Equipment & Services—2.0%
Acergy SA, Sponsored ADR		115,123		1,797,070
Basic Energy Services, Inc.¹		44,170		393,113
Bolt Technology Corp.¹		19,400		213,788
Cal Dive International, Inc.¹		106,860		807,862
Compagnie Generale de Geophysique-Veritas, Sponsored ADR¹		38,620		820,675
Complete Production Services, Inc.¹		59,630		775,190
Dawson Geophysical Co.¹		21,248		491,041
Geokinetics, Inc.¹		22,290		214,430
Gulfmark Offshore, Inc.¹		43,596		1,234,203
Matrix Service Co.¹		42,063		447,971
Oil States International, Inc.¹		46,040		1,808,912
Pioneer Drilling Co.¹		52,820		417,278
Rowan Cos., Inc.¹		24,690		558,982
Seacor Holdings, Inc.¹		18,370		1,400,713
T-3 Energy Services, Inc.¹		35,470		904,485
TGC Industries, Inc.¹		44,872		175,450
Tidewater, Inc.		28,132		1,348,929
Willbros Group, Inc.¹		86,481		1,458,934

				15,269,026

Oil, Gas & Consumable Fuels—2.5%
China Integrated Energy, Inc.¹		28,060		197,542
CVR Energy, Inc.¹		92,344		633,480
Dominion Resources Black Warrior Trust		14,340		205,779
Encore Acquisition Co.¹		5,656		271,601
Gulfport Energy Corp.¹		51,680		591,736
Holly Corp.		182,141		4,668,274
Inergy LP		86,400		3,082,752
MarkWest Energy Partners LP		184,318		5,394,988
Pengrowth Energy Trust		30,560		294,293
PrimeEnergy Corp.¹		5,544		201,746
Provident Energy Trust		36,830		247,498
Ship Finance International Ltd.		15,443		210,488


	Shares		Value

Oil, Gas & Consumable Fuels Continued
Stone Energy Corp.¹		13,410	$	242,051
Teekay Tankers Ltd., Cl. A		65,506		558,766
World Fuel Services Corp.		57,560		1,542,032

				18,343,026

Financials—18.5%
Capital Markets—2.9%
BGC Partners, Inc., Cl. A		79,520		367,382
Fifth Street Finance Corp.		71,690		769,951
Gladstone Investment Corp.		43,320		197,539
Investment Technology Group, Inc.¹		17,130		337,461
Knight Capital Group, Inc., Cl. A¹		342,226		5,270,280
MF Global Ltd.¹		478,374		3,324,699
Oppenheimer Holdings, Inc., Cl. A, Non-Vtg.		15,370		510,591
optionsXpress Holdings, Inc.		177,100		2,736,195
Penson Worldwide, Inc.¹		55,632		504,026
Rodman & Renshaw Capital Group, Inc.¹		108,720		445,752
Stifel Financial Corp.¹		93,230		5,522,945
Tradestation Group, Inc.¹		60,478		477,171
Triangle Capital Corp.		17,120		206,981
W.P. Carey & Co. LLC		21,460		593,369
Waddell & Reed Financial, Inc., Cl. A		22,550		688,677

				21,953,019

Commercial Banks—2.8%
Alliance Financial Corp.		8,360		226,974
Banco Latinoamericano de Exportaciones SA, Cl. E		65,500		910,450
Banco Macro SA, ADR		30,495		907,531
Bancolombia SA, Sponsored ADR		22,800		1,037,628
Bank of Marin Bancorp		8,150		265,364
BBVA Banco Frances SA, ADR		31,613		198,846
CapitalSource, Inc.		312,150		1,239,236
Century Bancorp, Inc., Cl. A		9,290		204,659
First of Long Island Corp. (The)²		9,290		234,573
Hancock Holding Co.		91,400		4,002,406
IBERIABANK Corp.		59,900		3,223,219
International Bancshares Corp.		81,419		1,541,262
National Bankshares, Inc.²		7,127		201,623
Northrim BanCorp, Inc.		13,100		221,128
Oriental Financial Group, Inc.		118,301		1,277,651
Santander BanCorp¹		25,190		309,333
Sterling Bancshares, Inc.		464,600		2,383,398
Westamerica Bancorp		38,700		2,142,819

				20,528,100

Consumer Finance—1.3%
Advance America Cash Advance Centers, Inc.		154,090		856,740
Cash America International, Inc.		50,807		1,776,213
EZCORP, Inc., Cl. A¹		86,940		1,496,237
First Cash Financial Services, Inc.¹		69,992		1,553,122
Nelnet, Inc., Cl. A		66,986		1,154,169
Student Loan Corp. (The)		8,410		391,654
World Acceptance Corp.¹		66,658		2,388,356

				9,616,491

Diversified Financial Services—1.1%
Encore Capital Group, Inc.¹		26,720		464,928
Life Partners Holdings, Inc.		41,747		884,619
MSCI, Inc., Cl. A¹		158,740		5,047,932
Portfolio Recovery Associates, Inc.¹		34,304		1,539,564

				7,937,043

Insurance—4.8%
Allied World Assurance Holdings Ltd.		21,601		995,158
American Physicians Capital, Inc.		28,625		867,910
American Physicians Service Group, Inc.		7,750		178,793
American Safety Insurance Holdings Ltd.¹		13,830		199,844
Amerisafe, Inc.¹		66,358		1,192,453
AmTrust Financial Services, Inc.		97,508		1,152,545
Argo Group International Holdings Ltd.¹		30,520		889,353
Aspen Insurance Holdings Ltd.		57,510		1,463,630
CNA Surety Corp.¹		43,726		651,080
Conseco, Inc.¹		248,830		1,244,150
EMC Insurance Group, Inc.		9,600		206,496
Employers Holdings, Inc.		49,820		764,239
Endurance Specialty Holdings Ltd.		36,920		1,374,532
Enstar Group Ltd.¹		11,960		873,319
FBL Financial Group, Inc., Cl. A		32,700		605,604
First Mercury Financial Corp.		42,713		585,595
Flagstone Reinsurance Holdings Ltd.		73,130		800,042
FPIC Insurance Group, Inc.¹		20,200		780,124
Greenlight Capital Re Ltd., Cl. A¹		37,440		882,461
Hanover Insurance Group, Inc.		127,320		5,656,828
Harleysville Group, Inc.		17,610		559,822
Infinity Property & Casualty Corp.		33,464		1,359,977
MBIA, Inc.¹		106,640		424,427
Mercer Insurance Group, Inc.		11,550		209,864
Mercury General Corp.		16,710		656,035
Montpelier Re Holdings Ltd.		71,560		1,239,419

STATEMENT OF INVESTMENTS Continued


	Shares		Value

Insurance Continued
National Interstate Corp.		8,360	$	141,786
National Western Life Insurance Co., Cl. A		2,270		394,117
OneBeacon Insurance Group Ltd.		32,390		446,334
Platinum Underwriters Holdings Ltd.		38,650		1,479,909
PMA Capital Corp., Cl. A¹		49,320		310,716
ProAssurance Corp.¹		23,172		1,244,568
Safety Insurance Group, Inc.		35,389		1,282,143
Seabright Insurance Holdings, Inc.¹		17,330		199,122
StanCorp Financial Group, Inc.		41,212		1,649,304
Unitrin, Inc.		56,870		1,253,984
Universal Insurance Holdings, Inc.		75,190		441,365
Validus Holdings Ltd.		49,204		1,325,556

				35,982,604

Real Estate Investment Trusts—4.7%
Agree Realty Corp.		20,940		487,693
Associated Estates Realty Corp.		21,870		246,475
CBL & Associates Properties, Inc.		60,960		589,483
Chimera Investment Corp.		699,800		2,715,224
DiamondRock Hospitality Co.		57,190		484,399
Digital Realty Trust, Inc.		104,610		5,259,791
Equity Lifestyle Properties, Inc.		17,120		864,046
Hatteras Financial Corp.		125,690		3,514,292
Home Properties of New York, Inc.		35,518		1,694,564
Hospitality Properties Trust		20,320		481,787
HRPT Properties Trust		30,630		198,176
Kilroy Realty Corp.		14,030		430,300
LaSalle Hotel Properties		33,110		702,925
Liberty Property Trust		6,290		201,343
LTC Properties, Inc.		73,880		1,976,290
Mack-Cali Realty Corp.		24,870		859,756
Mid-America Apartment Communities, Inc.		127,749		6,167,722
Monmouth Real Estate Investment Corp., Cl. A		29,510		219,554
National Health Investors, Inc.		29,141		1,077,926
Nationwide Health Properties, Inc.		6,610		232,540
Newcastle Investment Corp.¹		60,349		126,129
Realty Income Corp.		1,578		40,886
Starwood Property Trust, Inc.		121,650		2,297,969
Tanger Factory Outlet Centers, Inc.		80,430		3,135,966
Walter Investment Management Corp.		84,480		1,210,598

				35,215,834

Real Estate Management & Development—0.3%
E-House China Holdings Ltd., ADS¹		43,220		783,146
FirstService Corp.¹		9,855		188,428
Forestar Group, Inc.¹		65,810		1,446,504

				2,418,078

Thrifts & Mortgage Finance—0.6%
First Defiance Financial Corp.		25,990		293,427
First Niagara Financial Group, Inc.		142,200		1,978,002
NASB Financial, Inc.		3,738		87,058
Northwest Bancshares, Inc.		71,600		810,512
OceanFirst Financial Corp.		50,710		573,023
United Financial Bancorp., Inc.		30,854		404,496

				4,146,518

Health Care—14.9%
Biotechnology—1.4%
Acorda Therapeutics, Inc.¹		99,300		2,504,346
Cubist Pharmaceuticals, Inc.¹		9,600		182,112
Indevus Pharmaceuticals, Inc.^1,2		2,500		25
Martek Biosciences Corp.¹		75,137		1,423,095
PDL BioPharma, Inc.		177,362		1,216,703
Savient Pharmaceuticals, Inc.¹		307,045		4,178,882
Sinovac Biotech Ltd.¹		109,060		690,350

				10,195,513

Health Care Equipment & Supplies—4.2%
American Medical Systems Holdings, Inc.¹		59,960		1,156,628
Atrion Corp.		3,638		566,509
Dexcom, Inc.¹		20,400		164,832
Greatbatch, Inc.¹		108,800		2,092,224
Hill-Rom Holdings, Inc.		59,727		1,432,851
Integra LifeSciences Holdings Corp.¹		76,800		2,824,704
Invacare Corp.		52,101		1,299,399
Kensey Nash Corp.¹		30,058		766,479
Kinetic Concepts, Inc.¹		34,934		1,315,265
Masimo Corp.¹		55,540		1,689,527
Merit Medical Systems, Inc.¹		89,530		1,727,034
Natus Medical, Inc.¹		101,010		1,493,938
NuVasive, Inc.¹		143,060		4,575,059
Orthofix International NV¹		67,130		2,079,016
Quidel Corp.¹		44,870		618,309
Sirona Dental Systems, Inc.¹		7,970		252,968
Steris Corp.		50,710		1,418,359
SurModics, Inc.¹		22,221		503,528
Symmetry Medical, Inc.¹		81,070		653,424


	Shares		Value

Health Care Equipment & Supplies Continued
Thoratec Corp.¹		53,700	$	1,445,604
Utah Medical Products, Inc.		7,320		214,622
Volcano Corp.¹		154,400		2,683,472
Young Innovations, Inc.		8,050		199,479

				31,173,230

Health Care Providers & Services—7.3%
Alliance HealthCare Services, Inc.¹		22,190		126,705
Allied Healthcare International, Inc.¹		72,150		209,957
Amedisys, Inc.¹		28,410		1,379,590
America Service Group, Inc.		31,360		497,683
American Dental Partners, Inc.¹		14,950		192,855
AMN Healthcare Services, Inc.¹		66,896		606,078
AmSurg Corp.¹		74,890		1,649,078
Centene Corp.¹		72,412		1,532,962
Chemed Corp.		26,872		1,289,050
Community Health Systems, Inc.¹		19,582		697,119
Continucare Corp.¹		68,900		301,093
CorVel Corp.¹		4,750		159,315
Emergency Medical Services LP, Cl. A¹		24,020		1,300,683
Ensign Group, Inc. (The)		13,510		207,649
Genoptix, Inc.¹		86,391		3,069,472
Gentiva Health Services, Inc.¹		62,486		1,687,747
Health Management Associates, Inc., Cl. A¹		965,900		7,022,093
HEALTHSOUTH Corp.¹		67,310		1,263,409
Healthspring, Inc.¹		121,888		2,146,448
Healthways, Inc.¹		31,891		584,881
HMS Holdings Corp.¹		57,700		2,809,413
InVentiv Health, Inc.¹		56,216		909,013
Kindred Healthcare, Inc.¹		21,500		396,890
LHC Group, Inc.¹		47,610		1,600,172
LifePoint Hospitals, Inc.¹		29,671		964,604
Lincare Holdings, Inc.¹		45,624		1,693,563
Magellan Health Services, Inc.¹		36,570		1,489,496
MEDNAX, Inc.¹		77,752		4,673,673
Metropolitan Health Networks, Inc.¹		97,890		194,801
Molina Healthcare, Inc.¹		56,536		1,292,978
Nighthawk Radiology Holdings, Inc.¹		74,170		335,990
NovaMed Eyecare, Inc.¹		48,280		187,326
Odyssey Healthcare, Inc.¹		88,150		1,373,377
PharMerica Corp.¹		87,743		1,393,359
PSS World Medical, Inc.¹		1,370		30,921
RehabCare Group, Inc.¹		56,825		1,729,185
Res-Care, Inc.¹		36,042		403,670
Sun Healthcare Group, Inc.¹		322,042		2,953,125
Triple-S Management Corp., Cl. B¹		61,882		1,089,123
U.S. Physical Therapy, Inc.¹		29,075		492,240
Universal Health Services, Inc., Cl. B		20,842		635,681
VCA Antech, Inc.¹		16,996		423,540
Virtual Radiologic Corp.¹		15,780		201,353
WellCare Health Plans, Inc.¹		22,650		832,614

				54,029,974

Health Care Technology—0.3%
MedAssets, Inc.¹		115,800		2,456,118
Life Sciences Tools & Services—0.5%
Bruker Corp.¹		28,550		344,313
Cambrex Corp.¹		77,770		433,957
eResearch Technology, Inc.¹		123,420		741,754
Harvard Bioscience, Inc.¹		56,220		200,705
ICON plc, Sponsored ADR¹		36,100		784,453
Kendle International, Inc.¹		59,890		1,096,586

				3,601,768

Pharmaceuticals—1.2%
Biovail Corp.		55,690		777,432
Cornerstone Therapeutics, Inc.¹		36,000		219,600
Endo Pharmaceuticals Holdings, Inc.¹		31,702		650,208
Impax Laboratories, Inc.¹		43,630		593,368
K-V Pharmaceutical Co., Cl. A¹		97,680		358,486
King Pharmaceuticals, Inc.¹		80,978		993,600
Medicis Pharmaceutical Corp., Cl. A		24,286		656,936
Par Pharmaceutical Cos., Inc.¹		16,620		449,737
Perrigo Co.		44,530		1,774,075
Questcor Pharmaceuticals, Inc.¹		307,488		1,460,568
Valeant Pharmaceuticals International, Inc.¹		38,180		1,213,742

				9,147,752

Industrials—15.7%
Aerospace & Defense—1.5%
BE Aerospace, Inc.¹		265,218		6,232,623
Ceradyne, Inc.¹		67,410		1,294,946
Cubic Corp.		16,700		622,910
DynCorp International, Inc., Cl. A¹		83,833		1,203,004
Gencorp, Inc.¹		93,760		656,320
Triumph Group, Inc.		28,660		1,382,845

				11,392,648

STATEMENT OF INVESTMENTS Continued


	Shares		Value

Air Freight & Logistics—0.8%
Atlas Air Worldwide Holdings, Inc.¹		15,370	$	572,533
Hub Group, Inc., Cl. A¹		197,180		5,290,339

				5,862,872

Airlines—0.5%
Allegiant Travel Co.¹		22,390		1,056,136
Hawaiian Holdings, Inc.¹		136,138		952,966
Pinnacle Airlines Corp.¹		29,510		203,029
Republic Airways Holdings, Inc.¹		96,459		712,832
SkyWest, Inc.		68,990		1,167,311

				4,092,274

Building Products—0.5%
Aaon, Inc.		32,665		636,641
Ameron International Corp.		18,234		1,157,130
Apogee Enterprises, Inc.		97,434		1,364,076
Gibraltar Industries, Inc.¹		29,290		460,732
NCI Building Systems, Inc.¹		77,060		139,479
Universal Forest Products, Inc.		10,313		379,622

				4,137,680

Commercial Services & Supplies—2.2%
American Reprographics Co.¹		123,396		865,006
ATC Technology Corp.¹		54,163		1,291,788
Brink’s Co. (The)		24,330		592,192
Consolidated Graphics, Inc.¹		12,790		447,906
Courier Corp.		2,914		41,525
Deluxe Corp.		89,546		1,324,385
EnergySolutions, Inc.		254,400		2,159,856
Ennis, Inc.		31,150		523,009
G&K Services, Inc., Cl. A		28,780		723,241
M&F Worldwide Corp.¹		12,842		507,259
Miller (Herman), Inc.		63,790		1,019,364
North American Galvanizing & Coating, Inc.¹		45,580		221,063
R. R. Donnelley & Sons Co.		76,240		1,697,865
Sykes Enterprises, Inc.¹		29,223		744,310
Team, Inc.¹		25,990		488,872
Waste Connections, Inc.¹		103,420		3,448,023

