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OPPENHEIMER VARIABLE ACCOUNT FUNDS
ANNUAL REPORT
DECEMBER 31, 1997
[LOGO]
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OPPENHEIMER MONEY FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS
OBJECTIVE
OPPENHEIMER MONEY FUND, a series of Oppenheimer Variable Account Funds,
primarily seeks maximum current income in "money market" securities that offer
individual investors low capital risk and the maintenance of liquidity. These
securities include short-term U.S. Government securities, certificates of
deposit (CDS), bankers' acceptances and commercial paper.
NARRATIVE BY DOROTHY WARMACK, FUND MANAGER
Compared to the volatility in world stock markets during the past few months,
short-term interest rates have remained relatively calm. As is often the case,
U.S. money market instruments became a safe haven in times of stress.
In addition to safety and liquidity, money market fund investors also enjoyed
high yields during the year ended December 31, 1997. One reason: the Federal
Reserve Board raised short-term interest rates by 0.25 percentage points in late
March of 1997. This new interest rate was in place for most of the period
covered by this report.
For the year ended December 31, 1997, Oppenheimer Money Fund, a series of
Oppenheimer Variable Account Funds, provided a compounded annual yield of 5.32%.
Without compounding, the corresponding yield was 5.19%. The seven-day annualized
yields with and without compounding on December 31, 1997 were 5.38% and 5.24%,
respectively.(1) It's important to remember that an investment in the Fund is
neither insured nor guaranteed by the U.S. government, and there is no assurance
that the Fund will maintain a stable $1.00 share price in the future.
Typically, long-term and short-term interest rates move in the same direction.
During the past few months, long-term rates have fallen sharply. That's because
investors worldwide increasingly invested in U.S. Treasury bonds of all
maturities when they liquidated their Asia equity positions. Generally, when the
demand for bonds rises, bond prices increase, and issuers can pay lower yields
to attract the same number of investors.
However, while long-term interest rates have been falling, U.S. money market
yields have actually been rising in recent weeks. The main reason is that Japan,
the world's second largest issuer of short-term debt, continues to have
financial difficulties. Because investors perceive a lowered credit quality
there, issuers have been required to pay higher interest rates to compensate for
the additional risk. To compete, American issuers in both the government and
corporate sectors have been forced to also raise their short-term rates.
With this backdrop of heightened credit concerns, our strategy remains constant:
to invest in securities that present minimal credit risk. Today, U.S. blue chip
corporations offer a wide selection of commercial paper and other money market
instruments that currently are paying attractive yields.
All things considered, the U.S. economy is the envy of the world. Inflation is
virtually non-existent, long-term interest rates have fallen below 6%, the
federal budget is nearly balanced, unemployment is under 5% and economic growth
continues to be strong. True, Asia's devalued currencies and uncertain business
environment will slow our economy somewhat, because our exports to the Far East
will be curtailed. However, our economy was beginning to overheat in 1997 and
had the events in Asia not taken place, the Federal Reserve Board might have
intervened by raising short-term interest rates to slow down the economy.
As we have seen, world events can have a dramatic impact on interest rates as
well as the investment markets. However, we don't try to predict the future
course of interest rates and use those predictions to set our investment
strategy. Instead, we "ladder" the portfolio with some securities maturing in a
few days, some maturing in a month, some maturing in two months and so on. With
a relatively broad maturity spectrum, the portfolio is widely diversified and
able to take advantage of a variety of market conditions.
Money market yields are often compared with the rate of inflation to determine a
"real" rate of return. The real rate of return equals the stated money market
yield minus the rate of inflation. At the same time, money market funds provide
a strong combination of liquidity and safety of principal during times of
volatility in other markets.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Money Fund. We look forward to helping you reach your financial
goals in the future.
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1. Compounded yields assume reinvestment of dividends. Past performance does not
guarantee future results.
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OPPENHEIMER HIGH INCOME FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS
OBJECTIVE
OPPENHEIMER HIGH INCOME FUND, a series of Oppenheimer Variable Account Funds,
seeks a high level of current income. The Fund invests in high-yielding,
lower-rated and unrated fixed-income securities.(1)
NARRATIVE BY DAVID NEGRI, FUND MANAGER (2)
After a slow start, Oppenheimer High Income Fund performed relatively well
during 1997. For the one year period ended December 31, 1997, the Fund provided
an average annual total return of 12.21%.(3) These results reflect changes in
share price, plus reinvested income distributions, but are calculated before
insurance product charges are considered.
High-yield bonds had a good year in 1997. As yields on U.S. government
securities and investment-grade corporate bonds declined, investors began to
look to the high-yield bond market for incrementally higher yields. Greater
demand caused prices to rise, and existing high-yield bondholders benefited from
capital appreciation, which contributed to high total rates of return. This
trend continued until late in the year, when the market declines in Asia shifted
demand to high-quality credits such as U.S. Treasury securities. This "flight to
quality" caused U.S. Treasury securities to outperform other types of bonds,
including high-yield bonds, in the fourth quarter of 1997.
With the exception of our foreign bond position, which declined, we maintained a
steady allocation among bond market sectors during the year. We also invested
about 4% of the portfolio in preferred stocks.(4)
Our positions in corporate bonds were primarily in telecommunications companies,
including wireless communications. We also held bonds from companies in the
cable television and financial services industries. All three industries are in
the midst of deregulation, which we believe will be good for their businesses.
At the start of the year, our foreign bond positions were primarily in emerging
markets, including Latin America, Eastern Europe and Asia. As the U.S. dollar
gained strength, we cut back our exposure to Asia and Eastern Europe.
After the crisis in Asia developed and markets there plunged, we found very
attractive opportunities in Latin America. Bond markets in Latin America
declined in the wake of Asia's fall, despite the fact that the two regions do
not share the same problems. However, we expect Latin America's economic growth
rates to be very good next year. That's because Brazil has announced aggressive
steps to protect its currency and its financial system, and Mexico should be a
beneficiary of the strong U.S. economy. Inflation in these countries is down to
levels we haven't seen in many decades, and they've increased the strength of
their financial sector substantially. While we're not excited about Asia just
yet - we think it's still too early - we think Latin America will do well in
1998.
We are also optimistic about prospects for the U.S. high-yield bond market
during 1998. Most important, we believe economic conditions should remain
favorable. We expect growth to slow from current levels, largely in response to
declining demand for U.S. products overseas. We believe the rate of inflation
should remain at its current low levels. We expect these factors and others to
cause long-term interest rates to decline modestly from current levels, and
investors should continue to seek higher yields in the high-yield marketplace.
We plan to continue to allocate assets among those sectors of the high-yield and
foreign bond markets that we believe should provide the best yields relative to
risk. We believe this strategy should enable the Fund to provide a high level of
income and the opportunity for attractive total returns for its shareholders. We
appreciate your confidence in Oppenheimer Variable Account Funds - Oppenheimer
High Income Fund. We look forward to helping you reach your financial goals in
the future.
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1. The Fund invests in below-investment-grade securities, which may entail
greater credit risks, as described in the prospectus.
