N-30D 1 high_income.txt [GRAPHIC] Semiannual Report June 30, 2001 Oppenheimer High Income Fund/VA A Series of Oppenheimer Variable Account Funds [LOGO] Oppenheimer Funds(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 by investing in high yield, high risk fixed income securities both in the U.S. and abroad, including unrated securities ("junk" bonds) or securities in the lower rating categories. These securities may be considered 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 Tom Reedy, Portfolio Manager After a tumultuous 2000, both the high yield bond market and Oppenheimer High Income Fund/VA showed signs of improvement during the six months ended June 30, 2001, with the Fund producing a cumulative total return of 1.97%.(1) At the start of the six-month period, yields on non-investment-grade bonds stood at very high levels, reflecting broad concerns about whether, in a flagging economy, less-creditworthy businesses might default on their debts. Then, in January, the Federal Reserve (the Fed) twice cut the federal funds interest rate by 0.5% in an attempt to stimulate economic growth. Bond prices rallied dramatically that month, especially in the downtrodden high yield sector. Despite three additional 0.5% reductions by the Fed, the direction of the economy remained uncertain, and investors continued to anticipate higher default rates for lower rated bonds. Default rates, which had hovered at 1%-2% in the mid-1990s and approached 4% in 1999, have since accelerated to over 6%. To make matters worse, the recovery rate, or the amount investors receive as repayment of principal on defaulted bonds, has fallen from an historic, long-term average of more than 30 cents to approximately 20 cents. Much of this can be attributed to problems in raising capital for the telecommunications sector. Together, rising default rates and declining recovery rates caused investors to demand higher yields for lower rated bonds as the period progressed. As yields rose, prices receded from their January highs. Nonetheless, the high yield market as a whole finished the period in positive territory; rich yields compensated for the price depreciation in many cases, especially among BB-rated securities. For B-rated (or "single-B") securities, results were less favorable. Much of this group comprises securities issued by telecommunications companies still in the capital-intensive process of building out the infrastructure for the Internet and wireless communications. As investors have grown increasingly wary of this industry, a fair number of these single-B companies have found it more difficult to obtain capital to finish their buildouts and complete the transition to revenue-generating businesses. The general malaise surrounding these companies infected many other single-B securities during the period. As a result, yields on B-rated securities were approximately 4% higher than those of BB-rated issues. In reviewing performance, please remember that past performance cannot guarantee future results. Because of ongoing market volatility, the Fund's performance may be subject to fluctuations, and current performance may be less than the results shown. (1) Includes changes in net asset value per share and reinvestment of dividends and capital gains distributions 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. 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. 2 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Oppenheimer Variable Account Funds--Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- ================================================================================ Anticipating that the Fed would cut interest rates and thereby give the high yield market a boost, we positioned the portfolio somewhat aggressively, with an above-average weighting in B-rated securities (2) We believed that, because they are more economically sensitive, these lower rated issues would show more dramatic improvements in a resurgent economy. We looked for companies that were facing default risk not in 2001 but in 2002 or 2003. We felt that, by that time, the U.S. economy could have regained its forward momentum, making it easier for lower rated companies to access capital. In the meantime, their high coupons would have made a major contribution to the portfolio's current yield. As it was, the portfolio's single-B telecommunications holdings did provide very strong yields that were offset by price depreciation. In contrast, the energy bonds in the portfolio generated both high yields and price gains, reflecting improving fundamentals for the entire oil and gas sector. We believe that high yield default rates will continue to climb in 2001, then show signs of improvement in 2002 as the Fed's aggressive easing of monetary policy rekindles faster economic growth. For this reason, we are maintaining the portfolio's slight tilt toward economically sensitive single-B and telecommunications issues. In particular, we favor wireless infrastructure companies that construct and operate the towers where cellular transmitters are located. This more mature sector of telecommunications has withstood the economic slowdown better than the wireline portion and may do better yet when the economy regains speed. In the meantime, we will continue to seek out selective opportunities in the high yield market, which is just one of the reasons why Oppenheimer High Income Fund/VA remains an important part of The Right Way to Invest. (2) The Fund's portfolio is subject to change. Oppenheimer High Income Fund/VA 3 -------------------------------------------------------------------------------- Statement of Investments June 30, 2001 (Unaudited) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 ==================================================================================================================== Corporate Loans--0.3% -------------------------------------------------------------------------------------------------------------------- Telergy, Inc., Sr. Sec. Credit Facilities Term Loan, Tranche A, 11.02%, 12/22/01(1)(2) (Cost $1,007,944) $1,015,625 $ 1,015,625 ==================================================================================================================== Mortgage-Backed Obligations--1.6% -------------------------------------------------------------------------------------------------------------------- AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg Pass-Through Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(3) 200,000 158,930 -------------------------------------------------------------------------------------------------------------------- Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1997-D4, Cl. B1, 7.525%, 4/14/29(2) 167,000 132,335 Series 1997-D4, Cl. B2, 7.525%, 4/14/29(2) 167,000 128,029 Series 1997-D4, Cl. B3, 7.525%, 4/14/29(2) 166,000 118,327 -------------------------------------------------------------------------------------------------------------------- CBA Mortgage Corp., Commercial Mtg. Pass-Through Certificates: Series 1993-C1, Cl. E, 6.72%, 12/25/03(2)(3) 250,000 247,383 Series 1993-C1, Cl. F, 6.72%, 12/25/03(2)(3) 700,000 622,125 -------------------------------------------------------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates: Series 1997-CHL1, Cl. D, 8.11%, 5/25/08(2)(3) 300,000 252,844 Series 1997-CHL1, Cl. E, 8.11%, 2/25/11(2)(3) 1,500,000 1,104,375 -------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-C1, Cl. E, 7.441%, 3/15/06(1)(2) 835,342 761,195 -------------------------------------------------------------------------------------------------------------------- Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(3) 254,890 220,440 -------------------------------------------------------------------------------------------------------------------- Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates: Series 1994-C1, Cl. E, 8%, 6/25/26 588,534 581,452 Series 1995-C1, Cl. F, 6.90%, 2/25/27 292,088 273,855 -------------------------------------------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg Pass-Through Certificates, Series 1996-B, Cl. 1, 7.136%, 4/25/26(3) 1,353,319 947,323 ----------- Total Mortgage-Backed Obligations (Cost $5,664,727) 5,548,613 ==================================================================================================================== Loan Participations--1.0% -------------------------------------------------------------------------------------------------------------------- Shoshone Partners Loan Trust Sr. Nts., 6.064%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(1)(2) (Cost $5,373,847) 5,360,000 3,419,695 ==================================================================================================================== Corporate Bonds and Notes--82.7% -------------------------------------------------------------------------------------------------------------------- Aerospace/Defense--1.4% Alliant Techsystems, Inc., 8.50% Sr. Sub. Nts., 5/15/11(3) 900,000 913,500 -------------------------------------------------------------------------------------------------------------------- BE Aerospace, Inc.: 8.875% Sr. Sub. Nts., 5/1/11(3) 800,000 796,000 9.50% Sr. Unsec. Sub. Nts., 11/1/08 700,000 714,000 -------------------------------------------------------------------------------------------------------------------- Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts., Series B, 9/30/08 1,750,000 1,673,437 -------------------------------------------------------------------------------------------------------------------- Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 1,000,000 817,500 ----------- 4,914,437
4 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Chemicals--3.7% Avecia Group plc, 11% Sr. Unsec. Nts., 7/1/09 $ 800,000 $ 800,000 -------------------------------------------------------------------------------------------------------------------- ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07(1) 250,000 97,500 -------------------------------------------------------------------------------------------------------------------- Georgia Gulf Corp., 10.375% Sr. Unsec. Sub. Nts., 11/1/07 500,000 512,500 -------------------------------------------------------------------------------------------------------------------- Huntsman Corp./ICI Chemical Co. plc: 10.125% Sr. Unsec. Sub. Nts., 7/1/09 600,000 594,000 10.125% Sr. Unsec. Sub. Nts., 7/1/09EUR 500,000 421,183 Zero Coupon Sr. Unsec. Disc. Nts., 13.09%, 12/31/09(4) 800,000 246,000 -------------------------------------------------------------------------------------------------------------------- ISP Chemco, Inc., 10.25% Sr. Sub. Nts., 7/1/11(3) 2,000,000 2,010,000 -------------------------------------------------------------------------------------------------------------------- Lyondell Chemical Co.: 9.625% Sr. Sec. Nts., Series A, 5/1/07 750,000 748,125 9.875% Sec. Nts., Series B, 5/1/07 600,000 597,000 10.875% Sr. Sub. Nts., 5/1/09 100,000 98,500 -------------------------------------------------------------------------------------------------------------------- MacDermid, Inc., 9.125% Sr. Sub. Nts., 7/15/11(3) 1,750,000 1,767,500 -------------------------------------------------------------------------------------------------------------------- Messer Griesheim Holding AG, 10.375% Sr. Nts., 6/1/11(1)EUR 750,000 655,586 -------------------------------------------------------------------------------------------------------------------- Millennium America, Inc., 9.25% Sr. Nts., 6/15/08(3) 750,000 750,000 -------------------------------------------------------------------------------------------------------------------- PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07(5)(6) 500,000 245,000 -------------------------------------------------------------------------------------------------------------------- Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(5)(6) 700,000 224,000 -------------------------------------------------------------------------------------------------------------------- PMD Group, Inc., 11% Sr. Sub. Nts., 2/28/11(3) 1,200,000 1,224,000 -------------------------------------------------------------------------------------------------------------------- Polymer Group, Inc.: 8.75% Sr. Sub. Nts., 3/1/08 1,500,000 562,500 9% Sr. Unsec. Sub. Nts., Series B, 7/1/07 1,000,000 375,000 -------------------------------------------------------------------------------------------------------------------- Sterling Chemicals, Inc.: 11.25% Sr. Sub. Nts., Series A, 4/1/07(5) 200,000 49,000 11.75% Sr. Unsec. Sub. Nts., 8/15/06(5) 300,000 73,500 12.375% Sr. Sec. Nts., Series B, 7/15/06(5) 800,000 628,000 ----------- 12,678,894 -------------------------------------------------------------------------------------------------------------------- Consumer Non-Durables--1.9% AKI Holdings Corp., 0%/13.50% Sr. Disc. Debs., 7/1/09(7) 1,080,000 556,200 -------------------------------------------------------------------------------------------------------------------- AKI, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 1,000,000 960,000 -------------------------------------------------------------------------------------------------------------------- Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 752,000 759,520 -------------------------------------------------------------------------------------------------------------------- Galey & Lord, Inc., 9.125% Sr. Unsec. Sub. Nts., 3/1/08 700,000 318,500 -------------------------------------------------------------------------------------------------------------------- Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08(1)(5)(6) 900,000 -- -------------------------------------------------------------------------------------------------------------------- Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 155,125 -------------------------------------------------------------------------------------------------------------------- Levi Strauss & Co., 11.625% Sr. Unsec. Nts., 1/15/08 900,000 814,500 -------------------------------------------------------------------------------------------------------------------- Playtex Products, Inc., 9.375% Sr. Sub. Nts., 6/1/11(3) 1,000,000 1,022,500 -------------------------------------------------------------------------------------------------------------------- Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06 1,300,000 936,000 -------------------------------------------------------------------------------------------------------------------- Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 1,000,000 1,000,000 -------------------------------------------------------------------------------------------------------------------- Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(1)(5)(6) 600,000 60 ----------- 6,522,405