				16,095,664

Construction & Engineering—1.4%
Baker (Michael) Corp.¹		20,813		861,658
Comfort Systems USA, Inc.		117,662		1,451,949
Dycom Industries, Inc.¹		136,770		1,098,263
EMCOR Group, Inc.¹		67,160		1,806,604
Pike Electric Corp.¹		35,180		326,470
Primoris Services Corp.		27,960		222,841
Sterling Construction Co., Inc.¹		23,930		458,977
Tutor Perini Corp.¹		219,723		3,972,592

				10,199,354

Electrical Equipment—2.1%
AZZ, Inc.¹		30,430		995,061
Encore Wire Corp.		52,275		1,101,434
EnerSys, Inc.¹		75,328		1,647,423
GT Solar International, Inc.¹		133,690		743,316
Harbin Electric, Inc.¹		90,540		1,859,692
Hubbell, Inc., Cl. B		37,030		1,751,519
Powell Industries, Inc.¹		39,710		1,252,056
Regal-Beloit Corp.		65,030		3,377,658
Smith (A.O.) Corp.		19,480		845,237
Thomas & Betts Corp.¹		50,379		1,803,064

				15,376,460

Industrial Conglomerates—0.4%
Carlisle Cos., Inc.		43,090		1,476,263
Tredegar Corp.		77,681		1,228,913

				2,705,176

Machinery—3.8%
Altra Holdings, Inc.¹		27,367		337,982
American Railcar Industries, Inc.		19,290		212,576
Ampco-Pittsburgh Corp.		22,190		699,651
Chart Industries, Inc.¹		73,061		1,209,160
Colfax Corp.¹		98,984		1,191,767
EnPro Industries, Inc.¹		80,833		2,134,800
Force Protection, Inc.¹		90,241		470,156
Freightcar America, Inc.		61,600		1,221,528
Gardner Denver, Inc.		144,006		6,127,455
Graco, Inc.		142,200		4,062,654
Harsco Corp.		13,240		426,725
K-Tron International, Inc.¹		2,224		241,838
Lincoln Electric Holdings, Inc.		14,941		798,746
Mueller Industries, Inc.		76,020		1,888,337
Oshkosh Corp.		6,910		255,877
Portec Rail Products, Inc.		22,251		238,308
Timken Co.		32,930		780,770
Toro Co. (The)		31,800		1,329,558
Wabtec Corp.		93,050		3,800,162
Watts Water Technologies, Inc., Cl. A		19,300		596,756

				28,024,806


	Shares		Value

Marine—0.2%
Diana Shipping, Inc.¹		49,140	$	711,547
Kirby Corp.¹		12,430		432,937
Safe Bulkers, Inc.		75,670		662,869

				1,807,353

Professional Services—0.7%
GP Strategies Corp.¹		27,640		208,129
Resources Connection, Inc.¹		73,847		1,567,033
School Specialty, Inc.¹		72,670		1,699,751
Spherion Corp.¹		67,273		378,074
VSE Corp.		10,010		451,251
Watson Wyatt & Co. Holdings		18,532		880,641

				5,184,879

Road & Rail—1.2%
Avis Budget Group, Inc.¹		168,030		2,204,554
Dollar Thrifty Automotive Group, Inc.¹		51,220		1,311,744
Old Dominion Freight Line, Inc.¹		177,110		5,437,277

				8,953,575

Trading Companies & Distributors—0.4%
Aircastle Ltd.		23,600		232,460
DXP Enterprises, Inc.¹		15,697		205,160
Genesis Lease Ltd., ADS		8,120		72,512
Houston Wire & Cable Co.		37,728		448,963
Interline Brands, Inc.¹		14,530		250,933
WESCO International, Inc.¹		58,270		1,573,873

				2,783,901

Information Technology—20.3%
Communications Equipment—3.6%
ADTRAN, Inc.		35,310		796,241
Arris Group, Inc.¹		451,030		5,155,273
Black Box Corp.		27,165		769,856
Blue Coat Systems, Inc.¹		304,708		8,696,366
Comtech Telecommunications Corp.¹		125,700		4,405,785
InterDigital, Inc.¹		26,100		692,694
Ituran Location and Control Ltd.		15,741		202,114
Netgear, Inc.¹		33,662		730,129
Oplink Communications, Inc.¹		16,974		278,204
Plantronics, Inc.		48,214		1,252,600
Polycom, Inc.¹		111,800		2,791,646
Sierra Wireless, Inc.¹		80,130		849,378

				26,620,286

Computers & Peripherals—1.3%
China Digital TV Holding Co. Ltd., ADR		33,830		206,025
Diebold, Inc.		13,200		375,540
NCR Corp.¹		51,390		571,971
QLogic Corp.¹		90,440		1,706,603
Rimage Corp.¹		12,280		212,935
STEC, Inc.¹		59,910		978,929
Synaptics, Inc.¹		174,690		5,354,249

				9,406,252

Electronic Equipment & Instruments—1.6%
Anixter International, Inc.¹		18,250		859,575
Benchmark Electronics, Inc.¹		92,639		1,751,803
Cogent, Inc.¹		44,250		459,758
Insight Enterprises, Inc.¹		88,466		1,010,282
Multi-Fineline Electronix, Inc.¹		55,402		1,571,755
PC Connection, Inc.¹		5,520		37,260
PC Mall, Inc.¹		30,330		158,323
ScanSource, Inc.¹		48,308		1,289,824
Spectrum Control, Inc.¹		25,790		244,231
SYNNEX Corp.¹		49,743		1,525,120
Tech Data Corp.¹		40,868		1,906,901
Technitrol, Inc.		46,940		205,597
TTM Technologies, Inc.¹		90,970		1,048,884

				12,069,313

Internet Software & Services—1.9%
DivX, Inc.¹		17,800		100,392
EarthLink, Inc.		185,108		1,538,247
GigaMedia Ltd.¹		252,860		826,852
j2 Global Communications, Inc.¹		200,965		4,089,638
Perficient, Inc.¹		23,820		200,803
Saba Software, Inc.¹		52,090		215,653
SkillSoft plc, ADR¹		60,800		637,184
Sohu.com, Inc.¹		9,640		552,179
United Online, Inc.		117,672		846,062
ValueClick, Inc.¹		125,710		1,272,185
VistaPrint NV¹		66,163		3,748,796
Web.com Group, Inc.¹		16,280		106,308

				14,134,299

IT Services—4.5%
Acxiom Corp.¹		148,450		1,992,199
Broadridge Financial Solutions, Inc.		76,728		1,730,984
CACI International, Inc., Cl. A¹		99,500		4,860,575
Cass Information Systems, Inc.		2,230		67,792

STATEMENT OF INVESTMENTS Continued


	Shares		Value

IT Services Continued
Convergys Corp.¹		108,627	$	1,167,740
CSG Systems International, Inc.¹		69,031		1,317,802
DST Systems, Inc.¹		31,134		1,355,886
Forrester Research, Inc.¹		16,110		418,055
Gartner, Inc.¹		70,610		1,273,804
Global Cash Access, Inc.¹		97,785		732,410
iGate Corp.		31,716		317,160
Lender Processing Services, Inc.		75,880		3,085,281
Ness Technologies, Inc.¹		76,640		375,536
NeuStar, Inc., Cl. A¹		217,228		5,004,933
Patni Computer Systems Ltd., ADR		47,240		966,058
Satyam Computer Services Ltd., ADR¹		161,020		742,302
Syntel, Inc.		13,838		526,259
TeleTech Holdings, Inc.¹		94,516		1,893,155
Telvent GIT SA		20,730		808,055
TNS, Inc.¹		42,660		1,095,935
Unisys Corp.¹		31,500		1,214,640
Virtusa Corp.¹		75,300		682,218
Wright Express Corp.¹		49,010		1,561,459

				33,190,238

Semiconductors & Semiconductor Equipment—3.2%
Amkor Technology, Inc.¹		30,020		214,943
Atheros Communications, Inc.¹		122,600		4,197,824
Himax Technologies, Inc.		181,050		501,509
Mellanox Technologies Ltd.¹		17,090		322,317
Micrel, Inc.		132,917		1,089,919
Netlogic Microsystems, Inc.¹		86,950		4,022,307
Semtech Corp.¹		239,439		4,072,857
Sigma Designs, Inc.¹		48,870		522,909
Silicon Motion Technology Corp., ADR¹		32,707		111,531
Skyworks Solutions, Inc.¹		256,820		3,644,276
Tessera Technologies, Inc.¹		39,359		915,884
Varian Semiconductor Equipment Associates, Inc.¹		107,359		3,852,041
Volterra Semiconductor Corp.¹		28,980		554,098

				24,022,415

Software—4.2%
Actuate Corp.¹		111,460		477,049
Blackboard, Inc.¹		38,610		1,752,508
Changyou.com Ltd., ADR¹		6,290		208,891
Compuware Corp.¹		160,458		1,160,111
Concur Technologies, Inc.¹		56,280		2,405,970
Double-Take Software, Inc.¹		27,700		276,723
FactSet Research Systems, Inc.		75,582		4,978,586
Fair Isaac Corp.		75,431		1,607,435
Fortinet, Inc.¹		14,630		257,049
Giant Interactive Group, Inc., ADR		65,800		461,916
Henry (Jack) & Associates, Inc.		24,704		571,156
i2 Technologies, Inc.¹		44,110		843,383
Informatica Corp.¹		50,260		1,299,724
JDA Software Group, Inc.¹		25,500		649,485
Manhattan Associates, Inc.¹		55,155		1,325,375
MICROS Systems, Inc.¹		12,720		394,702
MicroStrategy, Inc., Cl. A¹		18,756		1,763,439
Monotype Imaging Holdings, Inc.¹		25,890		233,787
Net 1 UEPS Technologies, Inc.¹		89,680		1,741,586
Novell, Inc.¹		23,490		97,484
Perfect World Co. Ltd.¹		25,960		1,023,862
Pervasive Software, Inc.¹		37,750		181,955
Quest Software, Inc.¹		85,230		1,568,232
S1 Corp.¹		109,560		714,331
SonicWALL, Inc.¹		96,700		735,887
Sybase, Inc.¹		22,000		954,800
TIBCO Software, Inc.¹		342,530		3,298,564
Websense, Inc.¹		37,490		654,575

				31,638,565

Materials—5.0%
Chemicals—2.0%
Ashland, Inc.		32,799		1,299,496
Cabot Corp.		9,290		243,677
Cytec Industries, Inc.		72,281		2,632,474
Hawkins, Inc.		25,780		562,777
Innophos Holdings, Inc.		76,770		1,764,942
Innospec, Inc.		14,540		146,709
KMG Chemicals, Inc.		16,710		249,815
Koppers Holdings, Inc.		4,136		125,900
LSB Industries, Inc.¹		42,271		596,021
Minerals Technologies, Inc.		29,684		1,616,887
NewMarket Corp.		9,840		1,129,337
Omnova Solutions, Inc.¹		63,330		388,213
PolyOne Corp.¹		96,750		722,723
Schulman (A.), Inc.		51,700		1,043,306
Spartech Corp.		53,051		544,303
Stepan Co.		8,150		528,202
W.R. Grace & Co.¹		35,810		907,784

				14,502,566


	Shares			Value

Construction Materials—0.5%
Eagle Materials, Inc.		139,560		$	3,635,538
Containers & Packaging—1.1%
AEP Industries, Inc.¹		18,365			703,012
Boise, Inc.¹		84,480			448,589
Bway Holding Co.¹		38,114			732,551
Myers Industries, Inc.		61,680			561,288
Packaging Corp. of America		206,740			4,757,087
Rock-Tenn Co., Cl. A		24,959			1,258,183

					8,460,710

Metals & Mining—1.1%
Century Aluminum Co.¹		117,500			1,902,325
Compass Minerals International, Inc.		73,090			4,910,917
Mesabi Trust		13,790			176,512
Redcorp Ventures Ltd., Legend Shares^1,2		666,400			3,186
Thompson Creek Metals Co., Inc.¹		112,820			1,322,250

					8,315,190

Paper & Forest Products—0.3%
Buckeye Technologies, Inc.¹		82,410			804,322
Clearwater Paper Corp.¹		13,880			762,984
Domtar Corp.¹		6,850			379,559
KapStone Paper & Packing Corp.¹		52,510			517,224

					2,464,089

Telecommunication Services—0.4%
Diversified Telecommunication Services—0.3%
Atlantic Tele-Network, Inc.		4,449			244,739
Cincinnati Bell, Inc.¹		480,672			1,658,318
Hickory Tech Corp.		24,450			215,894
Nortel Inversora SA, Sponsored ADR¹		13,930			208,950

					2,327,901

Wireless Telecommunication Services—0.1%
USA Mobility, Inc.		79,212			872,124
Utilities—3.1%
Electric Utilities—1.0%
Cleco Corp.		73,000			1,995,090
Companhia Paranaense de Energia-Copel, Sponsored ADR		87,951			1,886,549
El Paso Electric Co.¹		44,480			902,054
Empresa Distribuidora y Comercializadora Norte SA, ADR¹		28,270			223,333
Westar Energy, Inc.		119,400			2,593,368

					7,600,394

Energy Traders—0.2%
Calpine Corp.¹		9,100			100,100
Mirant Corp.¹		83,860			1,280,542

					1,380,642

Gas Utilities—1.0%
AGL Resources, Inc.		44,240			1,613,433
Atmos Energy Corp.		54,940			1,615,236
Chesapeake Utilities Corp.		5,160			165,378
Laclede Group, Inc. (The)		12,490			421,787
New Jersey Resources Corp.		37,421			1,399,545
Nicor, Inc.		19,980			841,158
Southwest Gas Corp.		45,900			1,309,527

					7,366,064

Multi-Utilities—0.5%
Avista Corp.		36,490			787,819
NorthWestern Corp.		126,449			3,290,203

					4,078,022

Water Utilities—0.4%
Aqua America, Inc.		168,800			2,955,677

Total Common Stocks (Cost $624,546,465)					732,503,227

Investment Companies—1.8%
Apollo Investment Corp.		83,320			794,040
Ares Capital Corp.		40,288			501,586
ASA Ltd.		1,123			86,976
BlackRock Kelso Capital Corp.		28,270			240,860
Gladstone Capital Corp.		70,558			543,297
Hercules Technology Growth Capital, Inc.		136,377			1,416,957
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^3,4		263,497			263,497
MCG Capital Corp.¹		98,070			423,662
NGP Capital Resources Co.		28,570			232,274
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^3,5		6,595,140			6,595,140
PennantPark Investment Corp.		64,478			575,144
Prospect Capital Corp.		97,512			1,151,617
TICC Capital Corp.		50,370			304,739


Total Investment Companies (Cost $12,337,101)					13,129,789

Total Investments, at Value (Cost $636,883,566)		100.2	%		745,633,016
Liabilities in Excess of Other Assets		(0.2	)		(1,471,750	)

Net Assets		100.0	%	$	744,161,266

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments

1.		Non-income producing security.

2.		Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $439,407, which represents 0.06% of the Fund’s net assets. See Note 6 of accompanying Notes.

3.		Rate shown is the 7-day yield as of December 31, 2009.

4.		Interest rate is less than 0.0005%.

5.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:


	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009

OFI Liquid Assets Fund, LLC		65,710,173		292,370,758		358,080,931		—
Oppenheimer Institutional Money Market Fund, Cl. E		6,344,806		279,898,173		279,647,839		6,595,140


	Value		Income

OFI Liquid Assets Fund, LLC	$	—	$	799,148	^a
Oppenheimer Institutional Money Market Fund, Cl. E		6,595,140		51,276

	$	6,595,140	$	850,424


a.		Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

Valuation Inputs

	1)		Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2)		Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3)		Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value

Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	101,706,724	$	—	$	—	$	101,706,724
Consumer Staples		17,125,482		—		—		17,125,482
Energy		33,612,052		—		—		33,612,052
Financials		137,797,687		—		—		137,797,687
Health Care		110,604,330		—		25		110,604,355
Industrials		116,616,642		—		—		116,616,642
Information Technology		151,081,368		—		—		151,081,368
Materials		37,374,907		—		3,186		37,378,093
Telecommunication Services		3,200,025		—		—		3,200,025
Utilities		23,380,799		—		—		23,380,799
Investment Companies		13,129,789		—		—		13,129,789

Total Assets	$	745,629,805	$	—	$	3,211	$	745,633,016

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $630,288,426)	$	739,037,876
Affiliated companies (cost $6,595,140)		6,595,140

		745,633,016
Receivables and other assets:
Dividends		856,830
Shares of beneficial interest sold		712,507
Investments sold		1,700
Other		12,864

Total assets		747,216,917

Liabilities
Payables and other liabilities:
Investments purchased		2,063,531
Distribution and service plan fees		400,076
Shares of beneficial interest redeemed		273,820
Shareholder communications		212,111
Transfer and shareholder servicing agent fees		61,914
Trustees’ compensation		9,100
Other		35,099

Total liabilities		3,055,651

Net Assets	$	744,161,266


Composition of Net Assets
Par value of shares of beneficial interest	$	52,065
Additional paid-in capital		899,758,500
Accumulated net investment income		3,373,950
Accumulated net realized loss on investments and foreign currency transactions		(267,772,699	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		108,749,450

Net Assets	$	744,161,266


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $81,813,729 and 5,681,449 shares of beneficial interest outstanding)	$	14.40
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $662,347,537 and 46,383,987 shares of beneficial interest outstanding)	$	14.28

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $11,968)	$	9,542,038
Affiliated companies		51,276
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		93,103
Affiliated companies		799,148
Interest		4,066

