N-30D 1 g5294_opphighicomeva.txt Semiannual Report June 30, 2002 Oppenheimer HIGH INCOME FUND/VA A Series of Oppenheimer Variable Account Funds (LOGO OMITTED) OPPENHEIMERFUNDS[REGISTRATION MARK] The Right Way to Invest OPPENHEIMER HIGH INCOME FUND/VA ================================================================================ OBJECTIVE OPPENHEIMER HIGH INCOME FUND/VA, a series of Oppenheimer Variable Account Funds, seeks a high level of current income from investment in high-yield fixed-income securities. ================================================================================ NARRATIVE BY TOM REEDY AND DAVID NEGRI, CO-PORTFOLIO MANAGERS Oppenheimer High Income Fund/VA Non-Service shares generated a total return of -3.56% at Net Asset Value for the six months ended June 30, 2002.(1) This was a difficult period for the Fund, though the Fund's total return outpaced the average total return for its peer group of high-yield bond funds.(2) Yields on the bonds we invest in are very sensitive to economic conditions. They tend to rise as economic conditions worsen and decline as the economy improves. Yields declined in the winter and spring of 2002, once the economy shook off the initial impact of the September terrorist attacks and started showing signs of recuperating. Consumer spending was surprisingly robust, as consumers took advantage of special incentives like cash-back offers for autos and low home mortgage rates. The result: Sales of autos and existing homes and credit-card purchases all remained strong. Business activity exhibited small but fairly persistent signs of improvement as well. Encouraged by these signs of economic health, investors believed that financially weak companies would be more likely to meet their debt obligations, and they allowed yields on lower-rated securities to decline. Lower yields meant less income for the Fund. The Fund's default rate, as of June 30, 2002, was 3.14%. When a bond defaults, if the issuing company restructures its finances, we may receive some cash, equity in the company, new debt or some combination of the three. In any event, we lose the high income-producing power of the bond. Many of the defaults involved telecommunications companies. At roughly 5% during the period, our investment in that sector was neutral, or about the same as the benchmark index, the Merrill Lynch High Yield Master Index. Even with this low exposure, however, telecom was the worst performing industry sector for the benchmark and the Fund. Cable TV and chemical industry bonds also suffered. Fortunately, our allocations to both were below that of the Index. Our investments in economically sensitive bonds, including middle-rated (single-B) securities in sectors like housing, health care equipment providers, general industrial service companies, gaming and lodging did well. Historically, single-Bs have reacted quickly and positively when corporate profits have taken a turn for the better, yet they are not as risky as the lowest-rated bonds. 1. Total returns include changes in net asset value per share but do not include the charges associated with the separate account products which offer this Fund. Such performance would have been lower if such charges were taken into account, and can be provided by the separate account product sponsor. 2. The Fund's performance is compared to the average of the total return of the 711 funds in the Lipper High Current Yield Fund/VA category for the six-month period ended 6/30/02. 2 OPPENHEIMER HIGH INCOME FUND/VA Though these investments performed well, they didn't do as well as the higher-rated, double-B bonds in industries and credit sectors of the market that are more interest rate-sensitive, where we had limited exposure. The higher-rated bonds benefited from the fact that the economy hasn't recovered rapidly enough for the Fed to worry that it will "overheat" any time soon. Therefore, the Fed has not raised interest rates, and interest-sensitive bonds were not hurt like we had anticipated. We continue to expect a mild recovery but believe now that interest rates will climb only slightly. Such a scenario does not call for aggressive positioning, and we remain cautious. At this point, we feel we can increase the overall credit quality of the portfolio without incurring too much interest rate risk or sacrificing too much of the high current yield that makes Oppenheimer High Income Fund/VA an important part of the THE RIGHT WAY TO INVEST. IN REVIEWING PERFORMANCE, PLEASE REMEMBER THAT PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. BECAUSE OF ONGOING MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS, AND CURRENT PERFORMANCE MAY BE LESS THAN THE RESULTS SHOWN. The Fund's portfolio is subject to change. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. LOWER-GRADE DEBT SECURITIES (JUNK BONDS) MAY BE SUBJECT TO GREATER MARKET FLUCTUATIONS AND GREATER RISKS OF LOSS OF INCOME AND PRINCIPAL THAN INVESTMENT-GRADE DEBT SECURITIES. SECURITIES THAT ARE (OR THAT HAVE FALLEN) BELOW INVESTMENT GRADE ARE EXPOSED TO A GREATER RISK THAT THE ISSUERS OF THOSE SECURITIES MIGHT NOT MEET THEIR OBLIGATIONS TO PAY INTEREST AND PRINCIPAL. 3 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS June 30, 2002 / Unaudited PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- ASSET-BACKED SECURITIES--0.2% Consumer Credit Reference Index Securities Program, Credit Card Asset-Backed Certificates, Series 2002-B, Cl. FX, 10.421%, 3/22/07(1) (Cost $497,606) $ 500,000 $ 516,250 ---------------------------------------------------------------------------- CORPORATE LOANS--0.0% Telergy, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche A, 11.111%, 1/1/02(1,2) (Cost $966,644) 986,362 49,318 ---------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS--2.2% AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(3) 200,000 176,750 Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1997-D4, Cl. B1, 7.525%, 4/14/29 167,000 140,463 Series 1997-D4, Cl. B2, 7.525%, 4/14/29 167,000 131,330 Series 1997-D4, Cl. B3, 7.525%, 4/14/29 166,000 122,230 CBA Mortgage Corp., Commercial Mtg. Pass-Through Certificates: Series 1993-C1, Cl. E, 6.72%, 12/25/03(3,4) 250,000 249,883 Series 1993-C1, Cl. F, 6.72%, 12/25/03(1,4) 700,000 694,695 First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates: Series 1997-CHL1, Cl. D, 8.126%, 5/25/08(1,4) 300,000 282,844 Series 1997-CHL1, Cl. E, 8.168%, 2/25/11(1,4) 1,500,000 1,211,719 Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates: Series 1996-C1, Cl. E, 7.428%, 3/15/06(1,4) 835,342 807,635 Series 1997-RR, Cl. D, 7.713%, 4/30/39(3,4) 2,150,116 1,904,700 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(3) $ 509,780 $ 469,476 Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates, Series 1994-C1, Cl. E, 8%, 6/25/26(1) 309,572 309,820 Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-B, Cl. 1, 7.076%, 4/25/26(1,4) 1,091,599 827,568 ------------- Total Mortgage-Backed Obligations (Cost $7,188,306) 7,329,113 ============================================================================ CORPORATE BONDS AND NOTES--81.7% ---------------------------------------------------------------------------- CONSUMER DISCRETIONARY--25.9% ---------------------------------------------------------------------------- AUTO COMPONENTS--2.9% Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07(2,5) 400,000 -- Collins & Aikman Products Co., 10.75% Sr. Nts., 12/31/11(3) 800,021 808,000 Collins & Aikman Floorcoverings, Inc., 9.75% Sr. Sub. Nts., 2/15/10(3) 800,021 820,000 Dana Corp.: 9% Unsec. Nts., 8/15/11 700,000 693,000 10.125% Sr. Nts., 3/15/10(3) 500,000 512,500 Delco Remy International, Inc., 11% Sr. Unsec. Sub. Nts., 5/1/09 1,900,000 1,567,500 Dura Operating Corp.: 8.625% Sr. Nts., 4/15/12(3) 1,000,021 1,010,000 9% Sr. Sub. Nts., Series B, 5/1/09(EUR) 300,000 292,576 9% Sr. Unsec. Sub. Nts., Series D, 5/1/09 2,700,000 2,632,500 Exide Corp., 10% Sr. Unsec. Nts., 4/15/05(2) 600,000 105,000 Stoneridge, Inc., 11.50% Sr. Nts., 5/1/12(3) 1,000,021 1,015,000 ------------- 9,456,076 ---------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--7.1% Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 940,000 400,675 Aztar Corp., 9% Sr. Unsec. Sub. Nts., 8/15/11 1,250,000 1,276,562 Boyd Gaming Corp., 8.75% Nts., 4/15/12(3) 800,000 808,000 4 OPPENHEIMER HIGH INCOME FUND/VA PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE Continued Buffets, Inc., 11.25% Sr. Sub. Nts., 7/15/10(3) $ 400,000 $ 402,000 Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995(1,2,5) 9,500 -- Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 340,000 302,600 Coast Hotels & Casinos, Inc.: 