-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hf9iohSAqNPztegcPiFuHyPyoBGLnOY1O2DSY/Mr2np4F8xfROLw8wnSDG7T+jS2 G+plnSB0ZL8y+cRXtFOOJw== 0001086144-99-000039.txt : 19990819 0001086144-99-000039.hdr.sgml : 19990819 ACCESSION NUMBER: 0001086144-99-000039 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990818 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER VARIABLE ACCOUNT FUNDS CENTRAL INDEX KEY: 0000752737 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 840974272 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04108 FILM NUMBER: 99695499 BUSINESS ADDRESS: STREET 1: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 2: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER VARIABLE LIFE FUNDS DATE OF NAME CHANGE: 19860609 N-30D 1 HIGH INCOME FUND/VA SAR Semiannual Report June 30, 1999 O P P E N H E I M E R High Income Fund/VA A Series of Oppenheimer Variable Account Funds [graphic of airplane] [logo] OppenheimerFunds(R) THE RIGHT WAY TO INVEST Oppenheimer Variable Account Funds--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 investing in high-yield, high-risk fixed-income securities, including unrated securities or securities in the lower rating categories. These securities may be considered to be speculative. Investing in foreign securities entails additional expenses and risks including foreign currency fluctuations while investing in junk bonds carries a greater risk of default. ================================================================================ Narrative by David Negri and Tom Reedy, Co-Portfolio Managers Oppenheimer High Income Fund/VA performed well during the first half of 1999, despite a volatile environment for bond investing. For the six-month period that ended June 30, 1999, the Fund provided a cumulative total return of 3.80%.(1) We attribute the Fund's performance to our nearly fully invested position and our emphasis on high-yield corporate bonds, which performed strongly during the first half of the period. The year began with the U.S. economy growing at a surprisingly robust rate, fueled by high levels of consumer confidence and consumer spending. Most bond sectors reacted negatively to the economy's unexpectedly high rate of growth and the resulting increased potential for inflation, since inflation undermines the value of a bond's yield. However, high-yield bond prices remained strong as investors turned to the relatively attractive yields available on such bonds, confident that recession was unlikely to strike the United States. We positioned the Fund to take advantage of these conditions during the last few months of 1998 by aggressively redeploying our cash reserves and most of our U.S. Treasury bonds and other U.S. government-related securities into higher yielding corporate bonds. As a result, the Fund participated in the high-yield rally that occurred during the first quarter of 1999. We focused primarily on fast-growing industries that we believed were likely to benefit from global economic and technological trends. Our largest group of holdings was in the media/entertainment/telecommunications sector, among high-yielding debt obligations of companies such as NTL, Inc., a British cable and broadcasting company. These investments generally performed well during the high yield market's rally.(2) In early April 1999, reassured by evidence that the U.S. economy was continuing to grow at a sustainable rate and that global economies were stabilizing, investors began looking for undervalued opportunities among bonds and equities of companies in economically sensitive, cyclical industries that stood to benefit from a global recovery. This trend toward value-oriented securities undermined the strength of the high-yield growth sector that the Fund emphasized. However, the trend favored certain of the Fund's investments that had disappointed earlier in the year. Most notable of these were our holdings in the energy sector, which had declined in early 1999 as a result of weak Asian demand and the inability of oil-producing nations to coordinate production targets. From March 1999 through the end of June, we saw recovery in the energy sector in response to growing global demand. We also sought to take advantage of the shift in market sentiment by increasing our exposure to specific industries, such as paper and specialty chemicals, that we believed were best positioned to benefit from an environment of global growth. Looking toward the second half of 1999, we anticipate a favorable environment for investments in corporate high-yield bonds if, as we expect, the U.S. economy continues to grow without overheating. Only time will tell if the market's recent shift in favor of economically sensitive, cyclical companies will continue. However, we believe that the value-oriented industries we've identified hold potential for further increases and have positioned the Fund to participate in those gains. The Fund's performance may from time to time be subject to substantial short-term changes, particularly during periods of market or interest rate volatility. For updates on the Fund's performance, please contact your financial advisor, call us at 1-800-525-7048 or visit our website, www.oppenheimerfunds.com. 1. Includes changes in net asset value per share and does not include the charges associated with the separate account products which offer this Fund. Such performance is not annualized and would have been lower if such charges were taken into account. 2. The Fund's portfolio is subject to change. 2 Oppenheimer High Income Fund/VA Oppenheimer Variable Account Funds--Oppenheimer High Income Fund/VA ================================================================================ At the same time, a number of developments bear careful observation. Emerging markets, which have demonstrated remarkable resilience in recent months, still face fundamental economic challenges. We continue to look for signs of strength that might lead us to allocate more of the Fund's resources to those markets. We also remain cautious regarding the possibility of Y2K-related business disruptions that might affect corporate performance. Our disciplined investment strategy will guide us in evaluating investment challenges and opportunities as they arise, which is why Oppenheimer High Income Fund/VA remains part of The Right Way to Invest. Oppenheimer High Income Fund/VA 3 Statement of Investments June 30, 1999 (Unaudited)
Principal Market Value Amount(1) Note 1 ================================================================================================================================ Mortgage-Backed Obligations--2.0% - -------------------------------------------------------------------------------------------------------------------------------- AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 130,313 - -------------------------------------------------------------------------------------------------------------------------------- Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1997-D4, Cl. B1, 7.525%, 4/14/29(3) 167,000 128,877 Series 1997-D4, Cl. B2, 7.525%, 4/14/29(3) 167,000 126,816 Series 1997-D4, Cl. B3, 7.525%, 4/14/29(3) 166,000 113,347 - -------------------------------------------------------------------------------------------------------------------------------- CBA Mortgage Corp., Mtg. Pass-Through Certificates: Series 1993-C1, Cl. E, 6.72%, 12/25/03(2)(3) 250,000 217,500 Series 1993-C1, Cl. F, 6.72%, 12/25/03(2)(3) 700,000 598,828 - -------------------------------------------------------------------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates: Series 1997-CHL1, 8.054%, 5/25/08(2)(3) 300,000 246,000 Series 1997-CHL1, 8.055%, 2/25/11(2)(3) 1,500,000 1,072,500 - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-C1, Cl. E, 7.426%, 3/15/06(2)(3) 835,342 689,679 - -------------------------------------------------------------------------------------------------------------------------------- Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2) 254,890 203,912 - -------------------------------------------------------------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1994-C1, Cl. E, 8%, 6/25/26 630,356 611,151 Series 1994-C2, Cl. G, 8%, 4/25/25 688,707 662,934 Series 1995-C1, Cl. F, 6.90%, 2/25/27 518,797 472,754 - -------------------------------------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 6.581%, 4/25/26(2) 1,435,997 1,014,173 - -------------------------------------------------------------------------------------------------------------------------------- Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1996-C3, Cl. E, 8.256%, 6/25/30(4) 650,000 600,844 ------------ Total Mortgage-Backed Obligations (Cost $7,054,242) 6,889,628 ================================================================================================================================ Foreign Government Obligations--1.0% - -------------------------------------------------------------------------------------------------------------------------------- Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I, 2.815%, 4/1/07(3)ARP 2,597,935 1,617,662 - -------------------------------------------------------------------------------------------------------------------------------- Bulgaria (Republic of) Interest Arrears Bonds, 5.875%, 7/28/11(3) 1,450,000 986,000 - -------------------------------------------------------------------------------------------------------------------------------- Panama (Republic of) Interest Reduction Bonds, 4%,7/17/14(5) 275,000 202,125 - -------------------------------------------------------------------------------------------------------------------------------- Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4%, 3/7/17(5) 400,000 243,000 - -------------------------------------------------------------------------------------------------------------------------------- Philippines (Republic of) Debs., 6%, 12/1/09(3) 142,800 131,733 - -------------------------------------------------------------------------------------------------------------------------------- PT Hutama Karya Promissory Nts., Zero Coupon, B344 2/10/98 (2)(6)(IDR) 1,000,000,000 39,943 ------------ Total Foreign Government Obligations (Cost $3,442,648) 3,220,463 ================================================================================================================================ Loan Participations--0.3% - -------------------------------------------------------------------------------------------------------------------------------- Central Bank of Indonesia Gtd. Nts., Series 2 yr., 8.375%, 8/25/00(2)(3) (Cost $762,062) 1,000,000 932,500 4 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 ================================================================================================================================ Corporate Bonds and Notes--82.9% - -------------------------------------------------------------------------------------------------------------------------------- Aerospace/Defense--3.4% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 $ 1,000,000 $ 1,025,000 - -------------------------------------------------------------------------------------------------------------------------------- Amtran, Inc.: 9.625% Nts., 12/15/05 800,000 785,000 10.50% Sr. Nts., 8/1/04 700,000 703,500 - -------------------------------------------------------------------------------------------------------------------------------- Atlas Air, Inc.: 9.25% Sr. Nts., 4/15/08(2) 1,325,000 1,265,375 9.375% Sr. Unsec. Nts., 11/15/06 1,000,000 955,000 10.75% Sr. Nts., 8/1/05 700,000 717,500 - -------------------------------------------------------------------------------------------------------------------------------- BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 1,840,000 1,890,600 - -------------------------------------------------------------------------------------------------------------------------------- Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts., Series 1997-1, 1/1/01(2) 800,000 766,000 - -------------------------------------------------------------------------------------------------------------------------------- Decrane Aircraft Holdings, Inc., 12% Sr. Sub. Nts., 9/30/08(4) 1,750,000 1,776,250 - -------------------------------------------------------------------------------------------------------------------------------- Fairchild Corp., 10.75% Sr. Sub. Gtd. Nts., 4/15/09(4) 600,000 591,000 - -------------------------------------------------------------------------------------------------------------------------------- Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Series 1997-A, Cl. B, 6/15/04(2) 303,086 315,331 - -------------------------------------------------------------------------------------------------------------------------------- Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 837,750 820,996 ------------ 11,611,552 - -------------------------------------------------------------------------------------------------------------------------------- Chemicals--2.1% Brunner Mond Group plc, 12.50% Sr. Unsec. Sub. Nts., 7/15/08(GBP) 1,090,000 1,039,491 - -------------------------------------------------------------------------------------------------------------------------------- ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 