Total investment income		10,489,631

Expenses
Management fees		4,857,461
Distribution and service plan fees—Service shares		1,530,214
Transfer and shareholder servicing agent fees:
Non-Service shares		54,634
Service shares		437,044
Shareholder communications:
Non-Service shares		70,939
Service shares		613,905
Trustees’ compensation		26,215
Custodian fees and expenses		8,450
Other		66,282

Total expenses		7,665,144
Less waivers and reimbursements of expenses		(556,778	)

Net expenses		7,108,366

Net Investment Income		3,381,265

Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(133,062,028	)
Foreign currency transactions		(126,301	)

Net realized loss		(133,188,329	)
Net change in unrealized appreciation on:
Investments		345,818,161
Translation of assets and liabilities denominated in foreign currencies		403,244

Net change in unrealized appreciation		346,221,405

Net Increase in Net Assets Resulting from Operations	$	216,414,341

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	3,381,265		$	4,647,051
Net realized loss		(133,188,329	)		(131,260,264	)
Net change in unrealized appreciation (depreciation)		346,221,405			(252,725,263	)

Net increase (decrease) in net assets resulting from operations		216,414,341			(379,338,476	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(605,525	)		(406,564	)
Service shares		(4,276,612	)		(2,093,583	)

		(4,882,137	)		(2,500,147	)

Distributions from net realized gain:
Non-Service shares		—			(4,514,393	)
Service shares		—			(43,539,151	)

		—			(48,053,544	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		894,228			5,447,779
Service shares		(78,387,647	)		118,985,953

		(77,493,419	)		124,433,732

Net Assets
Total increase (decrease)		134,038,785			(305,458,435	)
Beginning of period		610,122,481			915,580,916

End of period (including accumulated net investment income of $3,373,950 and $4,880,816, respectively)	$	744,161,266		$	610,122,481

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	10.65		$	18.20		$	19.15		$	17.18		$	16.05

Income (loss) from investment operations:
Net investment income¹		.08			.12			.09			.08			.04
Net realized and unrealized gain (loss)		3.78			(6.73	)		(.30	)		2.46			1.51

Total from investment operations		3.86			(6.61	)		(.21	)		2.54			1.55

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.11	)		(.08	)		(.06	)		(.03	)		—
Distributions from net realized gain		—			(.86	)		(.68	)		(.54	)		(.42	)

Total dividends and/or distributions to shareholders		(.11	)		(.94	)		(.74	)		(.57	)		(.42	)

Net asset value, end of period	$	14.40		$	10.65		$	18.20		$	19.15		$	17.18


Total Return, at Net Asset Value²		37.20	%		(37.83	)%		(1.21	)%		15.00	%		9.92	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	81,814		$	58,478		$	93,939		$	81,405		$	44,820

Average net assets (in thousands)	$	69,585		$	80,406		$	94,815		$	62,659		$	39,708

Ratios to average net assets:³
Net investment income		0.71	%		0.80	%		0.48	%		0.46	%		0.23	%
Total expenses		0.91	%⁴		0.75	%⁴		0.73	%⁴		0.77	%⁴		0.81	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.82	%		0.75	%		0.73	%		0.77	%		0.81	%

Portfolio turnover rate		140	%		130	%		115	%		110	%		110	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total Expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.91	%
Year Ended December 31, 2008	0.75	%
Year Ended December 31, 2007	0.73	%
Year Ended December 31, 2006	0.77	%

See accompanying Notes to Financial Statements.


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	10.54		$	18.03		$	18.98		$	17.06		$	15.97

Income (loss) from investment operations:
Net investment income¹		.05			.08			.05			.04			—	²
Net realized and unrealized gain (loss)		3.76			(6.67	)		(.29	)		2.42			1.51

Total from investment operations		3.81			(6.59	)		(.24	)		2.46			1.51

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.07	)		(.04	)		(.03	)		—	²		—
Distributions from net realized gain		—			(.86	)		(.68	)		(.54	)		(.42	)

Total dividends and/or distributions to shareholders		(.07	)		(.90	)		(.71	)		(.54	)		(.42	)

Net asset value, end of period	$	14.28		$	10.54		$	18.03		$	18.98		$	17.06


Total Return, at Net Asset Value³		36.88	%		(38.00	)%		(1.39	)%		14.66	%		9.71	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	662,347		$	551,644		$	821,642		$	636,430		$	314,868

Average net assets (in thousands)	$	612,651		$	769,150		$	766,102		$	479,456		$	221,324

Ratios to average net assets:⁴
Net investment income		0.47	%		0.52	%		0.23	%		0.23	%		0.02	%
Total expenses		1.15	%⁵		0.99	%⁵		0.97	%⁵		1.00	%⁵		1.04	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.07	%		0.99	%		0.97	%		1.00	%		1.04	%

Portfolio turnover rate		140	%		130	%		115	%		110	%		110	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Less than $0.005 per share.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.15	%
Year Ended December 31, 2008	0.99	%
Year Ended December 31, 2007	0.97	%
Year Ended December 31, 2006	1.00	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Main Street Small Cap Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

There have been no significant changes to the fair valuation methodologies during the period.

NOTES TO FINANCIAL STATEMENTS Continued

Significant Accounting Policies Continued

Net Unrealized

Appreciation Based

on Cost of Securities

Undistributed

Accumulated

and Other Investments

Net Investment

Long-Term

Loss

for Federal Income

Income

Gain

Carryforward^1,2,3

Tax Purposes

3,385,900

—

253,669,994

94,650,105

As of December 31, 2009, the Fund had $253,669,994 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2016	$	91,876,720
2017		161,793,274

Total	$	253,669,994

2.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

3.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


		Reduction
Reduction		to Accumulated Net
to Accumulated Net		Realized Loss
Investment Income		on Investments

$	5,994	$	5,994

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	4,882,137	$	7,557,183
Long-term capital gain		—		42,996,508

Total	$	4,882,137	$	50,553,691


Federal tax cost of securities	$	650,982,911

Gross unrealized appreciation	$	115,425,855
Gross unrealized depreciation		(20,775,750	)

Net unrealized appreciation	$	94,650,105

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

NOTES TO FINANCIAL STATEMENTS Continued

Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		3,169,215		$	36,433,519			1,628,830		$	24,176,255
Dividends and/or distributions reinvested		83,752			605,525			326,974			4,920,957
Redeemed		(3,063,138	)		(36,144,816	)		(1,624,446	)		(23,649,433	)

Net increase		189,829		$	894,228			331,358		$	5,447,779


Service Shares
Sold		14,093,981		$	149,861,179			14,415,062		$	222,143,048
Dividends and/or distributions reinvested		592,905			4,262,989			3,047,035			45,492,232
Redeemed		(20,638,747	)		(232,511,815	)		(10,696,966	)		(148,649,327	)

Net increase (decrease)		(5,951,861	)	$	(78,387,647	)		6,765,131		$	118,985,953

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF and LAF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	930,003,724	$	1,002,571,378

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Waivers and Reimbursements of Expenses. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets would not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $59,921 and $487,552 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

As of December 31, 2009, the Fund held no outstanding forward contracts.

Illiquid Securities

As of December 31, 2009, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

7. Securities Lending

NOTES TO FINANCIAL STATEMENTS Continued

Subsequent Events Evaluation

Pending Litigation

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Money Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Money Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Money Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Principal
	Amount		Value

Certificates of Deposit—15.4%
Yankee Certificates of Deposit—15.4%
Bank of Nova Scotia, Houston TX, 0.20%, 3/3/10	$	3,000,000	$	3,000,000
BNP Paribas, New York:
0.27%, 1/21/10		4,000,000		4,000,000
0.27%, 1/25/10		3,000,000		3,000,000
0.27%, 2/11/10		2,000,000		2,000,000
National Australia Bank, New York, 0.19%, 3/1/10		1,500,000		1,500,000
Nordea Bank Finland plc, New York:
0.25%, 1/13/10		2,000,000		2,000,000
0.25%, 1/15/10		4,500,000		4,500,000
Rabobank Nederland NV, New York:
0.65%, 2/18/10		2,000,000		2,000,000
0.72%, 7/26/10		2,000,000		2,000,000
0.95%, 6/23/10		1,000,000		1,000,000
1.05%, 4/30/10		2,900,000		2,905,238

Total Certificates of Deposit (Cost $27,905,238)				27,905,238
Direct Bank Obligations—16.9%
Bank of America NA, 0.20%, 3/17/10		650,000		650,000
Calyon North America, Inc., 0.15%, 2/3/10		2,000,000		1,999,734
CBA (Delaware) Finance:
0.18%, 2/22/10		2,500,000		2,499,350
0.20%, 2/10/10		1,500,000		1,499,667
0.20%, 3/2/10		2,000,000		1,999,367
Danske Corp., 0.18%, 2/5/10¹		1,300,000		1,299,773
National Australia Funding (Delaware), Inc.:
0.20%, 1/27/10¹		2,150,000		2,149,689
0.215%, 2/16/10¹		2,900,000		2,899,203
0.39%, 1/7/10¹		2,000,000		1,999,870
Nordea North America, Inc., 0.21%, 1/22/10		2,150,000		2,149,749
Societe Generale North America, Inc.:
0.15%, 1/5/10		2,400,000		2,399,944
0.215%, 1/20/10		4,000,000		3,999,546
Westpac Banking Corp., 0.21%, 4/1/10¹		5,000,000		4,997,375

Total Direct Bank Obligations (Cost $30,543,267)				30,543,267
Short-Term Notes—60.5%
Diversified Financial Services—3.0%
General Electric Capital Corp., 0.20%, 1/20/10		1,950,000		1,949,794
General Electric Capital Services, 0.22%, 1/28/10		3,500,000		3,499,423

				5,449,217
Food Products—2.9%
Nestle Capital Corp.:
0.50%, 3/15/10¹		2,000,000		1,997,567
0.51%, 3/16/10¹		3,300,000		3,296,541

				5,294,108
Insurance—1.1%
United of Omaha Life Insurance Co., 0.531%, 12/29/10^2,3		2,000,000		2,000,000
Leasing & Factoring—2.8%
Toyota Motor Credit Corp.:
0.20%, 3/5/10		2,000,000		1,999,300
0.21%, 3/4/10		3,000,000		2,998,915

				4,998,215
Municipal—14.9%
Allegheny Cnty., PA Industrial Development Authority Bonds, Union Electric Steel Corp., Series 1997, 0.29%, 1/4/10³		2,141,000		2,141,000
Chicago, IL Industrial Development Revenue Bonds, Freedman Seating Co. Project, Series 1998, 0.42%, 1/4/10³		1,335,000		1,335,000
Health Care Revenue Bonds, SFO Associates Project, Series 1994, 0.30%, 1/1/10³		2,200,000		2,200,000
IL Finance Authority Industrial Development Revenue Bonds, Freedman Seating Co. Project, Series 2005, 0.42%, 1/4/10³		1,795,000		1,795,000
Laurel Grocery Project Nts., Series 1999, 0.80%, 1/4/10³		1,235,000		1,235,000
Manassas, VA Industrial Development Authority Bonds, Aurora Flight Science, Series 2005, 0.35%, 1/1/10³		985,000		985,000
Miami-Dade Cnty., FL Industrial Development Authority, Airbus Service Co., Inc. Project, Series 98, 0.39%, 1/4/10³		1,000,000		1,000,000
PA Economic Finance Authority, Kovatch Mobile Project, Series 2009A, 0.26%, 1/4/10³		1,500,000		1,500,000
Phoenix Civic Improvement Corp. Wastewater System Revenue Bond Anticipation Nts., Series 2009, 0.33%, 2/5/10		2,000,000		2,000,000
Putnam Cnty., WV Solid Waste Disposal Revenue Bonds, FMC Corp., Series 1991, 0.47%, 2/1/10³		1,730,000		1,730,000
San Antonio, TX Industrial Development Authority Revenue Bonds, Tindall Corp. Project, Series 2008, 0.29%, 1/4/10³		3,600,000		3,600,000
Valdosta-Lowndes Cnty., GA Industrial Authority, Steeda Autosports, Inc. Project, Series 2008, 0.35%, 1/1/10³		1,000,000		1,000,000

STATEMENT OF INVESTMENTS Continued


	Principal
	Amount			Value

Municipal Continued
Vigo Cnty., IN Economic Development Revenue Bonds, Republic Services, Inc. Project, Series 03, 0.32%, 1/4/10³	$	5,000,000		$	5,000,000
Whitehall, WI Industrial Development Revenue Bonds, Whitehall Specialties, 0.37%, 1/4/10³		500,000			500,000
Wright Brothers, Inc. Nts., Series 2005, 0.80%, 1/4/10³		985,000			985,000

					27,006,000
Personal Products—2.5%
Procter & Gamble International Funding SCA:
0.285%, 5/7/10^1,3		1,500,000			1,500,000
0.525%, 2/8/10^1,3		3,000,000			3,000,000

					4,500,000
Pharmaceuticals—2.8%
Roche Holdings, Inc., 1.26%, 2/25/10^3,4		5,000,000			5,000,000
Receivables Finance—19.5%
Barton Capital Corp.:
0.17%, 2/8/10¹		1,500,000			1,499,731
0.21%, 1/12/10¹		2,000,000			1,999,859
0.23%, 1/14/10¹		4,000,000			3,999,668
0.23%, 2/2/10¹		1,100,000			1,099,775
Chariot Funding LLC, 0.22%, 1/7/10⁴		600,000			599,978
Fairway Finance Corp.:
0.20%, 3/11/10¹		1,800,000			1,799,310
0.20%, 3/16/10¹		2,100,000			2,099,137
0.23%, 1/14/10¹		1,359,000			1,358,887
0.24%, 1/4/10¹		3,500,000			3,499,930
Gemini Securitization Corp., 0.22%, 2/9/10¹		4,000,000			3,999,047
Old Line Funding Corp.:
0.20%, 3/1/10¹		1,701,000			1,700,442
0.27%, 1/26/10¹		2,000,000			1,999,625
Park Avenue Receivables Co. LLC, 0.22%, 1/15/10¹		1,700,000			1,699,855
Ranger Funding Co. LLC, 0.20%, 3/12/10		1,000,000			999,611
Thunder Bay Funding LLC, 0.26%, 2/2/10⁴		3,832,000			3,831,114
Yorktown Capital LLC, 0.23%, 2/5/10¹		3,000,000			2,999,329

					35,185,298
Special Purpose Financial—8.8%
Crown Point Capital Co.:
0.50%, 1/5/10		3,000,000			2,999,833
0.50%, 1/8/10		3,000,000			2,999,708
FCAR Owner Trust I, 0.35%, 1/4/10		3,000,000			2,999,900
Lexington Parker Capital Co. LLC:
0.50%, 1/6/10¹		3,500,000			3,499,757
0.50%, 1/12/10¹		1,500,000			1,499,771
0.50%, 1/19/10¹		2,000,000			1,999,500

					15,998,469
U.S. Government Obligations—2.2%
Straight-A Funding LLC, Series I:
0.20%, 2/8/10		2,000,000			1,999,578
0.21%, 1/11/10		2,000,000			1,999,883

					3,999,461

Total Short-Term Notes (Cost $109,430,768)					109,430,768
U.S. Government Agencies—6.6%
Federal Home Loan Bank:
0.50%, 10/28/10-10/29/10		7,000,000			7,000,000
0.73%, 3/12/10³		4,000,000			4,000,000
3.125%, 11/12/10		1,000,000			1,022,334


Total U.S. Government Agencies (Cost $12,022,334)					12,022,334

Total Investments, at Value (Cost $179,901,607)		99.4	%		179,901,607
Other Assets Net of Liabilities		0.6			1,053,074

Net Assets		100.0	%	$	180,954,681

Footnotes to Statement of Investments

Short-term notes and direct bank obligations are generally traded on a discount basis; the interest rate shown is the discount rate received by the Fund at the time of purchase. Other securities normally bear interest at the rates shown.


1.		Security issued in an exempt transaction without registration under the Securities Act of 1933. Such securities amount to $59,893,641, or 33.10% of the Fund’s net assets, and have been determined to be liquid pursuant to guidelines adopted by the Board of Trustees.

2.		Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $2,000,000, which represents 1.11% of the Fund’s net assets. See Note 4 of accompanying Notes.

3.		Represents the current interest rate for a variable or increasing rate security.

4.		Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $9,431,092 or 5.21% of the Fund’s net assets as of December 31, 2009.