9.50% Sr. Sub. Nts., 4/1/09(3) 600,000 633,000 9.50% Sr. Unsec. Sub. Nts., 4/1/09 500,000 527,500 Family Restaurants, Inc.: 9.75% Sr. Nts., 2/1/02(2,5) 1,300,000 6,500 10.875% Sr. Sub. Disc. Nts., 2/1/04(1,2,5) 100,000 1,250 Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 800,000 832,000 Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 500,000 542,500 Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 500,000 450,000 Intrawest Corp., 9.75% Sr. Nts., 8/15/08 1,300,000 1,326,000 Isle of Capri Casinos, Inc., 9% Sr. Sub. Nts., 3/15/12(3) 1,000,000 1,015,000 John Q. Hammons Hotels, Inc., 8.875% Nts., 5/15/12(3) 800,000 788,000 Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06 1,000,000 1,025,000 Mandalay Resort Group, 10.25% Sr. Unsec. Sub. Nts., Series B, 8/1/07 800,000 843,000 MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11 1,700,000 1,717,000 Mohegan Tribal Gaming Authority: 8% Sr. Sub. Nts., 4/1/12(3) 700,000 706,125 8.375% Sr. Sub. Nts., 7/1/11 1,200,000 1,231,500 8.75% Sr. Unsec. Sub. Nts., 1/1/09 1,500,000 1,561,875 Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10(3) 1,500,000 1,496,250 Penn National Gaming, Inc., 8.875% Sr. Sub. Nts., 3/15/10 600,000 595,500 Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(6) 1,200,000 1,176,000 9.75% Sr. Nts., 6/15/07 300,000 309,000 Prime Hospitality Corp., 8.375% Sr. Sub. Nts., 5/1/12(3) 650,000 640,250 Station Casinos, Inc., 9.75% Sr. Sub. Nts., 4/15/07(1) 800,000 832,000 Sun International Hotels Ltd., 8.875% Sr. Sub. Nts., 8/15/11(3) 1,000,000 1,026,250 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- Vail Resorts, Inc., 8.75% Sr. Unsec. Sub. Nts., 5/15/09 $ 700,000 $ 703,500 Venetian Casino Resort LLC/ Las Vegas Sands, Inc., 11% Bonds, 6/15/10(3) 350,000 353,938 ------------- 23,528,775 ---------------------------------------------------------------------------- HOUSEHOLD DURABLES--4.1% Beazer Homes USA, Inc., 8.375% Sr. Nts., 4/15/12(3) 1,300,000 1,319,500 Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 500,000 340,000 D.R. Horton, Inc.: 7.875% Sr. Nts., 8/15/11 700,000 686,000 9.75% Sr. Sub. Nts., 9/15/10 500,000 520,000 Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 600,000 661,500 Interface, Inc., 10.375% Sr. Nts., 2/1/10(3) 500,000 534,375 K. Hovnanian Enterprises, Inc., 8.875% Sr. Sub. Nts., 4/1/12(3) 1,000,000 988,750 KB Home: 8.625% Sr. Sub. Nts., 12/15/08 950,000 964,250 9.50% Sr. Unsec. Sub. Nts., 2/15/11 850,000 877,625 Meritage Corp., 9.75% Sr. Unsec. Nts., 6/1/11 500,000 521,250 Metromedia International Group, Inc., 10.50% Sr. Unsec. Disc. Nts., 9/30/07(1,4) 254,531 62,360 Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 800,000 808,000 Standard Pacific Corp., 9.25% Sr. Sub. Nts., 4/15/12 700,000 707,000 Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 1,500,000 1,515,000 WCI Communities, Inc.: 9.125% Sr. Sub. Nts., 5/1/12 1,000,000 997,500 10.625% Sr. Unsec. Sub. Nts., 2/15/11 600,000 630,000 Williams Scotsman, Inc., 9.875% Sr. Unsec. Nts., 6/1/07(3) 1,700,000 1,632,000 ------------- 13,765,110 ---------------------------------------------------------------------------- INTERNET & CATALOG RETAIL--0.5% Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(6) 1,800,000 1,647,000 ---------------------------------------------------------------------------- MEDIA--8.5% Adelphia Communications Corp.: 7.875% Sr. Unsec. Nts., 5/1/09(2,5) 360,000 140,400 8.125% Sr. Nts., Series B, 7/15/03(2) 1,000,000 400,000 8.375% Sr. Nts., Series B, 2/1/08(2) 1,000,000 405,000 5 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- MEDIA Continued Adelphia Communications Corp.: Continued 10.25% Sr. Unsec. Nts., 11/1/06(2) $ 200,000 $ 80,000 10.25% Sr. Unsec. Sub. Nts., 6/15/11(2) 1,300,000 539,500 10.875% Sr. Unsec. Nts., 10/1/10(2) 1,500,000 600,000 AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 1,200,000 1,195,500 Block Communications, Inc., 9.25% Sr. Sub. Nts., 4/15/09(3) 599,979 603,000 Carmike Cinemas, Inc., 10.375% Gtd. Sr. Sub. Nts., Series B, 2/1/09 1,250,000 1,206,250 Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 975,000 979,875 Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.: 0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(6) 1,000,000 482,500 0%/11.75% Sr. Unsec. Sub. Disc. Nts., 5/15/11(6) 1,500,000 532,500 8.625% Sr. Unsec. Nts., 4/1/09 200,000 135,000 10% Sr. Nts., 4/1/09 500,000 347,500 10.75% Sr. Unsec. Nts., 10/1/09 3,000,000 2,122,500 11.125% Sr. Unsec. Nts., 1/15/11 999,979 695,000 Cinemark USA, Inc., 9.625% Sr. Sub. Nts., Series B, 8/1/08 250,000 251,250 Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10(2,5) 1,000,000 226,250 Corus Entertainment, Inc., 8.75% Sr. Sub. Nts., 3/1/12 800,000 804,000 Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08 900,000 958,500 Diamond Cable Communications plc, 11.75% Sr. Disc. Nts., 12/15/05(2) 600,000 159,000 Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(2) 399,979 358,000 Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(1,2,5,6) 500,000 66,250 EchoStar Broadband Corp., 10.375% Sr. Unsec. Nts., 10/1/07 2,000,000 1,920,000 EchoStar DBS Corp.: 9.125% Sr. Nts., 1/15/09(3) 299,979 276,000 9.375% Sr. Unsec. Nts., 2/1/09 1,000,000 930,000 Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 799,979 784,000 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- Entravision Communications Corp., 8.125% Sr. Sub. Nts., 3/15/09(3) $ 599,979 $ 606,000 Insight Communications Co., Inc., 0%/12.25% Sr. Disc. Nts., 2/15/11(6) 1,500,000 652,500 Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09 699,979 647,500 Key3Media Group, Inc., 11.25% Sr. Sub. Nts., 6/15/11 1,399,979 637,000 Lamar Advertising Co., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 500,000 516,250 Mediacom LLC/Mediacom Capital Corp., 9.50% Sr. Unsec. Nts., 1/15/13 600,000 522,000 Penton Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 6/15/11 825,000 507,375 Radio One, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 7/1/11 299,979 300,750 Regal Cinemas, Inc., 9.375% Sr. Sub. Nts., 2/1/12(3) 2,200,000 2,288,000 Sinclair Broadcast Group, Inc.: 8% Sr. Sub. Nts., 3/15/12 899,979 891,000 8.75% Sr. Sub. Nts., 12/15/11 799,979 804,000 Six Flags, Inc., 8.875% Sr. Nts., 2/1/10 1,000,000 1,000,000 Spanish Broadcasting System, Inc., 9.625% Sr. Unsec. Sub. Nts., 11/1/09 800,000 828,000 Telewest Communications plc, 0%/9.875% Sr. Disc. Nts., 4/15/09(6)(GBP) 200,000 102,128 United Pan-Europe Communications NV: 0%/13.375% Sr. Unsec. Disc. Nts., Series B, 11/1/09(2,5,6) 1,000,000 100,000 10.875% Sr. Unsec. Nts., Series B, 8/1/09(2) 600,000 81,000 11.25% Sr. Nts., Series B, 11/1/09(2)(EUR) 500,000 60,491 WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp., 12.75% Sr. Sub. Nts., 11/15/09 600,000 616,500 ------------- 28,358,269 ---------------------------------------------------------------------------- MULTILINE RETAIL--0.5% Saks, Inc.: 8.25% Sr. Unsec. Nts., 11/15/08 250,000 237,500 9.875% Nts., 10/1/11 1,300,000 1,313,000 ------------- 1,550,500 6 OPPENHEIMER HIGH INCOME FUND/VA PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- SPECIALTY RETAIL--1.8% Asbury Automotive Group, Inc., 9% Sr. Sub. Nts., 6/15/12(3) $ 500,000 $ 485,000 AutoNation, Inc., 9% Sr. Unsec. Nts., 8/1/08 1,200,000 1,242,000 CSK Auto, Inc., 12% Sr. Nts., 6/15/06(3) 1,000,000 1,073,750 Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 871,875 Petco Animal Supplies, Inc., 10.75% Sr. Sub. Nts., 11/1/11 750,000 813,750 United Auto Group, Inc., 9.625% Sr. Sub. Nts., 3/15/12(3) 300,000 303,000 United Rentals (North America), Inc., 10.75% Sr. Unsec. Nts., 4/15/08 1,000,000 1,075,000 United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 100,000 101,000 ------------- 5,965,375 ---------------------------------------------------------------------------- TEXTILES & APPAREL--0.5% Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 590,250 Galey & Lord, Inc., 9.125% Sr. Unsec. Sub. Nts., 3/1/08(2) 700,000 124,250 Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08(2) 1,500,000 307,500 Russell Corp., 9.25% Sr. Nts., 5/1/10(3) 600,000 621,000 ------------- 1,643,000 ---------------------------------------------------------------------------- CONSUMER STAPLES--5.1% ---------------------------------------------------------------------------- BEVERAGES--0.5% Constellation Brands, Inc., 8.125% Sr. Sub. Nts., 1/15/12 1,000,000 1,031,250 Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 800,000 672,000 ------------- 1,703,250 ---------------------------------------------------------------------------- FOOD & DRUG RETAILING--0.9% Fleming Cos., Inc.: 10.125% Sr. Unsec. Nts., 4/1/08 800,000 816,000 10.625% Sr. Unsec. Sub. Nts., Series