Oppenheimer High Income Fund/VA 5 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Energy--4.9% AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(3)(5)(6) $ 750,000 $ 264,375 -------------------------------------------------------------------------------------------------------------------- Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 500,000 410,000 -------------------------------------------------------------------------------------------------------------------- BRL Universal Equipment Corp., 8.875% Sr. Sec. Nts., 2/15/08 500,000 512,500 -------------------------------------------------------------------------------------------------------------------- Clark Refining & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 500,000 382,500 -------------------------------------------------------------------------------------------------------------------- Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 800,000 780,000 -------------------------------------------------------------------------------------------------------------------- Dresser, Inc., 9.375% Sr. Sub. Nts., 4/15/11(3) 500,000 508,750 -------------------------------------------------------------------------------------------------------------------- El Paso Energy Partners LP, 8.50% Sr. Unsec. Sub. Nts., 6/1/11(3) 1,000,000 1,005,000 -------------------------------------------------------------------------------------------------------------------- Empresa Electrica del Norte Grande SA, 10.50% Sr. Debs., 6/15/05(3) 1,000,000 282,500 -------------------------------------------------------------------------------------------------------------------- Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 800,000 860,000 -------------------------------------------------------------------------------------------------------------------- Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08(1) 1,025,000 722,625 -------------------------------------------------------------------------------------------------------------------- Leviathan Gas Pipeline Partners LP/Leviathan Finance Corp., 10.375% Sr. Unsec. Sub. Nts., Series B, 6/1/09 500,000 535,000 -------------------------------------------------------------------------------------------------------------------- Lone Star Technologies, Inc., 9% Sr. Sub. Nts., 6/1/11(3) 1,000,000 970,000 -------------------------------------------------------------------------------------------------------------------- Nuevo Energy Co., 9.375% Sr. Unsec. Sub. Nts., Series B, 10/1/10 700,000 707,000 -------------------------------------------------------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,600,000 1,452,000 -------------------------------------------------------------------------------------------------------------------- P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 645,000 683,700 -------------------------------------------------------------------------------------------------------------------- Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 800,000 812,000 -------------------------------------------------------------------------------------------------------------------- RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 2,000,000 1,845,000 -------------------------------------------------------------------------------------------------------------------- SESI LLC, 8.875% Sr. Unsec. Nts., 5/15/11(3) 1,500,000 1,511,250 -------------------------------------------------------------------------------------------------------------------- Statia Terminals International NV/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts., Series B, 11/15/03(1) 225,000 232,875 -------------------------------------------------------------------------------------------------------------------- Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 735,000 753,375 -------------------------------------------------------------------------------------------------------------------- Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(7) 2,000,000 1,830,000 ----------- 17,060,450 -------------------------------------------------------------------------------------------------------------------- Financial--2.6% AmeriCredit Corp., 9.875% Gtd. Sr. Nts., 4/15/06 800,000 808,000 -------------------------------------------------------------------------------------------------------------------- AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05(5) 900,000 508,500 -------------------------------------------------------------------------------------------------------------------- Bank Plus Corp., 12% Sr. Nts., 7/18/07(1) 517,000 553,190 -------------------------------------------------------------------------------------------------------------------- Conseco, Inc., 10.75% Sr. Unsec. Nts., 6/15/08 1,600,000 1,576,000 -------------------------------------------------------------------------------------------------------------------- Finova Capital Corp., 7.25% Sr. Unsec. Nts., 11/8/04(5) 1,400,000 1,301,663 -------------------------------------------------------------------------------------------------------------------- LaBranche & Co., Inc., 12% Sr. Unsec. Sub. Nts., 3/2/07 600,000 672,000 -------------------------------------------------------------------------------------------------------------------- Local Financial Corp., 11% Sr. Nts., 9/8/04(1) 800,000 804,000 -------------------------------------------------------------------------------------------------------------------- Metris Cos., Inc., 10.125% Sr. Unsec. Nts., 7/15/06 1,000,000 955,000 -------------------------------------------------------------------------------------------------------------------- Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27(1) 450,000 362,250 -------------------------------------------------------------------------------------------------------------------- Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 1,500,000 1,464,375 ----------- 9,004,978 -------------------------------------------------------------------------------------------------------------------- Food & Drug--1.1% Family Restaurants, Inc.: 9.75% Sr. Nts., 2/1/02(1)(5)(6) 1,300,000 82,875 10.875% Sr. Sub. Disc. Nts., 2/1/04(1)(5) 100,000 4,375 -------------------------------------------------------------------------------------------------------------------- Fleming Cos., Inc.: 10.125% Sr. Nts., 4/1/08(3) 800,000 824,000 10.625% Sr. Sub. Nts., Series B, 7/31/07 600,000 618,000 -------------------------------------------------------------------------------------------------------------------- Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 316,875 -------------------------------------------------------------------------------------------------------------------- Rite Aid Corp., 11.25% Sr. Nts., 7/1/08(3) 1,800,000 1,824,750 ----------- 3,670,875
6 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Food/Tobacco--1.8% Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 $ 700,000 $ 598,500 -------------------------------------------------------------------------------------------------------------------- Del Monte Corp., 9.25% Sr. Sub. Nts., 5/15/11(3) 1,000,000 1,025,000 -------------------------------------------------------------------------------------------------------------------- Doane Pet Care Co., 9.75% Sr. Unsec. Sub. Nts., 5/15/07 500,000 343,125 -------------------------------------------------------------------------------------------------------------------- Michael Foods, Inc., 11.75% Sr. Sub. Nts., 4/1/11(3) 400,000 412,000 -------------------------------------------------------------------------------------------------------------------- Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 1,300,000 1,001,000 -------------------------------------------------------------------------------------------------------------------- SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 906,500 -------------------------------------------------------------------------------------------------------------------- Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07(1) 1,175,000 910,625 -------------------------------------------------------------------------------------------------------------------- United Biscuits Finance plc, 10.625% Sr. Sub. Nts., 4/15/11(3)EUR 1,000,000 903,746 ----------- 6,100,496 -------------------------------------------------------------------------------------------------------------------- Forest Products/Containers--3.1% American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(1)(5)(6) 200,000 4,000 -------------------------------------------------------------------------------------------------------------------- Ball Corp.: 7.75% Sr. Unsec. Nts., 8/1/06 700,000 713,125 8.25% Sr. Unsec. Sub. Nts., 8/1/08 800,000 814,000 -------------------------------------------------------------------------------------------------------------------- Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04 2,000,000 1,240,000 -------------------------------------------------------------------------------------------------------------------- Gaylord Container Corp., 9.75% Sr. Unsec. Nts., Series B, 6/15/07 1,200,000 762,000 -------------------------------------------------------------------------------------------------------------------- Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 799,687 -------------------------------------------------------------------------------------------------------------------- Repap New Brunswick, Inc.: 9% First Priority Sr. Sec. Nts., 6/1/04 450,000 477,000 11.50% Sr. Sec. Nts., 6/1/04 500,000 570,000 -------------------------------------------------------------------------------------------------------------------- Riverwood International Corp.: 10.625% Sr. Unsec. Nts., 8/1/07 700,000 717,500 10.875% Sr. Sub. Nts., 4/1/08 500,000 482,500 -------------------------------------------------------------------------------------------------------------------- SD Warren Co., 14% Unsec. Nts., 12/15/06(8) 1,158,749 1,254,346 -------------------------------------------------------------------------------------------------------------------- Stone Container Corp.: 9.25% Sr. Nts., 2/1/08(3) 1,000,000 1,021,250 9.75% Sr. Nts., 2/1/11(3) 1,500,000 1,537,500 -------------------------------------------------------------------------------------------------------------------- U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 400,000 322,000 ----------- 10,714,908 -------------------------------------------------------------------------------------------------------------------- Gaming/Leisure--5.4% Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995(1)(5)(6) 9,500 -- -------------------------------------------------------------------------------------------------------------------- Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 340,000 340,000 -------------------------------------------------------------------------------------------------------------------- Coast Hotel & Casinos, Inc., 9.50% Sr. Unsec. Sub. Nts., 4/1/09 500,000 513,750 -------------------------------------------------------------------------------------------------------------------- Felcor Lodging LP, 8.50% Sr. Nts., 6/1/11(3) 2,000,000 1,920,000 -------------------------------------------------------------------------------------------------------------------- Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 800,000 820,000 -------------------------------------------------------------------------------------------------------------------- Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 500,000 530,000 -------------------------------------------------------------------------------------------------------------------- Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 1,000,000 925,000 -------------------------------------------------------------------------------------------------------------------- Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,000,000 1,060,000 -------------------------------------------------------------------------------------------------------------------- Intrawest Corp., 9.75% Sr. Nts., 8/15/08 1,500,000 1,507,500 -------------------------------------------------------------------------------------------------------------------- Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06(1) 1,000,000 990,000 -------------------------------------------------------------------------------------------------------------------- Mandalay Resort Group, 10.25% Sr. Unsec. Sub. Nts., Series B, 8/1/07 1,250,000 1,315,625 -------------------------------------------------------------------------------------------------------------------- Meristar Hospitality Corp.: 9.125% Sr. Nts., 1/15/08(3) 1,000,000 1,012,500 9.125% Sr. Nts., 1/15/11(3) 500,000 506,250