2. Effective January 1, 1998 the Fund's portfolio manager is Tom Reedy.
3. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
4. The Fund's portfolio is subject to change.
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OPPENHEIMER BOND FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS
OBJECTIVE
OPPENHEIMER BOND FUND, a series of Oppenheimer Variable Account Funds, primarily
seeks a high level of current income from investing in high-yield fixed-income
securities. Secondarily, the Fund seeks capital growth when this is consistent
with its primary objective of high current income.
NARRATIVE BY DAVID NEGRI, FUND MANAGER
After a slow start, Oppenheimer Bond Fund performed relatively well during 1997.
For the one year period ended December 31, 1997, the Fund provided an average
annual total return of 9.25%.(1) These results reflect changes in share price,
plus reinvested income distributions, but are calculated before insurance
product charges are considered.
As it became apparent toward mid-year that inflation would remain low, our view
of the interest rate environment became more positive. As a result, we increased
the Fund's AVERAGE DURATION, a measure of the portfolio's sensitivity to changes
in interest rates. By increasing the average duration from about 5.0 years early
in the year to a high of 5.8 years, we created a portfolio that was more
sensitive to DECLINING interest rates, which helped produce commensurately
higher rates of capital appreciation.(2)
Our allocation of assets among the various types of bonds did not change
significantly during the year, however. We kept about 65% of the Fund's assets
in U.S. government securities, including U.S. Treasuries and mortgage-backed
securities issued by federal agencies. Another 30% of the portfolio was invested
in investment-grade corporate bonds, primarily in the cable television, media
and commercial banking industries. These industries are in the midst of
deregulation, which we believe will be good for their businesses. On the other
hand, we've de-emphasized companies in the metals, paper and retail industries
because, at this late stage of the economic cycle, we don't want exposure to
companies that are too sensitive to changes in the economy.
About 15% of our corporate bond position was allocated to commercial private
mortgage securities, which represent pools of mortgages on hotels, shopping
malls, apartment buildings and other enterprises. During the past 12 months,
commercial mortgage bonds offered attractively high yields compared to other
bonds, as well as the relative safety of secured underlying assets.
The other 2% of the portfolio was invested in bonds issued by governments and
corporations overseas. While the Fund had virtually no exposure to Southeast
Asia, we did, and still do, have some positions in bonds issued in Australia.
The bond markets there have performed exceedingly well, but the ripple effect
from the Asian crisis caused a devaluation of their currencies relative to the
U.S. dollar, which offset the returns from the bond market rallies in those
countries for U.S. investors.
As for the future, we are optimistic about prospects for the U.S. bond market
during 1998. We expect economic growth to slow from current levels, in large
part in response to declining demand for U.S. products overseas. We believe the
rate of inflation should remain at its current low levels as growth moderates.
The federal government's progress toward a balanced budget should contribute to
less issuance of U.S. Treasury securities. Yet demand for these bonds should
remain high as overseas investors seek the safety of bonds issued by the most
creditworthy government in the world. We expect these factors and others to
cause long-term interest rates to decline modestly from current levels.
We intend to maintain the Fund's current strategic orientation. We expect to
keep the portfolio's average duration relatively long to hold higher yielding
securities for as long as possible while interest rates fall. What's more, we
plan to continue to allocate assets among those sectors of the bond market that
we believe should provide the best yields relative to risk. We believe this
strategy should enable the Fund to provide a competitive level of income and the
opportunity for attractive total returns for its shareholders.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Bond Fund. We look forward to helping you reach your financial goals
in the future.
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1. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
2. The Fund's portfolio is subject to change.
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OPPENHEIMER CAPITAL APPRECIATION FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT
FUNDS
OBJECTIVE
OPPENHEIMER CAPITAL APPRECIATION FUND, a series of Oppenheimer Variable Account
Funds, primarily seeks capital appreciation through investments in the common
stocks of "growth-type" companies. In addition, the Fund may selectively invest
in "special situations" that management believes may provide opportunities for
growth.
NARRATIVE BY PAUL LAROCCO, FUND MANAGER
Oppenheimer Capital Appreciation Fund, a series of Oppenheimer Variable Account
Funds, provided an average annual total return, without considering insurance
product charges, of 11.67% for the one-year period ended December 31, 1997.(1)
Back in April of 1997, we felt the fundamentals of the Fund's portfolio were
very strong - even though some of the holdings had low values in the market. We
believed these relatively low valuations represented a great buying opportunity,
and we used some of the Fund's cash to add to our positions. Over June, July and
August, many of these holdings increased in value, and resulted in a positive
performance swing for the Fund. The fundamentals of these companies remained
strong, and their valuations continued to improve.
In this Fund, we continue to aggressively pursue stocks in industries which
represent emerging growth, new technologies, and innovative products and
services. These are exciting areas in which to invest because many large
open-ended opportunities exist to invest in a company that's small today - but,
due to its potential for rapid growth, may become a much larger company in the
next several years.
In particular, information technology service companies represent an interesting
area for us. Due to the increasing complexity of technology, many corporations
rely on outside consulting resources to help them understand what their needs
are and how to address their information technology challenges.
We're also investing in companies that provide software and services for the
healthcare industry, an area which represents a huge untapped opportunity.
Historically, hospitals and doctors have spent a much lower percentage of their
revenues on software and hardware than other businesses. Now, they need to
implement new information technologies to automate their business processes
(much of which are still hand-written) and provide the best quality care at the
lowest cost. This includes everything from scheduling doctors and ordering
supplies to interfacing between labs and handling billing and managed care.
Another positive contributor to the Fund has been energy and oil service
companies. Today there's more demand for oil exploration equipment and
technology than in recent years because the cost of finding oil has gone down so
much - and the success rate has risen. As a result, drilling has become more
economically attractive, even with the relatively low price of oil.
On the other hand, the Fund has shifted away from some technology companies that
manufacture semiconductor and telecommunications equipment, due to their
exposure to the turmoil in Asia. The products and fundamentals of these
companies appear fine, but we believe that demand will weaken in the uncertain
economies of the Asia/ Pacific region, which will result in a significant hit to
earnings for several quarters. However, because this Fund has a small/mid-cap
focus, it is much more domestically oriented than many of its peers. And, as a
result, the Fund is less exposed to overseas market fluctuations than are funds
invested in larger multinational companies.
In 1998, we believe investors will be looking for earnings growth as the U.S.
economy slows. If the earnings of multinational companies are disappointing,
investors may leave those stocks and choose to invest in the companies where
earnings are growing strong - which we believe include small and mid-cap stocks.
With that thought in mind, we're very optimistic for the Fund over the coming
year.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Capital Appreciation Fund. We look forward to helping you reach your
financial goals in the future.
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1. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
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OPPENHEIMER GROWTH FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS
OBJECTIVE
OPPENHEIMER GROWTH FUND, a series of Oppenheimer Variable Account Funds, seeks
capital appreciation from investments in securities of well-known and
established companies. The Fund's present focus is in securities of mid-or
large-cap companies with a history of earnings and dividend growth.