500,000 480,625 - -------------------------------------------------------------------------------------------------------------------------------- Huntsman Corp./ICI Chemical Co. plc: 10.125% Sr. Unsec. Sub. Nts., 7/1/09(4) 800,000 812,000 10.125% Sr. Unsec. Sub. Nts., 7/1/09(EUR) 500,000 523,371 - -------------------------------------------------------------------------------------------------------------------------------- Lyondell Chemical Co.: 9.875% Nts., Series B, 5/1/07(4) 500,000 513,750 10.875% Sr. Sub. Nts. 5/1/09(4) 250,000 261,250 - -------------------------------------------------------------------------------------------------------------------------------- PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 500,000 407,500 - -------------------------------------------------------------------------------------------------------------------------------- Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 400,000 330,000 - -------------------------------------------------------------------------------------------------------------------------------- Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 250,000 243,750 - -------------------------------------------------------------------------------------------------------------------------------- Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 795,000 800,962 - -------------------------------------------------------------------------------------------------------------------------------- Sterling Chemicals, Inc.: 11.25% Sr. Sub. Nts., 4/1/07 250,000 186,250 11.75% Sr. Unsec. Sub. Nts., 8/15/06 750,000 573,750 - -------------------------------------------------------------------------------------------------------------------------------- ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(4) 800,000 811,000 ------------ 6,983,699 - -------------------------------------------------------------------------------------------------------------------------------- Consumer Durables--0.2% Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 413,312 - -------------------------------------------------------------------------------------------------------------------------------- TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 350,000 393,746 ------------ 807,058 Oppenheimer High Income Fund/VA 5 Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Consumer Non-Durables--3.3% AKI Holdings, Inc.: 0%/13.50% Sr. Disc. Debs., 7/1/09(7) $ 1,080,000 $ 415,800 10.50% Sr. Unsec. Nts., 7/1/08 1,000,000 975,000 - -------------------------------------------------------------------------------------------------------------------------------- American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05 400,000 255,000 - -------------------------------------------------------------------------------------------------------------------------------- Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 1,100,000 1,100,000 - -------------------------------------------------------------------------------------------------------------------------------- Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(4) 1,300,000 1,124,500 - -------------------------------------------------------------------------------------------------------------------------------- Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 900,000 679,500 - -------------------------------------------------------------------------------------------------------------------------------- Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 720,000 723,600 - -------------------------------------------------------------------------------------------------------------------------------- Revlon Consumer Products Corp.: 8.625% Sr. Unsec. Sub. Nts., 2/1/08 2,200,000 2,068,000 9% Sr. Nts., 11/1/06 1,185,000 1,173,150 - -------------------------------------------------------------------------------------------------------------------------------- Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., Series B, 11.49%, 3/15/01(8) 680,000 445,400 - -------------------------------------------------------------------------------------------------------------------------------- Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 1,200,000 1,248,000 - -------------------------------------------------------------------------------------------------------------------------------- Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 600,000 585,000 - -------------------------------------------------------------------------------------------------------------------------------- William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 235,000 240,287 ------------ 11,033,237 - -------------------------------------------------------------------------------------------------------------------------------- Energy--5.1% AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(4) 750,000 736,875 - -------------------------------------------------------------------------------------------------------------------------------- Chesapeake Energy Corp.: 9.125% Sr. Unsec. Nts., 4/15/06 1,000,000 885,000 9.625% Sr. Unsec. Nts., Series B, 5/1/05 1,000,000 940,000 - -------------------------------------------------------------------------------------------------------------------------------- Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 1,040,000 919,100 - -------------------------------------------------------------------------------------------------------------------------------- Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 275,000 240,969 - -------------------------------------------------------------------------------------------------------------------------------- Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B, 2/15/08 800,000 508,000 - -------------------------------------------------------------------------------------------------------------------------------- Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 800,000 718,000 - -------------------------------------------------------------------------------------------------------------------------------- Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(4) 1,000,000 655,000 - -------------------------------------------------------------------------------------------------------------------------------- Forcenergy, Inc., 8.50% Sr. Sub. Nts., Series B, 2/15/07(6) 700,000 493,500 - -------------------------------------------------------------------------------------------------------------------------------- Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 1,750,000 1,548,750 - -------------------------------------------------------------------------------------------------------------------------------- Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 1,025,000 548,375 - -------------------------------------------------------------------------------------------------------------------------------- Leviathan Gas Pipeline Partners LP/Leviathan Financial Corp., 10.375% Sr. Sub. Nts., 6/1/09(4) 500,000 512,500 - -------------------------------------------------------------------------------------------------------------------------------- National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(6) 810,000 319,950 - -------------------------------------------------------------------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,420,000 1,029,500 - -------------------------------------------------------------------------------------------------------------------------------- P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,000,000 997,500 - -------------------------------------------------------------------------------------------------------------------------------- Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 800,000 762,000 - -------------------------------------------------------------------------------------------------------------------------------- R&B Falcon Corp., 12.25% Sr. Nts., 3/15/06(4) 1,000,000 1,035,000 - -------------------------------------------------------------------------------------------------------------------------------- RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 1,060,000 560,475 - -------------------------------------------------------------------------------------------------------------------------------- RBF Finance Co.: 11% Sec. Nts., 3/15/06(4) 1,000,000 1,035,000 11.375% Sec. Nts., 3/15/09(4) 500,000 520,000 - -------------------------------------------------------------------------------------------------------------------------------- Statia Terminals International/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts., Series B, 11/15/03 225,000 239,062 - -------------------------------------------------------------------------------------------------------------------------------- Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 735,000 735,000 - -------------------------------------------------------------------------------------------------------------------------------- Universal Compression Holdings, Inc.: 0%/9.875% Sr. Disc. Nts., 2/15/08(7) 1,325,000 834,750 0%/11.375% Sr. Disc. Nts., 2/15/09(7) 720,000 435,600 ------------ 17,209,906 6 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Financial--1.3% Bakrie Investindo, Zero Coupon Promissory Nts., 3/26/98(2)(6)(IDR) 1,000,000,000 $ 21,787 - -------------------------------------------------------------------------------------------------------------------------------- Bank Plus Corp., 12% Sr. Nts., 7/18/07(2) 517,000 450,436 - -------------------------------------------------------------------------------------------------------------------------------- ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(2) 8,473 8,495 - -------------------------------------------------------------------------------------------------------------------------------- Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 800,000 832,000 - -------------------------------------------------------------------------------------------------------------------------------- Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 450,000 353,250 - -------------------------------------------------------------------------------------------------------------------------------- PT Polysindo Eka Perkasa, 24% Nts., 6/19/03(6)(IDR) 657,200,000 12,409 - -------------------------------------------------------------------------------------------------------------------------------- Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 2,165,000 2,024,275 - -------------------------------------------------------------------------------------------------------------------------------- Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(2)(6) 240,000 109,200 - -------------------------------------------------------------------------------------------------------------------------------- Veritas Capital Trust, 10% Nts., 1/1/28 550,000 441,375 ------------ 4,253,227 - -------------------------------------------------------------------------------------------------------------------------------- Food & Drug--1.9% Family Restaurants, Inc.: 9.75% Sr. Nts., 2/1/02 1,300,000 664,625 10.875% Sr. Sub. Disc. Nts., 2/1/04(2) 100,000 52,750 - -------------------------------------------------------------------------------------------------------------------------------- Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,135,000 1,058,387 - -------------------------------------------------------------------------------------------------------------------------------- Pathmark Stores, Inc.: 0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(7) 2,710,000 2,696,450 12.625% Sub. Nts., 6/15/02 900,000 918,000 - -------------------------------------------------------------------------------------------------------------------------------- Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 1,060,000 1,118,300 ------------ 6,508,512 - -------------------------------------------------------------------------------------------------------------------------------- Food/Tobacco--1.9% Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 520,000 512,200 - -------------------------------------------------------------------------------------------------------------------------------- Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(7) 501,000 370,740 - -------------------------------------------------------------------------------------------------------------------------------- New World Pasta Co., 9.25% Sr. Sub. Nts., 2/15/09(4) 1,200,000 1,173,000 - -------------------------------------------------------------------------------------------------------------------------------- Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 1,600,000 1,576,000 - -------------------------------------------------------------------------------------------------------------------------------- Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10 400,000 302,000 - -------------------------------------------------------------------------------------------------------------------------------- SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 841,750 - -------------------------------------------------------------------------------------------------------------------------------- Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 1,175,000 945,875 - -------------------------------------------------------------------------------------------------------------------------------- Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09(4) 750,000 738,750 ------------ 6,460,315 - -------------------------------------------------------------------------------------------------------------------------------- Forest Products/Containers--1.7% Ball Corp.: 7.75% Sr. Unsec. Nts., 8/1/06 700,000 686,875 8.25% Sr. Unsec. Sub. Nts., 8/1/08 800,000 792,000 - -------------------------------------------------------------------------------------------------------------------------------- Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 500,000 477,500 - -------------------------------------------------------------------------------------------------------------------------------- Packaging Corp. of America, 9.625% Sr. Sub. Nts., 4/1/09(4) 250,000 255,000 - -------------------------------------------------------------------------------------------------------------------------------- Repap Enterprises (New Brunswick), 9% First Priority Sr. Sec. Nts., 6/1/04 250,000 234,375 - -------------------------------------------------------------------------------------------------------------------------------- Riverwood International Corp.: 10.625% Sr. Unsec. Nts., 8/1/07 1,130,000 1,163,900 10.875% Sr. Sub. Nts., 4/1/08 750,000 733,125 - -------------------------------------------------------------------------------------------------------------------------------- SD Warren Co., 14% Unsec. Nts., 12/15/06(9) 1,158,749 1,329,664 ------------ 5,672,439 Oppenheimer High Income Fund/VA 7 Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Gaming/Leisure--5.5% AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(7) $ 450,000 $ 247,500 - -------------------------------------------------------------------------------------------------------------------------------- Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 940,000 851,875 - -------------------------------------------------------------------------------------------------------------------------------- Aztar Corp., 8.875% Sr. Sub. Nts., 5/15/07(4) 550,000 529,375 - -------------------------------------------------------------------------------------------------------------------------------- Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(6) 9,500 -- - -------------------------------------------------------------------------------------------------------------------------------- Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 840,000 789,600 - -------------------------------------------------------------------------------------------------------------------------------- Coast Hotel & Casinos, Inc., 9.50% Sr. Sub. Nts., 4/1/09(4) 500,000 483,750 - -------------------------------------------------------------------------------------------------------------------------------- Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 500,000 501,875 - -------------------------------------------------------------------------------------------------------------------------------- Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 800,000 752,000 - -------------------------------------------------------------------------------------------------------------------------------- Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 1,600,000 1,516,000 - -------------------------------------------------------------------------------------------------------------------------------- Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 120,000 125,400 - -------------------------------------------------------------------------------------------------------------------------------- Hollywood Casino Corp., 11.25% Sec. Nts., 5/1/07(4) 500,000 506,250 - -------------------------------------------------------------------------------------------------------------------------------- Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 1,000,000 997,500 - -------------------------------------------------------------------------------------------------------------------------------- Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,300,000 1,327,625 - -------------------------------------------------------------------------------------------------------------------------------- Intrawest Corp., 9.75% Sr. Nts., 8/15/08 1,500,000 1,518,750 - -------------------------------------------------------------------------------------------------------------------------------- Isle of Capri Casinos, Inc., 8.75% Sr. Sub. Nts., 4/15/09(4) 1,200,000 1,131,000 - -------------------------------------------------------------------------------------------------------------------------------- Jupiters Ltd., 8.50% Sr. Nts., 3/1/06(4) 1,000,000 985,000 - -------------------------------------------------------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 1,500,000 1,492,500 - -------------------------------------------------------------------------------------------------------------------------------- Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(7) 1,200,000 802,500 9.25% Sr. Nts., 4/1/06 600,000 594,000 9.75%, Sr. Nts., 6/15/07 750,000 761,250 - -------------------------------------------------------------------------------------------------------------------------------- Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,000,000 1,005,000 - -------------------------------------------------------------------------------------------------------------------------------- Station Casinos, Inc.: 9.75% Sr. Sub. Nts., 4/15/07 800,000 816,000 10.125% Sr. Sub. Nts., 3/15/06 800,000 830,000 ------------ 18,564,750 - -------------------------------------------------------------------------------------------------------------------------------- Healthcare--2.1% Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 1,300,000 1,212,250 - -------------------------------------------------------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08(DEM) 1,225,000 668,527 - -------------------------------------------------------------------------------------------------------------------------------- ICN Pharmaceuticals, Inc., 8.75% Sr. Nts., 11/15/08(4) 1,065,000 1,051,687 - -------------------------------------------------------------------------------------------------------------------------------- Integrated Health Services, Inc.: 9.50% Sr. Sub. Nts., 9/15/07 600,000 441,000 10.25% Sr. Sub. Nts., 4/30/06 35,000 25,856 - -------------------------------------------------------------------------------------------------------------------------------- King Pharmaceutical, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09 1,250,000 1,296,875 - -------------------------------------------------------------------------------------------------------------------------------- Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 1,000,000 860,000 - -------------------------------------------------------------------------------------------------------------------------------- Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(4) 1,200,000 1,242,000 - -------------------------------------------------------------------------------------------------------------------------------- Tenet Healthcare Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 250,000 237,500 ------------ 7,035,695 8 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Housing--1.6% CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06(2) $ 900,000 $ 873,000 - -------------------------------------------------------------------------------------------------------------------------------- D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 500,000 472,500 - -------------------------------------------------------------------------------------------------------------------------------- Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 600,000 597,000 - -------------------------------------------------------------------------------------------------------------------------------- Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08 1,300,000 1,215,500 - -------------------------------------------------------------------------------------------------------------------------------- Nortek, Inc.: 8.875% Sr. Nts., 8/1/08(4) 250,000 246,250 9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,393,000 9.25% Sr. Nts., Series B, 3/15/07 625,000 628,125 ------------ 5,425,375 - -------------------------------------------------------------------------------------------------------------------------------- Information Technology--1.1% Amkor Technologies, Inc.: 9.25% Sr. Nts., 5/1/06(4) 500,000 490,000 10.50% Sr. Sub. Nts., 5/1/09(4) 500,000 483,750 - -------------------------------------------------------------------------------------------------------------------------------- Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 500,000 466,250 - -------------------------------------------------------------------------------------------------------------------------------- Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 609,375 - -------------------------------------------------------------------------------------------------------------------------------- Fairchild Semiconductor Corp., 10.375% Sr. Sub. Nts., 10/1/07(4) 850,000 839,375 - -------------------------------------------------------------------------------------------------------------------------------- Unisys Corp., 11.75% Sr. Nts., 10/15/04 275,000 306,625 - -------------------------------------------------------------------------------------------------------------------------------- Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 500,000 445,000 ------------ 3,640,375 - -------------------------------------------------------------------------------------------------------------------------------- Manufacturing--2.8% American Standard Cos., Inc., 7.625% Sr. Nts., 2/15/10(10) 1,500,000 1,402,500 - -------------------------------------------------------------------------------------------------------------------------------- Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 350,000 341,250 - -------------------------------------------------------------------------------------------------------------------------------- Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 420,000 416,325 - -------------------------------------------------------------------------------------------------------------------------------- Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 400,000 308,000 - -------------------------------------------------------------------------------------------------------------------------------- Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 811,750 - -------------------------------------------------------------------------------------------------------------------------------- Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 635,000 466,725 - -------------------------------------------------------------------------------------------------------------------------------- Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 250,000 226,250 - -------------------------------------------------------------------------------------------------------------------------------- Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 765,000 757,350 - -------------------------------------------------------------------------------------------------------------------------------- International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 521,250 - -------------------------------------------------------------------------------------------------------------------------------- Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 700,000 712,250 - -------------------------------------------------------------------------------------------------------------------------------- Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 560,000 495,600 - -------------------------------------------------------------------------------------------------------------------------------- Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,447,500 - -------------------------------------------------------------------------------------------------------------------------------- Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 532,000 - -------------------------------------------------------------------------------------------------------------------------------- Terex Corp.: 8.875% Sr. Unsec. Sub. Nts., 4/1/08 630,000 604,800 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08(4) 400,000 384,000 ------------ 9,427,550 Oppenheimer High Income Fund/VA 9 Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Broadcasting--2.2% Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 $ 915,000 $ 933,300 - -------------------------------------------------------------------------------------------------------------------------------- Chancellor Media Corp.: 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 975,000 976,219 9% Sr. Unsec. Sub. Nts., 10/1/08 2,200,000 2,249,500 10.50% Sr. Sub. Nts., Series B, 1/15/07 450,000 474,750 - -------------------------------------------------------------------------------------------------------------------------------- Emmis Communications Corp., 8.125% Sr. Sub. Nts., 3/15/09(4) 1,500,000 1,434,375 - -------------------------------------------------------------------------------------------------------------------------------- Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(5) 400,000 414,000 - -------------------------------------------------------------------------------------------------------------------------------- Sinclair Broadcast Group, Inc., 9% Sr. Unsec. Sub. Nts., 7/15/07 885,000 878,363 - -------------------------------------------------------------------------------------------------------------------------------- Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 25,000 26,875 ------------ 7,387,382 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Cable/Wireless Video--4.7% Adelphia Communications Corp.: 7.875% Sr. Unsec. Nts., 5/1/09 360,000 335,700 8.125% Sr. Nts., Series B, 7/15/03 1,000,000 985,000 8.375% Sr. Nts., Series B, 2/1/08 1,000,000 967,500 9.25% Sr. Nts., 10/1/02 390,000 396,825 9.875% Sr. Nts., Series B, 3/1/07 140,000 147,000 10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 362,950 - -------------------------------------------------------------------------------------------------------------------------------- Bresnan Communications, Inc.: 0%/9.25% Sr. Disc. Nts., 2/1/09(4)(7) 810,000 530,550 8% Sr. Nts., 2/1/09(4) 250,000 248,125 - -------------------------------------------------------------------------------------------------------------------------------- Charter Communication Holdings LLC/Charter Communication Holdings Capital Corp.: 0%/9.92% Sr. Disc. Nts., 4/1/11(4)(7) 1,000,000 625,000 8.25% Sr. Nts., 4/1/07(4) 350,000 336,875 8.625% Sr. Nts., 4/1/09(4) 250,000 241,250 - -------------------------------------------------------------------------------------------------------------------------------- CSC Holdings, Inc.: 7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 952,500 9.875% Sr. Sub. Nts., 5/15/06 550,000 585,750 10.50% Sr. Sub. Debs., 5/15/16 250,000 284,063 - -------------------------------------------------------------------------------------------------------------------------------- Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(7) 500,000 146,875 - -------------------------------------------------------------------------------------------------------------------------------- EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09(4) 3,500,000 3,578,750 - -------------------------------------------------------------------------------------------------------------------------------- Falcon Holding Group LP: 0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(7) 1,300,000 916,500 8.375% Sr. Unsec. Debs., Series B, 4/15/10 2,200,000 2,183,500 - -------------------------------------------------------------------------------------------------------------------------------- Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03(3) 885,000 929,250 - -------------------------------------------------------------------------------------------------------------------------------- Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 500,000 344,583 - -------------------------------------------------------------------------------------------------------------------------------- United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(7) 1,040,000 689,000 ------------ 15,787,546 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Diversified Media--2.4% Ackerley Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 1/15/09 1,250,000 1,240,625 - -------------------------------------------------------------------------------------------------------------------------------- AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 500,000 472,500 - -------------------------------------------------------------------------------------------------------------------------------- GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(2) 446,433 426,634 - -------------------------------------------------------------------------------------------------------------------------------- IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(7)(GBP) 1,000,000 810,928 - -------------------------------------------------------------------------------------------------------------------------------- Regal Cinemas, Inc.: 8.875% Sr. Unsec. Sub. Nts., 12/15/10 750,000 693,750 9.50% Sr. Unsec. Sub. Nts., 6/1/08 750,000 705,000 10 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Diversified Media (continued) SFX Entertainment, Inc.: 9.125% Sr. Unsec. Sub. Nts., 12/1/08 $ 900,000 $ 877,500 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 1,800,000 1,773,000 - -------------------------------------------------------------------------------------------------------------------------------- TV Guide, Inc., 8.125% Sr. Sub. Nts., 3/1/09(4) 250,000 237,813 - -------------------------------------------------------------------------------------------------------------------------------- World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09 1,000,000 945,000 ------------ 8,182,750 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Telecommunications--18.3% Amazon.Com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(7) 2,620,000 1,722,650 - -------------------------------------------------------------------------------------------------------------------------------- COLT Telecom Group plc: 0%/12% Sr. Unsec. Disc. Nts., 12/15/06(7) 225,000 187,875 7.625% Bonds, 7/31/08(DEM) 1,925,000 1,011,211 8.875% Sr. Nts., 11/30/07(DEM) 250,000 137,548 10.125% Sr. Nts., 11/30/07(GBP) 400,000 680,142 Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase 7.8 ordinary shares)(7)(10) 1,775,000 1,482,125 - -------------------------------------------------------------------------------------------------------------------------------- Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 800,000 842,000 - -------------------------------------------------------------------------------------------------------------------------------- Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 600,000 525,750 - -------------------------------------------------------------------------------------------------------------------------------- Covad Communications Group, Inc.: 0%/13.50% Sr. Disc. Nts., 3/15/08(7) 1,500,000 832,500 12.50% Sr. Nts., 2/15/09 800,000 764,000 - -------------------------------------------------------------------------------------------------------------------------------- Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(7) 2,350,000 2,126,750 - -------------------------------------------------------------------------------------------------------------------------------- Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 400,000 403,000 - -------------------------------------------------------------------------------------------------------------------------------- e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07 500,000 392,500 - -------------------------------------------------------------------------------------------------------------------------------- Exodus Communications, Inc.: 11.25% Sr. Nts., 7/1/08(4) 600,000 633,000 11.25% Sr. Nts., 7/1/08 715,000 754,325 - -------------------------------------------------------------------------------------------------------------------------------- FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(2)(7) 500,000 262,500 - -------------------------------------------------------------------------------------------------------------------------------- Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(7) 810,000 457,650 - -------------------------------------------------------------------------------------------------------------------------------- Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 950,000 973,750 - -------------------------------------------------------------------------------------------------------------------------------- Globix Corp., 13% Sr. Unsec. Nts., 5/1/05(2) 1,000,000 960,000 - -------------------------------------------------------------------------------------------------------------------------------- GST Telecommunications, Inc.: 0%/12.75% Sr. Sub. Nts., 11/15/07(7) 1,250,000 1,331,250 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(4)(7) 178,000 241,413 - -------------------------------------------------------------------------------------------------------------------------------- GST Telecommunications, Inc./GST Network Funding Corp., Inc., 0%/10.50% Sr. Disc. Nts., 5/1/08(4)(7) 350,000 199,500 - -------------------------------------------------------------------------------------------------------------------------------- Hyperion Telecommunication, Inc., 12% Sr. Sub. Nts., 11/1/07(4) 1,200,000 1,233,000 - -------------------------------------------------------------------------------------------------------------------------------- ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(7) 115,000 90,275 - -------------------------------------------------------------------------------------------------------------------------------- ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(7) 1,220,000 701,500 - -------------------------------------------------------------------------------------------------------------------------------- Intermedia Communications, Inc.: 0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(7) 800,000 448,000 8.50% Sr. Nts., Series B, 1/15/08 660,000 607,200 8.60% Sr. Unsec. Nts., Series B, 6/1/08 300,000 277,500 8.875% Sr. Nts., 11/1/07 460,000 433,550 - -------------------------------------------------------------------------------------------------------------------------------- ITC Deltacom, Inc.: 8.875% Sr. Nts., 3/1/08 750,000 818,438 11% Sr. Nts., 6/1/07 1,000,000 993,750 Oppenheimer High Income Fund/VA 11 Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Telecommunications (continued) - -------------------------------------------------------------------------------------------------------------------------------- KMC Telecom Holdings, Inc.: 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(2)(7) $ 2,455,000 $ 1,362,525 13.50% Sr. Nts., 5/15/09(4) 200,000 201,250 - -------------------------------------------------------------------------------------------------------------------------------- Level 3 Communications, Inc.: 0%/10.50% Sr. Disc. Nts., 12/1/08(7) 1,250,000 775,000 9.125% Sr. Unsec. Nts., 5/1/08 250,000 246,875 - -------------------------------------------------------------------------------------------------------------------------------- McLeodUSA, Inc., 8.125% Sr. Nts., 2/15/09(4) 300,000 279,000 - -------------------------------------------------------------------------------------------------------------------------------- Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08 1,600,000 1,652,000 - -------------------------------------------------------------------------------------------------------------------------------- Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(7)(DEM) 700,000 230,686 - -------------------------------------------------------------------------------------------------------------------------------- Netia Holdings II BV, 13.125% Sr. Nts., 6/15/09(4) 500,000 505,000 - -------------------------------------------------------------------------------------------------------------------------------- NEXTLINK Communications, Inc.: 0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(7) 200,000 120,000 9% Sr. Nts., 3/15/08 800,000 756,000 9.625% Sr. Nts., 10/1/07 1,210,000 1,182,775 10.75% Sr. Unsec. Nts., 6/1/09 250,000 257,500 10.75% Sr. Unsec. Nts., 11/15/08 1,200,000 1,233,000 - -------------------------------------------------------------------------------------------------------------------------------- NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08 750,000 780,000 - -------------------------------------------------------------------------------------------------------------------------------- NTL, Inc.: 0%/9.75% Sr. Nts., 4/15/09(7)(GBP) 3,225,000 3,018,368 0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(7) 350,000 241,500 0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(7) 500,000 343,750 7% Cv. Sub. Nts., 12/15/08(4) 2,250,000 3,585,938 10% Sr. Nts., Series B, 2/15/07 1,055,000 1,097,200 11.50% Sr. Unsec. Nts., Series B, 10/1/08 1,600,000 1,770,000 - -------------------------------------------------------------------------------------------------------------------------------- Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 1,800,000 1,377,000 - -------------------------------------------------------------------------------------------------------------------------------- Petersburg Long Distance, Inc., 9% Cv. Sub. Nts., 6/1/06(4) 170,000 94,563 - -------------------------------------------------------------------------------------------------------------------------------- PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 2,170,000 2,191,700 - -------------------------------------------------------------------------------------------------------------------------------- Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts., 10/15/07(7) 1,000,000 785,000 - -------------------------------------------------------------------------------------------------------------------------------- RSL Communications plc: 9.125% Sr. Unsec. Nts., 3/1/08 500,000 463,750 