Oppenheimer High Income Fund/VA 7 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Gaming/Leisure (continued) MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11(9) $1,000,000 $ 1,011,250 -------------------------------------------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 1,500,000 1,548,750 -------------------------------------------------------------------------------------------------------------------- Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(7) 1,200,000 975,000 9.25% Sr. Nts., 4/1/06 600,000 600,000 9.75% Sr. Nts., 6/15/07 300,000 303,000 -------------------------------------------------------------------------------------------------------------------- Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,000,000 1,000,000 -------------------------------------------------------------------------------------------------------------------- Station Casinos, Inc., 9.75% Sr. Sub. Nts., 4/15/07 800,000 824,000 -------------------------------------------------------------------------------------------------------------------- Venetian Casino Resort LLC/Las Vegas Sands, Inc., 12.25% Mtg. Nts., 11/15/04 800,000 860,000 ----------- 18,562,625 -------------------------------------------------------------------------------------------------------------------- Healthcare--3.6% Beverly Enterprises, Inc., 9.625% Sr. Nts., 4/15/09(3) 1,500,000 1,545,000 -------------------------------------------------------------------------------------------------------------------- Charles River Laboratories International, Inc., 13.50% Sr. Sub. Nts., Series B, 10/1/09 715,000 836,550 -------------------------------------------------------------------------------------------------------------------- DaVita, Inc., 9.25% Sr. Unsec. Sub. Nts., 4/15/11(3) 800,000 820,000 -------------------------------------------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 2,525,000 2,468,187 -------------------------------------------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust IV, 7.875% Trust Preferred Nts., 6/15/11(3) 500,000 490,000 -------------------------------------------------------------------------------------------------------------------- ICN Pharmaceuticals, Inc.: 8.75% Sr. Nts., 11/15/08(3) 300,000 310,500 9.75% Sr. Nts., 11/15/08(3) 1,065,000 1,096,950 -------------------------------------------------------------------------------------------------------------------- King Pharmaceuticals, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09(1) 919,000 1,006,305 -------------------------------------------------------------------------------------------------------------------- Magellan Health Services, Inc.: 9% Sr. Sub. Nts., 2/15/08 1,200,000 1,137,000 9.375% Sr. Nts., 11/15/07(3) 1,000,000 1,021,250 -------------------------------------------------------------------------------------------------------------------- Tenet Healthcare Corp.: 8.625% Sr. Sub. Nts., 1/15/07 300,000 312,750 9.25% Sr. Nts., 9/1/10 850,000 962,625 -------------------------------------------------------------------------------------------------------------------- Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09 250,000 291,562 ----------- 12,298,679 -------------------------------------------------------------------------------------------------------------------- Housing--2.4% Blum CB Corp., 11.25% Sr. Unsec. Sub. Nts., 6/15/11(3) 1,500,000 1,481,250 -------------------------------------------------------------------------------------------------------------------- D.R. Horton, Inc.: 8% Sr. Nts., 2/1/09 500,000 485,000 9.75% Sr. Sub. Nts., 9/15/10 900,000 922,500 -------------------------------------------------------------------------------------------------------------------- Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 600,000 636,000 -------------------------------------------------------------------------------------------------------------------- KB Home, 9.50% Sr. Unsec. Sub. Nts., 2/15/11 1,500,000 1,515,000 -------------------------------------------------------------------------------------------------------------------- Meritage Corp., 9.75% Sr. Nts., 6/1/11(3) 500,000 500,000 -------------------------------------------------------------------------------------------------------------------- Nortek, Inc.: 9.125% Sr. Unsec. Nts., Series B, 9/1/07 1,000,000 985,000 9.25% Sr. Nts., Series B, 3/15/07 500,000 495,000 9.875% Sr. Sub. Nts., 6/15/11(3) 750,000 725,625 -------------------------------------------------------------------------------------------------------------------- WCI Communities, Inc., 10.625% Sr. Sub. Nts., 2/15/11(3) 600,000 627,000 ----------- 8,372,375
8 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Information Technology--2.2% Amkor Technology, Inc.: 9.25% Sr. Nts., 2/15/08(3) $ 800,000 $ 756,000 9.25% Sr. Unsec. Nts., 5/1/06 800,000 776,000 -------------------------------------------------------------------------------------------------------------------- ASAT Finance LLC, 12.50% Sr. Unsec. Nts., 11/1/06 325,000 303,875 -------------------------------------------------------------------------------------------------------------------- Cherokee International LLC, 10.50% Sr. Unsec. Sub. Nts., Series B, 5/1/09 1,000,000 760,000 -------------------------------------------------------------------------------------------------------------------- Chippac International Ltd., 12.75% Sr. Unsec. Sub. Nts., Series B, 8/1/09 500,000 488,750 -------------------------------------------------------------------------------------------------------------------- Fairchild Semiconductor Corp.: 10.375% Sr. Unsec. Nts., 10/1/07 850,000 828,750 10.50% Sr. Unsec. Sub. Nts., 2/1/09 1,050,000 1,029,000 -------------------------------------------------------------------------------------------------------------------- Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 1,115,000 1,103,850 -------------------------------------------------------------------------------------------------------------------- Flextronics International Ltd., 9.875% Sr. Unsec. Sub. Nts., 7/1/10 700,000 700,000 -------------------------------------------------------------------------------------------------------------------- Seagate Technology International, Inc., 12.50% Sr. Unsec. Sub. Nts., 11/15/07(3) 800,000 796,000 ----------- 7,542,225 -------------------------------------------------------------------------------------------------------------------- Manufacturing--2.1% Actuant Corp., 13% Sr. Sub. Nts., 5/1/09 600,000 609,000 -------------------------------------------------------------------------------------------------------------------- Agco Corp., 9.50% Sr. Unsec. Nts., 5/1/08(3) 1,000,000 970,000 -------------------------------------------------------------------------------------------------------------------- Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 500,000 291,250 -------------------------------------------------------------------------------------------------------------------- Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07(1) 400,000 22,000 -------------------------------------------------------------------------------------------------------------------- Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 575,875 -------------------------------------------------------------------------------------------------------------------- Exide Corp., 10% Sr. Unsec. Nts., 4/15/05 500,000 430,000 -------------------------------------------------------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08(1) 800,000 812,000 -------------------------------------------------------------------------------------------------------------------- Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08(1)(5)(6) 1,600,000 40,000 -------------------------------------------------------------------------------------------------------------------- Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07(1) 250,000 196,250 -------------------------------------------------------------------------------------------------------------------- Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 1,200,000 570,000 -------------------------------------------------------------------------------------------------------------------- International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 506,875 -------------------------------------------------------------------------------------------------------------------- Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07(1) 700,000 612,500 -------------------------------------------------------------------------------------------------------------------- Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08(1) 560,000 198,800 -------------------------------------------------------------------------------------------------------------------- Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 512,400 -------------------------------------------------------------------------------------------------------------------- Terex Corp.: 8.875% Sr. Unsec. Sub. Nts., 4/1/08 400,000 386,000 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 400,000 386,000 ----------- 7,118,950 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Broadcasting--1.4% AMFM Operating, Inc., 12.625% Sr. Sub. Debs., Series E, 10/31/06(1)(8) 148,500 163,721 -------------------------------------------------------------------------------------------------------------------- Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07(9) 975,000 1,028,625 -------------------------------------------------------------------------------------------------------------------- Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08 900,000 900,000 -------------------------------------------------------------------------------------------------------------------- Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 1,000,000 945,000 -------------------------------------------------------------------------------------------------------------------- Radio One, Inc., 8.875% Sr. Sub Nts., 7/1/11(3) 1,000,000 1,005,000 -------------------------------------------------------------------------------------------------------------------- Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 800,000 748,000 -------------------------------------------------------------------------------------------------------------------- Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 200,000 187,500 ----------- 4,977,846