D, 7/31/07 800,000 788,000 Great Atlantic & Pacific Tea Co., Inc. (The), 9.125% Sr. Nts., 12/15/11 400,000 374,000 Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 295,750 Pathmark Stores, Inc., 8.75% Sr. Sub. Nts., 2/1/12 800,000 816,000 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- Real Time Data Co., 13% Disc. Nts., 5/31/09(1,2,5,7) $ 476,601 $ 61,958 ------------- 3,151,708 ---------------------------------------------------------------------------- FOOD PRODUCTS--2.2% American Seafood Group LLC, 10.125% Sr. Sub. Nts., 4/15/10(3) 500,000 507,500 Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 700,000 472,500 Burns Philp Capital Pty Ltd., 9.75% Sr. Sub. Nts., 7/15/12(3) 300,000 298,500 Del Monte Corp., 9.25% Sr. Unsec. Sub. Nts., 5/15/11 500,000 522,500 Doane Pet Care Co., 9.75% Sr. Unsec. Sub. Nts., 5/15/07 300,000 262,500 Dole Food Co., Inc., 7.25% Nts., 5/1/09(3) 1,500,000 1,535,767 Michael Foods, Inc., 11.75% Sr. Unsec. Sub. Nts., 4/1/11 400,000 438,000 New World Pasta Co., 9.25% Sr. Nts., 2/15/09 200,000 195,000 Smithfield Foods, Inc.: 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 927,313 8% Sr. Nts., Series B, 10/15/09 500,000 510,000 Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 600,000 585,750 United Biscuits Finance plc, 10.625% Sr. Sub. Nts., 4/15/11(EUR) 1,000,000 1,111,976 ------------- 7,367,306 ---------------------------------------------------------------------------- Household Products--1.5% AKI Holdings Corp., 0%/13.50% Sr. Disc. Debs., 7/1/09(6) 1,080,000 546,750 AKI, Inc., 10.50% Sr. Unsec. Nts. 7/1/08 1,000,000 956,250 Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 279,438 Johnsondiversey, Inc., 9.625% Sr. Sub. Nts., 5/15/12(3) 600,021 630,000 Playtex Products, Inc., 9.375% Sr. Unsec. Sub. Nts., 6/1/11 1,000,021 1,065,000 Revlon Consumer Products Corp., 12% Sr. Sec. Nts., 12/1/05 1,400,000 1,400,000 Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(1,2,5) 600,000 -- ------------- 4,877,438 7 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- ENERGY--6.9% ---------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--3.0% BRL Universal Equipment Corp., 8.875% Sr. Sec. Nts., 2/15/08 $ 750,000 $ 746,250 Clark Refining & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 500,000 482,500 Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 300,000 296,250 Dresser, Inc., 9.375% Sr. Sub. Nts., 4/15/11(3) 400,000 407,000 Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08(1) 1,025,000 466,375 Hanover Equipment Trust, 8.50% Sr. Sec. Nts., Trust 2001, Cl. A, 9/1/08(3) 500,000 465,000 Hornbeck-Leevac Marine Services, Inc., 10.625% Sr. Nts., 8/1/08 1,500,000 1,576,875 Leviathan Gas Pipeline Partners LP/Leviathan Finance Corp., 10.375% Sr. Unsec. Sub. Nts., Series B, 6/1/09 500,000 532,500 Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,600,000 1,416,000 Petroleum Helicopters, Inc., 9.375% Sr. Nts., 5/1/09 600,000 618,000 Trico Marine Services, Inc., 8.875% Sr. Nts., 5/15/12(3) 1,400,000 1,393,000 Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(6) 1,700,000 1,623,500 ------------- 10,023,250 ---------------------------------------------------------------------------- OIL & GAS--3.9% Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 500,000 442,500 Chesapeake Energy Corp.: 8.125% Sr. Unsec. Nts., 4/1/11 800,000 790,000 8.375% Sr. Unsec. Nts., 11/1/08 800,000 804,000 Forest Oil Corp.: 7.75% Sr. Nts., 5/1/14(3) 1,000,000 970,000 10.50% Sr. Unsec. Sub. Nts., 1/15/06 250,000 267,500 Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 800,000 854,000 Giant Industries, Inc., 11% Sr. Sub. Nts., 5/15/12(3) 400,000 354,000 Magnum Hunter Resources, Inc., 9.60% Sr. Nts., 3/15/12(3) 800,000 828,000 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- Pennzoil-Quaker State Co.: 6.75% Nts., 4/1/09 $ 200,000 $ 208,094 10% Sr. Nts., 11/1/08(1) 1,000,000 1,176,250 Pioneer Natural Resources Co., 7.50% Sr. Nts., 4/15/12 1,000,000 1,020,999 Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 600,000 611,250 RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 2,000,000 1,020,000 Stone Energy Corp.: 8.25% Sr. Unsec. Sub. Nts., 12/15/11 800,000 804,000 8.75% Sr. Sub. Nts., 9/15/07 735,000 753,375 Swift Energy Co., 9.375% Sr. Unsec. Sub. Nts., 5/1/12 300,000 284,250 Westport Resources Corp., 8.25% Sr. Unsec. Sub. Nts., 11/1/11 600,000 618,000 XTO Energy, Inc., 7.50% Sr. Nts., 4/15/12 1,000,000 1,025,000 ------------- 12,831,218 ---------------------------------------------------------------------------- FINANCIALS--5.1% ---------------------------------------------------------------------------- BANKS--1.0% Armkel LLC/Armkel Finance, Inc., 9.50% Sr. Sub. Nts., 8/15/09 600,000 627,000 Bank Plus Corp., 12% Sr. Nts., 7/18/07 517,000 555,775 Local Financial Corp., 11% Sr. Nts., 9/8/04(3) 800,000 852,000 Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 450,000 362,250 Western Financial Bank, 9.625% Unsec. Sub. Debs., 5/15/12 800,000 804,000 ------------- 3,201,025 ---------------------------------------------------------------------------- DIVERSIFIED FINANCIALS--1.4% AmeriCredit Corp., 9.875% Sr. Nts., 4/15/06(1) 800,000 808,000 AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05(2,5) 900,000 193,500 Finova Group, Inc. (The), 7.50% Nts., 11/15/09 2,500,000 837,500 IPC Acquisition Corp., 11.50% Sr. Sub. Nts., 12/15/09(3) 750,000 723,750 LaBranche & Co., Inc., 12% Sr. Unsec. Sub. Nts., 3/2/07 600,000 675,000 Metris Cos., Inc.: 10% Sr. Unsec. Nts., 11/1/04 500,000 462,500 10.125% Sr. Unsec. Nts., 7/15/06 1,000,000 925,000 ------------- 4,625,250 8 OPPENHEIMER HIGH INCOME FUND/VA PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- REAL ESTATE--2.1% CB Richard Ellis Services, Inc., 11.25% Sr. Unsec. Sub. Nts., 6/15/11 $ 300,000 $ 253,500 Corrections Corp. of America, 9.875% Sr. Nts., 5/1/09(3) 500,000 517,500 Felcor Lodging LP: 8.50% Sr. Nts., 6/1/11 780,000 768,300 9.50% Sr. Unsec. Nts., 9/15/08(3) 400,000 408,000 IStar Financial, Inc., 8.75% Sr. Unsec. Nts., 8/15/08 750,000 744,652 MeriStar Hospitality Corp.: 9% Sr. Nts., 1/15/08 1,000,000 960,000 9.125% Sr. Nts., 1/15/11 500,000 480,000 9.125% Sr. Unsec. Nts., 1/15/11(3) 400,000 384,000 10.50% Sr. Nts., 6/15/09(3) 300,000 304,500 Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 1,500,000 1,492,500 Ventas Realty LP, 9% Sr. Nts., 5/1/12(3) 500,000 515,000 ------------- 6,827,952 ---------------------------------------------------------------------------- HEALTH CARE--4.9% ---------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--0.9% Fisher Scientific International, Inc.: 8.125% Sr. Sub. Nts., 5/1/12(3) 900,000 900,000 9% Sr. Unsec. Sub. Nts., 2/1/08 750,000 770,625 9% Sr. Unsec. Sub. Nts., 2/1/08 365,000 375,038 Sybron Dental Specialties, Inc., 8.125% Sr. Sub. Nts., 6/15/12(3) 500,000 497,500 Vanguard Health Systems, Inc., 9.75% Sr. Unsec. Sub. Nts., 8/1/11 500,000 523,750 ------------- 3,066,913 ---------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--4.0% aaiPharma, Inc., 11% Sr. Sub. Nts., 4/1/10(3) 100,000 93,000 AmerisourceBergen Corp., 8.125% Sr. Nts, 9/1/08 1,000,000 1,037,500 Beverly Enterprises, Inc., 9.625% Sr. Unsec. Nts., 4/15/09 1,125,000 1,158,750 Extendicare Health Services, Inc., 9.50% Sr. Nts., 7/1/10(3) 500,000 503,125 Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 2,000,000 1,805,000 Hanger Orthopedic Group, Inc., 10.375% Sr. Nts., 2/15/09(3) 400,000 418,000 Healthsouth Corp., 7.625% Nts., 6/1/12(3) 900,000 893,086 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- InSight Health Services Corp., 9.875% Sr. Sub. Nts., 11/1/11 $ 500,000 $ 505,000 Magellan Health Services, Inc.: 9% Sr. Sub. Nts., 2/15/08 700,000 255,500 9.375% Sr. Nts., 11/15/07(3) 800,000 604,000 PacifiCare Health Systems, Inc., 10.75% Sr. Nts., 6/1/09(3) 1,300,000 1,337,375 Rotech Healthcare, Inc., 9.50% Sr. Sub. Nts., 4/1/12(3) 900,000 922,500 Stewart Enterprises, Inc., 10.75% Sr. Unsec. Sub. Nts., 7/1/08 1,800,000 1,998,000 Unilab Corp., 12.75% Sr. Sub. Nts., 10/1/09(1) 250,000 293,750 US Oncology, Inc., 9.625% Sr. Sub. Nts., 2/1/12 400,000 390,000 Vicar Operating, Inc., 9.875% Sr. Sub. Nts., 12/1/09 1,000,000 1,055,000 ------------- 13,269,586 ---------------------------------------------------------------------------- INDUSTRIALS--13.0% ---------------------------------------------------------------------------- AEROSPACE & DEFENSE--1.7% Alliant Techsystems, Inc., 8.50% Sr. Unsec. Sub. Nts., 5/15/11 900,000 945,000 American Plumbing & Mechanical, Inc., 11.625% Sr. Sub. Nts., Series B, 10/15/08 500,000 497,500 BE Aerospace, Inc., 8.875% Sr. Unsec. Sub. Nts., 5/1/11 800,000 748,000 Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts., Series B, 9/30/08 1,750,000 1,618,750 Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 475,000 273,125 L-3 Communications Corp., 7.625% Sr. Sub. Nts., 6/15/12(3) 1,200,000 1,203,000 Transdigm, Inc., 10.375% Sr. Sub. Nts., 12/1/08(3) 200,000 206,000 ------------- 5,491,375 ---------------------------------------------------------------------------- AIR FREIGHT & COURIERS--0.1% Atlas Air, Inc, 9.25% Sr. Nts., 4/15/08 500,000 252,500 ---------------------------------------------------------------------------- AIRLINES--0.7% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 1,000,000 556,250 Amtran, Inc.: 9.625% Nts., 12/15/05 800,000 556,000 10.50% Sr. Nts., 8/1/04 1,800,000 1,305,000 ------------- 2,417,250 9 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- BUILDING PRODUCTS--0.8% Associated Materials, Inc., 9.75% Sr. Sub. Nts., 4/15/12(3) $ 700,000 $ 721,000 GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(3) 371,664 387,043 Nortek, Inc.: 9.125% Sr. Unsec. Nts., Series B, 9/1/07 700,000 712,250 9.25% Sr. Nts., Series B, 3/15/07 500,000 508,750 9.875% Sr. Unsec. Sub. Nts., 6/15/11 400,000 406,000 ------------- 2,735,043 ---------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--3.5% Allied Waste North America, Inc.: 8.50% Sr. Sub. Nts., 12/1/08 1,500,000 1,455,000 8.875% Sr. Nts., Series B, 4/1/08 2,400,000 2,364,000 10% Sr. Unsec. Sub. Nts., Series B, 8/1/09 1,000,000 987,580 American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(1,2,5) 200,000 3,000 Buhrmann US, Inc., 12.25% Sr. Unsec. Sub. Nts., 11/1/09 600,000 627,000 Coinmach Corp., 9% Sr. Nts., 2/1/10(3) 800,000 816,000 Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 350,000 213,500 Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 650,000 Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07(1) 250,000 196,250 Iron Mountain, Inc., 8.625% Sr. Unsec. Sub. Nts., 4/1/13 1,000,000 1,027,500 IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09(1,2) 550,000 688 Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 750,000 746,250 Mail-Well, Inc., 9.625% Sr. Nts., 3/15/12(3) 500,000 505,000 Protection One, Inc./Protection One Alarm Monitoring, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 900,000 796,500 Stericycle, Inc., 12.375% Sr. Unsec. Sub. Nts., Series B, 11/15/09 488,000 563,640 Synagro Technologies, Inc., 9.50% Sr. Sub. Nts., 4/1/09(3) 700,000 721,000 ------------- 11,672,908 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING--1.3% Brand Scaffold Services, Inc., 10.25% Sr. Unsec. Nts., 2/15/08 $ 1,000,000 $ 987,500 CSC Holdings, Inc.: 7.625% Sr. Unsec. Unsub. Nts., Series B, 4/1/11 600,000 483,463 7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 739,929 9.875% Sr. Sub. Debs., 2/15/13(1) 200,000 149,000 Integrated Electrical Services, Inc.: 9.375% Sr. Sub. Nts., Series B, 2/1/09 600,000 579,000 9.375% Sr. Sub. Nts., Series C, 2/1/09 1,000,000 965,000 Spectrasite Holdings, Inc.: 0%/11.25% Sr. Unsec. Disc. Nts., 4/15/09(6) 400,000 106,000 0%/12% Sr. Disc. Nts., 7/15/08(6) 1,200,000 378,000 ------------- 4,387,892 ---------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.5% Cherokee International LLC, 10.50% Sr. Unsec. Sub. Nts., Series B, 5/1/09 1,000,000 505,000 Dayton Superior Corp., 13% Sr. Unsec. Sub. Nts., 6/15/09 500,000 502,500 UCAR Finance, Inc., 10.25% Sr. Nts., 2/15/12(3) 600,000 615,000 ------------- 1,622,500 ---------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--1.2% Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 1,715,000 1,809,325 Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(1) 1,500,000 881,250 Tyco International Group SA, 6.375% Nts., 10/15/11 1,600,000 1,227,184 ------------- 3,917,759 ---------------------------------------------------------------------------- MACHINERY--1.9% Actuant Corp., 13% Sr. Sub. Nts., 5/1/09 378,000 440,370 AGCO Corp., 9.50% Sr. Unsec. Nts., 5/1/08 1,000,000 1,062,500 Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 705,500 Insilco Corp., 12% Sr. Sub. Nts., 8/15/07(2) 1,200,000 96,000 International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 450,000 10 OPPENHEIMER HIGH INCOME FUND/VA PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- MACHINERY Continued Joy Global, Inc., 8.75% Sr. Sub. Nts., 3/15/12(3) $ 600,000 $ 616,500 NMHG Holding Co., 10% Sr. Nts., 5/15/09(3) 600,000 612,000 Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 543,200 Terex Corp.: 8.875% Sr. Unsec. Sub. Nts., 4/1/08 400,000 408,000 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 400,000 408,000 9.25% Sr. Unsec. Sub. Nts., 7/15/11 800,000 832,000 ------------- 6,174,070 ---------------------------------------------------------------------------- MARINE--1.1% CP Ships Ltd., 10.375% Sr. Nts., 7/15/12(3) 1,000,000 987,500 Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount of 12% first priority ship mtg. sr. sec. nts., 7/15/05 and one warrant to purchase five shares of common stock)(1,2,9) 700,000 385,000 Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(3) 1,000,000 465,000 Pacific & Atlantic Holdings, Inc., 10.50% Sec. Nts., 12/31/07(3) 332,374 117,993 Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 1,106,250 Teekay Shipping Corp., 8.875% Sr. Nts., 7/15/11 575,000 600,875 ------------- 3,662,618 ---------------------------------------------------------------------------- ROAD & RAIL--0.1% Kansas City Southern Railway, 7.50% Sr. Nts., 6/15/09(3) 500,000 503,125 ---------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE--0.1% Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06(2) 900,000 220,500 ---------------------------------------------------------------------------- INFORMATION TECHNOLOGY--2.0% ---------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--0.0% CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts., 10/1/07(1,2,5,6) 1,834,000 183 ---------------------------------------------------------------------------- COMPUTERS & PERIPHERALS--0.1% Seagate Technology Hdd Holdings, 8% Sr. Nts., 5/15/09(3) 400,000 402,000 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.7% ChipPAC International Co. Ltd., 12.75% Sr. Unsec. Sub. Nts., Series B, 8/1/09(1) $ 500,000 $ 527,500 Flextronics International Ltd., 9.875% Sr. Unsec. Sub. Nts., 7/1/10 500,000 525,000 Ingram Micro, Inc., 9.875% Sr. Unsec. Sub. Nts., 8/15/08 1,200,000 1,254,000 ------------- 2,306,500 ---------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--0.2% Equinix, Inc., 13% Sr. Unsec. Nts., 12/1/07(1) 1,000,000 185,000 Exodus Communications, Inc., 10.75% Sr. Nts., 12/15/09(2,5)(EUR) 1,000,000 158,016 FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(1,2,5,6) 500,000 48,125 Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10(2) 500,000 92,500 PSINet, Inc.: 11% Sr. Nts., 8/1/09(2,5) 1,000,000 102,500 10.50% Sr. Unsec. Nts., 12/1/06(2,5)(EUR) 1,000,000 81,477 ------------- 667,618 ---------------------------------------------------------------------------- OFFICE ELECTRONICS--0.1% ASAT Finance LLC, 12.50% Sr. Unsec. Nts., 11/1/06(1) 325,000 258,375 ---------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--0.9% Amkor Technology, Inc.: 9.25% Sr. Unsec. Nts., 5/1/06 700,000 577,500 9.25% Sr. Unsec. Sub. Nts., 2/15/08 400,000 328,000 Fairchild Semiconductor Corp.: 10.375% Sr. Unsec. Nts., 10/1/07 850,000 888,250 10.50% Sr. Unsec. Sub. Nts., 2/1/09 1,050,000 1,123,500 ------------- 2,917,250 ---------------------------------------------------------------------------- MATERIALS--10.5% ---------------------------------------------------------------------------- CHEMICALS--3.6% Applied Extrusion Technologies, Inc., 10.75% Sr. Nts., Series B, 7/1/11 1,250,000 1,131,250 Avecia Group plc, 11% Sr. Unsec. Nts., 7/1/09 800,000 800,000 ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07(1) 250,000 126,250 Compass Minerals Group, Inc., 10% Sr. Sub. Nts., 8/15/11 1,200,000 1,272,000 Equistar Chemicals LP, 8.75% Sr. Unsec. Nts., 2/15/09 600,000 537,162 Georgia Gulf Corp., 10.375% Sr. Unsec. Sub. Nts., 11/1/07 250,000 268,750 11 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- CHEMICALS Continued Huntsman Corp./ICI Chemical Co. plc: 10.125% Sr. Unsec. Sub. Nts., 7/1/09 (EUR) 150,000 $ 128,511 Zero Coupon Sr. Unsec. Disc. Nts., 13.09%, 12/31/09(8) 400,000 98,000 Huntsman International LLC, 9.875% Sr. Nts., 3/1/09(3) 800,000 806,000 IMC Global, Inc., 11.25% Sr. Unsec. Nts., Series B, 6/1/11 300,000 325,500 ISP Chemco, Inc., 10.25% Sr. Unsec. Sub. Nts., 7/1/11 900,000 922,500 ISP Holdings, Inc., 10.625% Bonds, 12/15/09(3) 500,000 497,500 Lyondell Chemical Co.: 9.50% Sec. Nts., 12/15/08 600,000 561,000 9.625% Sr. Sec. Nts., Series