NARRATIVE BY JANE PUTNAM, FUND MANAGER
Oppenheimer Growth Fund exhibited strong performance over the past year. The
Fund's average annual total return, without considering insurance product
charges, for the one-year period ended December 31, 1997 was 26.68%.1
This strong performance is particularly impressive in light of the Fund's
significant cash holdings - holdings that should be understood in context of our
investment strategy and style. We make investment choices, both what to buy and
what to sell, on a stock-by-stock basis - a "bottom-up" approach. And while we
focus on stocks with good prospects for growth, we are price-sensitive,
following a "growth at a good price" strategy.
In a market like the one we experienced in 1997, our approach typically leads us
to sell more stocks than we buy. When a number of stocks we held reached our
target price levels, we sold them. We have identified many stocks that we'd like
to purchase based on their fundamentals, however, we often thought they were
simply too expensive. And, while growth prospects were certainly there, we could
not buy growth "at a good price," and as a result, we developed a cash cushion.
That cash cushion proved valuable during the market volatility we experienced in
October and November. Cash on hand both helped dampen the effect of market
swings on the Fund and provided the liquidity to take advantage of the
attractive buying opportunities that were created when stock prices temporarily
dropped.
While we select stocks based on their individual merit, many of the stocks we
held were in industry sectors which outperformed the overall market. The Fund
held large positions in the financial, consumer cyclical and energy sectors, all
of which showed solid growth. Within those industries we emphasized investments
in market segments that reported solid returns: in the financial industry,
brokers and consumer finance companies; in the consumer cyclical sector,
selected department, drug and grocery stores; and in the energy sector, oil
service companies and drillers.2
In the financial sector we trimmed our bank holdings during the year, choosing
instead to invest in asset managers, insurance companies, consumer lenders and
other specialized financial service firms, like the Travelers, a top holding of
the Fund. As the world's population grows older, we believe increased savings
for retirement will become a more important theme, not just in the United
States, but throughout Europe and selected other countries as well. We also
believe that as the asset management industry consolidates, the stronger firms
will become even stronger. A firm with the Travelers' strengths - exceptional
management, broad product line, global presence, strong financial track record
and proven acquisition expertise - is well positioned to grow and to dominate
its market globally.
CVS, a major consumer cyclical holding of the Fund, is another firm that has
shown the ability to take advantage of extensive industry consolidation. CVS has
been resourceful in laying out the front of its stores: the area filled with
high-margin impulse purchases, such as batteries and suntan lotion, that
shoppers walk through on the way to the prescription counter in the back. CVS
recently acquired Revco, a similar firm, but one that's much less successful in
front-end, high margin sales. By bringing its management ability and layout
strategy to bear, CVS should be able to create their typical much higher per
store returns in the stores acquired from Revco.
On the other hand, performance in certain sectors lagged. Technology, in which
we are traditionally an aggressive investor, had mixed results. While some
subsectors, such as software and selected PC manufacturers, were strong, other
areas in which we hold positions, such as disk drive and semiconductor
manufacturers, held down performance. We have reduced overall exposure to
technology stocks, targeting those companies that we believe are most vulnerable
should a slowdown in overall technology spending occur. Instead, we are focusing
on more familiar domestic names that have a high visibility and possess more
stable earnings histories.
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Going forward, we plan to remain focused on our fundamental approach of seeking
growth at the right price. We hope to reduce our cash level by identifying
companies with solid operating and financial fundamentals and by purchasing
their shares at what we believe are reasonable price levels. In 1998, unsettled
conditions in certain sectors of the global economy may well dampen growth and
could reduce corporate profits. In such an environment, we believe that our
disciplined approach and emphasis on individual stock selection should serve
investors well.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Growth Fund. We look forward to helping you reach your financial
goals in the future.
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1. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
2. The Fund's portfolio is subject to change.
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OPPENHEIMER MULTIPLE STRATEGIES FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT
FUNDS
OBJECTIVE
OPPENHEIMER MULTIPLE STRATEGIES FUND, a series of Oppenheimer Variable Account
Funds, seeks total return from investments in common stocks and other equity
securities, bonds and other debt securities, and "money market" securities.
Total return includes current income as well as capital appreciation. The
current allocation of the Fund's portfolio aims to take advantage of current
economic conditions, while seeking to manage risk.
NARRATIVE BY RICHARD RUBINSTEIN, FUND MANAGER
Oppenheimer Multiple Strategies Fund performed relatively well during 1997. For
the one year period ended December 31, 1997, the Fund provided an average annual
total return of 17.22%, without considering insurance product charges.(1)
Our approach to managing the Fund is to attempt to produce above-average returns
while seeking to manage risk, regardless of the prevailing economic and market
environments. We strive to control risk through broad diversification, which
enables shareholders to participate in many different markets and types of
investments simultaneously. By maintaining exposure to many different areas of
the financial markets, shareholders are more likely to participate in attractive
investments at any given time.
During 1997, several different types of investments performed well. The Fund's
exposure to the stock market ranged between 48% and 54% of assets during the
year, enabling shareholders to participate in the stock market's exceptional
performance. The balance of between 46% and 52% of the Fund was invested in
bonds. In addition to contributing to returns as interest rates declined, our
bond market exposure helped cushion shareholders from the negative effects of
the stock market's sharp sell-offs, including a drop of more than 10% in the
spring and the one-day decline of about 8% in late October.(2)
We also emphasize broad diversification within each asset class. Our bond
portfolio consists of a mix of U.S. Treasury securities, high-yield corporate
bonds and foreign bonds from a combination of developed and emerging countries.
We increased our holdings of U.S. Treasury securities over the year. We
commensurately reduced our positions in corporate and foreign bonds as the
differences in yields between these bond sectors and U.S. Treasury securities
narrowed.
The Fund's stock portfolio is diversified, not just among companies and
industries, but also among investment styles, including the growth, value,
contrarian, high-yield and international areas. Some of our largest
international holdings included banks in Switzerland, Italy, France, and
Germany. We expect these companies to benefit from improved efficiency, lower
costs, higher revenues and greater profitability. In the high-yield area, we
increased our position in electric utilities because of their attractive
dividend yields. In the contrarian area, we found opportunities in companies
with good businesses that have encountered short-term or intermediate-term
problems. If those problems are resolved, we expect their stock prices to rise.
Looking toward the future, we are cautiously optimistic. We are optimistic
because of the state of the U.S. economy as well as most regions overseas. In
the U.S., moderate rates of growth and low inflation should continue to support
the revenues of domestic companies. European companies are in the early stages
of the process of corporate restructuring that helped U.S. companies become more
efficient over the past decade. Latin America also has learned some difficult
lessons and appears to be on track toward more economic growth.
On the other hand, we are cautious because of our longstanding experience that
markets do not rise or fall in a straight line. The markets' volatility in 1997
may be a signal that further turbulence is ahead. And the persistent problems in
Japan and Southeast Asia could constrain growth in the economies of the rest of
the world. With stock valuations at historical highs, and bond yields at recent
lows, we are concerned that any unexpected disappointments could trigger a
market decline.
Our multiple-strategies approach should enable us to participate in rising
markets, while broad diversification provides protection against unexpected
market declines. We regard the Fund as a "portfolio for all seasons." Whatever
the future brings, we believe that the Fund is well positioned to confront the
challenges and take advantage of the opportunities.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Multiple Strategies Fund. We look forward to helping you reach your
financial goals in the future.