Oppenheimer High Income Fund/VA 9 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Cable/Wireless Video--10.4% Adelphia Communications Corp.: 7.875% Sr. Unsec. Nts., 5/1/09 $ 360,000 $ 319,500 8.125% Sr. Nts., Series B, 7/15/03(9) 1,000,000 990,000 8.375% Sr. Nts., Series B, 2/1/08 1,000,000 920,000 9.25% Sr. Nts., 10/1/02 390,000 392,925 9.875% Sr. Nts., Series B, 3/1/07 140,000 139,300 10.25% Sr. Unsec. Sub. Nts., 6/15/11 1,750,000 1,732,500 10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 344,675 10.875% Sr. Unsec. Nts., 10/1/10 750,000 763,125 -------------------------------------------------------------------------------------------------------------------- Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.: 0%/11.75% Sr. Disc. Nts., 5/15/11(3)(7) 5,000,000 2,925,000 0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(7) 3,150,000 2,165,625 8.25% Sr. Unsec. Nts., 4/1/07 350,000 333,375 10.75% Sr. Unsec. Nts., 10/1/09 5,000,000 5,287,500 11.125% Sr. Unsec. Nts., 1/15/11 1,000,000 1,060,000 -------------------------------------------------------------------------------------------------------------------- Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10 1,000,000 295,000 -------------------------------------------------------------------------------------------------------------------- CSC Holdings, Inc., 7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 925,587 -------------------------------------------------------------------------------------------------------------------- Diamond Cable Communications plc, 11.75% Sr. Disc. Nts., 12/15/05 2,350,000 1,609,750 -------------------------------------------------------------------------------------------------------------------- Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 400,000 254,000 -------------------------------------------------------------------------------------------------------------------- Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(7) 500,000 72,500 -------------------------------------------------------------------------------------------------------------------- EchoStar Broadband Corp., 10.375% Sr. Unsec. Nts., 10/1/07 2,950,000 2,964,750 -------------------------------------------------------------------------------------------------------------------- EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 1,000,000 985,000 -------------------------------------------------------------------------------------------------------------------- Insight Communications Co., Inc., 0%/12.25% Sr. Disc. Nts., 2/15/11(3)(7) 1,500,000 855,000 -------------------------------------------------------------------------------------------------------------------- Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09 700,000 728,000 -------------------------------------------------------------------------------------------------------------------- Mediacom LLC/Mediacom Capital Corp., 9.50% Sr. Nts., 1/15/13(3) 1,100,000 1,061,500 -------------------------------------------------------------------------------------------------------------------- NTL Communications Corp.: 0%/9.75% Sr. Unsec. Nts., Series B, 4/15/09(7)GBP 2,725,000 1,303,030 0%/11.50% Sr. Nts., 11/15/09(7)EUR 500,000 144,980 9.875% Sr. Unsec. Nts., Series B, 11/15/09EUR 600,000 313,665 11.50% Sr. Unsec. Nts., Series B, 10/1/08 1,600,000 1,064,000 -------------------------------------------------------------------------------------------------------------------- NTL, Inc., 10% Sr. Nts., Series B, 2/15/07 500,000 327,500 -------------------------------------------------------------------------------------------------------------------- Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07CAD 500,000 321,643 -------------------------------------------------------------------------------------------------------------------- Telewest Communications plc: 0%/9.25% Sr. Disc. Nts., 4/15/09(7) 1,500,000 738,750 0%/9.875% Sr. Disc. Nts., 4/15/09(7)GBP 1,300,000 877,594 11% Sr. Disc. Debs., 10/1/07 990,000 839,025 11.25% Sr. Nts., 11/1/08 1,990,000 1,781,050 -------------------------------------------------------------------------------------------------------------------- United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(7) 1,040,000 353,600 -------------------------------------------------------------------------------------------------------------------- United Pan-Europe Communications NV: 0%/13.375% Sr. Unsec. Disc. Nts., Series B, 11/1/09(7) 1,000,000 165,000 10.875% Sr. Nts., 8/1/09EUR 250,000 74,077 10.875% Sr. Unsec. Nts., Series B, 8/1/09 1,150,000 411,125 11.25% Sr. Nts., Series B, 11/1/09EUR 500,000 147,097 ----------- 35,986,748
10 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Diversified Media--2.4% Ackerley Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 1/15/09 600,000 $ 528,000 -------------------------------------------------------------------------------------------------------------------- AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 1,200,000 1,086,000 -------------------------------------------------------------------------------------------------------------------- Carmike Cinemas, Inc., 9.375% Gtd. Sr. Sub. Nts., Series B, 2/1/09(5)(6) 1,250,000 781,250 -------------------------------------------------------------------------------------------------------------------- GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(1) 400,940 406,778 -------------------------------------------------------------------------------------------------------------------- IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(7)GBP 1,200,000 1,240,445 -------------------------------------------------------------------------------------------------------------------- Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 500,000 527,500 -------------------------------------------------------------------------------------------------------------------- Mail-Well I Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08 1,000,000 865,000 -------------------------------------------------------------------------------------------------------------------- Penton Media, Inc., 10.375% Sr. Sub. Nts., 6/15/11(3) 2,200,000 2,178,000 -------------------------------------------------------------------------------------------------------------------- WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp., 12.75% Sr. Sub. Nts., 11/15/09 750,000 679,687 ----------- 8,292,660 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Telecommunications--5.4% 360networks, Inc.: 13% Sr. Unsec. Nts., 5/1/08(5)EUR 500,000 7,408 13% Sr. Unsec. Nts., 5/1/08(5) 400,000 8,000 -------------------------------------------------------------------------------------------------------------------- Allegiance Telecom, Inc., 0%/11.75% Sr. Unsec. Disc. Nts., Series B, 2/15/08(7) 1,000,000 575,000 -------------------------------------------------------------------------------------------------------------------- COLO.com, Inc., 13.875% Sr. Nts., 3/15/10(3)(5)(6) 600,000 88,500 -------------------------------------------------------------------------------------------------------------------- COLT Telecom Group plc: 0%/12% Sr. Unsec. Disc. Nts., 12/15/06(7) 800,000 724,000 7.625% Bonds, 7/31/08DEM 1,000,000 337,631 10.125% Sr. Nts., 11/30/07GBP 200,000 264,403 -------------------------------------------------------------------------------------------------------------------- Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 800,000 248,000 -------------------------------------------------------------------------------------------------------------------- Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(7) 1,000,000 85,000 -------------------------------------------------------------------------------------------------------------------- Equinix, Inc., 13% Sr. Unsec. Nts., 12/1/07(1) 1,000,000 625,000 -------------------------------------------------------------------------------------------------------------------- ESAT Telecom Group plc, 11.875% Sr. Unsec. Unsub. Nts., 11/1/09EUR 500,000 516,426 -------------------------------------------------------------------------------------------------------------------- Exodus Communications, Inc.: 10.75% Sr. Nts., 12/15/09EUR 1,000,000 247,630 11.25% Sr. Nts., 7/1/08 1,600,000 560,000 -------------------------------------------------------------------------------------------------------------------- FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(1)(7) 500,000 20,000 -------------------------------------------------------------------------------------------------------------------- FLAG Telecom Holdings Ltd.: 11.625% Sr. Nts., 3/30/10EUR 250,000 138,631 11.625% Sr. Unsec. Nts., 3/30/10 250,000 158,750 -------------------------------------------------------------------------------------------------------------------- Focal Communications Corp., 11.875% Sr. Unsec. Nts., Series B, 1/15/10 600,000 195,750 -------------------------------------------------------------------------------------------------------------------- Global Crossing Holdings Ltd.: 8.70% Sr. Nts., 8/1/07(3) 1,300,000 994,500 9.125% Sr. Unsec. Nts., 11/15/06 1,100,000 871,750 -------------------------------------------------------------------------------------------------------------------- Global TeleSystems, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(5)EUR 350,000 45,187 -------------------------------------------------------------------------------------------------------------------- Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10 800,000 236,000 -------------------------------------------------------------------------------------------------------------------- GST Telecommunications, Inc., 0%/12.75% Sr. Sub. Nts., 11/15/07(1)(5)(7) 1,250,000 18,750 -------------------------------------------------------------------------------------------------------------------- Intermedia Communications, Inc.: 0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(7) 1,200,000 882,000 8.60% Sr. Unsec. Nts., Series B, 6/1/08 500,000 492,500 8.875% Sr. Nts., 11/1/07 300,000 295,500 -------------------------------------------------------------------------------------------------------------------- Jazztel plc, 13.25% Sr. Unsec. Nts., 12/15/09EUR 1,500,000 476,212
Oppenheimer High Income Fund/VA 11 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Telecommunications (continued) KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(7) $2,500,000 $ 225,000 -------------------------------------------------------------------------------------------------------------------- KPNQwest BV, 8.875% Sr. Nts., 2/1/08(3)EUR 1,000,000 651,882 -------------------------------------------------------------------------------------------------------------------- Level 3 Communications, Inc.: 0%/10.50% Sr. Disc. Nts., 12/1/08(7) 1,000,000 260,000 11% Sr. Unsec. Nts., 3/15/08 500,000 222,500 11.25% Sr. Unsec. Nts., 3/15/10 650,000 279,500 -------------------------------------------------------------------------------------------------------------------- McLeodUSA, Inc., 8.125% Sr. Unsec. Nts., 2/15/09 1,000,000 532,500 -------------------------------------------------------------------------------------------------------------------- Metromedia Fiber Network, Inc.: 10% Sr. Nts., 12/15/09 500,000 192,500 10% Sr. Nts., 12/15/09(1)EUR 500,000 190,485 10% Sr. Unsec. Nts., Series B, 11/15/08 1,000,000 385,000 -------------------------------------------------------------------------------------------------------------------- Metromedia International Group, Inc., 10.50% Sr. Unsec. Disc. Nts., 9/30/07(1)(2) 229,771 116,034 -------------------------------------------------------------------------------------------------------------------- MGC Communications, Inc./Mpower Holding Corp., 13% Sr. Unsec. Nts., 4/1/10 600,000 159,000 -------------------------------------------------------------------------------------------------------------------- Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(7)DEM 500,000 91,983 -------------------------------------------------------------------------------------------------------------------- Netia Holdings II BV, 13.125% Sr. Nts., Series B, 6/15/09 1,350,000 587,250 -------------------------------------------------------------------------------------------------------------------- NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10(5) 800,000 40,000 -------------------------------------------------------------------------------------------------------------------- Ntelos, Inc., 13% Sr. Nts., 8/15/10(1) 1,000,000 705,000 -------------------------------------------------------------------------------------------------------------------- OpTel, Inc., 13% Sr. Nts., Series B, 2/15/05(1)(5)(6) 750,000 303,750 -------------------------------------------------------------------------------------------------------------------- PSINet, Inc.: 10.50% Sr. Unsec. Nts., 12/1/06(5)EUR 1,000,000 38,097 11% Sr. Nts., 8/1/09(5) 1,000,000 65,000 -------------------------------------------------------------------------------------------------------------------- RCN Corp.: 0%/9.80% Sr. Disc. Nts., Series B, 2/15/08(7) 500,000 142,500 10.125% Sr. Unsec. Nts., 1/15/10 500,000 207,500 -------------------------------------------------------------------------------------------------------------------- Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts., Series B, 2/15/10 800,000 28,000 -------------------------------------------------------------------------------------------------------------------- RSL Communications plc: 10.50% Sr. Unsec. Nts., 11/5/08(5)(6) 600,000 19,500 12.875% Sr. Unsec. Nts., 3/1/10(5)(6) 550,000 17,875 -------------------------------------------------------------------------------------------------------------------- Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09EUR 600,000 294,617 -------------------------------------------------------------------------------------------------------------------- Teligent, Inc., 11.50% Sr. Nts., 12/1/07(5) 400,000 3,000 -------------------------------------------------------------------------------------------------------------------- Time Warner Telecom LLC/Time Warner Telecom, Inc., 9.75% Sr. Nts., 7/15/08 700,000 631,750 -------------------------------------------------------------------------------------------------------------------- Time Warner Telecom, Inc., 10.125% Sr. Unsec. Sub. Nts., 2/1/11 1,000,000 905,000 -------------------------------------------------------------------------------------------------------------------- Versatel Telecom International NV: 11.25% Sr. Nts., 3/30/10EUR 150,000 47,304 11.875% Sr. Nts., 7/15/09 500,000 182,500 -------------------------------------------------------------------------------------------------------------------- Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08(5) 600,000 18,000 -------------------------------------------------------------------------------------------------------------------- WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(1)(7) 2,100,000 115,500 -------------------------------------------------------------------------------------------------------------------- Williams Communications Group, Inc.: 10.875% Sr. Unsec. Nts., 10/1/09 1,250,000 512,500 11.70% Sr. Unsec. Nts., 8/1/08(9) 1,600,000 672,000 -------------------------------------------------------------------------------------------------------------------- Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(5)(6) 1,000,000 12,500 -------------------------------------------------------------------------------------------------------------------- XO Communications, Inc.: 9% Sr. Unsec. Nts., 3/15/08 800,000 228,000 9.625% Sr. Nts., 10/1/07 500,000 147,500 10.75% Sr. Unsec. Nts., 11/15/08 400,000 130,000 10.75% Sr. Unsec. Nts., 6/1/09 850,000 276,250 ----------- 18,749,805