A, 5/1/07 300,000 287,250 9.875% Sec. Nts., Series B, 5/1/07 600,000 576,000 Noveon, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 2/28/11 1,200,000 1,278,000 OM Group, Inc., 9.25% Sr. Sub. Nts., 12/15/11 700,000 728,000 PCI Chemicals Canada, 10% Sr. Sec. Nts., 12/31/08 319,909 219,538 Pioneer Cos., Inc., 5.355% Sr. Sec. Nts., 12/31/06(1,4) 106,636 69,980 Sterling Chemicals, Inc.: 11.75% Sr. Unsec. Sub. Nts., 8/15/06(2) 300,000 43,500 12.375% Sr. Sec. Nts., Series B, 7/15/06(2) 1,200,000 1,122,000 ------------- 11,798,691 ---------------------------------------------------------------------------- CONTAINERS & PACKAGING--2.5% Ball Corp.: 7.75% Sr. Unsec. Nts., 8/1/06 700,000 724,500 8.25% Sr. Unsec. Sub. Nts., 8/1/08 800,000 832,000 Graphic Packaging Corp., 8.625% Sr. Sub. Nts., 2/15/12(3) 1,000,000 1,037,500 Owens-Brockway Glass Container, Inc., 8.875% Sr. Sec. Nts., 2/15/09(3) 700,000 703,500 Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 813,750 Silgan Holdings, Inc., 9% Sr. Sub. Debs., 6/1/09(3) 600,000 621,000 Stone Container Corp.: 8.375% Sr. Nts., 7/1/12(3) 600,000 607,500 9.25% Sr. Unsec. Nts., 2/1/08 1,000,000 1,057,500 9.75% Sr. Unsec. Nts., 2/1/11 1,000,000 1,075,000 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- TriMas Corp., 9.875% Sr. Sub. Nts., 6/15/12(3) $ 1,000,000 $ 1,002,500 ------------- 8,474,750 ---------------------------------------------------------------------------- METALS & MINING--3.0% AK Steel Corp., 7.75% Sr. Unsec. Nts., 6/15/12(3) 2,000,000 1,990,000 California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 300,000 303,750 Century Aluminum Co., 11.75% Sr. Sec. Nts., 4/15/08 1,000,000 1,080,000 Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 800,125 548,086 Jorgensen (Earle M.) Co., 9.75% Sr. Sec. Nts., 6/1/12(3) 1,200,000 1,188,000 Kaiser Aluminum & Chemical Corp.: 10.875% Sr. Nts., Series B, 10/15/06(2) 1,000,000 785,000 12.75% Sr. Sub. Nts., 2/1/03(2) 1,200,000 222,000 Metallurg Holdings, Inc., 0%/ 12.75% Sr. Disc. Nts., 7/15/08(6) 1,000,000 462,500 Metallurg, Inc., 11% Sr. Nts., 12/1/07 740,000 669,700 National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09(2) 1,300,000 487,500 P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 645,000 685,312 Steel Dynamics, Inc., 9.50% Sr. Nts., 3/15/09(3) 800,000 848,000 United States Steel LLC, 10.75% Sr. Nts., 8/1/08 600,000 627,000 ------------- 9,896,848 ---------------------------------------------------------------------------- PAPER & FOREST PRODUCTS--1.4% Ainsworth Lumber Co. Ltd.: 12.50% Sr. Nts., 7/15/07(7) 400,000 435,000 13.875% Sr. Sec. Nts., 7/15/07 750,000 843,750 Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04(2) 2,000,000 410,000 Georgia-Pacific Corp., 8.125% Sr. Unsec. Nts., 5/15/11 1,200,000 1,150,288 Louisiana-Pacific Corp., 10.875% Sr. Sub. Nts., 11/15/08 250,000 276,250 Repap New Brunswick, Inc., 11.50% Sr. Sec. Nts., 6/1/04 500,000 571,250 Tembec Industries, Inc., 7.75% Sr. Nts., 3/15/12 700,000 698,250 U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 300,000 199,500 ------------- 4,584,288 12 OPPENHEIMER HIGH INCOME FUND/VA PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--5.4% ---------------------------------------------------------------------------- Diversified Telecommunication Services--1.6% 360networks, Inc.: 13% Sr. Unsec. Nts., 5/1/08(1,2,5)(EUR) 500,000 $ 49 13% Sr. Unsec. Nts., 5/1/08(1,2,5) 400,000 40 American Tower Corp., 9.375% Sr. Nts., 2/1/09 500,000 277,500 COLO.com, Inc., 13.875% Sr. Nts., 3/15/10(1,2,5) 600,000 10,500 Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07(2,5) 800,000 24,000 ESAT Telecom Group plc, 11.875% Sr. Unsec. Unsub. Nts., 11/1/09(EUR) 500,000 561,698 Focal Communications Corp., 11.875% Sr. Unsec. Nts., Series B, 1/15/10(1) 100,000 16,500 Intermedia Communications, Inc.: 0%/11.25% Sr. Disc. Nts., Series B, 7/15/07(2,5,6) 200,000 63,000 0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(2,5,6) 200,000 21,000 8.60% Sr. Unsec. Nts., Series B, 6/1/08(2) 300,000 91,500 ITC/DeltaCom, Inc., 9.75% Sr. Unsec. Nts., 11/15/08(1,2) 2,250,000 641,250 KMC Telecom Holdings, Inc., 0%/ 12.50% Sr. Unsec. Disc. Nts., 2/15/08(1,6) 2,500,000 62,500 Level 3 Communications, Inc.: 0%/10.50% Sr. Disc. Nts., 12/1/08(6) 800,000 156,000 0%/12.875% Sr. Unsec. Disc. Nts., 3/15/10(6) 800,000 140,000 Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08(2) 600,000 9,000 NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10(2,5) 500,000 102,500 Ntelos, Inc., 13% Sr. Nts., 8/15/10(1) 700,000 283,500 NTL Communications Corp.: 0%/9.75% Sr. Unsec. Nts., Series B, 4/15/09(2,5)(GBP) 2,050,000 882,760 0%/11.50% Sr. Nts., 11/15/09(2,5,6)(EUR) 500,000 117,278 NTL, Inc., 0%/10.75% Sr. Unsec. Unsub. Nts., Series B, 4/1/08(2,5,6)(GBP) 50,000 21,721 Orion Network Systems, Inc., 12.50% Sr. Disc. Nts., 1/15/07 1,150,000 570,578 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- PanAmSat Corp., 8.50% Sr. Nts., 2/1/12(3) $ 1,200,000 $ 1,110,000 RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 357,000 92,820 Teligent, Inc., 11.50% Sr. Nts., 12/1/07(1,2,5) 400,000 40 Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08(1,2,5) 600,000 4,500 Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(1,2,5) 1,000,000 100 XO Communications, Inc.: 0%/12.25% Sr. Unsec. Disc. Nts., 6/1/09(2,5,6) 500,000 10,000 9% Sr. Unsec. Nts., 3/15/08(2) 800,000 24,000 9.625% Sr. Nts., 10/1/07(2,5) 500,000 15,000 10.75% Sr. Unsec. Nts., 11/15/08(2) 200,000 6,000 ------------- 5,315,334 ---------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--3.8% Alamosa Delaware, Inc., 12.50% Sr. Unsec. Nts., 2/1/11 400,000 114,000 American Cellular Corp., 9.50% Sr. Sub. Nts., 10/15/09 1,500,000 277,500 Crown Castle International Corp.: 0%/10.375% Sr. Disc. Nts., 5/15/11(6) 300,000 139,500 0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(6) 940,000 634,500 9% Sr. Nts., 5/15/11 400,000 246,000 9.50% Sr. Nts., 8/1/11 500,000 317,500 CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(1,2,5,6) 1,000,000 45,000 IPCS, Inc., 0%/14% Sr. Unsec. Disc. Nts., 7/15/10(6) 350,000 47,250 Leap Wireless International, Inc.: 0%/14.50% Sr. Unsec. Disc. Nts., 4/15/10(6) 400,000 22,000 12.50% Sr. Nts., 4/15/10 400,000 46,000 Microcell Telecommunications, Inc., 0%/12% Sr. Unsec. Disc. Nts., 6/1/09(6) 600,000 33,000 Millicom International Cellular SA, 13.50% Sr. Disc. Nts., 6/1/06 300,000 106,500 Nextel Communications, Inc.: 0%/10.65% Sr. Disc. Nts., 9/15/07(6) 500,000 273,750 9.375% Sr. Unsec. Nts., 11/15/09 500,000 255,000 12% Sr. Unsec. Nts., 11/1/08 250,000 138,125 Omnipoint Corp., 11.50% Sr. Nts., 9/15/09(3) 2,200,000 2,211,000 Orbcomm Global LP (Escrow), 8/15/04 600,000 -- 13 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Continued Polska Telefoniz Cyfrowa International Financial II SA, 11.25% Sr. Sub. Nts., 12/1/09(EUR) 400,000 $ 405,904 Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts., Series B, 12/15/06 500,000 523,125 Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 500,000 304,918 Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 700,000 325,500 SBA Communications Corp.: 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(6) 2,000,000 1,130,000 10.25% Sr. Unsec. Nts., 2/1/09 1,000,000 605,000 TeleCorp PCS, Inc.: 0%/11.625% Sr. Unsec. Sub. Disc. Nts., 4/15/09(6) 490,000 374,850 10.625% Sr. Unsec. Sub. Nts., 7/15/10 1,058,000 994,520 Tritel PCS, Inc.: 0%/12.75% Sr. Unsec. Sub. Disc. Nts., 5/15/09(6) 524,000 413,960 10.375% Sr. Sub. Nts., 1/15/11 945,000 864,675 Triton PCS, Inc., 8.75% Sr. Unsec. Sub. Nts., 11/15/11 200,000 124,000 US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B, 11/1/09(6) 800,000 196,000 VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09 1,703,000 1,643,395 ------------- 12,812,472 ---------------------------------------------------------------------------- UTILITIES--3.5% ---------------------------------------------------------------------------- ELECTRIC UTILITIES--2.8% AES Corp. (The): 8.75% Sr. Unsec. Unsub. Nts., 6/15/08 1,100,000 709,500 8.875% Sr. Unsec. Nts., 2/15/11 500,000 312,500 AES Drax Holdings Ltd., 10.41% Sr. Sec. Sub. Nts., Series B, 12/31/20 1,000,000 845,000 Caithness Coso Funding Corp., 9.05% Sr. Sec. Nts., Series B, 12/15/09 500,000 512,500 Calpine Corp., 8.50% Sr. Unsec. Nts., 2/15/11 3,600,000 2,430,000 CMS Energy Corp., 9.875% Sr. Unsec. Nts., 10/15/07 800,000 600,673 PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------- Edison Mission Energy: 9.875% Sr. Unsec. Nts., 4/15/11 $ 300,000 $ 297,515 10% Sr. Unsec. Nts., 8/15/08 1,000,000 996,345 Empresa Electrica del Norte Grande SA, 10.50% Sr. Debs., 6/15/05(1) 1,000,000 322,500 ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 982,000 955,987 Western Resources, Inc., 9.75% Sr. Unsec. Nts., 5/15/07(3) 1,500,000 1,438,425 ------------- 9,420,945 ---------------------------------------------------------------------------- GAS UTILITIES--0.6% AmeriGas Partners LP/AmeriGas Eagle Finance Corp., 8.875% Sr. Unsec. Nts., 5/20/11 1,000,000 1,045,000 El Paso Energy Partners LP, 8.50% Sr. Unsec. Sub. Nts., Series B, 6/1/11 1,000,000 1,000,000 ------------- 2,045,000 ---------------------------------------------------------------------------- MULTI-UTILITIES--0.1% Dynegy Holdings, Inc., 8.75% Sr. Nts., 2/15/12 400,000 298,518 ------------- Total Corporate Bonds and Notes (Cost $318,389,962) 271,115,313 SHARES ============================================================================ Preferred Stocks--1.2% AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg., 12/1/08(1,7) 13,331 133 Dobson Communications Corp.: 12.25% Sr. Exchangeable, Non-Vtg.