10.50% Gtd. Sr. Nts., 11/15/08 1,450,000 1,442,750 - -------------------------------------------------------------------------------------------------------------------------------- Tele1 Europe BV, Units (each unit consists of $1,000 principal amount of 13% sr. nts., 5/15/09 and one warrant to purchase 40.403 shares of common stock)(4)(10) 500,000 521,250 - -------------------------------------------------------------------------------------------------------------------------------- Telewest Communications plc: 0%/9.25% Sr. Nts., 4/15/09(4)(7) 1,500,000 1,006,875 0%/9.875% Sr. Nts., 4/15/09(4)(7)(GBP) 1,300,000 1,352,465 0%/11% Sr. Disc. Debs., 10/1/07(7) 990,000 886,050 11.25% Sr. Nts., 11/1/08 1,990,000 2,243,725 - -------------------------------------------------------------------------------------------------------------------------------- Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 1,300,000 1,339,000 - -------------------------------------------------------------------------------------------------------------------------------- US Xchange LLC, 15% Sr. Unsec. Nts., 7/1/08(2) 800,000 836,000 - -------------------------------------------------------------------------------------------------------------------------------- Verio, Inc.: 10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,513,300 11.25% Sr. Nts., 12/1/08 500,000 526,250 13.50% Sr. Unsec. Nts., 6/15/04 385,000 433,125 - -------------------------------------------------------------------------------------------------------------------------------- Viatel, Inc.: 0%/12.50% Sr. Unsec. Disc. Nts., 4/15/08(7) 765,000 493,425 11.25% Sr. Sec. Nts., 4/15/08 830,000 850,750 - -------------------------------------------------------------------------------------------------------------------------------- WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(2)(7) 1,750,000 1,067,500 ------------ 61,587,497 12 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Wireless Communications--6.5% Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 $ 200,000 $ 173,000 - -------------------------------------------------------------------------------------------------------------------------------- CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(7) 1,834,000 779,450 - -------------------------------------------------------------------------------------------------------------------------------- Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08(4) 800,000 830,000 - -------------------------------------------------------------------------------------------------------------------------------- Crown Castle International Corp.: 0%/10.375% Sr. Disc. Nts., 5/15/11(7) 400,000 234,000 0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(7) 940,000 658,000 9% Sr. Nts., 5/15/11 750,000 738,750 - -------------------------------------------------------------------------------------------------------------------------------- CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(7) 1,000,000 487,500 - -------------------------------------------------------------------------------------------------------------------------------- Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 240,000 255,600 - -------------------------------------------------------------------------------------------------------------------------------- Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(6)(7) 226,000 96,050 - -------------------------------------------------------------------------------------------------------------------------------- ICO Global Communications (Holdings) Ltd., Units (each unit consists of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to purchase 19.85 shares of common stock)(10) 700,000 290,500 - -------------------------------------------------------------------------------------------------------------------------------- Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 250,000 218,125 - -------------------------------------------------------------------------------------------------------------------------------- Microcell Telecommunications, Inc.: 0%/12% Sr. Disc. Nts., 6/1/09(4)(7) 1,000,000 575,000 0%/14% Sr. Disc. Nts., Series B, 6/1/06(7) 700,000 568,750 - -------------------------------------------------------------------------------------------------------------------------------- Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(7) 300,000 222,000 - -------------------------------------------------------------------------------------------------------------------------------- Nextel Communications, Inc.: 0%/9.75% Sr. Disc. Nts., 10/31/07(7) 600,000 421,500 0%/10.65% Sr. Disc. Nts., 9/15/07(7) 900,000 659,250 - -------------------------------------------------------------------------------------------------------------------------------- Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06 2,400,000 2,460,000 - -------------------------------------------------------------------------------------------------------------------------------- Orange plc, 8% Sr. Nts., 8/1/08 2,600,000 2,496,000 - -------------------------------------------------------------------------------------------------------------------------------- ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 1,125,000 1,096,875 - -------------------------------------------------------------------------------------------------------------------------------- Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(7) 1,150,000 638,250 - -------------------------------------------------------------------------------------------------------------------------------- Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(7) 2,400,000 1,386,000 - -------------------------------------------------------------------------------------------------------------------------------- Price Communications Wireless, Inc.: 9.125% Sr. Sec. Nts., Series B, 12/15/06 800,000 812,000 11.75% Sr. Sub. Nts., 7/15/07 425,000 478,125 - -------------------------------------------------------------------------------------------------------------------------------- Real Time Data, Inc., Units (each unit consists of $1,000 principal amount of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant to purchase six ordinary shares)(2)(7)(10) 1,000,000 465,000 - -------------------------------------------------------------------------------------------------------------------------------- Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,900,000 1,919,000 - -------------------------------------------------------------------------------------------------------------------------------- SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(7) 2,720,000 1,577,600 - -------------------------------------------------------------------------------------------------------------------------------- Spectrasite Holdings, Inc.: 0%/11.25% Sr. Disc. Nts., 4/15/09(4)(7) 675,000 381,375 0%/12% Sr. Disc. Nts., 7/15/08(4)(7) 1,640,000 1,041,400 ------------ 21,959,100 - -------------------------------------------------------------------------------------------------------------------------------- Metals/Minerals--2.6% AK Steel Corp.: 7.875% Sr. Nts., 2/15/09(4) 1,250,000 1,206,250 9.125% Sr. Nts., 12/15/06 1,200,000 1,242,000 - -------------------------------------------------------------------------------------------------------------------------------- Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 320,000 331,600 - -------------------------------------------------------------------------------------------------------------------------------- California Steel Industries Corp., 8.50% Sr. Nts., 4/1/09(4) 500,000 489,375 - -------------------------------------------------------------------------------------------------------------------------------- Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,470,000 - -------------------------------------------------------------------------------------------------------------------------------- International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 403,000 Oppenheimer High Income Fund/VA 13 Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Metals/Minerals (continued) Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 $ 410,000 $ 420,250 - -------------------------------------------------------------------------------------------------------------------------------- Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(7) 2,000,000 770,000 - -------------------------------------------------------------------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07 540,000 521,100 - -------------------------------------------------------------------------------------------------------------------------------- National Steel Corp.: 9.875% First Mtg. Bonds, Series D, 3/1/09 400,000 409,000 9.875% Nts., Series B, 3/1/09(4) 200,000 204,500 - -------------------------------------------------------------------------------------------------------------------------------- Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 1,400,000 1,459,500 ------------ 8,926,575 - -------------------------------------------------------------------------------------------------------------------------------- Retail--1.3% Boyds Collection Ltd. (The), 9% Sr. Sub. Nts., 5/15/08(4) 752,000 746,360 - -------------------------------------------------------------------------------------------------------------------------------- Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 1,100,000 962,500 - -------------------------------------------------------------------------------------------------------------------------------- Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 864,000 - -------------------------------------------------------------------------------------------------------------------------------- Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 582,000 - -------------------------------------------------------------------------------------------------------------------------------- Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 1,000,000 995,000 - -------------------------------------------------------------------------------------------------------------------------------- Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 329,063 ------------ 4,478,923 - -------------------------------------------------------------------------------------------------------------------------------- Service--6.4% Allied Waste North America, Inc., 7.875% Sr. Unsec. Nts., Series B, 1/1/09 1,000,000 932,500 - -------------------------------------------------------------------------------------------------------------------------------- American Plumbing & Mechanical, Inc., 11.625% Gtd. Sr. Sub. Nts., 10/15/08(4) 500,000 485,000 - -------------------------------------------------------------------------------------------------------------------------------- Cherokee International LLC, 10.50% Sr. Sub. Nts., 5/1/09(4) 1,000,000 1,002,500 - -------------------------------------------------------------------------------------------------------------------------------- Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(7) 600,000 615,000 - -------------------------------------------------------------------------------------------------------------------------------- Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07(2) 750,000 709,688 - -------------------------------------------------------------------------------------------------------------------------------- Dura Operating Corp.: 9% Sr. Sub. Nts., 5/1/09(4) 1,300,000 1,248,000 9% Sr. Sub. Nts., 5/1/09(4)(EUR) 300,000 297,780 - -------------------------------------------------------------------------------------------------------------------------------- Fisher Scientific International, Inc.: 9% Sr. Unsec. Sub. Nts., 2/1/08 2,050,000 1,957,750 9% Sr. Unsec. Sub. Nts., 2/1/08 365,000 348,575 - -------------------------------------------------------------------------------------------------------------------------------- Formica Corp., 10.875% Sr. Sub. Nts., 3/1/09(4) 1,000,000 975,000 - -------------------------------------------------------------------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 915,000 947,025 - -------------------------------------------------------------------------------------------------------------------------------- IT Group, Inc., 11.25% Sr. Sub. Nts., 4/1/09(4) 650,000 627,250 - -------------------------------------------------------------------------------------------------------------------------------- Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 815,000 843,525 - -------------------------------------------------------------------------------------------------------------------------------- Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08(2) 1,500,000 1,350,000 - -------------------------------------------------------------------------------------------------------------------------------- Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(2) 1,500,000 1,275,000 - -------------------------------------------------------------------------------------------------------------------------------- Panolam Industries International, Inc., 11.50% Sr. Sub. Nts., 2/15/09(4) 1,000,000 1,037,500 - -------------------------------------------------------------------------------------------------------------------------------- Premier