12 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Wireless Communications--9.3% AirGate PCS, Inc., 0%/13.50% Sr. Sub. Disc. Nts., 10/1/09(7) $ 800,000 $ 468,000 -------------------------------------------------------------------------------------------------------------------- Alamosa Delaware, Inc., 12.50% Sr. Nts., 2/1/11(3) 500,000 452,500 -------------------------------------------------------------------------------------------------------------------- American Tower Corp., 9.375% Sr. Nts., 2/1/09(3) 1,500,000 1,406,250 -------------------------------------------------------------------------------------------------------------------- CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts., 10/1/07(1)(5)(7) 1,834,000 2,292 -------------------------------------------------------------------------------------------------------------------- Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08 800,000 744,000 -------------------------------------------------------------------------------------------------------------------- Crown Castle International Corp.: 0%/10.375% Sr. Disc. Nts., 5/15/11(7) 300,000 188,250 0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(7) 940,000 737,900 9% Sr. Nts., 5/15/11 750,000 667,500 9.375% Sr. Nts., 8/1/11(3) 800,000 726,000 10.75% Sr. Nts., 8/1/11 500,000 486,250 -------------------------------------------------------------------------------------------------------------------- CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(7) 1,000,000 392,500 -------------------------------------------------------------------------------------------------------------------- Horizon PCS, Inc., 0%/14% Sr. Unsec. Sub. Nts., 10/1/10(7) 1,300,000 513,500 -------------------------------------------------------------------------------------------------------------------- IPCS, Inc., 0%/14% Sr. Unsec. Disc. Nts., 7/15/10(7) 750,000 307,500 -------------------------------------------------------------------------------------------------------------------- Leap Wireless International, Inc., 12.50% Sr. Nts., 4/15/10 550,000 365,750 -------------------------------------------------------------------------------------------------------------------- Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 700,000 528,500 -------------------------------------------------------------------------------------------------------------------- Microcell Telecommunications, Inc.: 0%/12% Sr. Unsec. Disc. Nts., 6/1/09(7) 1,000,000 430,000 0%/14% Sr. Disc. Nts., Series B, 6/1/06(7) 700,000 521,500 -------------------------------------------------------------------------------------------------------------------- Millicom International Cellular SA, 13.50% Sr. Disc. Nts., 6/1/06 300,000 259,500 -------------------------------------------------------------------------------------------------------------------- Nextel Communications, Inc.: 0%/9.75% Sr. Disc. Nts., 10/31/07(7) 250,000 167,188 0%/10.65% Sr. Disc. Nts., 9/15/07(7) 700,000 496,125 -------------------------------------------------------------------------------------------------------------------- Omnipoint Corp., 11.50% Sr. Nts., 9/15/09(1) 2,200,000 2,541,000 -------------------------------------------------------------------------------------------------------------------- ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(1)(5)(6) 600,000 9,000 -------------------------------------------------------------------------------------------------------------------- Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(7) 1,150,000 419,750 -------------------------------------------------------------------------------------------------------------------- Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(7) 500,000 260,000 -------------------------------------------------------------------------------------------------------------------- Polska Telefoniz Cyfrowa International Financial II SA, 11.25% Sr. Sub. Nts., 12/1/09EUR 400,000 348,799 -------------------------------------------------------------------------------------------------------------------- Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts., Series B, 12/15/06 500,000 520,000 -------------------------------------------------------------------------------------------------------------------- Real Time Data Co., 13% Disc. Nts., 5/31/09(1)(8) 476,601 483,316 -------------------------------------------------------------------------------------------------------------------- Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,600,000 1,560,000 -------------------------------------------------------------------------------------------------------------------- SBA Communications Corp.: 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(7) 2,820,000 2,270,100 10.25% Sr. Unsec. Nts., 2/1/09 1,800,000 1,656,000 -------------------------------------------------------------------------------------------------------------------- Spectrasite Holdings, Inc.: 0%/11.25% Sr. Unsec. Disc. Nts., 4/15/09(7) 400,000 186,000 0%/12% Sr. Disc. Nts., 7/15/08(7) 1,640,000 889,700 10.75% Sr. Unsec. Nts., Series B, 3/15/10 300,000 256,500 -------------------------------------------------------------------------------------------------------------------- TeleCorp PCS, Inc.: 0%/11.625% Sr. Unsec. Sub. Disc. Nts., 4/15/09(7) 800,000 504,000 10.625% Sr. Unsec. Sub. Nts., 7/15/10 1,600,000 1,512,000 -------------------------------------------------------------------------------------------------------------------- Tritel PCS, Inc.: 0%/12.75% Sr. Unsec. Sub. Disc. Nts., 5/15/09(7) 800,000 512,000 10.375% Sr. Sub. Nts., 1/15/11 1,500,000 1,380,000
Oppenheimer High Income Fund/VA 13 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Media/Entertainment: Wireless Communications (continued) Triton PCS, Inc.: 0%/11% Sr. Unsec. Sub. Disc. Nts., 5/1/08(7) $ 600,000 $ 486,750 9.375% Sr. Unsec. Sub. Nts., 2/1/11 800,000 780,000 -------------------------------------------------------------------------------------------------------------------- US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B, 11/1/09(7) 2,000,000 992,500 -------------------------------------------------------------------------------------------------------------------- VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09 4,000,000 4,580,000 ----------- 32,008,420 -------------------------------------------------------------------------------------------------------------------- Metals/Minerals--1.9% AK Steel Corp.: 7.875% Sr. Unsec. Nts., 2/15/09 500,000 490,000 9.125% Sr. Nts., 12/15/06 500,000 515,000 -------------------------------------------------------------------------------------------------------------------- California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 300,000 265,500 -------------------------------------------------------------------------------------------------------------------- Century Aluminum Co., 11.75% Sr. Sec. Nts., 4/15/08(3) 1,000,000 1,045,000 -------------------------------------------------------------------------------------------------------------------- Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 1,500,000 892,500 -------------------------------------------------------------------------------------------------------------------- Kaiser Aluminum & Chemical Corp.: 10.875% Sr. Nts., Series B, 10/15/06 400,000 384,000 12.75% Sr. Sub. Nts., 2/1/03 1,600,000 1,432,000 -------------------------------------------------------------------------------------------------------------------- Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(7) 1,000,000 465,000 -------------------------------------------------------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07(1) 740,000 677,100 -------------------------------------------------------------------------------------------------------------------- National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 1,300,000 461,500 ----------- 6,627,600 -------------------------------------------------------------------------------------------------------------------- Retail--0.8% Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(7) 1,000,000 667,500 -------------------------------------------------------------------------------------------------------------------- Elizabeth Arden, Inc., 11.75% Sr. Sec. Nts., Series B, 2/1/11 500,000 533,750 -------------------------------------------------------------------------------------------------------------------- Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 832,500 -------------------------------------------------------------------------------------------------------------------- Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 561,000 ----------- 2,594,750 -------------------------------------------------------------------------------------------------------------------- Service--7.2% Allied Waste North America, Inc.: 7.875% Sr. Unsec. Nts., Series B, 1/1/09 3,500,000 3,613,750 8.875% Sr. Sec. Nts., 4/1/08 500,000 491,250 10% Sr. Unsec. Sub. Nts., Series B, 8/1/09(3) 2,600,000 2,681,250 -------------------------------------------------------------------------------------------------------------------- American Plumbing & Mechanical, Inc., 11.625% Sr. Sub. Nts., Series B, 10/15/08 500,000 497,500 -------------------------------------------------------------------------------------------------------------------- AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(7) 450,000 34,313 -------------------------------------------------------------------------------------------------------------------- Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08(1) 940,000 568,700 -------------------------------------------------------------------------------------------------------------------- Applied Extrusion Technologies, Inc., 10.75% Sr. Nts., 7/1/11(3) 1,250,000 1,268,750 -------------------------------------------------------------------------------------------------------------------- Brand Scaffold Service, Inc., 10.25% Sr. Unsec. Nts., 2/15/08 1,000,000 933,750 -------------------------------------------------------------------------------------------------------------------- Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 1,200,000 486,000 -------------------------------------------------------------------------------------------------------------------- Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 350,000 281,750 -------------------------------------------------------------------------------------------------------------------- Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 592,188 -------------------------------------------------------------------------------------------------------------------- Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 915,000 933,300 -------------------------------------------------------------------------------------------------------------------- Integrated Electrical Services, Inc.: 9.375% Sr. Sub. Nts., 2/1/09(3) 1,000,000 985,000 9.375% Sr. Sub. Nts., Series B, 2/1/09 600,000 591,000