(7) 2,312 1,023,060 13% Sr. Exchangeable, Non-Vtg.(7) 1,530 723,132 e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(1,5,7) 498 50 Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(5) 8,000 194,000 Global Crossing Holdings Ltd., 10.50% Sr. Exchangeable, Non-Vtg.(1,7) 7,893 -- ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(1,5,7) 342 5 McLeodUSA, Inc., 2.50% Cv., Series A(5) 3,258 12,217 Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable, Non-Vtg.(1,5,7) 7,274 -- 14 OPPENHEIMER HIGH INCOME FUND/VA MARKET VALUE SHARES SEE NOTE 1 ============================================================================ PREFERRED STOCKS Continued Nextel Communications, Inc., 13% Cum., Series D, Non-Vtg.(7) 2 $ 59 Pacific & Atlantic Holdings, Inc., 7.50% Cum. Cv., Series A(1,5,7) 18,197 72,788 Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(7) 66 516,450 PRIMEDIA, Inc., 8.625% Exchangeable, Series H, Non-Vtg. 6,000 181,500 Rural Cellular Corp., 11.375% Cum., Series B, Non-Vtg.(7) 1,336 257,180 Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A(1) 10,000 1,117,500 ------------- Total Preferred Stocks (Cost $10,085,829) 4,098,074 ============================================================================ COMMON STOCKS--0.5% Aurora Foods, Inc.(1) 3,049 2,454 Celcaribe SA(1,5) 121,950 1,220 Chesapeake Energy Corp.(5) 140,000 1,008,000 Covad Communications Group, Inc.(5) 20,660 24,379 Geotek Communications, Inc.(1) 226 -- Grove Investors, Inc.(5) 7,111 -- Horizon Natural Resources Co.(1,5) 20,000 220,000 ICO Global Communication Holdings Ltd.(5) 42,107 77,898 Orbital Sciences Corp.(5) 3,056 24,356 Pioneer Cos., Inc.(1,5) 20,688 37,859 Southern Pacific Funding Corp., Liquidating Trust(1,5) 251,604 -- TVMAX Holdings, Inc.(1,5) 7,500 142,500 WRC Media Corp.(1,5) 1,353 14 ------------- Total Common Stocks (Cost $3,730,913) 1,538,680 UNITS ============================================================================ RIGHTS, WARRANTS AND CERTIFICATES--0.2% ASAT Finance LLC Wts., Exp. 11/1/06(1,5) 500 875 CellNet Data Systems, Inc. Wts., Exp. 10/1/07(1,5) 1,434 14 Charles River Laboratories International, Inc. Wts., Exp. 10/1/09(1,5) 1,100 203,500 Chesapeake Energy Corp. Wts.: Exp. 1/23/03(1,5) 8,351 -- Exp. 1/23/03(1,5) 4,767 -- Exp. 9/1/04(1,5) 14,000 -- COLO.com, Inc. Wts., Exp. 3/15/10(1,5) 600 6 Concentric Network Corp. Wts., Exp. 12/15/07(1,5) 750 7 Covergent Communications, Inc. Wts., Exp. 4/1/08(1,5) 2,000 20 MARKET VALUE UNITS SEE NOTE 1 ---------------------------------------------------------------------------- Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08(1,5) 1,750 $ -- Diva Systems Corp. Wts., Exp. 3/1/08(1,5) 1,500 15 e.spire Communications, Inc. Wts., Exp. 11/1/05(1,5) 475 5 Equinix, Inc. Wts., Exp. 12/1/07(1,5) 1,000 10 Geotek Communications, Inc. Wts., Exp. 7/15/05(1,5) 52,500 -- Golden State Bancorp, Inc. Litigation Wts. 15,626 17,034 Grove Investors, Inc., Tranche A Wts., Exp. 9/14/08(5) 1,975 -- Grove Investors, Inc., Tranche B Wts., Exp. 9/14/08(5) 1,975 -- Horizon PCS, Inc. Wts., Exp. 10/1/10(1,5) 1,300 65 ICG Communications, Inc. Wts., Exp. 9/15/05(1,5) 5,940 59 ICO Global Communication Holdings Ltd. Wts.: Exp. 5/16/06(5) 10,561 158 Exp. 5/16/06(1,5) 16 -- Imperial Credit Industries, Inc. Wts., Exp. 1/31/08(1,5) 5,148 -- In-Flight Phone Corp. Wts., Exp. 8/31/02(1,5) 950 -- Insilco Corp. Wts., Exp. 8/15/07(1,5) 765 8 IPCS, Inc. Wts., Exp. 6/15/10(1,5) 750 281 KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(1,5) 2,455 123 Leap Wireless International, Inc. Wts., Exp. 4/15/10(1,5) 550 344 Long Distance International, Inc. Wts., Exp. 4/13/08(1,5) 800 -- Loral Space & Communications Ltd. Wts., Exp. 1/15/07(1,5) 800 8 McLeodUSA, Inc. Wts., Exp. 4/16/07(1,5) 7,220 72 Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(3,5) 3,200 1,018 Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(1,5) 1,500 15 Ntelos, Inc. Wts., Exp. 8/15/10(1,5) 1,000 4,250 Pathmark Stores, Inc. Wts., Exp. 9/19/10(5) 20,000 101,000 PLD Telekom, Inc., 9% Cv. Sub. Nts. Wts., Exp. 3/31/03 (cv. into Metromedia International Group, Inc.)(1,5) 170 2 Protection One, Inc. Wts.: Exp. 11/1/03(1,5) 28,000 -- Exp. 6/30/05(1,5) 1,600 -- R&B Falcon Corp. Wts., Exp. 5/1/09(3,5) 1,000 236,375 15 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued MARKET VALUE UNITS SEE NOTE 1 ============================================================================ RIGHTS, WARRANTS AND CERTIFICATES Continued Real Time Data Co. Wts., Exp. 5/31/04(1,5) 121,440 $ -- Republic Technologies International LLC Wts., Exp. 7/15/09(1,5) 500 5 Telergy, Inc. Wts., Exp. 9/25/10(1,5) 2,019 20 Telus Corp. Wts., Exp. 9/15/05(1,5) 1,079 1,619 ------------- Total Rights, Warrants and Certificates (Cost $451,309) 566,908 PRINCIPAL AMOUNT ============================================================================ STRUCTURED NOTES--2.9% JPMorgan Chase Bank, 8.75% High Yield Index-Linked Nts., 5/15/07 (Cost $10,399,937) $10,500,000 9,791,250 ============================================================================ REPURCHASE AGREEMENTS--7.7% Repurchase agreement with PaineWebber, Inc., 1.93%, dated 6/28/02, to be repurchased at $25,435,090 on 7/1/02, collateralized by Federal Home Loan Mortgage Corp., 6%--6.50%, 12/1/27--2/1/32, with a value of $8,266,065 and Federal National Mortgage Assn., 5.50%--6%, 5/1/32, with a value of $17,734,402 (Cost $25,431,000) 25,431,000 25,431,000 ---------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (Cost $377,141,506) 96.6% 320,435,906 ---------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 3.4 11,422,217 ----------------------------- NET ASSETS 100.0% $331,858,123 ============================= FOOTNOTES TO STATEMENT OF INVESTMENTS Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: CAD Canadian Dollar EUR Euro GBP British Pound Sterling 1. Identifies issues considered to be illiquid or restricted--See Note 6 of Notes to Financial Statements. 2. Issuer is in default. 3. 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 $66,004,079 or 19.89% of the Fund's net assets as of June 30, 2002. 4. Represents the current interest rate for a variable or increasing rate security. 5. Non-income producing security. 6. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 7. Interest or dividend is paid-in-kind. 8. Zero coupon bond reflects effective yield on the date of purchase. 9. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units, which represent debt securities, principal amount disclosed represents total underlying principal. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF ASSETS AND LIABILITIES Unaudited