Graphics, Inc., 11.50% Sr. Unsec. Nts., 12/1/05(2) 700,000 675,500 - -------------------------------------------------------------------------------------------------------------------------------- Protection One Alarm Monitoring, Inc.: 6.75% Cv. Sr. Sub. Nts., 9/15/03 950,000 865,688 13.625% Sr. Sub. Disc. Nts., 6/30/05 400,000 449,500 - -------------------------------------------------------------------------------------------------------------------------------- Quest Diagnostic, Inc., 9.875% Sr. Sub. Nts., 7/1/09(4)(11) 1,000,000 1,012,500 - -------------------------------------------------------------------------------------------------------------------------------- Royster-Clark, Inc., 10.25% First Mtg. Nts., 4/1/09(4) 650,000 643,500 - -------------------------------------------------------------------------------------------------------------------------------- Tembec Industries, Inc., 8.625% Sr. Nts., 6/30/09 800,000 800,000 - -------------------------------------------------------------------------------------------------------------------------------- United Rentals, Inc.: 9% Nts., 4/1/09(4) 350,000 344,750 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 2,000,000 1,980,000 ------------ 21,423,531 14 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Transportation--3.7% Budget Group, Inc., 9.125% Sr. Nts., 4/1/06(4) $ 1,000,000 $ 935,000 - -------------------------------------------------------------------------------------------------------------------------------- Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 390,000 407,550 - -------------------------------------------------------------------------------------------------------------------------------- Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 600,000 652,500 - -------------------------------------------------------------------------------------------------------------------------------- HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(4) 950,000 964,250 - -------------------------------------------------------------------------------------------------------------------------------- Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 25,000 24,625 - -------------------------------------------------------------------------------------------------------------------------------- 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)(2)(10) 1,500,000 847,500 - -------------------------------------------------------------------------------------------------------------------------------- Navigator Gas Transport plc: 10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 1,175,000 581,625 Units (each unit consists of $1,000 principal amount of 12% second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(4)(10) 500,000 162,500 - -------------------------------------------------------------------------------------------------------------------------------- Oxford Automotive, Inc.: 10.125% Sr. Sub. Nts., 6/15/07(4) 600,000 603,000 10.125% Sr. Unsec. Sub. Nts., 6/15/07 1,525,000 1,532,625 - -------------------------------------------------------------------------------------------------------------------------------- Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship Mtg. Nts., 5/30/08 700,000 282,625 - -------------------------------------------------------------------------------------------------------------------------------- Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 1,485,000 - -------------------------------------------------------------------------------------------------------------------------------- Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,700,000 1,506,625 - -------------------------------------------------------------------------------------------------------------------------------- Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(7) 2,600,000 2,587,000 ------------ 12,572,425 - -------------------------------------------------------------------------------------------------------------------------------- Utility--0.8% Calpine Corp.: 8.75% Sr. Nts., 7/15/07 545,000 539,550 10.50% Sr. Nts., 5/15/06 25,000 26,750 - -------------------------------------------------------------------------------------------------------------------------------- El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(12) 555,000 615,250 - -------------------------------------------------------------------------------------------------------------------------------- ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 1,000,000 953,974 - -------------------------------------------------------------------------------------------------------------------------------- Integrated Electric Services, Inc., 9.375% Sr. Sub. Nts., 2/1/09(4) 600,000 594,000 ------------ 2,729,524 ------------ Total Corporate Bonds and Notes (Cost $293,488,822) 279,668,943 Shares ================================================================================================================================ Preferred Stocks--5.2% - -------------------------------------------------------------------------------------------------------------------------------- AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(9) 15,000 333,750 - -------------------------------------------------------------------------------------------------------------------------------- Capstar Communications, Inc., 12.625% Cum. Exchangeable, Series E, Non-Vtg.(2)(9) 1,396 162,285 - -------------------------------------------------------------------------------------------------------------------------------- CGA Group Ltd., Preferred Stock, Series A(2)(9) 76,590 1,914,750 - -------------------------------------------------------------------------------------------------------------------------------- Clark USA, Inc., 11.50% Cum. Sr. Exchangeable(9) 454 307,585 - -------------------------------------------------------------------------------------------------------------------------------- Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable Preferred Stock, Series B, Non-Vtg.(9) 568 532,500 - -------------------------------------------------------------------------------------------------------------------------------- Dobson Communications Corp.: 12.25% Sr. Exchangeable(9) 1,161 1,100,047 13% Sr. Exchangeable(4)(9) 1,000 982,500 - -------------------------------------------------------------------------------------------------------------------------------- e.spire Communications, Inc., 12.75% Jr. Redeemable Preferred Stock, Non-Vtg.(9) 412 145,230 - -------------------------------------------------------------------------------------------------------------------------------- Eagle-Picher Holdings, Inc., Cum. Exchangeable, Series B, 3/1/08, Non-Vtg.(13) 8,000 418,000 Oppenheimer High Income Fund/VA 15 Statement of Investments (Unaudited) (Continued) Market Value Shares Note 1 - -------------------------------------------------------------------------------------------------------------------------------- Preferred Stocks (continued) Fidelity Federal Bank FSB Glendale California, l2% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A(2)(13) 20 $ 465 - -------------------------------------------------------------------------------------------------------------------------------- Global Crossing Ltd., 10.50% Sr. Exchangeable Preferred, 12/1/08 10,000 1,062,500 - -------------------------------------------------------------------------------------------------------------------------------- ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg(9) 284 283,290 - -------------------------------------------------------------------------------------------------------------------------------- Intermedia Communications, Inc., 13.50% Exchangeable, Series B(9) 846 831,195 - -------------------------------------------------------------------------------------------------------------------------------- Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable Preferred Stock, Non-Vtg.(9) 6,881 273,520 - -------------------------------------------------------------------------------------------------------------------------------- Nextel Communications, Inc., 11.125% Preferred, Series E, Non-Vtg.(9) 1,218 1,221,045 - -------------------------------------------------------------------------------------------------------------------------------- NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(9) 30,000 1,522,500 - -------------------------------------------------------------------------------------------------------------------------------- Packaging Corp. of America, 12.375%, Preferred Stock(4)(9) 2,000 211,500 - -------------------------------------------------------------------------------------------------------------------------------- Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(9) 45 393,187 - -------------------------------------------------------------------------------------------------------------------------------- PRIMEDIA, Inc.: 8.625% Exchangeable, Series H, Non-Vtg. 10,000 953,750 9.20% Exchangeable, Series F, Non-Vtg. 2,500 245,312 - -------------------------------------------------------------------------------------------------------------------------------- R&B Falcon Corp., 13.875% Cum. Sr. Preferred, Units (one $1,000 sr. preferred shares and one warrant to purchase 35 shares common stock at $9.50 per share)(2)(10)(13) 1,200 1,239,000 - -------------------------------------------------------------------------------------------------------------------------------- Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(9) 1,118 1,131,975 - -------------------------------------------------------------------------------------------------------------------------------- SF Holdings Group, Inc.: 13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(9) 196 436,100 13.75% Exchangeable(4)(9) 26 57,850 - -------------------------------------------------------------------------------------------------------------------------------- Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable, Non-Vtg.(4)(9)(13) 645 701,438 - -------------------------------------------------------------------------------------------------------------------------------- Star Gas Partners, LP, Units (representing Ltd. Partnership Interests) 517 8,886 - -------------------------------------------------------------------------------------------------------------------------------- Walden Residential Properties, Inc.: 9.16% Cv., Series B, Non-Vtg.(13) 30,000 736,875 9.20% Preferred, Vtg.(13) 8,950 193,544 ------------ Total Preferred Stocks (Cost $20,350,007) 17,400,579 ================================================================================================================================ Common Stocks--0.3% - -------------------------------------------------------------------------------------------------------------------------------- Celcaribe SA(4)(13) 121,950 320,119 - -------------------------------------------------------------------------------------------------------------------------------- Coinstar, Inc.(13) 5,250 150,609 - -------------------------------------------------------------------------------------------------------------------------------- ECM Fund, L.P.I.(2) 150 132,750 - -------------------------------------------------------------------------------------------------------------------------------- Equitable Bag, Inc.(2)(13) 3,723 3,723 - -------------------------------------------------------------------------------------------------------------------------------- Gulfstream Holding, Inc.(13) 56 -- - -------------------------------------------------------------------------------------------------------------------------------- Horizon Group Properties, Inc.(13) 851 2,766 - -------------------------------------------------------------------------------------------------------------------------------- Intermedia Communications, Inc.(13) 206 6,180 - -------------------------------------------------------------------------------------------------------------------------------- Optel, Inc.(13) 945 9 - -------------------------------------------------------------------------------------------------------------------------------- Price Communications Corp.(13) 36,646 549,690 - -------------------------------------------------------------------------------------------------------------------------------- SF Holdings Group, Inc., Cl. C(13) 7,252 73 - -------------------------------------------------------------------------------------------------------------------------------- Zale Corp.