14 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Service (continued) Iron Mountain, Inc., 8.625% Sr. Unsec. Sub. Nts., 4/1/13 $1,000,000 $ 1,012,500 -------------------------------------------------------------------------------------------------------------------- IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 650,000 614,250 -------------------------------------------------------------------------------------------------------------------- Key3Media Group, Inc., 11.25% Sr. Sub. Nts., 6/15/11 2,000,000 1,970,000 -------------------------------------------------------------------------------------------------------------------- Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 750,000 746,250 -------------------------------------------------------------------------------------------------------------------- Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(1) 1,500,000 1,064,063 -------------------------------------------------------------------------------------------------------------------- Protection One, Inc./Protection One Alarm Monitoring, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 1,200,000 918,000 -------------------------------------------------------------------------------------------------------------------- Stericycle, Inc., 12.375% Sr. Unsec. Sub. Nts., Series B, 11/15/09 700,000 760,375 -------------------------------------------------------------------------------------------------------------------- Stewart Enterprises, Inc., 10.75% Sr. Sub. Nts., 7/1/08(3) 1,800,000 1,863,000 -------------------------------------------------------------------------------------------------------------------- United Rentals, Inc.: 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 900,000 846,000 10.75% Sr. Unsec. Nts., 4/15/08(3) 1,000,000 1,040,000 ----------- 24,792,939 -------------------------------------------------------------------------------------------------------------------- Transportation--4.7% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 1,000,000 956,250 -------------------------------------------------------------------------------------------------------------------- Amtran, Inc.: 9.625% Nts., 12/15/05 800,000 684,000 10.50% Sr. Nts., 8/1/04 1,800,000 1,593,000 -------------------------------------------------------------------------------------------------------------------- Atlas Air, Inc.: 9.25% Sr. Nts., 4/15/08 500,000 352,500 10.75% Sr. Nts., 8/1/05 700,000 549,500 -------------------------------------------------------------------------------------------------------------------- Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 600,000 570,000 -------------------------------------------------------------------------------------------------------------------- Delco Remy International, Inc., 11% Sr. Sub. Nts., 5/1/09(3) 1,900,000 1,985,500 -------------------------------------------------------------------------------------------------------------------- Dura Operating Corp.: 9% Sr. Sub. Nts., 5/1/09(3) 1,400,000 1,323,000 9% Sr. Sub. Nts., Series B, 5/1/09 1,300,000 1,228,500 9% Sr. Sub. Nts., Series B, 5/1/09EUR 300,000 234,932 -------------------------------------------------------------------------------------------------------------------- Hayes Lemmerz International, Inc., 11.875% Sr. Nts., 6/15/06(3) 1,200,000 1,170,000 -------------------------------------------------------------------------------------------------------------------- Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 400,000 334,000 -------------------------------------------------------------------------------------------------------------------- Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount of 12% first priority ship mtg. sr. sec. nts., 7/15/05 and one warrant to purchase five shares of common stock)(1)(2)(10) 700,000 385,000 -------------------------------------------------------------------------------------------------------------------- Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(3) 1,000,000 555,000 -------------------------------------------------------------------------------------------------------------------- Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 800,000 492,000 -------------------------------------------------------------------------------------------------------------------- Pacific & Atlantic Holdings, Inc., 10.50% Sec. Nts., 12/31/07(1) 300,046 136,521 -------------------------------------------------------------------------------------------------------------------- Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 855,000 -------------------------------------------------------------------------------------------------------------------- Teekay Shipping Corp., 8.875% Sr. Nts., 7/15/11(3) 1,600,000 1,624,000 -------------------------------------------------------------------------------------------------------------------- Tenneco, Inc., 11.625% Sr. Unsec. Sub. Nts., Series B, 10/15/09 600,000 309,000 -------------------------------------------------------------------------------------------------------------------- Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04(5)(6) 950,000 954,750 ----------- 16,292,453
Oppenheimer High Income Fund/VA 15 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Principal Market Value Amount See Note 1 -------------------------------------------------------------------------------------------------------------------- Utility--3.0% AES Corp. (The): 8.75% Sr. Unsec. Unsub. Nts., 6/15/08 $1,500,000 $ 1,481,250 8.875% Sr. Unsec. Nts., 2/15/11 500,000 491,250 9.375% Sr. Unsec. Nts., 9/15/10 700,000 710,500 -------------------------------------------------------------------------------------------------------------------- AES Drax Energy Ltd., 11.50% Sr. Sec. Sub. Nts., 8/30/10 1,000,000 1,090,000 -------------------------------------------------------------------------------------------------------------------- Azurix Corp., 10.75% Sr. Unsec. Nts., Series B, 2/15/10 300,000 310,500 -------------------------------------------------------------------------------------------------------------------- Caithness Coso Funding Corp., 9.05% Sr. Sec. Nts., Series B, 12/15/09 500,000 492,500 -------------------------------------------------------------------------------------------------------------------- CMS Energy Corp.: 8.50% Sr. Nts., 4/15/11 500,000 486,420 9.875% Sr. Unsec. Nts., 10/15/07 2,000,000 2,087,222 -------------------------------------------------------------------------------------------------------------------- El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(9)(11) 555,000 600,376 -------------------------------------------------------------------------------------------------------------------- ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 1,000,000 976,897 -------------------------------------------------------------------------------------------------------------------- ITC/DeltaCom, Inc., 9.75% Sr. Unsec. Nts., 11/15/08 2,250,000 1,563,750 ----------- 10,290,665 ----------- Total Corporate Bonds and Notes (Cost $337,942,959) 285,176,183 Shares ==================================================================================================================== Preferred Stocks--3.8% -------------------------------------------------------------------------------------------------------------------- AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(1)(8) 11,732 117 -------------------------------------------------------------------------------------------------------------------- CGA Group Ltd., Series A, Vtg.(1)(8) 103,820 2,595,500 -------------------------------------------------------------------------------------------------------------------- Dobson Communications Corp.: 12.25% Sr. Exchangeable, Non-Vtg.(8) 1,528 1,379,020 13% Sr. Exchangeable, Non-Vtg.(8) 1,293 1,141,072 -------------------------------------------------------------------------------------------------------------------- e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(1)(8) 498 50 -------------------------------------------------------------------------------------------------------------------- Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(1) 8,000 132,000 -------------------------------------------------------------------------------------------------------------------- Fidelity Federal Bank, l2% Non-Cum. Exchangeable, Series A, Non-Vtg.(1) 20 505 -------------------------------------------------------------------------------------------------------------------- Global Crossing Holdings Ltd., 10.50% Sr. Exchangeable, Non-Vtg.(8) 7,500 433,125 -------------------------------------------------------------------------------------------------------------------- ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(1)(8) 342 5 -------------------------------------------------------------------------------------------------------------------- Intermedia Communications, Inc., 13.50% Exchangeable, Series B(8) 1,105 1,107,762 -------------------------------------------------------------------------------------------------------------------- Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable, Non-Vtg.(1)(6)(8) 7,274 909 -------------------------------------------------------------------------------------------------------------------- Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(8) 1,511 910,378 -------------------------------------------------------------------------------------------------------------------- Pacific & Atlantic Holdings, Inc., 7.50% Cum. Cv., Series A(1)(6)(8) 16,406 98,436 -------------------------------------------------------------------------------------------------------------------- Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(8) 57 525,825 -------------------------------------------------------------------------------------------------------------------- PRIMEDIA, Inc.: 8.625% Exchangeable, Series H, Non-Vtg 15,000 1,143,750 9.20% Exchangeable, Series F, Non-Vtg.(1) 2,500 195,625 -------------------------------------------------------------------------------------------------------------------- Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(8) 1,841 1,532,633 -------------------------------------------------------------------------------------------------------------------- SF Holdings Group, Inc.: 13.75% Exchangeable, Non-Vtg.(1) 84 182,700 13.75% Exchangeable, Series B, Non-Vtg 196 426,300 -------------------------------------------------------------------------------------------------------------------- Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A(1) 10,000 1,000,000 -------------------------------------------------------------------------------------------------------------------- XO Communications, Inc. 13.50% Sr., Series E, Non-Vtg.(8) 740 46,250 14% Cum. Sr. Exchangeable Redeemable, Non-Vtg.(8) 39,502 187,635 ----------- Total Preferred Stocks (Cost $21,140,323) 13,039,597
16 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Market Value Shares See Note 1 ==================================================================================================================== Common Stocks--0.5% -------------------------------------------------------------------------------------------------------------------- Aurora Foods, Inc.(1)(6) 12,397 $ 33,968 -------------------------------------------------------------------------------------------------------------------- Celcaribe SA(1)(6) 121,950 198,169 -------------------------------------------------------------------------------------------------------------------- Chesapeake Energy Corp.(6) 194,238 1,320,818 -------------------------------------------------------------------------------------------------------------------- Equitable Bag, Inc.(1)(6) 3,723 -- -------------------------------------------------------------------------------------------------------------------- Geotek Communications, Inc. (Liquidation Trust Certificates)(1)(6) 226 2 -------------------------------------------------------------------------------------------------------------------- Gulfstream Holding, Inc.(1)(6) 56 -- -------------------------------------------------------------------------------------------------------------------- ICO Global Communication Holdings Ltd.(6) 42,107 71,582 -------------------------------------------------------------------------------------------------------------------- OpTel, Inc., Non-Vtg.(1)(6) 945 9 -------------------------------------------------------------------------------------------------------------------- SF Holdings Group, Inc., Cl. C(1)(6) 7,250 36,250 -------------------------------------------------------------------------------------------------------------------- Southern Pacific Funding Corp. Liquidating Trust(1)(6) 251,604 -- -------------------------------------------------------------------------------------------------------------------- WRC Media Corp.