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1. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
2. The Fund's portfolio is subject to change.
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OPPENHEIMER GLOBAL SECURITIES FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT
FUNDS
OBJECTIVE
OPPENHEIMER GLOBAL SECURITIES FUND, a series of Oppenheimer Variable Account
Funds, seeks long term capital appreciation from growth companies worldwide.
NARRATIVE BY BILL WILBY, FUND MANAGER
Oppenheimer Global Securities Fund performed well during 1997. For the one-year
period ended December 31, 1997, the Fund provided an average annual total return
of 22.42%.1 These results reflect changes in share price, plus reinvested
distributions, but are calculated before insurance product charges are
considered. We also performed well relative to our peers, ranking 4 of 199 among
global sub-accounts, as measured by Lipper Analytical Services for the one-year
period ended December 31, 1997.2
While the performance of the international markets was mixed in 1997, our
investment approach, which emphasizes individual opportunities rather than
specific international regions, worked quite well. Our approached helped us
avoid the trouble spots in the global equity markets and participate where
prospects were brightest.
With that said, we believe it is important to understand the environment in
which we operated. That's because 1997 was an extraordinarily difficult year for
some of the world's stock markets and a strong year for others. For example,
European markets provided attractive returns, the result of increased investor
confidence in an economic recovery. Another major theme driving Europe's markets
has been the corporate restructuring taking place as companies prepare for the
anticipated debut of the European Monetary Union on January 1, 1999. In
contrast, the Asian markets did very poorly. In Japan, a prolonged economic
recession kept stock prices depressed, and the emerging markets of Southeast
Asia declined sharply between July and October. Because we held only a few minor
positions in markets such as Indonesia and Thailand, the Fund avoided the brunt
of the Asian sell-off.
Instead, we focused primarily on Europe, where we found several attractive
investments, primarily in the financial services industry. For example, our
European holdings include French banks engaged in aggressive cost-cutting
programs, a reorientation towards shareholder value and a strong earnings
recovery. In addition, we held a large position in Cap Gemini, one Europe's
largest software companies, which performed very well over the past year.3
In contrast, we reduced our positions in U.S. financial services companies,
including some of the large banks. We believe that consumer credit problems may
intensify, which could affect lenders' earnings. On the other hand, we have
maintained positions in U.S. technology leaders, such as IBM, which is in the
midst of a change from a mainframe manufacturer to a technology services
company. As IBM completes this shift, we believe the market may reward them with
a higher stock price.
The global oil services industry contributed significantly to the Fund's
performance in 1997. Holdings such as Global Marine and TransOcean Offshore have
high quality fleets of semi-submersible oil rigs, and these companies have
benefitted from increased exploration for oil.
Looking forward, we have adopted a more defensive posture. Whatever the future
brings, however, we remain confident that our disciplined investment approach
can help our shareholders participate in the global financial markets.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Global Securities Fund. We look forward to helping you reach your
financial goals in the future.
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1. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
2. Source: LIPPER ANALYTICAL SERVICES, INC., 12/31/97. Based on the comparisons
between changes in net asset value without considering insurance product
charges, with dividends and capital gains distributions reinvested. The Fund was
ranked 4 of 199 (1-year) and 3 of 60 (5-year) among global sub-accounts for the
period ended 12/31/97. Past performance does not guarantee future results.
3. The Fund's portfolio is subject to change.
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OPPENHEIMER STRATEGIC BOND FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS
OBJECTIVE
OPPENHEIMER STRATEGIC BOND FUND, a series of Oppenheimer Variable Account Funds,
seeks a high level of current income from debt securities. The Fund primarily
invests in three sectors: foreign fixed-income securities(1), lower rated
high-yield domestic corporate bonds and U.S. government securities.
NARRATIVE BY DAVID NEGRI, FUND MANAGER
After a slow start, Oppenheimer Strategic Bond Fund performed relatively well
during 1997. For the one year period ended December 31, 1997, the Fund provided
an average annual total return of 8.71%.(2) These results reflect changes in
share price, plus reinvested income distributions, but are calculated before
insurance product charges are considered.
As it became apparent toward mid-year that inflation would probably remain low,
our view of the interest rate environment became more positive. As a result, we
increased the Fund's AVERAGE DURATION, a measure of the portfolio's sensitivity
to changes in interest rates. By increasing the average duration to a high of
5.1 years, we created a portfolio that was more sensitive to DECLINING interest
rates, which helped produce higher rates of return.(3)
Our allocation of assets among the various types of bonds did not change
significantly, however. We kept about 30% of the Fund's assets in U.S.
government securities, including U.S. Treasuries and mortgage-backed securities
issued by federal agencies. Another 35% of the portfolio was invested in
high-yield corporate bonds, which performed particularly well. We also invested
about 20% of the portfolio in bonds from foreign governments and corporations.
Our foreign bond positions were split evenly between bonds from developed
countries, such as Europe, Australia, Canada, New Zealand, and bonds from
emerging markets, including Latin America, Eastern Europe and Asia.
Our positions in corporate bonds were primarily in telecommunications companies,
including wireless communications. We also held bonds from companies in the
cable television and financial services industries. These industries are in the
midst of deregulation, which we believe will be good for their businesses.
In the foreign bond sector, the Fund had virtually no exposure to Southeast
Asia, and the Fund performed relatively well when the Asian crisis developed.
However, the problems in Asia also affected bond markets in Latin America,
despite the fact that the two regions do not share the same problems. When bond
prices fell in Latin America, we took advantage of the opportunity to add to our
positions at very attractive prices. Our positions in bonds issued in New
Zealand and Australia have performed well, but the ripple effect from the Asian
crisis caused a devaluation of their currencies relative to the U.S. dollar.
Devaluation offset the returns from the bond market rallies in those countries
for U.S. investors.
We are optimistic about prospects for the U.S. bond market. Perhaps most
important, 1998 economic conditions should remain favorable. We expect economic
growth to slow from current levels in response to declining demand for U.S.
products overseas. The rate of inflation should remain at its current low levels
as growth moderates. The federal government's progress toward a balanced budget
should contribute to less issuance of U.S. Treasury securities. Yet demand for
these bonds should remain high as economic problems overseas cause investors to
seek the safety of bonds issued by the most creditworthy government in the
world. We expect these factors and others to cause long-term interest rates to
decline modestly from current levels.
We intend to maintain the Fund's current strategic orientation. We are keeping
the portfolio's average duration relatively long to hold higher yielding
securities for as long as possible while interest rates fall. We also plan to
continue to allocate assets among those sectors of the bond market that we
believe should provide the best yields relative to risk. We believe this
strategy should enable the Fund to provide a competitive level of income and the
opportunity for attractive total returns for its shareholders.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Strategic Bond Fund. We look forward to helping you reach your
financial goals in the future.
- ----------------------------
1. Investing in foreign securities entails special risks, such as currency
fluctuations, described in the prospectus.
2. Includes changes in net asset value per share without deducting insurance
product charges. Such performance would have been lower if these charges were
taken into account.