(13) 650 26,000 ------------ Total Common Stocks (Cost $839,390) 1,191,919 16 Oppenheimer High Income Fund/VA Statement of Investments (Unaudited) (Continued) Market Value Units Note 1 ================================================================================================================================ Rights, Warrants and Certificates--0.8% - -------------------------------------------------------------------------------------------------------------------------------- Ames Department Stores, Inc., Litigation Trust(2) 39,658 $ 397 - -------------------------------------------------------------------------------------------------------------------------------- Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/00(2) 125 1 - -------------------------------------------------------------------------------------------------------------------------------- CellNet Data Systems, Inc. Wts., Exp. 10/07(4) 1,434 5,557 - -------------------------------------------------------------------------------------------------------------------------------- CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 18,600 - -------------------------------------------------------------------------------------------------------------------------------- Clearnet Communications, Inc. Wts., Exp. 9/05 660 5,559 - -------------------------------------------------------------------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/07(2) 750 262,594 - -------------------------------------------------------------------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/08(2) 3,200 24,400 - -------------------------------------------------------------------------------------------------------------------------------- Decrane Aircraft Holdings, Inc. Wts., Exp. 9/08 1,750 -- - -------------------------------------------------------------------------------------------------------------------------------- Diva Systems Corp. Wts., Exp. 3/08(2) 1,500 18,000 - -------------------------------------------------------------------------------------------------------------------------------- e.spire Communications, Inc. Wts., Exp. 11/05 475 27,340 - -------------------------------------------------------------------------------------------------------------------------------- FirstWorld Communications, Inc. Wts., Exp. 4/08(4) 500 25,062 - -------------------------------------------------------------------------------------------------------------------------------- Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(2) 500 2,750 - -------------------------------------------------------------------------------------------------------------------------------- Geotek Communications, Inc. Wts., Exp. 7/05(2) 52,500 525 - -------------------------------------------------------------------------------------------------------------------------------- Globix Corp. Wts., Exp. 5/05(2) 1,800 180,000 - -------------------------------------------------------------------------------------------------------------------------------- Golden State Bancorp, Inc. Wts., Exp. 1/01 15,626 20,509 - -------------------------------------------------------------------------------------------------------------------------------- Gothic Energy Corp. Wts.: Exp. 1/03 8,351 -- Exp. 1/03(2) 4,766 48 Exp. 9/04(2) 14,000 14,882 - -------------------------------------------------------------------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/05(2) 5,940 85,676 - -------------------------------------------------------------------------------------------------------------------------------- IHF Capital, Inc.: Series H Exp. 11/99(4) 250 2 Series I Wts., Exp. 11/99(2) 400 4 - -------------------------------------------------------------------------------------------------------------------------------- In-Flight Phone Corp. Wts., Exp. 8/02 950 -- - -------------------------------------------------------------------------------------------------------------------------------- Insilco Corp. Wts., Exp. 8/07(2) 765 -- - -------------------------------------------------------------------------------------------------------------------------------- KMC Telecom Holdings, Inc. Wts., Exp. 4/08(2) 2,455 6,292 - -------------------------------------------------------------------------------------------------------------------------------- Long Distance International, Inc. Wts., Exp. 4/08(2) 800 2,400 - -------------------------------------------------------------------------------------------------------------------------------- Loral Space & Communications Ltd. Wts., Exp. 1/07(2) 800 9,700 - -------------------------------------------------------------------------------------------------------------------------------- Microcell Telecommunications, Inc. Wts., Exp. 6/06(2) 3,200 48,800 - -------------------------------------------------------------------------------------------------------------------------------- Millenium Seacarriers, Inc. Wts., Exp. 7/05(2) 1,500 2,625 - -------------------------------------------------------------------------------------------------------------------------------- Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 217,031 - -------------------------------------------------------------------------------------------------------------------------------- PLD Telekom, Inc., 9% Cv. Sub. Nts. Wts., Exp. 3/03 170 8 - -------------------------------------------------------------------------------------------------------------------------------- Price Communications Corp. Wts., Exp. 8/07(2) 8,600 786,900 - -------------------------------------------------------------------------------------------------------------------------------- Protection One, Inc. Wts.: Exp. 11/03(2) 28,000 350,000 Exp. 6/05(2) 1,600 11,200 - -------------------------------------------------------------------------------------------------------------------------------- Trizec Hahn Corp. Wts., Exp. 7/99 3,970 8,584 - -------------------------------------------------------------------------------------------------------------------------------- United International Holdings, Inc. Wts., Exp. 11/99(2) 1,440 331,380 - -------------------------------------------------------------------------------------------------------------------------------- WAM!NET, Inc. Wts., Exp. 3/05(4) 5,250 117,469 ------------ Total Rights, Warrants and Certificates (Cost $277,296) 2,584,295 Oppenheimer High Income Fund/VA 17 Statement of Investments (Unaudited) (Continued) Principal Market Value Amount(1) Note 1 ================================================================================================================================ Structured Instruments--1.5% - -------------------------------------------------------------------------------------------------------------------------------- Shoshone Partners Loan Trust Sr. Nts., 6.653%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(2)(3) (Cost $5,445,451) $ 5,360,000 $ 5,081,759 ================================================================================================================================ Repurchase Agreements--4.5% - -------------------------------------------------------------------------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 4.80%, dated 6/30/99, to be repurchased at $15,202,027 on 7/1/99, collateralized by U.S. Treasury Nts., 5.50%-8%, 11/30/99-7/15/06, with a value of $12,831,859, U.S. Treasury Bonds, 6%-9.25%, 2/15/16-2/15/26, with a value of $2,687,096 (Cost $15,200,000) 15,200,000 15,200,000 - -------------------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (Cost $346,859,918) 98.5% 332,170,086 - -------------------------------------------------------------------------------------------------------------------------------- Other Assets Net of Liabilities 1.5 5,018,052 ------------- ------------ Net Assets 100.0% $337,188,138 ============= ============
1. Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP -- Argentine Peso EUR -- Euro CAD -- Canadian Dollar GBP -- British Pound Sterling DEM -- German Mark IDR -- Indonesian Rupiah 2. Identifies issues considered to be illiquid or restricted--See Note 7 of Notes to Financial Statements. 3. Represents the current interest rate for a variable 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 $60,400,810 or 17.91% of the Fund's net assets as of June 30, 1999. 5. Represents the current interest rate for an increasing rate security. 6. Non-income producing--issuer is in default. 7. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 8. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 9. Interest or dividend is paid-in-kind. 10. 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. 11. When-issued security to be delivered and settled after June 30, 1999. 12. A sufficient amount of securities has been designated to cover outstanding foreign currency exchange contracts. See Note 5 of Notes to Financial Statements. 13. Non-income producing security. See accompanying Notes to Financial Statements. 18 Oppenheimer High Income Fund/VA Statement of Assets and Liabilities June 30, 1999 (Unaudited) ===================================================================================================== Assets Investments, at value (cost $346,859,918)--see accompanying statement $332,170,086 - ----------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency exchange contracts--Note 5 158,698 - ----------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 6,370,326 Shares of beneficial interest sold 727,973 Investments sold 515,522 Closed forward foreign currency exchange contracts 124,071 Daily variation on futures contracts 9,590 Other 3,017 ------------ Total assets 340,079,283 ===================================================================================================== Liabilities Bank overdraft 3,354 - ----------------------------------------------------------------------------------------------------- Unrealized depreciation on foreign currency exchange contracts--Note 5 10,217 - ----------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $1,000,000 purchased on a when-issued basis)--Note 1 2,115,668 Shares of beneficial interest redeemed 712,392 Shareholder reports 22,090 Custodian fees 11,495 Legal, auditing and other professional fees 8,226 Daily variation on futures contracts 335 Transfer and shareholder servicing agent fees 183 Closed forward foreign currency exchange contracts 90 Other 7,095 ------------ Total liabilities 2,891,145 ===================================================================================================== Net Assets $337,188,138 ============ ===================================================================================================== Composition of Net Assets Paid-in capital $342,456,635 - ----------------------------------------------------------------------------------------------------- Undistributed net investment income 15,981,987 - ----------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (6,704,897) - ----------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (14,545,587) ------------ Net assets--applicable to 31,611,767 shares of beneficial interest outstanding $337,188,138 ============ ===================================================================================================== Net Asset Value, Redemption Price Per Share and Offering Price Per Share $10.67
See accompanying Notes to Financial Statements. Oppenheimer High Income Fund/VA 19 Statement of Operations For the Six Months Ended June 30, 1999 (Unaudited) ====================================================================================== Investment Income Interest $16,409,915 - -------------------------------------------------------------------------------------- Dividends 1,061,311 ----------- Total income 17,471,226 ====================================================================================== Expenses Management fees--Note 4 1,260,067 - -------------------------------------------------------------------------------------- Legal, auditing and other professional fees 10,388 - -------------------------------------------------------------------------------------- Custodian fees and expenses 7,256 - -------------------------------------------------------------------------------------- Shareholder reports 6,750 - -------------------------------------------------------------------------------------- Registration and filing fees 4,184 - -------------------------------------------------------------------------------------- Insurance expenses 2,042 - -------------------------------------------------------------------------------------- Trustees' compensation 1,889 - -------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 1,053 - -------------------------------------------------------------------------------------- Other 645 ----------- Total expenses 1,294,274 Less expenses paid indirectly--Note 1 (5,095) ----------- Net expenses 1,289,179 ====================================================================================== Net Investment Income 16,182,047 ====================================================================================== Realized and Unrealized Gain (Loss) Net realized gain (loss) on: Investments (2,332,456) Closing of futures contracts (327,696) Foreign currency transactions 246,182 ----------- Net realized loss (2,413,970) - -------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments (489,309) Translation of assets and liabilities denominated in foreign currencies (589,683) ----------- Net change (1,078,992) ----------- Net realized and unrealized loss (3,492,962) ====================================================================================== Net Increase in Net Assets Resulting from Operations $12,689,085 ===========
See accompanying Notes to Financial Statements. 20 Oppenheimer High Income Fund/VA Statements of Changes in Net Assets