Valuation Inputs

1) Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value

Assets Table
Investments, at Value:
Certificates of Deposit	$	—	$	27,905,238	$	—	$	27,905,238
Direct Bank Obligations		—		30,543,267		—		30,543,267
Short-Term Notes		—		109,430,768		—		109,430,768
U.S. Government Agencies		—		12,022,334		—		12,022,334

Total Assets	$	—	$	179,901,607	$	—	$	179,901,607

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value (cost $179,901,607)—see accompanying statement of investments	$	179,901,607
Cash		1,001,498
Receivables and other assets:
Shares of beneficial interest sold		239,901
Interest		94,578
Other		8,256

Total assets		181,245,840

Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		241,077
Legal, auditing and other professional fees		16,934
Transfer and shareholder servicing agent fees		15,571
Shareholder communications		9,181
Trustees’ compensation		4,453
Dividends		576
Other		3,367

Total liabilities		291,159

Net Assets	$	180,954,681


Composition of Net Assets
Par value of shares of beneficial interest	$	180,919
Additional paid-in capital		180,764,475
Accumulated net realized gain on investments		9,287

Net Assets—applicable to 180,919,306 shares of beneficial interest outstanding	$	180,954,681


Net Asset Value, Redemption Price Per Share and Offering Price Per Share	$	1.00

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Interest	$	1,802,055

Expenses
Management fees		982,135
Transfer and shareholder servicing agent fees		141,353
Insurance expenses		58,164
Shareholder communications		22,348
Trustees’ compensation		9,532
Custodian fees and expenses		2,065
Other		34,069

Total expenses		1,249,666
Less waivers and reimbursements of expenses		(213,291	)

Net expenses		1,036,375

Net Investment Income		765,680

Net Realized Gain on Investments		10,354

Net Increase in Net Assets Resulting from Operations	$	776,034

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008
Operations
Net investment income	$	765,680		$	5,787,151
Net realized gain		10,354			321

Net increase in net assets resulting from operations		776,034			5,787,472

Dividends and/or Distributions to Shareholders
Dividends from net investment income		(765,999	)		(5,787,153	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions		(62,411,738	)		53,607,490

Net Assets
Total increase (decrease)		(62,401,703	)		53,607,809
Beginning of period		243,356,384			189,748,575

End of period (including accumulated net investment loss of $– and $1,067, respectively)	$	180,954,681		$	243,356,384

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00

Income from investment operations-net investment income and net realized gain¹		—	²		.03			.05			.05			.03

Dividends and/or distributions to shareholders:
Dividends from net investment income		—	²		(.03	)		(.05	)		(.05	)		(.03	)
Distributions from net realized gain		—			—			—	²		—	²		—

Total dividends and/or distributions to shareholders		—	²		(.03	)		(.05	)		(.05	)		(.03	)

Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00


Total Return³		0.32	%		2.78	%		4.98	%		4.71	%		2.86	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	180,955		$	243,356		$	189,749		$	171,521		$	173,162

Average net assets (in thousands)	$	218,079		$	212,564		$	181,271		$	171,118		$	186,453

Ratios to average net assets:⁴
Net investment income		0.35	%		2.72	%		4.86	%		4.61	%		2.80	%
Total expenses		0.57	%		0.50	%		0.50	%		0.49	%		0.48	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.48	%		0.50	%		0.50	%		0.49	%		0.48	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Less than $0.005 per share.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Money Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek maximum current income from investments in “money market” securities consistent with low capital risk and the maintenance of liquidity. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. Securities are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. If amortized cost is determined not to approximate market value, the fair value of the portfolio securities will be determined under procedures approved by the Fund’s Board of Trustees.

There have been no significant changes to the fair valuation methodologies during the period.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.


Undistributed Net	Undistributed		Accumulated Loss
Investment Income	Long-Term Gains		Carryforward^1,2

$61,455	$	—	$	—


1.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforwards.

2.		During the fiscal year ended December 31, 2008, the Fund utilized $2 of capital loss carryforward to offset capital gains realized in that fiscal year.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


		Reduction
Reduction		to Accumulated Net
to Accumulated Net		Realized Gain
Investment Loss		on Investments

$	1,386	$	1,386

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	765,999	$	5,787,153

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income distributions, if any, are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually but may be paid at other times to maintain the net asset value per share at $1.00.

Investment Income. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Sold		66,197,591		$	66,197,591			163,835,502		$	163,835,502
Dividends and/or distributions reinvested		765,999			765,999			5,787,153			5,787,153
Redeemed		(129,375,328	)		(129,375,328	)		(116,015,165	)		(116,015,165	)

Net increase (decrease)		(62,411,738	)	$	(62,411,738	)		53,607,490		$	53,607,490

3. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $500 million	0.450	%
Next $500 million	0.425
Next $500 million	0.400
Over $1.5 billion	0.375

Waivers and Reimbursements of Expenses. The Manager has voluntarily undertaken to waive fees and/or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. This undertaking may be amended or withdrawn at any time. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $135,299.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as a percentage of daily net assets will not exceed the annual rate of 0.50%. This voluntary undertaking may be amended or withdrawn at any time. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $77,992.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees to 0.35% of average annual net assets of the Fund.

4. Illiquid Securities

As of December 31, 2009, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

5. Temporary Guarantee Program for Money Market Funds

The Fund’s Board of Trustees elected for the Fund to participate in the Temporary Guarantee Program for Money Market Funds (the “Program”) established by the U.S. Treasury Department. The Treasury Department accepted the Fund’s application to participate in the Program and entered into a Guarantee Agreement with the Fund dated as of September 19, 2008. The Fund also notified the Treasury Department of its intent to continue its participation in the Program through September 18, 2009. The Program could not be extended beyond September 18, 2009.

Under the Program, shareholders of the Fund as of the close of business on September 19, 2008 were guaranteed against loss in the event that the Fund’s net asset value fell below $0.995. The Program applied only to shareholders of record as of the close of business on September 19, 2008. The number of shares covered by the Program was the lesser of (a) the number of shares of the Fund owned by the shareholder on September 19, 2008 or (b) the number of shares owned by the shareholder on the date the Fund’s net asset value fell below $0.995. If the number of shares of the Fund a shareholder held after September 19, 2008 fluctuated during the Program period due to purchases or redemptions of shares, any shares in excess of the amount held as of the close of business on September 19, 2008 would not have been covered.

The Fund paid a fee to participate in the Program’s initial term in the amount equal to 0.01% of the Fund’s net assets as of the close of business on September 19, 2008. The Fund paid a fee to continue its participation in the Program through April 30, 2009 in the amount of 0.015% of the Fund’s net assets as of the close of business on September 19, 2008. The Fund paid an additional fee to continue its participation in the Program through September 18, 2009 in the amount of 0.015% of the Fund’s net assets as of the close of business on September 19, 2008. Fees paid by the Fund to participate in the Program are shown as “Insurance expenses” on the Statement of Operations.

6. Subsequent Events Evaluation

7. Pending Litigation

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer MidCap Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer MidCap Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer MidCap Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Shares		Value

Common Stocks—98.6%
Consumer Discretionary—17.2%
Diversified Consumer Services—1.3%
Education Management Corp.¹		172,400	$	3,794,524
Strayer Education, Inc.		18,100		3,846,069

				7,640,593

Hotels, Restaurants & Leisure—2.3%
Chipotle Mexican Grill, Inc., Cl. A¹		43,030		3,793,525
Panera Bread Co., Cl. A¹		73,500		4,922,295
WMS Industries, Inc.¹		116,014		4,640,560

				13,356,380

Household Durables—0.8%
Tupperware Brands Corp.		98,500		4,587,145
Media—1.5%
Discovery Communications, Inc.¹		183,400		5,624,878
Scripps Networks Interactive, Cl. A		67,500		2,801,250

				8,426,128

Multiline Retail—2.3%
Dollar Tree, Inc.¹		169,150		8,169,945
Nordstrom, Inc.		128,700		4,836,546

				13,006,491

Specialty Retail—6.1%
American Eagle Outfitters, Inc.		188,900		3,207,522
Chico’s FAS, Inc.¹		333,400		4,684,270
Guess?, Inc.		151,100		6,391,530
J. Crew Group, Inc.¹		167,600		7,498,424
Tiffany & Co.		130,400		5,607,200
Urban Outfitters, Inc.¹		221,580		7,753,084

				35,142,030

Textiles, Apparel & Luxury Goods—2.9%
Phillips/Van Heusen Corp.		64,300		2,615,724
Polo Ralph Lauren Corp., Cl. A		102,840		8,327,983
Warnaco Group, Inc. (The)¹		127,500		5,379,225

				16,322,932

Consumer Staples—2.9%
Food Products—1.8%
J.M. Smucker Co. (The)		95,100		5,872,425
TreeHouse Foods, Inc.¹		115,200		4,476,672

				10,349,097

Household Products—0.7%
Church & Dwight Co., Inc.		65,300		3,947,385
Personal Products—0.4%
Nu Skin Asia Pacific, Inc., Cl. A		99,500		2,673,565
Energy—7.2%
Energy Equipment & Services—2.4%
Cameron International Corp.¹		210,750		8,809,350
Oceaneering International, Inc.¹		83,100		4,863,012

				13,672,362

Oil, Gas & Consumable Fuels—4.8%
Concho Resources, Inc.¹		238,850		10,724,365
EXCO Resources, Inc.		265,600		5,638,688
Petrohawk Energy Corp.¹		210,300		5,045,097
Range Resources Corp.		125,246		6,243,513

				27,651,663

Financials—9.0%
Capital Markets—4.6%
Greenhill & Co., Inc.		47,600		3,819,424
Jefferies Group, Inc.¹		304,800		7,232,904
Stifel Financial Corp.¹		130,100		7,707,124
Waddell & Reed Financial, Inc., Cl. A		258,900		7,906,806

				26,666,258

Commercial Banks—0.8%
Signature Bank¹		139,400		4,446,860
Diversified Financial Services—0.6%
MSCI, Inc., Cl. A¹		104,610		3,326,598
Insurance—1.1%
Assured Guaranty Ltd.		165,700		3,605,632
RenaissanceRe Holdings Ltd.		51,160		2,719,154

				6,324,786

Real Estate Investment Trusts—1.0%
Digital Realty Trust, Inc.		113,200		5,691,696
Real Estate Management &
Development—0.9%
Jones Lang LaSalle, Inc.		87,400		5,278,960
Health Care—16.3%
Biotechnology—4.5%
Alexion Pharmaceuticals, Inc.¹		247,300		12,073,186
Human Genome Sciences, Inc.¹		151,300		4,629,780
Myriad Genetics, Inc.¹		147,650		3,853,665
United Therapeutics Corp.¹		95,300		5,017,545

				25,574,176

Health Care Equipment & Supplies—4.3%
Edwards Lifesciences Corp.¹		120,570		10,471,505
IDEXX Laboratories, Inc.¹		108,340		5,789,690

STATEMENT OF INVESTMENTS Continued


	Shares		Value

Health Care Equipment & Supplies Continued
ResMed, Inc.¹		55,800	$	2,916,666
Thoratec Corp.¹		210,300		5,661,276

				24,839,137

Health Care Providers & Services—5.3%
Catalyst Health Solutions, Inc.¹		89,800		3,275,006
Genoptix, Inc.¹		147,011		5,223,301
HMS Holdings Corp.¹		150,500		7,327,845
MEDNAX, Inc.¹		144,700		8,697,917
Schein (Henry), Inc.¹		107,170		5,637,142

				30,161,211

Health Care Technology—0.9%
Cerner Corp.¹		65,900		5,432,796
Life Sciences Tools & Services—0.5%
Illumina, Inc.¹		99,101		3,037,446
Pharmaceuticals—0.8%
Perrigo Co.		114,110		4,546,142
Industrials—12.3%
Aerospace & Defense—0.9%
Rockwell Collins, Inc.		98,600		5,458,496
Air Freight & Logistics—1.9%
C.H. Robinson Worldwide, Inc.		187,480		11,010,700
Commercial Services & Supplies—2.0%
Stericycle, Inc.¹		118,122		6,516,791
Waste Connections, Inc.¹		141,600		4,720,944

				11,237,735

Electrical Equipment—1.3%
Regal-Beloit Corp.		88,800		4,612,272
Roper Industries, Inc.		51,600		2,702,292

				7,314,564

Machinery—3.7%
Bucyrus International, Inc.		104,300		5,879,391
Flowserve Corp.		54,000		5,104,620
Gardner Denver, Inc.		140,081		5,960,447
Nordson Corp.		72,300		4,423,314

				21,367,772

Professional Services—2.5%
IHS, Inc., Cl. A¹		79,280		4,345,337
Manpower, Inc.		76,500		4,175,370
Monster Worldwide, Inc.¹		150,000		2,610,000
Verisk Analytics, Inc., Cl. A¹		99,540		3,014,071

				14,144,778

Information Technology—26.0%
Communications Equipment—2.0%
F5 Networks, Inc.¹		137,700		7,295,346
Juniper Networks, Inc.¹		155,100		4,136,517

				11,431,863

Computers & Peripherals—1.3%
NetApp, Inc.¹		209,870		7,217,429
Electronic Equipment &
Instruments—1.3%
Amphenol Corp., Cl. A		96,810		4,470,686
FLIR Systems, Inc.¹		90,700		2,967,704

				7,438,390

Internet Software & Services—4.1%
Equinix, Inc.¹		68,983		7,322,545
GSI Commerce, Inc.¹		179,800		4,565,122
Mercadolibre, Inc.¹		43,802		2,272,010
Rackspace Hosting, Inc.¹		144,200		3,006,570
VistaPrint NV¹		110,370		6,253,564

				23,419,811

IT Services—2.4%
Cognizant Technology Solutions Corp.¹		229,610		10,401,333
Global Payments, Inc.		67,300		3,624,778

				14,026,111

Semiconductors & Semiconductor Equipment—5.8%
Broadcom Corp., Cl. A¹		141,400		4,447,030
Lam Research Corp.¹		209,220		8,203,516
Marvell Technology Group Ltd.¹		314,700		6,530,025
Netlogic Microsystems, Inc.¹		101,400		4,690,764
Silicon Laboratories, Inc.¹		118,400		5,723,456
Varian Semiconductor Equipment Associates, Inc.¹		109,800		3,939,624

				33,534,415

Software—9.1%
Ansys, Inc.¹		138,830		6,033,552
Concur Technologies, Inc.¹		109,400		4,676,850
FactSet Research Systems, Inc.		92,780		6,111,419

Informatica Corp.¹		55,500		1,435,230
Longtop Financial Technologies Ltd., ADR¹		173,400		6,419,268
Nuance Communications, Inc.¹		278,100		4,321,674
Red Hat, Inc.¹		147,800		4,567,020
Salesforce.com, Inc.¹		123,780		9,131,251
Solarwinds, Inc.¹		143,600		3,304,236
Sybase, Inc.¹		136,300		5,915,420

				51,915,920


	Shares			Value

Materials—5.2%
Chemicals—2.1%
Airgas, Inc.		74,600		$	3,550,960
Lubrizol Corp. (The)		119,320			8,704,394

					12,255,354

Containers & Packaging—1.0%
Rock-Tenn Co., Cl. A		117,300			5,913,093
Metals & Mining—2.1%
Silver Wheaton Corp.¹		164,400			2,469,288
Steel Dynamics, Inc.		292,400			5,181,328
Thompson Creek Metals Co., Inc.¹		345,400			4,048,088

					11,698,704

Telecommunication Services—2.5%
Wireless Telecommunication Services—2.5%
American Tower Corp.¹		179,780			7,768,294
SBA Communications Corp.¹		187,070			6,390,310

					14,158,604

Total Common Stocks (Cost $450,312,111)					565,645,576

Investment Companies—1.9%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^2,3		46,893			46,893
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^2,4		10,877,341			10,877,341

Total Investment Companies (Cost $10,924,234)					10,924,234

Total Investments, at Value (Cost $461,236,345)		100.5	%		576,569,810
Liabilities in Excess of Other Assets		(0.5	)		(2,789,055	)

Net Assets		100.0	%	$	573,780,755


Footnotes to Statement of Investments

1.		Non-income producing security.

2.		Rate shown is the 7-day yield as of December 31, 2009.

3.		Interest rate is less than 0.0005%.

4.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

Shares

Gross

Shares

December 31, 2008

Additions

Reductions

December 31, 2009

Oppenheimer Institutional Money Market Fund, Cl. E

28,742,391

248,128,858

265,993,908

10,877,341


	Value		Income

Oppenheimer Institutional Money Market Fund, Cl. E	$	10,877,341	$	121,804

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Valuation Inputs

1) Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value

Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	98,481,699	$	—	$	—	$	98,481,699
Consumer Staples		16,970,047		—		—		16,970,047
Energy		41,324,025		—		—		41,324,025
Financials		51,735,158		—		—		51,735,158
Health Care		93,590,908		—		—		93,590,908
Industrials		70,534,045		—		—		70,534,045
Information Technology		148,983,939		—		—		148,983,939
Materials		29,867,151		—		—		29,867,151
Telecommunication Services		14,158,604		—		—		14,158,604
Investment Companies		10,924,234		—		—		10,924,234

Total Assets	$	576,569,810	$	—	$	—	$	576,569,810

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $450,359,004)	$	565,692,469
Affiliated companies (cost $10,877,341)		10,877,341

		576,569,810
Receivables and other assets:
Dividends		286,972
Shares of beneficial interest sold		498
Other		19,752

Total assets		576,877,032

Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		2,914,855
Shareholder communications		78,424
Transfer and shareholder servicing agent fees		48,123
Trustees’ compensation		16,259
Distribution and service plan fees		15,509
Other		23,107

Total liabilities		3,096,277

Net Assets	$	573,780,755


Composition of Net Assets
Par value of shares of beneficial interest	$	15,728
Additional paid-in capital		993,267,282
Accumulated net investment income		37,265
Accumulated net realized loss on investments		(534,872,985	)
Net unrealized appreciation on investments		115,333,465

Net Assets	$	573,780,755


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $547,682,402 and 14,997,735 shares of beneficial interest outstanding)	$	36.52
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $26,098,353 and 730,031 shares of beneficial interest outstanding)	$	35.75

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $3,443)	$	2,549,649
Affiliated companies		121,804
Interest		1,778

Total investment income		2,673,231

Expenses
Management fees		3,638,767
Distribution and service plan fees—Service shares		56,482
Transfer and shareholder servicing agent fees:
Non-Service shares		338,903
Service shares		19,137
Shareholder communications:
Non-Service shares		233,703
Service shares		11,043
Trustees’ compensation		23,128
Custodian fees and expenses		2,246
Other		46,762

Total expenses		4,370,171
Less waivers and reimbursements of expenses		(771,861	)

Net expenses		3,598,310

Net Investment Loss		(925,079	)

Realized and Unrealized Gain (Loss)
Net realized loss on investments from unaffiliated companies		(78,545,847	)
Net change in unrealized appreciation on investments		224,373,833

Net Increase in Net Assets Resulting from Operations	$	144,902,907

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment loss	$	(925,079	)	$	(2,429,611	)
Net realized loss		(78,545,847	)		(219,835,993	)
Net change in unrealized appreciation (depreciation)		224,373,833			(251,402,010	)

Net increase (decrease) in net assets resulting from operations		144,902,907			(473,667,614	)

Beneficial Interest Transactions
Net decrease in net assets resulting from beneficial interest transactions:
Non-Service shares		(52,496,797	)		(88,752,649	)
Service shares		(2,261,210	)		(3,655,383	)

		(54,758,007	)		(92,408,032	)

Net Assets
Total increase (decrease)		90,144,900			(566,075,646	)
Beginning of period		483,635,855			1,049,711,501

End of period (including accumulated net investment income of $37,265 and $80,204, respectively)	$	573,780,755		$	483,635,855

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	27.54		$	54.07		$	50.85		$	49.39		$	43.97

Income (loss) from investment operations:
Net investment loss¹		(.05	)		(.13	)		(.02	)		(.02	)		(.12	)
Net realized and unrealized gain (loss)		9.03			(26.40	)		3.24			1.48			5.54

Total from investment operations		8.98			(26.53	)		3.22			1.46			5.42

Net asset value, end of period	$	36.52		$	27.54		$	54.07		$	50.85		$	49.39


Total Return, at Net Asset Value²		32.61	%		(49.07	)%		6.33	%		2.96	%		12.33	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	547,683		$	461,684		$	1,002,442		$	1,054,809		$	1,227,881

Average net assets (in thousands)	$	478,968		$	754,170		$	1,045,592		$	1,135,831		$	1,177,979

Ratios to average net assets:³
Net investment loss		(0.17	)%		(0.30	)%		(0.04	)%		(0.04	)%		(0.26	)%
Total expenses		0.86	%⁴		0.71	%⁴		0.69	%⁴		0.69	%⁴		0.69	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.71	%		0.68	%		0.69	%		0.69	%		0.69	%

Portfolio turnover rate		102	%		78	%		112	%		56	%		32	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	0.86	%
Year Ended December 31, 2008	0.71	%
Year Ended December 31, 2007	0.69	%
Year Ended December 31, 2006	0.69	%

See accompanying Notes to Financial Statements.


Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	27.03		$	53.22		$	50.19		$	48.87		$	43.64

Income (loss) from investment operations:
Net investment loss¹		(.13	)		(.24	)		(.17	)		(.16	)		(.25	)
Net realized and unrealized gain (loss)		8.85			(25.95	)		3.20			1.48			5.48

Total from investment operations		8.72			(26.19	)		3.03			1.32			5.23

Net asset value, end of period	$	35.75		$	27.03		$	53.22		$	50.19		$	48.87


Total Return, at Net Asset Value²		32.26	%		(49.21	)%		6.04	%		2.70	%		11.99	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	26,098		$	21,952		$	47,270		$	47,131		$	36,551

Average net assets (in thousands)	$	22,605		$	35,815		$	49,421		$	44,273		$	28,798

Ratios to average net assets:³
Net investment loss		(0.44	)%		(0.57	)%		(0.31	)%		(0.33	)%		(0.54	)%
Total expenses		1.12	%⁴		0.98	%⁴		0.96	%⁴		0.97	%⁴		0.97	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.97	%		0.95	%		0.96	%		0.97	%		0.97	%

Portfolio turnover rate		102	%		78	%		112	%		56	%		32	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	1.12	%
Year Ended December 31, 2008	0.98	%
Year Ended December 31, 2007	0.96	%
Year Ended December 31, 2006	0.97	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer MidCap Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation by investing in “growth type” companies. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

There have been no significant changes to the fair valuation methodologies during the period.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Net Unrealized Appreciation

Based on Cost of

Undistributed

Accumulated

Securities and Other

Net Investment

Long-Term

Loss

Investments for Federal

Income

Gain

Carryforward^1,2,3,4

Income Tax Purposes

$ —

—

531,261,211

111,775,206


1.		As of December 31, 2009, the Fund had $531,261,211 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2010	$	230,224,822
2017		301,036,389

Total	$	531,261,211

2.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

3.		During the fiscal year ended December 31, 2008, the Fund utilized $4,134,778 of capital loss carryforward to offset capital gains realized in that fiscal year.

4.		During the fiscal year ended December 31, 2009, $225,332,848 of unused capital loss carryforward expired.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


			Reduction to
	Reduction		Accumulated Net
Reduction	to Accumulated Net		Realized Loss
to Paid-in Capital	Investment Loss		on Investments

$226,596,595	$	882,140	$	225,714,455

No distributions were paid during the years ended December 31, 2009 and December 31, 2008.


Federal tax cost of securities	$	464,794,604

Gross unrealized appreciation	$	114,959,287
Gross unrealized depreciation		(3,184,081	)

Net unrealized appreciation	$	111,775,206

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		730,850		$	22,021,499			1,670,583		$	61,944,000
Redeemed		(2,496,465	)		(74,518,296	)		(3,445,654	)		(150,696,649	)

Net decrease		(1,765,615	)	$	(52,496,797	)		(1,775,071	)	$	(88,752,649	)


Service Shares
Sold		97,563		$	2,820,902			131,251		$	5,180,963
Redeemed		(179,541	)		(5,082,112	)		(207,366	)		(8,836,346	)

Net decrease		(81,978	)	$	(2,261,210	)		(76,115	)	$	(3,655,383	)

NOTES TO FINANCIAL STATEMENTS Continued

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	491,481,494	$	509,739,681

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $700 million	0.60
Over $1.5 billion	0.58

Waivers and Reimbursements of Expenses. Effective September 1, 2008 through August 31, 2009, the Manager had voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund’s average daily net assets if the Fund’s trailing one-year total return performance was in the fourth or fifth quintile of the Fund’s Lipper peer group.

Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.09% of the Fund’s average annual net assets. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be amended or withdrawn at any time.

During the year ended December 31, 2009, the Manager waived $666,761 in advisory fees as a result of these voluntary arrangements.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. This voluntary undertaking may be amended or withdrawn at any time. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $84,220 and $4,001 for Non-Service and Service shares, respectively.

Prior to May 1, 2009, OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

5. Subsequent Events Evaluation

6. Pending Litigation

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Value Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The accompanying financial statements and financial highlights of Oppenheimer Value Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Value Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP
Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009


	Shares		Value

Common Stocks—94.3%
Consumer Discretionary—9.9%
Hotels, Restaurants & Leisure—0.5%
Brinker International, Inc.		2,720	$	40,582
Household Durables—0.5%
Mohawk Industries, Inc.¹		880		41,888
Media—7.7%
Comcast Corp., Cl. A		2,090		35,237
News Corp., Inc., Cl. A		12,318		168,633
Time Warner Cable, Inc.		5,130		212,331
Viacom, Inc., Cl. B¹		5,500		163,515

				579,716

Multiline Retail—0.1%
Dollar General Corp.¹		190		4,262
Specialty Retail—1.1%
Bed Bath & Beyond, Inc.¹		2,150		83,055
Consumer Staples—5.2%
Beverages—1.3%
Molson Coors Brewing Co., Cl. B, Non-Vtg.		2,242		101,249
Food & Staples Retailing—3.9%
Kroger Co. (The)		6,840		140,425
Walgreen Co.		4,104		150,699

				291,124

Energy—15.7%
Oil, Gas & Consumable Fuels—15.7%
Apache Corp.		2,246		231,720
Chevron Corp.		4,870		374,941
CONSOL Energy, Inc.		3,230		160,854
EOG Resources, Inc.		460		44,758
Exxon Mobil Corp.		2,384		162,565
Marathon Oil Corp.		6,588		205,677

				1,180,515

Financials—19.8%
Capital Markets—4.8%
Goldman Sachs Group, Inc. (The)		850		143,514
Morgan Stanley		7,484		221,526

				365,040

Commercial Banks—1.9%
Comerica, Inc.		1,290		38,145
Wells Fargo & Co.		3,910		105,531

				143,676

Diversified Financial Services—6.0%
Bank of America Corp.		8,090		121,835
JPMorgan Chase & Co.		7,860		327,526

				449,361

Insurance—7.1%
ACE Ltd.		2,060		103,824
Allstate Corp.		2,420		72,697
Assurant, Inc.		3,650		107,602
Everest Re Group Ltd.		1,287		110,270
MetLife, Inc.		3,950		139,633

				534,026

Health Care—11.4%
Health Care Equipment & Supplies—2.1%
Covidien plc		3,360		160,910
Health Care Providers & Services—2.5%
Aetna, Inc.		5,960		188,932
Pharmaceuticals—6.8%
Biovail Corp.		5,410		75,524
Merck & Co., Inc.		6,570		240,068
Pfizer, Inc.		10,859		197,525

				513,117

Industrials—11.1%
Aerospace & Defense—1.3%
AerCap Holdings NV¹		1,970		17,848
Lockheed Martin Corp.		1,070		80,625

				98,473

Electrical Equipment—1.9%
General Cable Corp.¹		4,890		143,864
Industrial Conglomerates—3.6%
Tyco International Ltd.		7,620		271,882
Machinery—3.2%
Navistar International Corp.¹		6,263		242,065
Trading Companies & Distributors—1.1%
Aircastle Ltd.		6,600		65,010
Genesis Lease Ltd., ADS		2,010		17,949

				82,959

Information Technology—8.0%
Communications Equipment—3.3%
Motorola, Inc.¹		27,760		215,418
QUALCOMM, Inc.		750		34,695

				250,113

Computers & Peripherals—2.5%
Dell, Inc.¹		12,980		186,393

STATEMENT OF INVESTMENTS Continued


	Shares			Value

Software—2.2%
Oracle Corp.		6,680		$	163,927
Materials—5.1%
Chemicals—4.1%
Celanese Corp., Series A		4,610			147,981
Potash Corp. of Saskatchewan, Inc.		1,470			159,495

					307,476

Metals & Mining—1.0%
Xstrata plc, Unsponsored ADR¹		20,500			74,825
Telecommunication Services—3.6%
Diversified Telecommunication Services—3.2%
AT&T, Inc.		8,702			243,917
Wireless Telecommunication Services—0.4%
Sprint Nextel Corp.¹		7,150			26,169
Utilities—4.5%
Electric Utilities—3.5%
Edison International, Inc.		4,350			151,293
Exelon Corp.		2,266			110,739

					262,032

Multi-Utilities—1.0%
PG&E Corp.		1,794			80,102

Total Common Stocks (Cost $6,183,029)					7,111,650

Preferred Stocks—1.9%
Bank of America Corp., 10% Cv., Series S¹ (Cost $142,500)		9,500			141,740

Investment Companies—4.6%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^2,3		9,096			9,096
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^2,4		340,073			340,073

Total Investment Companies (Cost $349,169)					349,169

Total Investments, at Value (Cost $6,674,698)		100.8	%		7,602,559
Liabilities in Excess of Other Assets		(0.8	)		(59,743	)


Net Assets		100.0	%	$	7,542,816

Footnotes to Statement of Investments


1.		Non-income producing security.

2.		Rate shown is the 7-day yield as of December 31, 2009.

3.		Interest rate is less than 0.0005%.

4.		Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

Shares

Gross

Shares

December 31, 2008

Additions

Reductions

December 31, 2009

Oppenheimer Institutional Money Market Fund, Cl. E

664,973

10,850,044

11,174,944

340,073


	Value		Income

Oppenheimer Institutional Money Market Fund, Cl. E	$	340,073	$	1,614

Valuation Inputs

	1)		Level 1—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

	2)		Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

	3)		Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:


					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value

Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	749,503	$	—	$	—	$	749,503
Consumer Staples		392,373		—		—		392,373
Energy		1,180,515		—		—		1,180,515
Financials		1,492,103		—		—		1,492,103
Health Care		862,959		—		—		862,959
Industrials		839,243		—		—		839,243
Information Technology		600,433		—		—		600,433
Materials		382,301		—		—		382,301
Telecommunication Services		270,086		—		—		270,086
Utilities		342,134		—		—		342,134
Preferred Stocks		141,740		—		—		141,740
Investment Companies		349,169		—		—		349,169

Total Assets	$	7,602,559	$	—	$	—	$	7,602,559

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $6,334,625)	$	7,262,486
Affiliated companies (cost $340,073)		340,073

		7,602,559

Receivables and other assets:
Dividends		6,790
Other		5,662

Total assets		7,615,011

Liabilities
Payables and other liabilities:
Investments purchased		26,993
Legal, auditing and other professional fees		20,012
Shareholder communications		9,656
Shares of beneficial interest redeemed		5,007
Distribution and service plan fees		4,454
Trustees’ compensation		3,187
Transfer and shareholder servicing agent fees		638
Other		2,248

Total liabilities		72,195

Net Assets	$	7,542,816


Composition of Net Assets
Par value of shares of beneficial interest	$	840
Additional paid-in capital		9,026,679
Accumulated net investment income		53,310
Accumulated net realized loss on investments and foreign currency transactions		(2,465,874	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		927,861

Net Assets	$	7,542,816


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $37,677 and 5,222 shares of beneficial interest outstanding)	$	7.22
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $7,505,139 and 835,048 shares of beneficial interest outstanding)	$	8.99

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009


Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $589)	$	122,990
Affiliated companies		1,614
Interest		18

Total investment income		124,622

Expenses
Management fees		41,350
Distribution and service plan fees—Service shares		12,371
Transfer and shareholder servicing agent fees:
Non-Service shares		27
Service shares		4,166
Shareholder communications:
Non-Service shares		114
Service shares		21,464
Legal, auditing and other professional fees		27,002
Trustees’ compensation		6,612
Registration and filing fees		4,267
Custodian fees and expenses		148
Other		2,129

Total expenses		119,650
Less waivers and reimbursements of expenses		(55,747	)

Net expenses		63,903

Net Investment Income		60,719

Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies (including premiums on options exercised)		(217,690	)
Closing and expiration of option contracts written		3,628
Foreign currency transactions		(22,722	)

Net realized loss		(236,784	)
Net change in unrealized appreciation on:
Investments		1,765,327
Translation of assets and liabilities denominated in foreign currencies		3,599

Net change in unrealized appreciation		1,768,926

Net Increase in Net Assets Resulting from Operations	$	1,592,861

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS


Year Ended December 31,	2009			2008

Operations
Net investment income	$	60,719		$	56,053

Net realized loss		(236,784	)		(1,927,397	)

Net change in unrealized appreciation (depreciation)		1,768,926			(1,273,014	)

Net increase (decrease) in net assets resulting from operations		1,592,861			(3,144,358	)

Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(103	)		(2,000	)
Service shares		(9,896	)		(47,216	)

		(9,999	)		(49,216	)

Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		23,026			(1,475,254	)
Service shares		1,240,784			1,155,875

		1,263,810			(319,379	)

Net Assets
Total increase (decrease)		2,846,672			(3,512,953	)

Beginning of period		4,696,144			8,209,097

End of period (including accumulated net investment income of $53,310 and $2,584, respectively)	$	7,542,816		$	4,696,144

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS


Non-Service Shares Year Ended December 31,	2009			2008			2007			2006			2005

Per Share Operating Data
Net asset value, beginning of period	$	4.99		$	11.73		$	11.58		$	11.16		$	12.26

Income (loss) from investment operations:
Net investment income (loss)¹		.11			.12			.10			(.03	)		.02
Net realized and unrealized gain (loss)		2.14			(4.44	)		.59			1.61			.71

Total from investment operations		2.25			(4.32	)		.69			1.58			.73

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.02	)		(2.42	)		(.10	)		(.01	)		(.02	)
Distributions from net realized gain		—			—			(.44	)		(1.15	)		(1.81	)

Total dividends and/or distributions to shareholders		(.02	)		(2.42	)		(.54	)		(1.16	)		(1.83	)


Net asset value, end of period	$	7.22		$	4.99		$	11.73		$	11.58		$	11.16


Total Return, at Net Asset Value²		45.08	%		(36.43	)%		5.89	%		14.03	%		5.88	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	38		$	6		$	1,728		$	2,657		$	2,562

Average net assets (in thousands)	$	20		$	857		$	2,753		$	2,695		$	2,878

Ratios to average net assets:³
Net investment income (loss)		1.75	%		1.07	%		0.80	%		(0.29	)%		0.15	%
Total expenses		2.30	%⁴		1.48	%⁴		1.49	%⁴		2.14	%⁴		1.78	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.85	%		1.25	%		1.25	%		2.14	%		1.78	%

Portfolio turnover rate		122	%		175	%		142	%		124	%		86	%


1.		Per share amounts calculated based on the average shares outstanding during the period.

2.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

3.		Annualized for periods less than one full year.

4.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	2.31	%
Year Ended December 31, 2008	1.48	%
Year Ended December 31, 2007	1.49	%
Year Ended December 31, 2006	2.14	%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued


Service Shares Year Ended December 31,	2009			2008			2007			2006¹

Per Share Operating Data
Net asset value, beginning of period	$	6.79		$	11.75		$	11.57		$	11.89

Income (loss) from investment operations:
Net investment income (loss)²		.09			.08			.06			(.05	)
Net realized and unrealized gain (loss)		2.12			(4.97	)		.60			.88

Total from investment operations		2.21			(4.89	)		.66			.83

Dividends and/or distributions to shareholders:
Dividends from net investment income		(.01	)		(.07	)		(.04	)		—
Distributions from net realized gain		—			—			(.44	)		(1.15	)

Total dividends and/or distributions to shareholders		(.01	)		(.07	)		(.48	)		(1.15	)


Net asset value, end of period	$	8.99		$	6.79		$	11.75		$	11.57


Total Return, at Net Asset Value³		32.57	%		(41.62	)%		5.70	%		6.81	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	7,505		$	4,690		$	6,481		$	455

Average net assets (in thousands)	$	5,501		$	5,561		$	3,527		$	268

Ratios to average net assets:⁴
Net investment income (loss)		1.10	%		0.84	%		0.49	%		(1.30	)%
Total expenses⁵		2.17	%		2.13	%		1.63	%		2.89	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.15	%		1.50	%		1.50	%		2.88	%

Portfolio turnover rate		122	%		175	%		142	%		124	%


1.		For the period from September 18, 2006 (inception of offering) to December 31, 2006.

2.		Per share amounts calculated based on the average shares outstanding during the period.

3.		Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

4.		Annualized for periods less than one full year.

5.		Total expenses including indirect expenses from affiliated fund were as follows:


Year Ended December 31, 2009	2.18	%
Year Ended December 31, 2008	2.13	%
Year Ended December 31, 2007	1.63	%
Period Ended December 31, 2006	2.89	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Value Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

The following is a summary of significant accounting policies consistently followed by the Fund.