3. The Fund's portfolio is subject to change.
<PAGE>
OPPENHEIMER GROWTH & INCOME FUND, A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS
OBJECTIVE
OPPENHEIMER GROWTH & INCOME FUND, a series of Oppenheimer Variable Account
Funds, seeks high total return, which includes growth in the value of its
shares, as well as current income from equity and debt securities.
NARRATIVE BY ROBERT MILNAMOW, FUND MANAGER
Oppenheimer Growth & Income Fund performed very well during 1997. For the
one-year period ended December 31, 1997, the Fund provided an average annual
total return, without considering insurance product charges, of 32.48%.(1) We
also performed well relative to our peers, ranking 26 of 475 among growth and
income sub-accounts, as measured by Lipper Analytical Services for the one-year
period ended December 31, 1997.(2)
In general, the Fund's performance has improved during the past six months due
to investments in both strong sectors/industries and specific stocks.
For example, the Fund held several financial stocks throughout the year, many of
which have benefited from both excellent fundamentals and consolidation
activity. One of our largest holdings, Chase Manhattan Bank, was an above
average performer during 1997. We remain positive on Chase because of its
inexpensive valuation, tight expense controls, and strong global presence.
Furthermore, Chase has been aggressively buying back its stock, a bullish sign.
Other strong performers in the financial arena are some of our insurance
holdings, including Allstate and Everest Re. Allstate has reported positive
earnings gains due to its ability to improve its operating costs during the past
year, as well as its ability to limit its exposures to major risk areas and
natural disasters. Everest Re, a reinsurance company that provides excess layers
of property and casualty insurance to other insurance companies, has also
exhibited strong gains during the period.
Technology stocks have also been key contributors to the Fund's positive
performance throughout the year, though they have become somewhat volatile in
recent months. We have eliminated our positions in a few companies with
deteriorating fundamentals, and we have increased our holdings in a number of
other technology companies, including Ikon, First Data and Structural Dynamics.
These companies have all underperformed the market during the past year, but, we
continue to believe that these companies still have very promising fundamentals.
Another position we added to during the last few months is Republic Industries.
Republic Industries is a rapidly growing company in the new, used and rental car
businesses. By offering user-friendly "one-stop shopping," Republic is trying to
simplify and improve the whole automotive buying experience for consumers.
The Fund was unable to benefit last year from its limited holdings in energy
service companies. While the energy sector has corrected sharply during the past
few months, the group was an above average performer during 1997. We continue to
like the fundamentals in this sector, and as a result, over the past few months
we've been adding to our energy service holdings. We are particularly excited
about companies that specialize in deep-water drilling activity.
Looking into 1998, our biggest concern is what impact the financial crisis in
Southeast Asia will have on earnings growth for many of our investments. We will
continue to monitor our holdings closely to identify those companies most at
risk to earnings disappointments. In conclusion, we believe that the key to the
Fund's ability to continue outperforming its peers is its ability to be flexible
and opportunistic, and to seek to capitalize on market opportunities as they
arise.
We appreciate your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Growth & Income Fund. We look forward to helping you reach your
financial goals in the future.
- ----------------------------
1. Includes changes in net asset value per share without deducting any insurance
product charges. Such performance would have been lower if these charges were
taken into account.
2. Source: LIPPER ANALYTICAL SERVICES, INC., 12/31/97. Based on the comparisons
between changes in net asset value without considering insurance product
charges, with dividends and capital gains distributions reinvested. Past
performance does not guarantee future results.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
<S> <C> <C>
- -------------------------------------------------------------
DIRECT BANK OBLIGATIONS - 9.4%
- -------------------------------------------------------------
Abbey National North America Corp.,
5.54%, 1/23/98 $6,000,000 $ 5,979,687
- -------------------------------------------------------------
Bankers Trust Co., New York, 5.71%,
4/15/98(1) 3,000,000 3,000,000
- -------------------------------------------------------------
National Westminster Bank of
Canada, 5.59%, 4/30/98 3,000,000 2,944,585
------------
Total Direct Bank Obligations 11,924,272
- -------------------------------------------------------------
LETTERS OF CREDIT - 8.6%
- -------------------------------------------------------------
ABN Amro Bank NV, guaranteeing
commercial paper of Formosa
Plastics Corp., USA-Series A,
5.55%, 2/27/98 2,000,000 1,982,425
- -------------------------------------------------------------
Bank of America, guaranteeing
commercial paper of Formosa
Plastics Corp., USA-Series B,
5.55%, 3/19/98 2,000,000 1,976,258
- -------------------------------------------------------------
Credit Suisse, guaranteeing
commercial paper of Daewoo
International Corp., 5.63%, 4/22/98 5,000,000 4,913,204
- -------------------------------------------------------------
Societe Generale, guaranteeing
commercial paper of Nacional
Financiera SNC-Series B, 5.535%,
2/17/98 2,000,000 1,985,548
------------
Total Letters of Credit 10,857,435
- -------------------------------------------------------------
SHORT-TERM NOTES - 75.7%
- -------------------------------------------------------------
AUTOMOTIVE - 0.8%
BMW US Capital Corp., 5.65%,
1/14/98 1,000,000 997,960
- -------------------------------------------------------------
BANKS - 4.9%
Bankers Trust New York Corp.,
5.54%, 2/17/98 3,280,000 3,256,276
- -------------------------------------------------------------
Barnett Banks, Inc., 5.92%, 1/16/98 3,000,000 2,992,500
------------
6,248,776
- -------------------------------------------------------------
BROKER/DEALERS - 24.5%
Bear Stearns Cos., Inc., 6.169%,
3/23/98(1) 5,000,000 5,002,296
- -------------------------------------------------------------
Lehman Brothers Holdings, Inc.:
4.975%, 8/14/98(1) 2,000,000 2,000,000
5.70%, 4/10/98 3,000,000 2,952,975
- -------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.67%,
5/22/98 6,250,000 6,111,203
- -------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co., 6.75%, 3/24/98 5,000,000 5,000,000
- -------------------------------------------------------------
Republic New York Securities Corp.,
7%, 4/24/98 5,000,000 5,000,000
- -------------------------------------------------------------
Salomon Smith Barney, Inc.:
5.77%, 3/30/98 2,000,000 1,971,791
5.884%, 10/20/98(1) 3,000,000 3,000,000
------------
31,038,265
- -------------------------------------------------------------
COMMERCIAL FINANCE - 6.5%
CIT Group Holdings, Inc., 5.902%,
3/11/98(1) 1,000,000 1,000,000
- -------------------------------------------------------------
FINOVA Capital Corp.:
5.60%, 1/5/98 2,000,000 1,998,756
5.61%, 4/29/98 2,000,000 1,963,223
- -------------------------------------------------------------