Six Months Ended Year Ended June 30, 1999 December 31, (Unaudited) 1998 ===================================================================================================================== Operations Net investment income $ 16,182,047 $ 27,929,383 - --------------------------------------------------------------------------------------------------------------------- Net realized loss (2,413,970) (2,889,367) - --------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation (1,078,992) (24,125,468) ------------ ------------ Net increase in net assets resulting from operations 12,689,085 914,548 ===================================================================================================================== Dividends and Distributions to Shareholders Dividends from net investment income (23,246,834) (6,694,100) - --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain -- (8,113,249) ===================================================================================================================== Beneficial Interest Transactions Net increase in net assets resulting from beneficial interest transactions--Note 2 19,183,230 51,132,667 ===================================================================================================================== Net Assets Total increase 8,625,481 37,239,866 - --------------------------------------------------------------------------------------------------------------------- Beginning of period 328,562,657 291,322,791 ------------ ------------ End of period (including undistributed net investment income of $15,981,987 and $23,046,774, respectively) $337,188,138 $328,562,657 ============ ============
See accompanying Notes to Financial Statements. Oppenheimer High Income Fund/VA 21 Financial Highlights
Six Months Ended June 30, 1999 Year Ended December 31, (Unaudited) 1998 1997 1996 1995 1994 =============================================================================================================================== Per Share Operating Data Net asset value, beginning of period $11.02 $11.52 $11.13 $10.63 $ 9.79 $11.02 - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .49 .95 .94 .97 .98 .94 Net realized and unrealized gain (loss) (.09) (.90) .37 .58 .94 (1.27) - ------------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations .40 .05 1.31 1.55 1.92 (.33) - ------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.75) (.25) (.91) (1.05) (1.08) (.66) Distributions from net realized gain -- (.30) (.01) -- -- (.24) - ------------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (.75) (.55) (.92) (1.05) (1.08) (.90) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.67 $11.02 $11.52 $11.13 $10.63 $9.79 ======= ======= ======= ======= ======= ======= =============================================================================================================================== Total Return, at Net Asset Value(1) 3.80% 0.31% 12.21% 15.26% 20.37% (3.18)% =============================================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $337,188 $328,563 $291,323 $191,293 $133,451 $ 95,698 - ------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $344,623 $322,748 $223,617 $157,203 $115,600 $101,096 - ------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 9.47% 8.65% 8.88% 9.18% 9.81% 9.15% Expenses(3) 0.75% 0.78% 0.82% 0.81% 0.81% 0.67% - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(4) 19% 161% 168% 125% 107% 110%
1. Assumes a $1,000 hypothetical 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. 2. Annualized for periods less than one full year. 3. Beginning in fiscal 1995, the expense ratio reflects the effect of expenses paid indirectly by the Fund. Prior year expense ratios have not been adjusted. 4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended June 30, 1999, were $88,652,672 and $58,075,066, respectively. See accompanying Notes to Financial Statements. 22 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), a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund operated under the name Oppenheimer High Income Fund through April 30, 1999. The Fund's investment objective seeks 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 following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- Securities Valuation. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Foreign currency exchange contracts are valued based on the closing prices of the foreign currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. - -------------------------------------------------------------------------------- Securities Purchased on a When-Issued Basis. Delivery and payment for securities that have been purchased by the Fund on a forward commitment or when-issued basis can take place a month or more after the transaction date. Normally the settlement date occurs within six months after the transaction date; however, the fund may, from time to time, purchase securities whose settlement date extends beyond six months and possibly as long as two years or more beyond 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 Fund maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Fund's net asset value to the extent the Fund makes such purchases while remaining substantially fully invested. As of June 30, 1999, the Fund had entered into outstanding when-issued or forward commitments of $1,000,000. In connection with its ability to purchase securities on a when-issued or forward commitment basis, the Fund may enter into mortgage dollar-rolls in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Fund records each dollar-roll as a sale and a new purchase transaction. - -------------------------------------------------------------------------------- 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, 1999, securities with an aggregate market value of $1,092,839, representing 0.32% 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. 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. Oppenheimer High Income Fund/VA 23 Notes to Financial Statements (Unaudited) (Continued) ================================================================================ 1. Significant Accounting Policies (continued) Repurchase Agreements. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- 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 loss carryovers, to shareholders. As of December 31, 1998, the Fund had available for federal income tax purposes an unused capital loss carryover of approximately $3,402,000, expiring in 2006. - -------------------------------------------------------------------------------- Distributions to Shareholders. Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- Classification of 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 distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. - -------------------------------------------------------------------------------- Expense Offset Arrangements. Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Fund. - -------------------------------------------------------------------------------- Other. Investment transactions are accounted for as of trade date and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and options written and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles 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 no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
Six Months Ended June 30, 1999 Year Ended December 31, 1998 ------------------------------ ------------------------------- Shares Amount Shares Amount - ------------------------------------------------------------------------------------------------------------------------------- Sold 6,950,070 $ 76,291,148 15,303,847 $ 171,699,925 Dividends and distributions reinvested 2,201,405 23,246,834 1,300,031 14,807,349 Redeemed (7,346,627) (80,354,752) (12,094,532) (135,374,607) ---------- ------------ ----------- ------------- Net increase 1,804,848 $ 19,183,230 4,509,346 $ 51,132,667 ========== ============ =========== =============
24 Oppenheimer High Income Fund/VA Notes to Financial Statements (Unaudited) (Continued) ================================================================================ 3. Unrealized Gains and Losses on Securities As of June 30, 1999, net unrealized depreciation on investments of $14,689,832 was composed of gross appreciation of $7,382,597, and gross depreciation of $22,072,429. ================================================================================ 4. Management Fees and Other Transactions with Affiliates Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund provides for a fee of 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% of 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, 1999, was 0.74% of average annual net assets. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer agent for the Fund and is responsible for maintaining the shareholder registry and shareholder accounting records for the Fund. OFS provides these services at cost. ================================================================================ 5. Foreign Currency Contracts A foreign currency exchange 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 exchange contracts for operational purposes and to seek to protect against adverse exchange rate fluctuation. 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. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. Securities denominated in foreign currency to cover net exposure on outstanding foreign currency contracts are noted in the Statement of Investments where applicable. As of June 30, 1999, the Fund had outstanding foreign currency contracts as follows:
Expiration Contract Valuation as of Unrealized Unrealized Contract Description Dates Amounts (000s) June 30, 1999 Appreciation Depreciation - ------------------------------------------------------------------------------------------------------------------------------ Contracts to Sell - ----------------- British Pound Sterling (GBP) 7/15/99 44,800 GBP 7,062,475 $157,370 $ -- Canadian Dollar (CAD) 7/15/99 5,400 CAD 364,932 -- 10,217 Euro (EUR) 12/1/99 8,100 EUR 845,100 1,328 -- -------- ------- Total Unrealized Appreciation and Depreciation $158,698 $10,217 ======== =======
Oppenheimer High Income Fund/VA 25 Notes to Financial Statements (Unaudited) (Continued) ================================================================================ 6. Futures Contracts The Fund may buy and sell futures contracts in order to gain exposure to or to seek to protect against changes in interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Fund may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. 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. The Fund may recognize a realized gain or loss when the contract is closed or expires. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. ================================================================================ 7. Illiquid or Restricted Securities As of June 30, 1999, 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, 1999 was $31,369,248, which represents 9.30% of the Fund's net assets, of which $3,506,369 is considered restricted. Information concerning restricted securities is as follows:
Valuation Per Acquisition Cost Per Unit as of Security Dates Unit June 30, 1999 - ----------------------------------------------------------------------------------------------------------------------- Bonds - ----- ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.00% 102.25% TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95- 100.00- 8/13/96 105.75 116.10 Trans World Airlines Lease, 14% Equipment Trust, 7/2/08. 3/19/98 101.00 99.00 Stocks and Warrants - ------------------- CGA Group Ltd., Preferred Stock, Series A 6/17/98- 12/29/98 $ 25.00 $ 25.00 CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .03 ECM Fund, L.P.I. 4/14/92 1,000.00 885.00 Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 28.94
26 Oppenheimer High Income Fund/VA Oppenheimer High Income Fund/VA A Series of Oppenheimer Variable Account Funds ======================================================================================= Officers and Trustees James C. Swain, Chairman and Chief Executive Officer Bridget A. Macaskill, President Robert G. Avis, Trustee William A. Baker, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee David P. Negri, Vice President Thomas P. Reedy, Vice President Andrew J. Donohue, Vice President and Secretary Brian W. Wixted, Vice President and Treasurer Robert G. Zack, Assistant Secretary Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer ======================================================================================= Investment Advisor OppenheimerFunds, Inc. ======================================================================================= Transfer Agent OppenheimerFunds Services ======================================================================================= Custodian of Portfolio Securities The Bank of New York ======================================================================================= 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 the independent auditors. This is a copy of a report to shareholders of Oppenheimer High Income Fund/VA. This report must be preceded or accompanied by a Prospectus of Oppenheimer High Income Fund/VA. For material information concerning the Fund, see the Prospectus. 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.
Oppenheimer High Income Fund/VA 27 -----END PRIVACY-ENHANCED MESSAGE-----