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as unadjusted quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

There have been no significant changes to the fair valuation methodologies during the period.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required, however, during the year ended December 31, 2009, the Fund paid federal excise tax of $114. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

Net Unrealized

Appreciation

Based on Cost of

Securities and

Undistributed

Accumulated

Other Investments

Net Investment

Long-Term

Loss

for Federal Income

Income

Gain

Carryforward^1,2,3

Tax Purposes

$64,428

—

2,303,479

757,533


1.		As of December 31, 2009, the Fund had $2,303,479 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2016	$	1,303,597
2017		999,882

Total	$	2,303,479


2.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

3.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

Accordingly, the following amounts have been reclassified for December 31, 2009. Net assets of the Fund were unaffected by the reclassifications.


			Reduction to
Reduction to	Increase to		Accumulated Net
Paid-in	Accumulated Net		Realized Loss on
Capital	Investment Income		Investments

$114	$	6	$	108

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:


	Year Ended		Year Ended
	December 31, 2009		December 31, 2008

Distributions paid from:
Ordinary income	$	9,999	$	49,216


Federal tax cost of securities	$	6,845,026

Gross unrealized appreciation	$	999,389
Gross unrealized depreciation		(241,856	)

Net unrealized appreciation	$	757,533

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:


	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount

Non-Service Shares
Sold		4,808		$	27,757			957		$	8,036
Dividends and/or distributions reinvested		14			103			409			2,000
Redeemed		(846	)		(4,834	)		(147,464	)		(1,485,290	)

Net increase (decrease)		3,976		$	23,026			(146,098	)	$	(1,475,254	)


Service Shares
Sold		326,123		$	2,582,040			461,846		$	4,322,028
Dividends and/or distributions reinvested		1,092			9,896			7,057			47,216
Redeemed		(182,945	)		(1,351,152	)		(329,902	)		(3,213,369	)

Net increase		144,270		$	1,240,784			139,001		$	1,155,875

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended December 31, 2009, were as follows:


	Purchases		Sales

Investment securities	$	7,710,909	$	6,421,680

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:


Fee Schedule

Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

NOTES TO FINANCIAL STATEMENTS Continued

Fees and Other Transactions with Affiliates Continued

Waivers and Reimbursements of Expenses. Effective January 1, 2007, the Manager voluntarily agreed to limit the Fund’s total annual operating expenses so that those expenses as percentages of daily net assets would not exceed the annual rate of 1.25% for Non-Service shares and 1.50% for Service shares. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $295 and $55,158 for Non-Service and Service shares, respectively. This voluntary undertaking and may be amended or withdrawn at any time.

Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

5. Risk Exposures and the Use of Derivative Instruments

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

The effect of derivative instruments on the Statement of Operations is as follows:

Amount of Realized Gain or Loss Recognized on Derivatives

Investments

from unaffiliated

Derivatives Not

companies (including

Closing and

Accounted for as

premiums on

expiration of option

Hedging Instruments

options exercised)*

contracts written

Total

Equity contracts

(110

)

3,628

3,518


*		Includes purchased option contracts, purchased swaption contracts and written option contracts exercised, if any.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

As of December 31, 2009, the Fund held no outstanding forward contracts.

Option Activity

The Fund has written put options on individual equity securities and, or, equity indexes to increase exposure to equity risk. A written put option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

The Fund has written covered call options on individual equity securities and, or, equity indexes to decrease exposure to equity risk. A written covered call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

The Fund has purchased call options on individual equity securities and, or, equity indexes to increase exposure to equity risk. A purchased call option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

Additional associated risks to the Fund include counterparty credit risk for over-the-counter options and liquidity risk. Written option activity for the year ended December 31, 2009 was as follows:


	Call Options						Put Options
	Number of			Amount of			Number of			Amount of
	Contracts			Premiums			Contracts			Premiums

Options outstanding as of December 31, 2008		—		$	—			—		$	—
Options written		168			11,721			17			1,895
Options closed or expired		(160	)		(10,654	)		(17	)		(1,895	)
Options exercised		(8	)		(1,067	)		—			—

Options outstanding as of December 31, 2009		—		$	—			—		$	—

6. Subsequent Events Evaluation

7. Pending Litigation

Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

NOTES TO FINANCIAL STATEMENTS Continued

7. Pending Litigation Continued

Oppenheimer Variable Account Funds

Investment Adviser
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Distributor
OppenheimerFunds Distributor, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.CALL OPP (225.5677)

Custodian Bank
JPMorgan Chase Bank
4 Chase Metro Tech Center
Brooklyn, New York 11245

Independent Registered Public Accounting Firm
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

Counsel to the Funds & Independent Directors
K&L Gates LLP
70 West Madison Street, Suite 3100
Chicago, Illinois 60602

(a) Eighteenth Amended and Restated Declaration of Trust dated 4/30/10: Filed herewith

(b) Amended By-Laws dated 10/24/00: Previously filed with Registrant’s Post-Effective Amendment No. 36 (4/17/01), and incorporated herein by reference.

(c) (i) Oppenheimer Aggressive Growth Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(d) (i) Amended and Restated Investment Advisory Agreement for Oppenheimer Aggressive Growth Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(ii) Amended and Restated Investment Advisory Agreement for Oppenheimer Balanced Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(iii) Amended and Restated Investment Advisory Agreement for Oppenheimer Bond Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(iv) Amendment No. 1 to the Amended and Restated investment Advisory Agreement for Oppenheimer Core Bond Fund/VA dated 4/10/07: Previously filed with Registrant’s Post-Effective Amendment No. 52 (4/24/07), and incorporated herein by reference.

(v) Amended and Restated Investment Advisory Agreement for Oppenheimer Capital Appreciation Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(vi) Amended and Restated Investment Advisory Agreement for Oppenheimer Global Securities Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(vii) Amended and Restated Investment Advisory Agreement for Oppenheimer High Income Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(viii) Amended and Restated Investment Advisory Agreement for Oppenheimer Main Street Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(ix) Amended and Restated Investment Advisory Agreement for Oppenheimer Main Street Small Cap Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(x) Amended and Restated Investment Advisory Agreement for Oppenheimer Money Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(xi) Amended and Restated Investment Advisory Agreement for Oppenheimer Strategic Bond Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(xii) Amended and Restated Investment Advisory Agreement for Oppenheimer Value Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(e) (i) General Distributors Agreement for Service shares of Oppenheimer Aggressive Growth Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(f) Form of Oppenheimer Funds Compensation Deferral Plan, as Amended and Restated Effective January 1, 2008: Previously filed with Post-Effective Amendment No. 2 to the Registration Statement of Oppenheimer Portfolio Series Fixed Income Active Allocation Fund (Reg. No. 333-146105), (5/29/09), and incorporated herein by reference.

(g) Global Custody Agreement dated August 16, 2002: Previously filed with Post-Effective Amendment No. 51 to the Registration Statement of Oppenheimer Capital Appreciation Fund (Reg. No. 2-69719), (10/23/06), and incorporated herein by reference.

(h) Not applicable.

(i) (i) Opinion and Consent of Counsel dated 3/14/85: Previously filed with Registrant’s Pre-Effective Amendment No. 1 (3/20/85), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95) pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(j) Independent Registered Public Accounting Firm’s Consent: Filed herewith.

(l) Investment Letter dated 3/14/85 from Monarch Life Insurance Company to Registrant: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(m) (i) Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Aggressive Growth Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through 9/17/09: Previously filed with Post-Effective Amendment No. 16 to the Registration Statement of Oppenheimer Main Street Cap Fund (Reg. No. 333-78269), 10/2/09, and incorporated herein by reference.

(o) (i) Powers of Attorney dated August 26, 2009 for all Trustees/Directors and Officers, with the exception of William F. Glavin, Jr.: Previously filed with Post-Effective Amendment No. 24 to the Registration Statement of Oppenheimer Senior Floating Rate Fund (Reg. No. 333-128848), (11/20/09), and incorporated herein by reference.

(ii) Power of Attorney dated December 18, 2009 for William F. Glavin, Jr.: Previously filed with Post Effective Amendment No. 64 to the Registration Statement of Oppenheimer Quest for Value Funds, (Reg. No. 33-15489), (12/18/09), and incorporated herein by reference.

(p) Amended and Restated Code of Ethics of the Oppenheimer Funds dated November 30, 2007 under Rule 17j-1 of the Investment Company Act of 1940: Previously filed with Post-Effective Amendment No. 65 to the Registration Statement of Oppenheimer Quest for Value Funds, (Reg. No. 33-15489), (02/24/10), and incorporated herein by reference.

Reference is made to the provisions of Article Seven of Registrant's Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this Registration Statement, and incorporated herein by reference.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of Registrant pursuant to the foregoing provisions or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and certain subsidiaries and affiliates act in the same capacity to other investment companies, including without limitation those described in Parts A and B hereof and listed in Item 31(b) below.

Oppenheimer Limited Term Municipal Fund (a series of Oppenheimer Municipal Fund)

Oppenheimer Portfolio Series Fixed Income Active Allocation Fund
Oppenheimer Principal Protected Main Street Fund (a series of Oppenheimer Principal

Oppenheimer Principal Protected Main Street Fund II (a series of Oppenheimer Principal

Oppenheimer Principal Protected Main Street Fund III (a series of Oppenheimer Principal

Rochester Fund Municipals

The address of the Oppenheimer funds listed above, Shareholder Financial Services, Inc., Shareholder Services, Inc., Centennial Asset Management Corporation, and OppenheimerFunds Legacy Program is 6803 South Tucson Way, Centennial, Colorado 80112-3924.
The address of OppenheimerFunds, Inc., OppenheimerFunds Distributor, Inc., HarbourView Asset Management Corporation, Oppenheimer Acquisition Corp., OFI Private Investments Inc., OFI Institutional Asset Management, Inc. Oppenheimer Real Asset Management, Inc. and OFI Trust Company is Two World Financial Center, 225 Liberty Street, 11^th Floor, New York, New York 10281-1008.
The address of OppenheimerFunds International Ltd. is 70 Sir John Rogerson’s Quay, Dublin 2, Ireland.
The address of OFI Institutional Asset Management, Ltd., is One Silk Road, London, England EC27 8HQ
The address of Trinity Investment Management Corporation is 301 North Spring Street, Bellefonte, Pennsylvania 16823.
The address of OppenheimerFunds International Distributor Limited is 13^th Floor, Printing House, 6 Duddell Street, Central, Hong Kong.

(a) OppenheimerFunds Distributor, Inc. is the Distributor of the Registrant's shares. It is also the Distributor of each of the other registered open-end investment companies for which OppenheimerFunds, Inc. is the investment adviser, as described in Part A and Part B of this Registration Statement and listed in Item 31(b) above (except Panorama Series Fund, Inc.) and for MassMutual Institutional Funds.

(b) The directors and officers of the Registrant's principal underwriter are:

⁽²⁾Two World Financial Center, 225 Liberty Street, 11^th Floor, New York, NY 10281-1008

The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and rules promulgated thereunder are in the possession of OppenheimerFunds, Inc. at its offices at 6803 South Tucson Way, Centennial, Colorado 80112-3924.

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 28th day of April, 2010.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the dates indicated:

William L. Armstrong* Chairman of the April 28, 2010
William L. Armstrong Board of Trustees

Brian W. Wixted* Treasurer, Principal April 28, 2010
Brian W. Wixted Financial & Accounting Officer


	Shares		Value

Common Stocks—52.1%
Consumer Discretionary—4.0%
Media—4.0%
Jupiter Telecommunications Co. Ltd.		6,621	$	6,554,531
Liberty Global, Inc., Series A¹		80,238		1,758,015
Liberty Global, Inc., Series C¹		77,960		1,703,426

				10,015,972

Consumer Staples—6.2%
Beverages—0.4%
Molson Coors Brewing Co., Cl. B, Non-Vtg.		22,100		998,036
Food & Staples Retailing—1.8%
CVS Caremark Corp.		44,100		1,420,461
Kroger Co. (The)		89,600		1,839,488
Walgreen Co.		31,000		1,138,320

				4,398,269

Food Products—1.7%
Nestle SA		87,780		4,259,806
Tobacco—2.3%
Altria Group, Inc.		83,010		1,629,486
Lorillard, Inc.		50,660		4,064,452

				5,693,938

Energy—5.3%
Oil, Gas & Consumable Fuels—5.3%
Chevron Corp.		86,600		6,667,334
Exxon Mobil Corp.		96,370		6,571,470

				13,238,804

Financials—6.3%
Capital Markets—1.1%
Goldman Sachs Group, Inc. (The)		8,400		1,418,256
Morgan Stanley		46,300		1,370,480

				2,788,736

Diversified Financial Services—2.2%
JPMorgan Chase & Co.		132,900		5,537,943
Insurance—3.0%
Assurant, Inc.		51,500		1,518,220
Everest Re Group Ltd.		68,430		5,863,082

				7,381,302

Health Care—5.8%
Biotechnology—1.1%
Amgen, Inc.¹		23,400		1,323,738
Genzyme Corp. (General Division)¹		18,900		926,289
Vanda Pharmaceuticals, Inc.¹		49,100		551,884

				2,801,911

Health Care Equipment & Supplies—1.8%
Beckman Coulter, Inc.		32,120		2,101,933
Covidien plc		46,700		2,236,463

				4,338,396

Health Care Providers & Services—1.1%
Aetna, Inc.		87,140		2,762,338
Pharmaceuticals—1.8%
Merck & Co., Inc.		88,927		3,249,393
Pfizer, Inc.		67,965		1,236,283

				4,485,676

Industrials—4.5%
Electrical Equipment—0.6%
General Cable Corp.¹		50,500		1,485,710
Industrial Conglomerates—0.6%
Tyco International Ltd.		41,300		1,473,584
Machinery—2.6%
Joy Global, Inc.		57,780		2,980,870
Navistar International Corp.¹		92,850		3,588,653

				6,569,523

Trading Companies & Distributors—0.7%
Aircastle Ltd.		168,100		1,655,785
Information Technology—17.6%
Communications Equipment—3.9%
Orbcomm, Inc.¹		375		1,013
QUALCOMM, Inc.		113,360		5,244,034
Research in Motion Ltd.¹		65,680		4,436,027

				9,681,074

Computers & Peripherals—0.8%
Dell, Inc.¹		147,000		2,110,920
Electronic Equipment & Instruments—0.0%
CalAmp Corp.¹		19		65
Internet Software & Services—4.6%
eBay, Inc.¹		150,600		3,545,124
Google, Inc., Cl. A¹		12,910		8,003,942

				11,549,066

Software—8.3%
Oracle Corp.		128,700		3,158,298
Synopsys, Inc.¹		114,640		2,554,179
Take-Two Interactive Software, Inc.¹		1,048,576		10,538,189
THQ, Inc.¹		853,300		4,300,632

				20,551,298

Materials—1.8%
Chemicals—1.8%
Celanese Corp., Series A		28,200		905,220
Potash Corp. of Saskatchewan, Inc.		32,400		3,515,400

				4,420,620


	Shares		Value

Telecommunication Services—0.0%
Diversified Telecommunication Services—0.0%
XO Holdings, Inc.¹		85	$	50
Utilities—0.6%
Electric Utilities—0.6%
Edison International, Inc.		40,500		1,408,590


Total Common Stocks (Cost $123,200,811)				129,607,412

Preferred Stocks—3.6%
Bank of America Corp., 10% Cv., Series S¹		235,500		3,513,660
Mylan, Inc., 6.50% Cv., Non-Vtg.		4,800		5,492,928


Total Preferred Stocks (Cost $6,579,607)				9,006,588

	Units

Rights, Warrants and Certificates—0.0%
XO Communications, Inc.:
Series A Wts., Strike Price $6.25, Exp. 1/16/10^1,2		171		—
Series B Wts., Strike Price $7.50, Exp. 1/16/10^1,2		128		1
Series C Wts., Strike Price $10, Exp. 1/16/10^1,2		128		—