Heller Financial, Inc.:
6%, 1/9/98 334,000 333,555
6%, 4/2/98 3,000,000 2,954,500
------------
8,250,034
- -------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 1.5%
First Data Corp., 5.67%, 5/19/98 2,000,000 1,956,530
- -------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.2%
General Electric Capital Corp.,
5.55%, 2/23/98 2,510,000 2,489,491
- -------------------------------------------------------------
General Motors Acceptance Corp.,
5.56%, 1/26/98 1,500,000 1,494,208
------------
3,983,699
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
- -------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES - 4.7%
PHH Corp.:
5.939%, 1/27/98(1) $1,000,000 $ 999,986
5.96%, 1/15/98(1) 5,000,000 4,999,981
------------
5,999,967
- -------------------------------------------------------------
INSURANCE - 5.5%
Pacific Mutual Life Insurance Co.,
5.647%, 1/2/98(1)(2) 5,000,000 5,000,000
- -------------------------------------------------------------
Travelers Insurance Co., 5.708%,
9/16/98(1)(2) 2,000,000 2,000,000
------------
7,000,000
- -------------------------------------------------------------
LEASING & FACTORING - 3.9%
American Honda Finance Corp.,
5.58%, 1/22/98 5,000,000 4,983,725
- -------------------------------------------------------------
MANUFACTURING - 1.4%
Rexam PLC, 6%, 1/12/98(3) 1,750,000 1,746,792
- -------------------------------------------------------------
METALS/MINING - 3.3%
Rio Tinto America, Inc., 5.55%,
2/27/98(3) 4,200,000 4,163,093
- -------------------------------------------------------------
NONDURABLE HOUSEHOLD GOODS - 2.6%
Newell Co., 6.80%, 1/2/98(3) 3,345,000 3,344,368
- -------------------------------------------------------------
SPECIAL PURPOSE FINANCIAL - 12.9%
Asset Backed Capital Finance, Inc.:
5.60%, 2/9/98(3) 1,500,000 1,490,900
5.68%, 1/8/98(3) 2,000,000 1,997,791
- -------------------------------------------------------------
Beta Finance, Inc.:
5.54%, 2/25/98(3) 2,000,000 1,983,072
5.56%, 3/12/98(3) 2,000,000 1,978,300
5.57%, 4/29/98(3) 2,000,000 1,963,486
- -------------------------------------------------------------
Cooperative Assn. of Tractor
Dealers-Series A, 5.95%, 2/10/98 1,000,000 993,389
- -------------------------------------------------------------
CXC, Inc.:
5.59%, 2/17/98(3) 3,000,000 2,978,106
5.68%, 3/26/98(3) 3,000,000 2,960,240
------------
16,345,284
------------
Total Short-Term Notes 96,058,493
- -------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
5.5%
- -------------------------------------------------------------
Finnish Export Credit Ltd., 5.55%,
7/15/98 2,000,000 1,939,875
- -------------------------------------------------------------
Westseutsche Landsbank
Girozentrale, 8%, 1/2/98 5,000,000 4,998,889
------------
Total Foreign Government
Obligations 6,938,764
- -------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 99.2% 125,778,964
- -------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.8 1,003,418
---------- ------------
NET ASSETS 100.0% $126,782,382
---------- ------------
---------- ------------
</TABLE>
Short-term notes, direct bank obligations and letters of credit are generally
traded on a discount basis; the interest rate is the discount rate received by
the Fund at the time of purchase. Other securities normally bear interest at the
rates shown.
1. Floating or variable rate obligation. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to change
periodically and is the effective rate on December 31, 1997. This instrument may
also have a demand feature which allows the recovery of principal at any time,
or at specified intervals not exceeding one year, on up to 30 days' notice.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature.
2. Restricted securities which are considered illiquid, by virtue of the absence
of a readily available market or because of legal or contractual restrictions on
resale, amount to $7,000,000, or 5.52% of the Fund's net assets. The Fund may
not invest more than 10% of its net assets (determined at the time of purchase)
in illiquid securities.
3. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $24,606,148, or 19.41% of the
Fund's net assets and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 4.6%
- ----------------------------------------------------------------------
Amresco Commercial Mortgage Funding
I Corp., Multiclass Mtg. Pass-
Through Certificates, Series
1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 178,813
- ----------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-D4:
Cl. B1, 7.525%, 4/14/29(3) 167,000 165,435
Cl. B2, 7.525%, 4/14/29(3) 167,000 161,338
Cl. B3, 7.525%, 4/14/29(3) 166,000 153,835
- ----------------------------------------------------------------------
CBA Mortgage Corp., Mtg.
Pass-Through Certificates, Series
1993-C1:
Cl. E, 7.76%, 12/25/03(3) 250,000 252,675
Cl. F, 7.76%, 12/25/03(3)(4) 700,000 562,590
- ----------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. E, 7.50%, 3/1/11(2) 506,000 523,862
Cl. F, 7.50%, 6/20/13(2) 300,000 291,000
Cl. G, 7.50%, 6/20/14(2) 500,000 462,350
Cl. H, 7.50%, 8/20/14(2) 225,000 177,660
- ----------------------------------------------------------------------
Commercial Mortgage Acceptance
Corp., Collateralized Mtg.
Obligation, Series 1996-C1, Cl. E,
8.129%, 12/25/20(3)(4) 250,000 261,250
- ----------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1:
8.116%, 2/25/11(2)(3) 1,500,000 1,276,950
8.116%, 5/25/08(2)(3) 300,000 304,290
- ----------------------------------------------------------------------
First Union-Lehman Brothers
Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-C1, 7.086%,
4/18/27(5) 8,207,763 640,109
- ----------------------------------------------------------------------
General Motors Acceptance Corp.,
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-C1, Cl. X,
8.905%, 7/15/27(5) 9,689,791 975,035
- ----------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl.
D, 8.189%, 6/15/21(3) 367,685 375,958
- ----------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. E, 7.51%,
2/15/28(2)(3) 835,342 798,404
Series 1997-HF1, Cl. F, 6.86%,
2/15/10(2) 300,000 273,375
- ----------------------------------------------------------------------
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(2) 254,890 242,783
Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl.
G, 7.15%, 6/15/06(4) 750,000 712,734
- ----------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates, Series-DMC, Cl. C,
8.921%, 8/12/11(4) 900,000 961,031
- ----------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 664,744 656,286
Series 1994-C2, Cl. G, 8%, 4/25/25 745,616 744,456
Series 1995-C1, Cl. F, 6.90%,
2/25/27 724,039 682,516
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS
(CONTINUED)
- ----------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.136%, 4/25/26 $ 1,473,761 $ 1,040,844
- ----------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates, Series 1996-C3, Cl.
E, 8.458%, 6/25/30(4) 650,000 651,625
------------
Total Mortgage-Backed Obligations
(Cost $12,447,815) 13,527,204
- ----------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 3.2%
- ----------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/27 (Cost $9,255,469) 9,000,000 9,250,317
- ----------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
2.1%
- ----------------------------------------------------------------------
Argentina (Republic of) Unsec.
Unsub. Medium-Term Nts., 5.50%,
3/27/01 JPY 110,000,000 835,103
- ----------------------------------------------------------------------
Argentina (Republic of) Unsec.