June 30, 2002 ========================================================================================================================== ASSETS Investments, at value (cost $377,141,506) - see accompanying statement $320,435,906 -------------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 7,086,310 Investments sold 6,147,570 Shares of beneficial interest sold 357,025 Other 2,640 ------------- Total assets 334,029,451 ========================================================================================================================== LIABILITIES Bank overdraft 477,779 -------------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 1,103,220 Shares of beneficial interest redeemed 544,159 Shareholder reports 16,153 Closed foreign currency contracts 8,267 Transfer and shareholder servicing agent fees 1,481 Trustees' compensation 1,028 Service plan fees 691 Other 18,550 ------------- Total liabilities 2,171,328 ========================================================================================================================== NET ASSETS $331,858,123 ============= ========================================================================================================================== COMPOSITION OF NET ASSETS Par value of shares of beneficial interest $ 44,750 -------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 457,556,625 -------------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 11,698,590 -------------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (80,739,356) -------------------------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (56,702,486) ------------- NET ASSETS $331,858,123 ============= ========================================================================================================================== 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 $328,400,447 and 44,283,830 shares of beneficial interest outstanding) $7.42 -------------------------------------------------------------------------------------------------------------------------- Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $3,457,676 and 466,524 shares of beneficial interest outstanding) $7.41
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 OPPENHEIMER HIGH INCOME FUND/VA STATEMENT OF OPERATIONS Unaudited
For the Six Months Ended June 30, 2002 ========================================================================================================================== INVESTMENT INCOME Interest $ 14,283,993 -------------------------------------------------------------------------------------------------------------------------- Dividends 417,131 ------------- Total investment income 14,701,124 ========================================================================================================================== EXPENSES Management fees 1,294,955 -------------------------------------------------------------------------------------------------------------------------- Distribution and service plan fees-Service shares 690 -------------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 6,501 -------------------------------------------------------------------------------------------------------------------------- Trustees' compensation 5,544 -------------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 4,438 -------------------------------------------------------------------------------------------------------------------------- Shareholder reports 3,427 -------------------------------------------------------------------------------------------------------------------------- Other 32,225 ------------- Total expenses 1,347,780 Less reduction to custodian expenses (1,134) ------------- Net expenses 1,346,646 ========================================================================================================================== NET INVESTMENT INCOME 13,354,478 ========================================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on: Investments (27,820,607) Foreign currency transactions (620,215) ------------- Net realized loss (28,440,822) -------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation on: Investments 878,874 Translation of assets and liabilities denominated in foreign currencies 1,356,820 ------------- Net change 2,235,694 ------------- Net realized and unrealized loss (26,205,128) ========================================================================================================================== NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(12,850,650) =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 OPPENHEIMER HIGH INCOME FUND/VA STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, (UNAUDITED) 2001 ========================================================================================================================== OPERATIONS Net investment income $ 13,354,478 $ 34,546,979 -------------------------------------------------------------------------------------------------------------------------- Net realized loss (28,440,822) (28,960,743) -------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation 2,235,694 1,095,345 ----------------------------- Net increase (decrease) in net assets resulting from operations (12,850,650) 6,681,581 ========================================================================================================================== DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Non-Service shares (35,408,403) (34,924,849) Service shares (306) -- ========================================================================================================================== BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions: Non-Service shares 31,736,025 39,498,599 Service shares 3,590,509 3,076 ========================================================================================================================== NET ASSETS Total increase (decrease) (12,932,825) 11,258,407 -------------------------------------------------------------------------------------------------------------------------- Beginning of period 344,790,948 333,532,541 ----------------------------- End of period (including undistributed net investment income of $11,698,590 and $33,752,821, respectively) $331,858,123 $344,790,948 =============================
19 OPPENHEIMER HIGH INCOME FUND/VA FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, NON-SERVICE SHARES (UNAUDITED) 2001 2000 1999 1998 1997 ============================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $ 8.54 $ 9.27 $ 10.72 $ 11.02 $ 11.52 $ 11.13 ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .28 .84 1.00 1.01 .95 .94 Net realized and unrealized gain (loss) (.55) (.62) (1.36) (.55) (.90) .37 ------------------------------------------------------------------------------- Total from investment operations (.27) .22 (.36) .46 .05 1.31 ----------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.85) (.95) (1.09) (.76) (.25) (.91) Distributions from net realized gain -- -- -- -- (.30) (.01) Total dividends and/or distributions to shareholders (.85) (.95) (1.09) (.76) (.55) (.92) ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 7.42 $ 8.54 $ 9.27 $ 10.72 $ 11.02 $ 11.52 =============================================================================== ============================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(1) (3.56)% 1.97% (3.74)% 4.29% 0.31% 12.21% ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $328,400 $344,788 $333,533 $340,829 $328,563 $291,323 ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $353,676 $347,723 $329,260 $340,519 $322,748 $223,617 ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 7.60% 9.94% 10.47% 9.61% 8.65% 8.88% Expenses 0.77% 0.79% 0.79% 0.75% 0.78%(3) 0.82%(3) ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 34% 46% 31% 33% 161% 168%
1. Assumes an 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 OPPENHEIMER HIGH INCOME FUND/VA
SIX MONTHS PERIOD ENDED ENDED JUNE 30, 2002 DEC. 31, SERVICE SHARES (UNAUDITED) 2001(1) =================================================================================================================== PER SHARE OPERATING DATA Net asset value, beginning of period $ 8.54 $ 8.40 ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .73 .20 Net realized and unrealized loss (1.01) (.06) --------------------- Total from investment operations (.28) .14 ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.85) -- Distributions from net realized gain -- -- --------------------- Total dividends and/or distributions to shareholders (.85) -- ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.41 $ 8.54 ===================== =================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(2) (3.71)% 1.67% =================================================================================================================== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $3,458 $3 ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 598 $2 ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 9.51% 12.51% Expenses 1.00% 0.96% ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 34% 46%