(1)(6) 1,353 14 ----------- Total Common Stocks (Cost $1,908,825) 1,660,812 Units ==================================================================================================================== Rights, Warrants and Certificates--0.2% -------------------------------------------------------------------------------------------------------------------- ASAT Finance LLC Wts., Exp. 11/1/06(1) 500 25,250 -------------------------------------------------------------------------------------------------------------------- CellNet Data Systems, Inc. Wts., Exp. 10/1/07(1) 1,434 717 -------------------------------------------------------------------------------------------------------------------- CGA Group Ltd. Wts., Exp. 6/16/07(1) 62,000 18,600 -------------------------------------------------------------------------------------------------------------------- Charles River Laboratories International, Inc. Wts., Exp. 10/1/09(1) 1,100 20,350 -------------------------------------------------------------------------------------------------------------------- Chesapeake Energy Corp. Wts.: Exp. 1/23/03(1) 8,351 -- Exp. 1/23/03(1) 4,766 -- Exp. 9/1/04(1) 14,000 -- -------------------------------------------------------------------------------------------------------------------- COLO.com, Inc. Wts., Exp. 3/15/10(1) 600 6 -------------------------------------------------------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/15/07(1) 750 11,625 -------------------------------------------------------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/1/08(1) 2,000 700 -------------------------------------------------------------------------------------------------------------------- Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08(1) 1,750 -- -------------------------------------------------------------------------------------------------------------------- Diva Systems Corp. Wts., Exp. 3/1/08(1) 1,500 15 -------------------------------------------------------------------------------------------------------------------- e.spire Communications, Inc. Wts., Exp. 11/1/05(1) 475 1,662 -------------------------------------------------------------------------------------------------------------------- Equinix, Inc. Wts., Exp. 12/1/07(1) 1,000 20,125 -------------------------------------------------------------------------------------------------------------------- Geotek Communications, Inc. Wts., Exp. 7/15/05(1) 52,500 525 -------------------------------------------------------------------------------------------------------------------- Golden State Bancorp, Inc. Litigation Wts 15,626 20,470 -------------------------------------------------------------------------------------------------------------------- Horizon PCS, Inc. Wts., Exp. 10/1/10(1) 1,299 25,818 -------------------------------------------------------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/15/05(1) 5,940 624 -------------------------------------------------------------------------------------------------------------------- ICO Global Communication Holdings Ltd. Wts.: Exp. 5/16/06(1) 10,561 528 Exp. 5/16/06 16 4 -------------------------------------------------------------------------------------------------------------------- In-Flight Phone Corp. Wts., Exp. 8/31/02(1) 950 -- -------------------------------------------------------------------------------------------------------------------- Insilco Corp. Wts., Exp. 8/15/07(1) 765 8 -------------------------------------------------------------------------------------------------------------------- IPCS, Inc. Wts., Exp. 6/15/10(1) 750 15,375 -------------------------------------------------------------------------------------------------------------------- KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(1) 2,455 1,227 -------------------------------------------------------------------------------------------------------------------- Leap Wireless International, Inc. Wts., Exp. 4/15/10(1) 550 22,066 -------------------------------------------------------------------------------------------------------------------- Long Distance International, Inc. Wts., Exp. 4/13/08(1) 800 8 -------------------------------------------------------------------------------------------------------------------- Loral Space & Communications Ltd. Wts., Exp. 1/15/07(1) 800 8
Oppenheimer High Income Fund/VA 17 -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) --------------------------------------------------------------------------------
Market Value Units See Note 1 ==================================================================================================================== Rights, Warrants and Certificates (continued) -------------------------------------------------------------------------------------------------------------------- Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(3) 3,200 $ 62,400 -------------------------------------------------------------------------------------------------------------------- Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(1) 1,500 15 -------------------------------------------------------------------------------------------------------------------- Ntelos, Inc. Wts., Exp. 8/15/10(1) 1,000 5,125 -------------------------------------------------------------------------------------------------------------------- Pathmark Stores, Inc. Wts., Exp. 9/19/10 20,000 175,600 -------------------------------------------------------------------------------------------------------------------- PLD Telekom, Inc., 9% Cv. Sub. Nts. Wts., Exp. 3/31/03 (cv. into Metromedia International Group, Inc.)(1) 170 2 -------------------------------------------------------------------------------------------------------------------- Protection One, Inc. Wts.: Exp. 11/1/03(1) 28,000 -- Exp. 6/30/05(1) 1,600 160 -------------------------------------------------------------------------------------------------------------------- R&B Falcon Corp. Wts., Exp. 5/1/09(3) 1,000 400,875 -------------------------------------------------------------------------------------------------------------------- Real Time Data Co. Wts., Exp. 5/31/04(1) 121,440 1,214 -------------------------------------------------------------------------------------------------------------------- Republic Technologies International LLC Wts., Exp. 7/15/09(1) 500 5 -------------------------------------------------------------------------------------------------------------------- Telergy, Inc. Wts., Exp. 9/25/10(1) 2,019 20 -------------------------------------------------------------------------------------------------------------------- Telus Corp. Wts., Exp. 9/15/05 1,079 16,185 -------------------------------------------------------------------------------------------------------------------- WAM!NET, Inc. Wts., Exp. 3/1/05(1) 5,250 53 ------------ Total Rights, Warrants and Certificates (Cost $249,248) 847,365 Principal Amount ==================================================================================================================== Structured Instruments--0.5% -------------------------------------------------------------------------------------------------------------------- Bear Stearns Cos., Inc. (The), High Yield Index Medium-Term Nts., 6%, 2/14/02 (Cost $2,000,000) $ 2,000,000 1,982,800 ==================================================================================================================== Repurchase Agreements--7.4% -------------------------------------------------------------------------------------------------------------------- Repurchase agreement with Deutsche Bank Securities, Inc., 3.92%, dated 6/29/01, to be repurchased at $25,464,316 on 7/2/01, collateralized by U.S. Treasury Bonds, 8.875%-10.375%, 11/15/09-2/15/19, with a value of $26,062,675 (Cost $25,456,000) 25,456,000 25,456,000 -------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (Cost $400,743,873) 98.0% 338,146,690 -------------------------------------------------------------------------------------------------------------------- Other Assets Net of Liabilities 2.0 6,729,880 ----------- ------------ Net Assets 100.0% $344,876,570 ----------- ------------
Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: CAD -- Canadian Dollar EUR -- Euro DEM -- German Mark GBP -- British Pound Sterling (1) Identifies issues considered to be illiquid or restricted--See Note 7 of Notes to Financial Statements. (2) Represents the current interest rate for a variable or increasing rate security. (3) Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $67,053,273 or 19.44% of the Fund's net assets as of June 30, 2001. (4) Zero-coupon bond reflects the effective yield on the date of purchase. (5) Issuer is in default. (6) Non-income-producing security. (7) Denotes a step bond: a zero-coupon bond that converts to a fixed or variable interest rate at a designated future date. (8) Interest or dividend is paid in kind. (9) Securities with an aggregate market value of $2,388,500 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. (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) A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of Notes to Financial Statements. See accompanying Notes to Financial Statements. 18 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Statement of Assets and Liabilities June 30, 2001 (Unaudited) -------------------------------------------------------------------------------- ==================================================================================================================== Assets Investments, at value (cost $400,743,873)--see accompanying statement $338,146,690 -------------------------------------------------------------------------------------------------------------------- Cash 36,590 -------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 20,048 -------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 7,429,634 Shares of beneficial interest sold 319,431 Investments sold 180,020 Closed foreign currency contracts 17,990 Other 3,041 ------------- Total assets 346,153,444 ==================================================================================================================== Liabilities Unrealized depreciation on foreign currency contracts 13,383 -------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 671,439 Shares of beneficial interest redeemed 513,805 Shareholder reports 63,722 Trustees' compensation 1 Other 14,524 ------------- Total liabilities 1,276,874 ==================================================================================================================== Net Assets $344,876,570 ============= ==================================================================================================================== Composition of Net Assets Par value of shares of beneficial interest $ 40,384 -------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 422,447,719 -------------------------------------------------------------------------------------------------------------------- Undistributed (overdistributed) net investment income 17,091,389 -------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments and foreign currency transactions (32,106,558) -------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies (62,596,364) ------------- Net assets--applicable to 40,383,841 shares of beneficial interest outstanding $344,876,570 ============= ==================================================================================================================== Net Asset Value, Redemption Price Per Share and Offering Price Per Share $ 8.54
See accompanying Notes to Financial Statements. Oppenheimer High Income Fund/VA 19 -------------------------------------------------------------------------------- Statement of Operations For the Six Months Ended June 30, 2001 (Unaudited) -------------------------------------------------------------------------------- ==================================================================================================================== Investment Income Interest $ 17,549,445 -------------------------------------------------------------------------------------------------------------------- Dividends 1,053,863 ------------ Total income 18,603,308 ==================================================================================================================== Expenses Management fees 1,302,730 -------------------------------------------------------------------------------------------------------------------- Shareholder reports 91,057 -------------------------------------------------------------------------------------------------------------------- Trustees' compensation 3,960 -------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 3,483 -------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 1,259 -------------------------------------------------------------------------------------------------------------------- Other 24,265 ------------ Total expenses 1,426,754 Less reduction to custodian expenses (2,307) ------------ Net expenses 1,424,447 ==================================================================================================================== Net Investment Income 17,178,861 ==================================================================================================================== Realized and Unrealized Gain (Loss) Net realized gain (loss) on: Investments (8,779,229) Closing of futures contracts 1,163,944 Foreign currency transactions (446,796) ------------ Net realized gain (loss) (8,062,081) -------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (1,796,915) Translation of assets and liabilities denominated in foreign currencies (765,924) ------------ Net change (2,562,839) Net realized and unrealized gain (loss) (10,624,920) ==================================================================================================================== Net Increase in Net Assets Resulting from Operations $ 6,553,941 ============