Unsub. Medium-Term Nts., 8.75%,
7/10/02 ARP 420,000 364,417
- ----------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.69%, 7/28/11(3) 50,000 36,625
- ----------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds,
6.688%, 2/28/25(3) 335,000 252,925
- ----------------------------------------------------------------------
Ecuador (Republic of) Past Due
Interest Bonds, 6.688%, 2/27/15(3) 699,878 458,420
- ----------------------------------------------------------------------
Financiera Energetica Nacional SA
Nts., 9.375%, 6/15/06 500,000 504,688
- ----------------------------------------------------------------------
Halkbank Turkiye Halk Bonds, 8%,
2/26/02 DEM 170,000 89,820
- ----------------------------------------------------------------------
Hashemite (Kingdom of Jordan)
Collateralized Par Bonds, Series
DEF, 4%, 12/23/23(3) 580,000 400,200
- ----------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Disc.
Bonds, 6.875%, 12/23/23(3) 500,000 417,031
- ----------------------------------------------------------------------
Ivory Coast (Government of) Past
Due Interest Bonds, 12/29/49(7) 1,375,000 543,125
- ----------------------------------------------------------------------
Nigeria (Federal Republic of)
Promissory Nts., Series RC, 5.092%,
1/5/10 319,347 225,695
- ----------------------------------------------------------------------
Pakistan (Republic of) Bonds,
9.856%, 5/30/00(3) 130,000 125,125
- ----------------------------------------------------------------------
Pakistan (Republic of) Debs.,
11.50%, 12/22/99 54,000 54,135
- ----------------------------------------------------------------------
Pera Financial Services Sec. Nts.,
9.375%, 10/15/02(4) 110,000 101,337
- ----------------------------------------------------------------------
Peru (Republic of) Front-Loaded
Interest Reduction Bonds, 3.25%,
3/7/17(3) 300,000 177,750
- ----------------------------------------------------------------------
Peru (Republic of) Past Due
Interest Bonds, 4%, 3/7/17(3) 260,000 168,675
- ----------------------------------------------------------------------
Petroleos Mexicanos Debs., 14.50%,
3/31/06 GBP 180,000 376,139
- ----------------------------------------------------------------------
PT Hutama Karya Promissory Nts.,
Zero Coupon, 28.69%, 2/10/98(8) IDR 1,000,000,000 174,620
- ----------------------------------------------------------------------
Romania (Government of) Bonds,
7.75%, 6/17/02 DEM 98,000 52,732
- ----------------------------------------------------------------------
Turkey (Republic of) Treasury
Bills, Zero Coupon, 101.517%,
3/18/98(8) TRL 20,000,000,000 79,557
- ----------------------------------------------------------------------
Venezuela (Republic of) Bonds,
9.25%, 9/15/27 65,000 58,403
- ----------------------------------------------------------------------
Venezuela (Republic of) Disc.
Bonds, Series W-B, 6.75%,
3/31/20(3) 3,570 3,209
- ----------------------------------------------------------------------
Venezuela (Republic of) Disc.
Bonds, Series DL, 6.75%,
12/18/07(3) 238,095 214,137
- ----------------------------------------------------------------------
Venezuela (Republic of) Sr. Unsec.
Unsub. Nts., Series REGS, 9.125%,
6/18/07 300,000 294,000
------------
Total Foreign Government
Obligations (Cost $6,283,361) 6,007,868
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
LOAN PARTICIPATIONS - 0.7%
- ----------------------------------------------------------------------
Algeria (Republic of) Reprofiled
Debt Loan Participation, Tranche A,
6.625%, 9/4/06(3) $ 1,010,000 $ 828,200
- ----------------------------------------------------------------------
Morocco (Kingdom of) Loan
Participation Agreement, Tranche A,
6.66%, 1/1/09(3) 100,000 86,391
- ----------------------------------------------------------------------
Russian (Government of) Principal
Loans Debs., 6.719%,
6/2/98(2)(3)(7) 1,115,000 689,906
- ----------------------------------------------------------------------
Trinidad & Tobago Loan
Participation Agreement, Tranche B,
1.575%, 9/30/00(2)(3) JPY 59,260,366 423,871
------------
Total Loan Participations (Cost
$2,073,605) 2,028,368
- ----------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 57.5%
- ----------------------------------------------------------------------
BASIC INDUSTRY - 3.5%
- ----------------------------------------------------------------------
CHEMICALS - 1.8%
ClimaChem, Inc., 10.75% Gtd. Sr.
Unsec. Nts., 12/1/07(4) 300,000 310,500
- ----------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 250,000 269,375
- ----------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., 9/15/07(4) 475,000 470,250
- ----------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 1,045,000 1,162,562
- ----------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Sr. Nts., 10/15/07(4) 400,000 396,000
- ----------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 575,000 582,187
- ----------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Sub. Nts.,
8/1/07(4) 750,000 772,500
- ----------------------------------------------------------------------
Sterling Chemicals Holdings, Inc.,
0%/13.50% Sr. Disc. Nts.,
8/15/08(9) 650,000 399,750
- ----------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 300,000 301,500
11.75% Sr. Unsec. Sub. Nts.,
8/15/06 635,000 650,875
------------
5,315,499
- ----------------------------------------------------------------------
CONTAINERS - 0.1%
Consumers International, Inc.,
10.25% Sr. Sec. Nts., 4/1/05(2) 375,000 412,500
- ----------------------------------------------------------------------
METALS/MINING - 0.2%
Metallurg, Inc., 11% Sr. Nts.,
12/1/07(4) 535,000 551,050
- ----------------------------------------------------------------------
PAPER - 0.4%
Four M Corp., 12% Sr. Nts., Series
B, 6/1/06(2) 150,000 159,750
- ----------------------------------------------------------------------
Riverwood International Corp.,
10.625% Sr. Unsec. Nts., 8/1/07 750,000 765,000
- ----------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr.
Nts., 11/15/07 300,000 312,000
------------
1,236,750
- ----------------------------------------------------------------------
STEEL - 1.0%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 540,000 556,200
- ----------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 675,000 783,000
- ----------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 700,000 764,750
- ----------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Nts., 8/1/07(4) 825,000 832,219
------------
2,936,169
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER RELATED - 7.6%
- ----------------------------------------------------------------------
CONSUMER PRODUCTS - 1.9%
Coleman Escrow Corp., Zero Coupon
Sr. First Priority Disc. Nts.,
10.71%, 5/15/01(8) $ 530,000 $ 353,775
- ----------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Unsec.
Sub. Nts., 9/1/07 250,000 262,500
- ----------------------------------------------------------------------
Holmes Products Corp., 9.875% Gtd.
Nts., 11/15/07(4) 400,000 409,000
- ----------------------------------------------------------------------
Icon Fitness Corp., 0%/14% Sr.
Disc. Nts., 11/15/06(2)(9) 900,000 513,000
- ----------------------------------------------------------------------
Icon Health & Fitness, Inc., 13%
Sr. Sub. Nts., Series B, 7/15/02 800,000 898,000
- ----------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub.
Disc. Nts., Series B, 11/15/04(9) 1,450,000 1,268,750
- ----------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts.:
10.56%, 3/15/01(8) 1,515,000 1,052,925
12.33%, 3/15/98(8) 350,000 346,421
- ----------------------------------------------------------------------
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(2) 350,000 421,750
------------
5,526,121
- ----------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO - 0.6%
CFP Holdings, Inc., 11.625% Gtd.