Total Rights, Warrants and Certificates (Cost $0)				1

	Principal
	Amount

Asset-Backed Securities—3.8%
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.711%, 5/25/34³	$	830,484		615,359
Bank of America Auto Trust, Automobile Asset-Backed Certificates, Series 2009-2A, Cl. A4, 3.03%, 10/15/16⁴		1,025,000		1,040,022
Bank of America Credit Card Trust, Credit Card Asset-Backed Certificates, Series 2006-A16, Cl. A16, 4.72%, 5/15/13		265,000		273,215
Chase Issuance Trust, Credit Card Asset-Backed Certificates, Series 2007-A15, Cl. A, 4.96%, 9/17/12		665,000		685,187
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2003-C4, Cl. C4, 5%, 6/10/15		180,000		177,107
CNH Equipment Trust, Asset-Backed Certificates, Series 2009-B, Cl. A3, 2.97%, 3/15/13		465,000		471,971
Countrywide Home Loans, Asset-Backed Certificates:
Series 2002-4, Cl. A1, 0.971%, 2/25/33³		18,836		14,930
Series 2005-16, Cl. 2AF2, 5.382%, 5/1/36³		322,717		264,397
Series 2005-17, Cl. 1AF2, 5.362%, 5/1/36³		183,447		151,263
CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.351%, 6/25/47³		480,000		374,438
DT Auto Owner Trust, Automobile Receivables Nts., Series 2009-1, Cl. A1, 2.98%, 10/15/15		245,000		244,199
Ford Credit Auto Owner Trust, Automobile Receivables Nts.:
Series 2009-B, Cl. A2, 2.10%, 11/15/11		120,000		120,765
Series 2009-E, Cl. A2, 0.80%, 3/15/12		505,000		504,451
Harley-Davidson Motorcycle Trust 2009-2, Motorcycle Contract-Backed Nts., Series 2009-2, Cl. A2, 2%, 7/15/12		810,000		815,545
Honda Auto Receivables 2009-3 Owner Trust, Automobile Asset-Backed Nts., Series 2009-3, Cl. A2, 1.50%, 8/15/11²		350,000		351,770
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2005-3, Cl. A1, 0.493%, 1/20/35³		264,867		229,403
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.343%, 3/20/36³		178,629		172,163
MBNA Credit Card Master Note Trust, Credit Card Receivables:
Series 2003-C7, Cl. C7, 1.583%, 3/15/16³		1,710,000		1,535,037
Series 2005-A6, Cl. A6, 4.50%, 1/15/13		660,000		673,473
Option One Mortgage Loan Trust 2006-2, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.331%, 7/1/36³		674,668		472,871
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through Certificates, Series 2006-KS7, Cl. A2, 0.331%, 9/25/36³		310,800		298,763
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates, Series 2006-BNC3, Cl. A2, 0.271%, 9/25/36³		39,188		38,880

Total Asset-Backed Securities (Cost $10,416,059)				9,525,209

Mortgage-Backed Obligations—28.8%
Government Agency—25.0%
FHLMC/FNMA/FHLB/Sponsored—23.5%
Federal Home Loan Bank, Mtg.-Backed Obligations, Series 5G-2012, Cl. 1, 4.97%, 2/24/12		583,063		606,821


	Principal
	Amount		Value

FHLMC/FNMA/FHLB/Sponsored Continued
Federal Home Loan Mortgage Corp.:
5.50%, 9/1/39	$	1,488,892	$	1,561,398
7%, 10/1/37		2,127,351		2,321,160
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 2006-11, Cl. PS, 23.719%, 3/25/36³		279,764		374,303
Series 2426, Cl. BG, 6%, 3/15/17		580,844		624,316
Series 2427, Cl. ZM, 6.50%, 3/15/32		622,523		669,903
Series 2626, Cl. TB, 5%, 6/1/33		805,000		853,657
Series 2638, Cl. KG, 4%, 11/1/27		1,000,000		1,029,332
Series 2648, Cl. JE, 3%, 2/1/30		710,180		709,277
Series 2663, Cl. BA, 4%, 8/1/16		771,962		793,010
Series 2676, Cl. KB, 5%, 2/1/20		270,367		278,388
Series 2686, Cl. CD, 4.50%, 2/1/17		496,188		511,092
Series 2907, Cl. GC, 5%, 6/1/27		186,387		193,923
Series 2929, Cl. PC, 5%, 1/1/28		170,000		177,181
Series 2952, Cl. GJ, 4.50%, 12/1/28		100,691		103,507
Series 3019, Cl. MD, 4.75%, 1/1/31		472,722		491,630
Series 3025, Cl. SJ, 23.895%, 8/15/35³		87,291		109,743
Series 3094, Cl. HS, 23.529%, 6/15/34³		169,223		219,208
Series 3157, Cl. MC, 5.50%, 2/1/26		698,841		714,406
Series 3279, Cl. PH, 6%, 2/1/27		675,000		697,181
Series 3291, Cl. NA, 5.50%, 10/1/27		125,705		130,366
Series 3306, Cl. PA, 5.50%, 10/1/27⁵		213,080		220,498
Series R001, Cl. AE, 4.375%, 4/1/15		153,928		157,945
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 14.56%, 6/1/26⁶		146,195		32,706
Series 183, Cl. IO, 10.863%, 4/1/27⁶		227,567		50,856
Series 184, Cl. IO, 18.537%, 12/1/26⁶		250,964		55,709
Series 192, Cl. IO, 8.551%, 2/1/28⁶		65,995		15,559
Series 2130, Cl. SC, 52.029%, 3/15/29⁶		182,362		27,010
Series 224, Cl. IO, 0%, 3/1/33^6,7		374,527		83,129
Series 243, Cl. 6, 0%, 12/15/32^6,7		229,289		47,074
Series 2527, Cl. SG, 26.607%, 2/15/32⁶		120,136		7,117
Series 2531, Cl. ST, 42.803%, 2/15/30⁶		1,483,486		96,608
Series 2796, Cl. SD, 66.214%, 7/15/26⁶		257,810		32,802
Series 2802, Cl. AS, 99.999%, 4/15/33⁶		307,503		27,308
Series 2920, Cl. S, 78.194%, 1/15/35⁶		1,470,342		171,178
Series 3000, Cl. SE, 99.999%, 7/15/25⁶		1,331,239		124,242
Series 3045, Cl. DI, 40.74%, 10/15/35⁶		1,199,158		142,362
Series 3110, Cl. SL, 99.999%, 2/15/26⁶		206,137		18,332
Series 3146, Cl. SA, 49.975%, 4/15/36⁶		1,425,942		218,664
Series 3399, Cl. SC, 19.734%, 12/15/37⁶		1,044,911		114,626
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security, Series 176, Cl. PO, 4.474%, 6/1/26⁸		64,339		52,584
Federal National Mortgage Assn.:
4.50%, 1/1/25-1/1/40⁹		3,617,000		3,656,273
5%, 1/1/25-1/1/40⁹		8,853,000		9,115,282
5.50%, 9/25/20		14,850		15,815
5.50%, 1/1/25-1/1/40⁹		7,133,000		7,470,971
6%, 3/1/37		1,401,273		1,488,633
6%, 1/1/25-1/1/40⁹		8,023,000		8,527,238
6.50%, 1/1/40⁹		1,780,000		1,906,547
7%, 11/1/17⁵		294,839		315,253
7.50%, 1/1/33		255,436		288,195
8.50%, 7/1/32		12,622		14,132
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Trust 1998-61, Cl. PL, 6%, 11/25/28		205,836		221,210
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,000,000		1,061,358
Trust 2004-81, Cl. KC, 4.50%, 4/1/17		715,407		736,195
Trust 2005-104, Cl. MC, 5.50%, 12/25/25		700,000		739,672
Trust 2005-12, Cl. JC, 5%, 6/1/28		474,055		494,286
Trust 2005-22, Cl. EC, 5%, 10/1/28		170,000		177,515
Trust 2005-30, Cl. CU, 5%, 4/1/29		177,697		185,807
Trust 2005-57, Cl. PA, 5.50%, 5/1/27		364,138		368,334
Trust 2005-69, Cl. LE, 5.50%, 11/1/33		567,347		598,205
Trust 2006-46, Cl. SW, 23.351%, 6/25/36³		208,596		276,226
Trust 2006-57, Cl. PA, 5.50%, 8/25/27		474,596		488,683
Trust 2009-37, Cl. HA, 4%, 4/1/19		832,166		862,157
Trust 2009-70, Cl. PA, 5%, 8/1/35		867,103		916,321
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-65, Cl. S, 45.005%, 11/25/31⁶		599,206		94,102
Trust 2001-81, Cl. S, 36.86%, 1/25/32⁶		137,579		21,324
Trust 2002-47, Cl. NS, 34.133%, 4/25/32⁶		303,533		41,859
Trust 2002-51, Cl. S, 34.441%, 8/25/32⁶		278,715		38,011
Trust 2002-52, Cl. SD, 41.084%, 9/25/32⁶		331,085		45,068
Trust 2002-77, Cl. SH, 44.552%, 12/18/32⁶		188,950		29,335
Trust 2002-84, Cl. SA, 46.329%, 12/25/32⁶		534,541		69,738
Trust 2002-9, Cl. MS, 35.508%, 3/25/32⁶		207,207		27,737
Trust 2003-33, Cl. SP, 56.243%, 5/25/33⁶		617,100		87,120
Trust 2003-4, Cl. S, 44.252%, 2/25/33⁶		354,454		50,581
Trust 2003-46, Cl. IH, 0%, 6/1/33^6,7		2,023,281		304,530
Trust 2003-89, Cl. XS, 60.423%, 11/25/32⁶		292,556		36,326
Trust 2004-54, Cl. DS, 51.449%, 11/25/30⁶		276,610		31,215
Trust 2005-14, Cl. SE, 43.129%, 3/25/35⁶		219,879		24,588
Trust 2005-40, Cl. SA, 74.116%, 5/25/35⁶		809,651		94,958
Trust 2005-6, Cl. SE, 85.79%, 2/25/35⁶		1,089,463		120,666
Trust 2005-71, Cl. SA, 72.228%, 8/25/25⁶		869,296		103,270
Trust 2005-87, Cl. SE, 44.143%, 10/25/35⁶		1,023,347		116,218
Trust 2005-87, Cl. SG, 35.207%, 10/25/35⁶		46,516		6,286
Trust 2006-60, Cl. DI, 40.539%, 4/25/35⁶		140,544		17,419
Trust 2007-88, Cl. XI, 25.543%, 6/25/37⁶		4,033,056		454,484
Trust 222, Cl. 2, 16.05%, 6/1/23⁶		491,879		96,253
Trust 233, Cl. 2, 22.983%, 8/1/23⁶		435,855		104,157
Trust 240, Cl. 2, 23.279%, 9/1/23⁶		820,885		183,288
Trust 252, Cl. 2, 23.374%, 11/1/23⁶		397,375		94,307
Trust 273, Cl. 2, 15.757%, 8/1/26⁶		109,805		24,885
Trust 319, Cl. 2, 4.666%, 2/1/32⁶		138,411		31,757
Trust 331, Cl. 9, 9.073%, 2/1/33⁶		403,912		86,993
Trust 334, Cl. 17, 16.086%, 2/1/33⁶		231,533		44,706


	Principal
	Amount		Value

FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued
Trust 339, Cl. 12, 0%, 7/1/33^6,7	$	402,150	$	75,631
Trust 339, Cl. 7, 0%, 7/1/33^6,7		1,439,957		234,567
Trust 343, Cl. 13, 8.301%, 9/1/33⁶		350,612		58,790
Trust 345, Cl. 9, 2.695%, 1/1/34⁶		586,687		105,364
Trust 351, Cl. 10, 1.924%, 4/1/34⁶		57,043		11,006
Trust 351, Cl. 8, 2.248%, 4/1/34⁶		176,893		34,099
Trust 356, Cl. 10, 0.169%, 6/1/35⁶		146,330		27,644
Trust 356, Cl. 12, 0%, 2/1/35^6,7		78,187		14,652
Trust 362, Cl. 12, 0%, 8/1/35^6,7		946,130		181,151
Trust 362, Cl. 13, 0%, 8/1/35^6,7		520,060		99,653
Trust 364, Cl. 16, 0%, 9/1/35^6,7		411,302		69,332
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 5.28%, 9/25/23⁸		179,542		140,183

				58,323,672

GNMA/Guaranteed—1.5%
Government National Mortgage Assn.:
4.50%, 1/1/409		3,340,000		3,343,133
8%, 4/15/23		78,859		90,578
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 2001-21, Cl. SB, 80.641%, 1/16/27⁶		295,273		42,046
Series 2002-15, Cl. SM, 70.84%, 2/16/32⁶		346,699		43,070
Series 2002-76, Cl. SY, 77.048%, 12/16/26⁶		778,618		121,791
Series 2004-11, Cl. SM, 58.679%, 1/17/30⁶		252,343		41,656

				3,682,274
Non-Agency—3.8%
Commerical—2.4%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2006-1, Cl. AM, 5.421%, 9/1/45		1,800,000		1,424,778
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates: Series 2008-C7, Cl. AM, 6.092%, 12/1/49³		780,000		591,153
Deutsche Alt-A Securities, Inc., Mtg. Pass-Through Certificates, Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		359,931		198,295
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		307,183		285,890
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		312,188		221,879
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2005-C4, Cl. AM, 5.334%, 11/1/45³		355,000		290,440
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2001-LIBA, Cl. B, 6.733%, 2/10/16⁴		290,000		307,185
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP4, Cl. AM, 4.999%, 10/1/42		485,000		409,772
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		235,000		227,417
Series 2007-LD11, Cl. A2, 5.803%, 6/15/49³		270,000		277,501
JPMorgan Mortgage Trust 2007-S3, Mtg. Pass-Through Certificates, Series 2007-S3, Cl. 1A90, 7%, 7/1/37		437,140		339,752
LB-UBS Commercial Mortgage Trust 2007-C1, Commercial Mtg. Pass-Through Certificates, Series 2007-C1, Cl. A2, 5.318%, 1/15/12		500,000		509,471
Mastr Adjustable Rate Mortgages Trust 2004-13, Mtg. Pass-Through Certificates, Series 2004-13, Cl. 2 A2, 3.023%, 4/1/34³		283,891		269,142
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		613,780		527,969

				5,880,644

Multifamily—0.5%
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg. Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.979%, 12/25/34³		288,631		279,358
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through Certificates, Series 2004-S, Cl. A1, 3.105%, 9/25/34³		252,134		233,385
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 5A1, 5.589%, 7/1/36³		387,350		302,062
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.096%, 3/25/36³		713,431		578,468

				1,393,273


	Principal
	Amount		Value

Residential—0.9%
Banc of America Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Series 2004-E, Cl. 2A6, 4.158%, 6/1/34³	$	175,000	$	147,856
CHL Mortgage Pass-Through Trust 2006-6, Mtg. Pass-Through Certificates, Series 2006-6, Cl. A3, 6%, 4/1/36		390,017		333,702
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates: Series 2008-C7, Cl. A4, 6.092%, 12/1/49³		300,000		270,128
Countrywide Alternative Loan Trust 2005-29CB, Mtg. Pass-Through Certificates, Series 2005-29CB, Cl. A4, 5%, 7/1/35		922,108		699,194
GSR Mortgage Loan Trust 2006-5F, Mtg. Pass-Through Certificates, Series 2006-5F, Cl. 2A1, 6%, 6/1/36		400,166		347,216
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33		200,576		199,043
RALI Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		137,962		125,659
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 3.003%, 9/1/34³		121,986		115,699

				2,238,497

Total Mortgage-Backed Obligations (Cost $71,280,986)				71,518,360

U.S. Government Obligations—0.6%
Federal Home Loan Mortgage Corp. Nts., 2.50%, 4/23/14		765,000		765,328
Federal National Mortgage Assn. Nts., 3%, 9/16/14		595,000		603,200


Total U.S. Government Obligations (Cost $1,362,160)				1,368,528

Non-Convertible Corporate Bonds and Notes—12.5%
Consumer Discretionary—1.5%
Automobiles—0.3%
Daimler Finance North America LLC, 6.50% Sr. Unsec. Unsub. Nts., 11/15/13		235,000		257,836
Ford Motor Credit Co. LLC, 9.75% Sr. Unsec. Nts., 9/15/10		465,000		479,890

				737,726
Hotels, Restaurants & Leisure—0.1%
Hyatt Hotels Corp., 5.75% Sr. Unsec. Unsub. Nts., 8/15/15⁴		242,000		243,740
Household Durables—0.1%
Fortune Brands, Inc., 3% Sr. Unsec. Unsub. Bonds, 6/1/12		252,000		249,903
Leisure Equipment & Products—0.1%
Mattel, Inc., 6.125% Sr. Unsec. Nts., 6/15/11		230,000		242,584
Media—0.7%
CBS Corp., 8.875% Sr. Unsec. Nts., 5/15/19		222,000		266,024
Comcast Cable Communications Holdings, Inc., 9.455% Sr. Unsec. Nts., 11/15/22		115,000		148,206
DirecTV Holdings LLC/DirecTV Financing Co., Inc.:
5.875% Sr. Unsec. Unsub. Nts., 10/1/19⁴		200,000		203,794
7.625% Sr. Unsec. Unsub. Nts., 5/15/16²		182,000		199,089
DISH DBS Corp., 7.875% Sr. Unsec. Nts., 9/1/19		205,000		216,019
Grupo Televisa SA, 6.625% Sr. Unsec. Bonds, 1/15/40⁴		200,000		198,785
Time Warner Cos., Inc., 9.125% Debs., 1/15/13		165,000		191,584
Time Warner Entertainment Co. LP, 8.375% Sr. Nts., 7/15/33		130,000		155,846
Viacom, Inc., 7.875% Sr. Unsec. Debs., 7/30/30		140,000		151,393

				1,730,740

Specialty Retail—0.2%
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		212,000		205,312
Staples, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/1/11		350,000		376,226

				581,538

Consumer Staples—0.7%
Beverages—0.3%
Anheuser-Busch InBev Worldwide, Inc., 7.75% Sr. Unsec. Unsub. Nts., 1/15/19⁴		374,000		438,610
Constellation Brands, Inc., 8.375% Sr. Nts., 12/15/14²		220,000		235,400

				674,010

Food & Staples Retailing—0.0%
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31		95,000		121,955
Food Products—0.2%
Bunge Ltd. Finance Corp.:
5.35% Sr. Unsec. Unsub. Nts., 4/15/14		25,000		25,581
8.50% Sr. Unsec. Nts., 6/15/19		175,000		199,816