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, 2001 December 31, (Unaudited) 2000 ============================================================================================================================== Operations Net investment income (loss) $ 17,178,861 $ 34,458,330 ------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) (8,062,081) (12,609,134) ------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) (2,562,839) (34,460,833) ------------ ------------ Net increase (decrease) in net assets resulting from operations 6,553,941 (12,611,637) ============================================================================================================================== Dividends and/or Distributions to Shareholders Dividends from net investment income (34,924,849) (33,307,606) ============================================================================================================================== Beneficial Interest Transactions Net increase (decrease) in net assets resulting from beneficial interest transactions 39,714,937 38,623,186 ============================================================================================================================== Net Assets Total increase (decrease) 11,344,029 (7,296,057) ------------------------------------------------------------------------------------------------------------------------------ Beginning of period 333,532,541 340,828,598 ------------ ------------ End of period [including undistributed (overdistributed) net investment income of $17,091,389 and $34,837,377, respectively] $344,876,570 $333,532,541 ============ ============
See accompanying Notes to Financial Statements. Oppenheimer High Income Fund/VA 21 -------------------------------------------------------------------------------- Financial Highlights --------------------------------------------------------------------------------
Six Months Ended June 30, 2001 Year Ended December 31, (Unaudited) 2000 1999 1998 1997 1996 ================================================================================================================================ Per Share Operating Data Net asset value, beginning of period $9.27 $10.72 $11.02 $11.52 $11.13 $10.63 -------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .41 1.00 1.01 .95 .94 .97 Net realized and unrealized gain (loss) (.19) (1.36) (.55) (.90) .37 .58 -------------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations .22 (.36) .46 .05 1.31 1.55 -------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.95) (1.09) (.76) (.25) (.91) (1.05) Distributions from net realized gain -- -- -- (.30) (.01) -- -------------------------------------------------------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.95) (1.09) (.76) (.55) (.92) (1.05) -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.54 $9.27 $10.72 $11.02 $11.52 $11.13 ===== ===== ====== ====== ====== ====== ================================================================================================================================ Total Return, at Net Asset Value(1) 1.97% (3.74)% 4.29% 0.31% 12.21% 15.26% ================================================================================================================================ Ratios/Supplemental Data Net assets, end of period (in thousands) $344,877 $333,533 $340,829 $328,563 $291,323 $191,293 -------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $356,599 $329,260 $340,519 $322,748 $223,617 $157,203 -------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 9.71% 10.47% 9.61% 8.65% 8.88% 9.18% Expenses 0.81% 0.79% 0.75% 0.78%(3) 0.82%(3) 0.81%(3) -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 24% 31% 33% 161% 168% 125%
(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 of less than one full year. (3) Expense ratio reflects the reduction to custodian expenses. 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), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund's investment objective is to seek a high level of current income from investment in high yield fixed income securities. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Fund. -------------------------------------------------------------------------------- Securities Valuation. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). -------------------------------------------------------------------------------- Structured Notes. The Fund invests in foreign currency-linked structured notes whose market values and redemption prices are linked to foreign currency exchange rates. The structured notes are leveraged, which increases the volatility of each note's market value relative to the change in the underlying foreign currency exchange rate. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of June 30, 2001, the market value of these securities comprised 0.5% of the Fund's net assets and resulted in unrealized losses in the current period of $17,200. The Fund also hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5. -------------------------------------------------------------------------------- Security Credit Risk. The Fund invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of June 30, 2001, securities with an aggregate market value of $5,858,207, representing 1.70% 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. -------------------------------------------------------------------------------- Repurchase Agreements. The Fund requires its custodian bank 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. Oppenheimer High Income Fund/VA 23 -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (Continued) -------------------------------------------------------------------------------- ================================================================================ 1. Significant Accounting Policies (continued) 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 June 30, 2001, the Fund had available for federal income tax purposes an estimated unused capital loss carryover of $28,594,471. This estimated capital loss carryover represents carryover as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. As of December 31, 2000, the Fund had available for federal income tax purposes unused capital loss carryovers as follows: Expiring ---------------------------------------------- 2006 $ 3,401,577 2007 4,933,260 2008 11,572,833 ------------ Total $19,907,670 ============ -------------------------------------------------------------------------------- Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. -------------------------------------------------------------------------------- Classification of Dividends and Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. -------------------------------------------------------------------------------- Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. -------------------------------------------------------------------------------- Security Transactions. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- Other. The Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies, as revised, effective for fiscal years beginning after December 15, 2000. As required, the Fund began amortizing premiums on debt securities effective January 1, 2001. Prior to this date, the Fund did not amortize premiums on debt securities. The cumulative effect of this accounting change had no impact on the total net assets of the Fund, but resulted in a $409,614 decrease to cost of securities and a corresponding $409,614 decrease in net unrealized depreciation, based on securities held as of December 31, 2000. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 24 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (Continued) -------------------------------------------------------------------------------- ================================================================================ 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
Six Months Ended June 30, 2001 Year Ended December 31, 2000 ------------------------------ ----------------------------- Shares Amount Shares Amount ---------------------------------------------------------------------------------------------------------------------- Sold 9,561,310 $ 87,560,425 14,844,051 $ 144,443,891 Dividends and/or distributions reinvested 3,924,140 34,924,848 3,447,992 33,307,606 Redeemed (9,098,535) (82,770,336) (14,076,683) (139,128,311) ---------- ------------ ----------- ------------- Net increase (decrease) 4,386,915 $ 39,714,937 4,215,360 $ 38,623,186 ========== ============ =========== =============
================================================================================ 3. Purchases and Sales of Securities The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended June 30, 2001, were $126,533,107 and $73,207,112, respectively. -------------------------------------------------------------------------------- 4. Fees and Other Transactions with Affiliates Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust. The annual fees are 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for the six months ended June 30, 2001, was an annualized rate of 0.74%. -------------------------------------------------------------------------------- Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS an agreed-upon per account fee. -------------------------------------------------------------------------------- 5. Foreign Currency Contracts A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts for operational purposes and to seek to protect against adverse exchange rate fluctuations. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of June 30, 2001, the Fund had outstanding foreign currency contracts as follows:
Expiration Contract Valuation as of Unrealized Unrealized Contract Description Dates Amounts (000s) June 30, 2001 Appreciation Depreciation -------------------------------------------------------------------------------------------------------------------------- Contracts to Sell ----------------- British Pound Sterling (GBP) 12/5/01 2,785 GBP $3,892,738 $20,048 $ -- Canadian Dollar (CAD) 7/3/01 540 CAD 355,806 -- 13,383 ------- ------- Total Unrealized Appreciation and Depreciation $20,048 $13,383 ======= =======
Oppenheimer High Income Fund/VA 25 -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) (Continued) -------------------------------------------------------------------------------- ================================================================================ 6. Futures Contracts A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date at a negotiated price. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices "financial futures" or debt securities "interest rate futures" in order to gain exposure to or to seek to protect against changes in market value of stock and bonds or 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 decreases in market value of portfolio securities. The Fund may also purchase futures contracts to gain exposure to market changes 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 recognizes a realized gain or loss when the contract is closed or expires. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Realized gains and losses are reported on the Statement of Operations as closing and expiration of futures contracts. 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, 2001, 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 Directors 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, 2001, was $26,918,247, which represents 7.81% of the Fund's net assets, of which $2,649,284 is considered restricted. Information concerning restricted securities is as follows:
Valuation Per Unrealized Acquisition Cost Unit as of Appreciation Security Dates Per Unit June 30, 2001 (Depreciation) ------------------------------------------------------------------------------------------------------------------ Stocks and Warrants ------------------- Aurora Foods, Inc. 9/18/00 $ 0.00 $ 2.74 $33,968 CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 0.00 0.30 18,600 CGA Group Ltd., Series A, Vtg. 6/17/97-4/17/01 25.00 25.00 -- Geotek Communications, Inc. 4/6/00 0.00 0.01 2 Real Time Data Co. Wts., Exp. 5/31/04 6/30/99 0.01 0.01 --
26 Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- Oppenheimer High Income Fund/VA -------------------------------------------------------------------------------- A Series of Oppenheimer Variable Account Funds ================================================================================ Officers and Trustees James C. Swain, Trustee, CEO and Chairman of the Board Bridget A. Macaskill, Trustee and President William L. Armstrong, Trustee Robert G. Avis, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee F. William Marshall, Jr., Trustee David P. Negri, Vice President Thomas P. Reedy, Vice President Andrew J. Donohue, Vice President and Secretary Brian W. Wixted, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary ================================================================================ 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 those records by the independent auditors. For more complete information about Oppenheimer High Income Fund/VA, please refer to the Prospectus. To obtain a copy, call your financial advisor, or call OppenheimerFunds, Inc.at 1.800.981.2871. (C)Copyright 2001 OppenheimerFunds, Inc. All rights reserved. Oppenheimer High Income Fund/VA 27