1. For the period from September 18, 2001 (inception of offering) to December 31, 2001. 2. Assumes an investment on the business day before the first day of the fiscal period (or inception of offering), 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. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 OPPENHEIMER HIGH INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer High Income Fund/VA (the Fund) is a separate series of Oppenheimer Variable Account Funds (the Trust), 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 from investment in high-yield fixed-income securities. The Trust's investment advisor 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. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. The following is a summary of significant accounting policies consistently followed by the Fund. -------------------------------------------------------------------------------- SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange 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 closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). -------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in foreign currency-linked structured notes whose market values and redemption prices are linked to foreign currency exchange rates. The structured notes are leveraged, which increases the volatility of each note's market value relative to the change in the underlying foreign currency exchange rate. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of June 30, 2002, the market value of these securities comprised 2.9% of the Fund's net assets and resulted in unrealized gains (losses) in the current period of $608,687. The Fund also hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5. -------------------------------------------------------------------------------- SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower-yielding, higher-rated fixed-income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of June 30, 2002, securities with an aggregate market value of $10,412,394, representing 3.14% of the Fund's net assets, were in default. -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. 22 OPPENHEIMER HIGH INCOME FUND/VA 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. -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. The Fund, along with other affiliated entities managed by OFI, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily 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 continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. As of June 30, 2002, the Fund had available for federal income tax purposes an estimated unused capital loss carryforward of $77,828,927. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. As of December 31, 2001, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows: Expiring -------------------------------- 2006 $ 3,401,577 2007 4,933,260 2008 11,572,833 2009 22,696,701 ----------- Total $42,604,371 =========== -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. -------------------------------------------------------------------------------- CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for 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. 23 OPPENHEIMER HIGH INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited / Continued ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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, which includes accretion of discount and amortization of premium, is accrued as earned. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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 income and expenses during the reporting period. Actual results could differ from those estimates. ================================================================================ 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:
SIX MONTHS ENDED JUNE, 2002 YEAR ENDED DECEMBER 31, 2001(1) SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- NON-SERVICE SHARES Sold 10,739,714 $ 87,871,758 16,771,940 $ 148,496,080 Dividends and/or distributions reinvested 4,568,826 35,408,402 3,924,140 34,924,849 Redeemed (11,391,508) (91,544,135) (16,326,208) (143,922,330) ------------------------------------------------------------------ Net increase 3,917,032 $ 31,736,025 4,369,872 $ 39,498,599 ================================================================== -------------------------------------------------------------------------------------------------------------------------- SERVICE SHARES Sold 466,541 $ 3,593,437 362 $ 3,083 Dividends and/or distributions reinvested 39 305 -- -- Redeemed (417) (3,233) (1) (7) ------------------------------------------------------------------ Net increase 466,163 $ 3,590,509 361 $ 3,076 ==================================================================
1. For the year ended December 31, 2001, for Non-Service shares and for the period from September 18, 2001 (inception of offering) to December 31, 2001, for Service shares. ================================================================================ 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended June 30, 2002, were $117,288,616 and $97,774,724, respectively. 24 OPPENHEIMER HIGH INCOME FUND/VA ================================================================================ 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust. The annual fees are 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for the six months ended June 30, 2002 was an annualized rate of 0.74%. -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $22.50 per account fee. Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Fund is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.25% of average net assets of the fund. This undertaking may be amended or withdrawn at any time. -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FOR SERVICE SHARES. The Fund has adopted a Distribution and Service Plan for Service shares to pay OppenheimerFunds Distributor, Inc., the Distributor, for distribution-related services for the Fund's Service shares. Under the Plan, payments are made quarterly at an annual rate of up to 0.25% of the average annual net assets of the Service shares of the Fund. ================================================================================ 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts for operational purposes and to seek to protect against adverse exchange rate fluctuations. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. 25 OPPENHEIMER HIGH INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited / Continued ================================================================================ 6. ILLIQUID OR RESTRICTED SECURITIES As of June 30, 2002, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of June 30, 2002 was $14,490,969, which represents 4.37% of the Fund's net assets, of which $2,454 is considered restricted. Information concerning restricted securities is as follows:
UNREALIZED ACQUISITION VALUATION AS OF APPRECIATION SECURITY DATES COST JUNE 30, 2002 (DEPRECIATION) -------------------------------------------------------------------------------------------------------------------------- Stocks and/or Warrants Aurora Foods, Inc. 9/18/00 $ -- $2,454 $ 2,454 Geotek Communications, Inc. 4/6/00 -- -- -- Real Time Data Co. Wts. 6/30/99 1,214 -- (1,214)
26 OPPENHEIMER HIGH INCOME FUND/VA OPPENHEIMER HIGH INCOME FUND/VA A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS ================================================================================ TRUSTEES AND OFFICERS James C. Swain, Trustee, CEO and Chairman of the Board John V. Murphy, President and Trustee William L. Armstrong, Trustee Robert G. Avis, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Beverly L. Hamilton, Trustee Robert J. Malone, Trustee F. William Marshall, Jr., Trustee Dimitrios Kourkoulakis, Vice President David P. Negri, Vice President Thomas P. Reedy, Vice President Robert G. Zack, Vice President and Secretary Brian W. Wixted, Treasurer Katherine P. Feld, Assistant Secretary Kathleen T. Ives, Assistant Secretary Denis R. Molleur, Assistant Secretary ================================================================================ INVESTMENT ADVISOR OppenheimerFunds, Inc. ================================================================================ DISTRIBUTOR OppenheimerFunds Distributor, Inc. ================================================================================ TRANSFER AGENT OppenheimerFunds Services ================================================================================ INDEPENDENT AUDITORS Deloitte & Touche LLP ================================================================================ LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. The financial statements included herein have been taken from the records of the Fund without examination of those records by the independent auditors. For more complete information about Oppenheimer High Income Fund/VA, please refer to the Prospectus. To obtain a copy or for more information on how to obtain a separate account prospectus, call OppenheimerFunds, Inc. at 1.800.981.2871. 27 OPPENHEIMER HIGH INCOME FUND/VA (LOGO OMITTED) OPPENHEIMERFUNDS[REGISTRATION MARK] Distributor, Inc. [COPYRIGHT]Copyright 2002 OppenheimerFunds, Inc. All rights reserved.