	Shares

Investment Companies—12.3%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%^11,12		326,558			326,558

Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%^11,13		30,151,515			30,151,515


Total Investment Companies (Cost $30,478,073)					30,478,073


Total Investments, at Value (Cost $272,681,099)		113.7	%		282,498,175

Liabilities in Excess of Other Assets		(13.7	)		(33,954,865	)


Net Assets		100.0	%	$	248,543,310


Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $242,529,584)	$	252,346,660
Affiliated companies (cost $30,151,515)		30,151,515

		282,498,175

Receivables and other assets:
Interest, dividends and principal paydowns		951,368
Futures margins		15,620
Other		13,752

Total assets		283,478,915

Liabilities
Depreciated swaps, at value		35,332

Payables and other liabilities:
Investments purchased on a when-issued or delayed delivery basis		34,401,962
Shares of beneficial interest redeemed		202,080
Futures margins		54,918
Distribution and service plan fees		53,777
Shareholder communications		33,382
Transfer and shareholder servicing agent fees		21,011
Trustees’ compensation		10,445
Other		122,698

Total liabilities		34,935,605

Net Assets	$	248,543,310


Composition of Net Assets
Par value of shares of beneficial interest	$	24,227

Additional paid-in capital		325,929,669

Accumulated net investment income		3,221,774

Accumulated net realized loss on investments and foreign currency transactions		(90,086,927	)

Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		9,454,567


Net Assets	$	248,543,310


Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $159,796,672 and 15,515,263 shares of beneficial interest outstanding)	$	10.30

Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $88,746,638 and 8,711,297 shares of beneficial interest outstanding)	$	10.19


Investment Income
Interest (net of foreign withholding taxes of $189)	$	5,013,737

Dividends:
Unaffiliated companies (net of foreign withholding taxes of $24,474)		2,568,963
Affiliated companies		198,336

Total investment income		7,781,036

Expenses
Management fees		1,759,787

Distribution and service plan fees—Service shares		191,645

Transfer and shareholder servicing agent fees:
Non-Service shares		111,060
Service shares		58,479

Shareholder communications:
Non-Service shares		73,071
Service shares		36,168

Trustees’ compensation		11,864

Custodian fees and expenses		4,250

Other		59,854

Total expenses		2,306,178
Less waivers and reimbursements of expenses		(695,204	)

Net expenses		1,610,974

Net Investment Income		6,170,062

Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies		(25,783,290	)
Closing and expiration of option contracts written		279,815
Closing and expiration of futures contracts		50,329
Foreign currency transactions		(600,318	)
Short positions		3,103
Swap contracts		(4,840,574	)

Net realized loss		(30,890,935	)

Net change in unrealized appreciation (depreciation) on:
Investments		72,372,135
Translation of assets and liabilities denominated in foreign currencies		28,995
Futures contracts		(1,275,692	)
Swap contracts		(482,719	)

Net change in unrealized appreciation		70,642,719

Net Increase in Net Assets Resulting from Operations	$	45,921,846


	When-Issued or Delayed Delivery
	Basis Transactions

Purchased securities		$34,401,962


1.		As of December 31, 2009, the Fund had $89,130,813 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2009, details of the capital loss carryforwards were as follows:


Expiring

2016	$	44,402,106
2017		44,728,707

Total	$	89,130,813


2.		The Fund had $2,354 of post-October foreign currency losses which were deferred.

3.		The Fund had $120,488 of straddle losses which were deferred.

4.		During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

5.		During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.


Reduction	Reduction to Accumulated		Reduction to Accumulated Net
to Paid-in Capital	Net Investment Income		Realized Loss on Investments

$119	$	3,606,257	$	3,606,376


Federal tax cost of securities	$	273,842,246
Federal tax cost of other investments		4,274,456

Total federal tax cost	$	278,116,702


Gross unrealized appreciation	$	28,597,222
Gross unrealized depreciation		(19,939,475	)

Net unrealized appreciation	$	8,657,747

Name & Principal Business Address	Position & Office with Underwriter	Position and Office with Registrant
Timothy Abbhul⁽¹⁾	Vice President and Treasurer	None
Robert Agan⁽¹⁾	Vice President	None
Anthony Allocco⁽²⁾	Assistant Vice President	None
Janette Aprilante⁽²⁾	Secretary	None
James Austin⁽¹⁾	Vice President	None
James Barker 1723 W. Nelson Street Chicago, IL 60657	Vice President	None
Kathleen Beichert⁽¹⁾	Senior Vice President	None
Rocco Benedetto⁽²⁾	Vice President	None
Christopher Bergeron	Vice President	None
Rick Bettridge 11504 Flowering Plum Lane Highland, UT 84003	Vice President	None
David A. Borrelli 105 Black Calla Ct. San Ramon, CA 94583	Vice President	None
Jeffrey R. Botwinick 4431 Twin Pines Drive Manlius, NY 13104	Vice President	None
Sarah Bourgraf⁽¹⁾	Vice President	None
Bryan Bracchi 1124 Hampton Dr. Allen, TX 75013	Vice President	None
Joshua Broad⁽²⁾	Vice President	None
Ken Broadsky⁽²⁾	Vice President	None
Kevin E. Brosmith 5 Deer Path South Natlick, MA 01760	Senior Vice President	None
Jeffrey W. Bryan 1048 Malaga Avenue Coral Gables, FL 33134	Vice President	None
Ross Burkstaller 211 Tulane Drive SE Albuquerque, NM 87106	Vice President	None
Robert Caruso 15 Deforest Road Wilton, CT 06897	Vice President	None
Donelle Chisolm⁽²⁾	Assistant Vice President	None
Andrew Chronofsky	Vice President	None
Angelanto Ciaglia⁽²⁾	Vice President	None
Nicholas Cirbo⁽¹⁾	Vice President	None
Melissa Clayton⁽²⁾	Assistant Vice President	None
Craig Colby⁽²⁾	Vice President	None
Rodney Constable⁽¹⁾	Vice President	None
Neev Crane 1530 Beacon Street, Apt. #1403 Brookline, MA 02446	Vice President	None
Michael Daley 40W387 Oliver Wendell Holmes St St. Charles, IL 60175	Vice President	None
Fredrick Davis 14431 SE 61^st Street Bellevue, WA 98006	Vice President	None
John Davis⁽²⁾	Vice President	None
Stephen J. Demetrovits⁽²⁾	Vice President	None
Brian Dietrich ⁽¹⁾	Assistant Vice President	None
Steven Dombrower 13 Greenbrush Court Greenlawn, NY 11740	Vice President	None
Robert Dunphy⁽²⁾	Vice President	None
Beth Arthur Du Toit⁽¹⁾	Vice President	None
Paul Eck 3055 Forest Ridge Court Fairlawn, OH 44333	Vice President	None
Kent M. Elwell 35 Crown Terrace Yardley, PA 19067	Vice President	None
Gregg A. Everett 4328 Auston Way Palm Harbor, FL 34685-4017	Vice President	None
George R. Fahey 9511 Silent Hills Lane Lone Tree, CO 80124	Senior Vice President	None
Eric C. Fallon 10 Worth Circle Newton, MA 02458	Vice President	None
Matthew Farrier⁽¹⁾	Vice President	None
Kristie Feinberg⁽²⁾	Assistant Treasurer	None
Joseph Fernandez 1717 Richbourg Park Drive Brentwood, TN 37027	Vice President	None
Mark J. Ferro 104 Beach 221^st Street Breezy Point, NY 11697	Senior Vice President	None
Eric P. Fishel 725 Boston Post Rd., #12 Sudbury, MA 01776	Vice President	None
Patrick W. Flynn 14083 East Fair Avenue Englewood, CO 80111	Senior Vice President	None
John (“J”) Fortuna⁽²⁾	Vice President	None
Jayme D. Fowler 3818 Cedar Springs Road, #101-349 Dallas, TX 75219	Vice President	None
Diane Frankenfield⁽²⁾	Senior Vice President	None
Jerry Fraustro⁽²⁾	Vice President	None
William Friebel 2919 St. Albans Forest Circle Glencoe, MO 63038	Vice President	None
Alyson Frost⁽²⁾	Assistant Vice President	None
Greg Fulginite 515 N. Bemiston Ave. St. Louis, MO 63130	Vice President	None
William Gahagan⁽²⁾	Vice President	None
Charlotte Gardner⁽¹⁾	Vice President	None
David Goldberg⁽²⁾	Assistant Vice President	None
Michael Gottesman 255 Westchester Way Birmingham, MI 48009	Vice President	None
Raquel Granahan⁽²⁾	Senior Vice President	None
Robert Grill⁽²⁾	Senior Vice President	None
Eric Grossjung 4002 N. 194^th Street Elkhorn, NE 68022	Vice President	None
Michael D. Guman 3913 Pleasant Avenue Allentown, PA 18103	Vice President	None
James E. Gunter 603 Withers Circle Wilmington, DE 19810	Vice President	None
Kevin J. Healy⁽²⁾	Vice President	None
Kenneth Henry⁽²⁾	Vice President	None
Wendy G. Hetson⁽²⁾	Vice President	None
Jennifer Hoelscher⁽¹⁾	Assistant Vice President	None
Edward Hrybenko⁽²⁾	Senior Vice President	None
Amy Huber⁽¹⁾	Assistant Vice President	None
Brian F. Husch 37 Hollow Road Stonybrook, NY 11790	Vice President	None
Patrick Hyland⁽²⁾	Assistant Vice President	None
Keith Hylind⁽²⁾	Vice President	None
Kathleen T. Ives⁽¹⁾	Vice President & Assistant Secretary	Assistant Secretary
Shonda Rae Jaquez⁽²⁾	Vice President	None
Brian Johnson⁽¹⁾	Vice President	None
Eric K. Johnson 8588 Colonial Drive Lone Tree, CO 80124	Senior Vice President	None
Elyse Jurman 5486 NW 42 Ave Boca Raton, FL 33496	Vice President	None
Thomas Keffer⁽²⁾	Senior Vice President	None
Michael Keogh⁽²⁾	Vice President	None
Brian Kiley⁽²⁾	Vice President	None
Richard Klein 4820 Fremont Avenue South Minneapolis, MN 55419	Senior Vice President	None
Brent A. Krantz 61500 Tam McArthur Loop Bend, OR 97702	Senior Vice President	None
Eric Kristenson⁽²⁾	Vice President	None
David T. Kuzia 10258 S. Dowling Way Highlands Ranch, CO 80126	Vice President	None
Tracey Lange⁽²⁾	Vice President	None
John Laudadio	Vice President	None
Jesse Levitt⁽²⁾	Vice President	None
Julie Libby⁽²⁾	Senior Vice President	None
Eric J. Liberman 27 Tappan Ave., Unit West Sleepy Hollow, NY 10591	Vice President	None
Malissa Lischin⁽²⁾	Assistant Vice President	None
Christina Loftus⁽²⁾	Vice President	None
Thomas Loncar 1401 North Taft Street, Apt. 726 Arlington, VA 22201	Vice President	None
Peter Maddox⁽²⁾	Vice President	None
Michael Malik 546 Idylberry Road San Rafael, CA 94903	Vice President	None
Steven C. Manns 1627 N. Hermitage Avenue Chicago, IL 60622	Vice President	None
Todd A. Marion 24 Midland Avenue Cold Spring Harbor, NY 11724	Vice President	None
LuAnn Mascia⁽²⁾	Vice President	None
Anthony Mazzariello⁽²⁾	Vice President	None
Michael McDonald 11749 S Cormorant Circle Parker, CO 80134	Vice President	None
John C. McDonough 533 Valley Road New Canaan, CT 06840	President and Director	None
Kent C. McGowan 9510 190^th Place SW Edmonds, WA 98020	Vice President	None
Brian F. Medina 3009 Irving Street Denver, CO 80211	Vice President	None
William Meerman 4939 Stonehaven Drive Columbus, OH 43220	Vice President	None
Clint Modler⁽¹⁾	Vice President	None
Robert Moser 9650 East Aspen Hill Circle Lone Tree, CO 80124	Vice President	None
David W. Mountford 7820 Banyan Terrace Tamarac, FL 33321	Vice President	None
James Mugno⁽²⁾	Vice President	None
Matthew Mulcahy⁽²⁾	Vice President	None
Wendy Jean Murray 32 Carolin Road Upper Montclair, NJ 07043	Vice President	None
Janet Oleary⁽²⁾	Vice President	None
John S. Napier 17 Hillcrest Ave. Darien, CT 06820	Senior Vice President	None
Christina Nasta⁽²⁾	Vice President	None
Kevin P. Neznek⁽²⁾	Vice President	None
Christopher Nicholson⁽²⁾	Vice President	None
Chad Noel	Vice President	None
Timothy O’Connell⁽²⁾	Vice President	None
Janet Oleary⁽²⁾	Vice President	None
Alan Panzer 6755 Ridge Mill Lane Atlanta, GA 30328	Vice President	None
Maria Paster⁽²⁾	Assistant Vice President	None
Donald Pawluk⁽²⁾	Vice President	None
Brian C. Perkes 6 Lawton Ct. Frisco, TX 75034	Vice President	None
Wayne Perry 3900 Fairfax Drive Apt 813 Arlington, VA 22203	Vice President	None
Charles K. Pettit⁽²⁾	Vice President	None
David Pfeffer⁽²⁾	Director	None
Andrew Phillips⁽¹⁾	Assistant Vice President	None
Aaron Pisani⁽¹⁾	Vice President	None
Rachel Powers⁽¹⁾	Vice President	None
Nicole Pretzel⁽²⁾	Vice President	None
Minnie Ra 100 Dolores Street, #203 Carmel, CA 93923	Vice President	None
Dustin Raring 27 Blakemore Drive Ladera Ranch, CA 92797	Vice President	None
Michael A. Raso 3 Vine Place Larchmont, NY 10538	Vice President	None
Richard E. Rath 46 Mt. Vernon Ave. Alexandria, VA 22301	Vice President	None
Ramsey Rayan⁽²⁾	Vice President	None
William J. Raynor⁽⁴⁾	Vice President	None
Ian M. Roche 7070 Bramshill Circle Bainbridge, OH 44023	Vice President	None
Michael Rock 9016 Stourbridge Drive Huntersville, NC 28078	Vice President	None
Stacy Roode⁽²⁾	Vice President	None
Thomas Sabow 6617 Southcrest Drive Edina, MN 55435	Vice President	None
John Saunders 2251 Chantilly Ave. Winter Park, FL 32789	Vice President	None
Thomas Schmitt 40 Rockcrest Rd Manhasset, NY 11030	Vice President	None
William Schories 3 Hill Street Hazlet, NJ 07730	Vice President	None
Jennifer Sexton⁽²⁾	Vice President	None
Eric Sharp 862 McNeill Circle Woodland, CA 95695	Vice President	None
Kenneth Shell⁽¹⁾	Vice President	None
Debbie A. Simon 55 E. Erie St., #4404 Chicago, IL 60611	Vice President	None
Bryant Smith	Vice President	None
Christopher M. Spencer 2353 W 118^th Terrace Leawood, KS 66211	Vice President	None
John A. Spensley 375 Mallard Court Carmel, IN 46032	Vice President	None
Michael Staples 4255 Jefferson St Apt 328 Kansas City, MO 64111	Vice President	None
Alfred St. John⁽²⁾	Vice President	None
Bryan Stein 8 Longwood Rd. Voorhees, NJ 08043	Vice President	None
Wayne Strauss⁽³⁾	Assistant Vice President	None
Brian C. Summe 2479 Legends Way Crestview Hills, KY 41017	Vice President	None
Kenneth Sussi⁽²⁾	Vice President	None
Michael Sussman⁽²⁾	Vice President	None
George T. Sweeney 5 Smokehouse Lane Hummelstown, PA 17036	Senior Vice President	None
Brian Taylor	Vice President	None
James Taylor⁽²⁾	Assistant Vice President	None
Paul Temple⁽²⁾	Vice President	None
Troy Testa	Vice President	None
David G. Thomas 16628 Elk Run Court Leesburg, VA 20176	Vice President	None
Mark S. Vandehey⁽¹⁾	Vice President and Chief Compliance Officer	Vice President and Chief Compliance Officer
Vincent Vermette⁽²⁾	Vice President	None
Teresa Ward⁽¹⁾	Vice President	None
Janeanne Weickum⁽¹⁾	Vice President	None
Michael J. Weigner 4905 W. San Nicholas Street Tampa, FL 33629	Vice President	None
Donn Weise 3249 Earlmar Drive Los Angeles, CA 90064	Vice President	None
Chris G. Werner 98 Crown Point Place Castle Rock, CO 80108	Vice President	None
Ryan Wilde⁽¹⁾	Vice President	None
Julie Wimer⁽²⁾	Assistant Vice President	None
Peter Winters 911 N. Organce Ave, Apt. 514 Orlando, FL 32801	Vice President	None
Patrick Wisneski⁽¹⁾	Vice President	None
Meredith Wolff⁽²⁾	Vice President	None
Michelle Wood⁽²⁾	Vice President	None
Cary Patrick Wozniak 18808 Bravata Court San Diego, CA 92128	Vice President	None
John Charles Young 3914 Southwestern Houston, TX 77005	Vice President	None
Jill Zachman⁽²⁾	Vice President	None
Robert G. Zack⁽²⁾	General Counsel & Director	Vice President & Secretary
Steven Zito⁽¹⁾	Vice President	None

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

/s/ KPMG LLP

KPMG llp Denver, Colorado February 16, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

/s/ KPMG LLP

KPMG llp

Denver, Colorado February 18, 2010

KPMG llp
Denver, Colorado
February 16, 2010

Denver, Colorado
February 18, 2010