Sr. Nts., Series B, 1/15/04 75,000 75,375
- ----------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., 12/15/07(4)(9) 500,000 288,750
- ----------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sub. Nts., 11/15/07(4) 1,000,000 1,035,000
- ----------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75%
Sr. Sub. Nts., 5/15/07 350,000 358,750
------------
1,757,875
- ----------------------------------------------------------------------
HEALTHCARE - 0.6%
Genesis Health Ventures, Inc.,
9.25% Sr. Sub. Nts., 10/1/06 115,000 117,731
- ----------------------------------------------------------------------
Integrated Health Services, Inc.:
10.25% Sr. Sub. Nts., 4/30/06 35,000 37,275
9.50% Sr. Sub. Nts., 9/15/07(4) 765,000 787,950
- ----------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07(4) 655,000 674,650
------------
1,617,606
- ----------------------------------------------------------------------
HOTEL/GAMING - 3.5%
Boyd Gaming Corp.:
9.25% Sr. Unsec. Gtd. Nts., 10/1/03 575,000 605,187
9.50% Sr. Unsec. Sub. Nts., 7/15/07 125,000 131,562
- ----------------------------------------------------------------------
Capital Gaming International, Inc.,
Promissory Nts., 8/1/95(10) 9,500 0
- ----------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 825,000 853,875
- ----------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd.
First Mtg. Nts., 12/1/03 1,550,000 1,674,000
- ----------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr.
Nts., 7/15/07 400,000 423,000
- ----------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 1,275,000 1,341,937
- ----------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02 700,000 899,500
- ----------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 125,000 135,625
9.50% Gtd. Sr. Sub. Nts., 4/15/07 550,000 584,375
- ----------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts.,
Series B, 3/15/03 1,100,000 1,325,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
HOTEL/GAMING (CONTINUED)
Signature Resorts, Inc., 9.75% Sr.
Sub. Nts., 10/1/07(4) $ 900,000 $ 904,500
- ----------------------------------------------------------------------
Station Casinos, Inc.:
10.125% Sr. Sub. Nts., 3/15/06 735,000 779,100
9.625% Sr. Sub. Nts., 6/1/03 200,000 207,000
- ----------------------------------------------------------------------
Venetian Casino Resort LLC/Las
Vegas Sands, Inc., 12.25% Mtg.
Nts., 11/15/04(4) 375,000 377,344
------------
10,242,505
- ----------------------------------------------------------------------
RESTAURANTS - 0.7%
Ameriking, Inc., 10.75% Sr. Nts.,
12/1/06 755,000 796,525
- ----------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 139,000 142,127
9.75% Sr. Sub. Nts., 6/1/02(11) 950,000 980,875
------------
1,919,527
- ----------------------------------------------------------------------
TEXTILE/APPAREL - 0.3%
CMI Industries, Inc., 9.50% Sr.
Sub. Nts., 10/1/03(2) 95,000 93,812
- ----------------------------------------------------------------------
Dan River, Inc., 10.125% Sr. Sub.
Nts., 12/15/03 250,000 268,437
- ----------------------------------------------------------------------
Tultex Corp., 9.625% Sr. Unsec.
Nts., 4/15/07 150,000 150,000
- ----------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 350,000 369,250
------------
881,499
- ----------------------------------------------------------------------
ENERGY - 4.3%
- ----------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr.
Sub. Nts., 6/15/07 1,385,000 1,405,775
- ----------------------------------------------------------------------
Clark R&M, Inc., 8.875% Sr. Sub.
Nts., 11/15/07(4) 1,200,000 1,218,000
- ----------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 275,000 301,125
- ----------------------------------------------------------------------
Cliffs Drilling Co., 10.25% Sr.
Nts., 5/15/03 200,000 218,750
- ----------------------------------------------------------------------
Dailey International, Inc., 9.75%
Gtd. Sr. Unsec. Nts., 8/15/07(4) 425,000 448,375
- ----------------------------------------------------------------------
Energy Corp. of America, 9.50% Sr.
Sub. Nts., Series A, 5/15/07 665,000 666,662
- ----------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B,
2/15/07 400,000 407,000
9.50% Sr. Sub. Nts., 11/1/06 280,000 298,200
- ----------------------------------------------------------------------
Gothic Energy Corp., 12.25% Sr.
Nts., 9/1/04(2) 1,000,000 1,050,000
- ----------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr.
Sub. Bonds, 7/15/06 1,500,000 1,614,375
- ----------------------------------------------------------------------
Parker Drilling Corp., 9.75% Gtd.
Sr. Nts., 11/15/06 600,000 649,500
- ----------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sub. Debs., 2/1/06 1,150,000 1,040,750
- ----------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 910,000 928,200
- ----------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts., Series B, 11/15/03 225,000 238,500
- ----------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 1,675,000 1,712,687
- ----------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts.,
5/15/07 265,000 261,025
------------
12,458,924
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL SERVICES - 3.0%
- ----------------------------------------------------------------------
BANKS & THRIFTS - 0.5%
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 $ 517,000 $ 581,625
- ----------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(2) 800,000 848,000
------------
1,429,625
- ----------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 1.8%
Amresco, Inc., 10% Sr. Sub. Nts.,
Series 97-A, 3/15/04 600,000 625,500
- ----------------------------------------------------------------------
Bakrie Investindo, Zero Coupon
Promissory Nts., 19.09%, 3/26/98(8) IDR 1,000,000,000 166,261
- ----------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts.,
6/10/02(2) 91,619 91,849
- ----------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr.
Nts., 9/15/04 425,000 423,406
- ----------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd.
Bonds, 8/1/27 450,000 490,500
- ----------------------------------------------------------------------
Ocwen Financial Corp., 11.875%
Nts., 10/1/03 850,000 962,625
- ----------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 1,200,000 1,290,000
- ----------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04 600,000 603,000
- ----------------------------------------------------------------------
Veritas Capital Trust, 10% Gtd.
Debs., 1/1/28(4) 525,000 536,812
------------
5,189,953
- ----------------------------------------------------------------------
INSURANCE - 0.7%
Residential Reinsurance, 11.447%
Nts., 12/15/98(3) 1,000,000 1,032,175
- ----------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr.
Nts., 12/15/03 1,000,000 1,070,000
------------
2,102,175
- ----------------------------------------------------------------------
HOUSING RELATED - 0.9%
- ----------------------------------------------------------------------
BUILDING MATERIALS - 0.2%
Nortek, Inc., 9.25% Sr. Nts.,
Series B, 3/15/07 600,000 615,000
- ----------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.7%
Continental Homes Holding Corp.,
10% Gtd. Unsec. Bonds, 4/15/06 80,000 87,600
- ----------------------------------------------------------------------
First Place Tower, Inc., Units
(each unit consists of one $10
principal amount of 8.50% cv. sub.
debs., 12/15/15 and 40 common
shares)(12) CAD 180,660 473,421
- ----------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr.
Gtd. Nts., 3/1/04(2) 280,000 306,600
- ----------------------------------------------------------------------
Hovnanian K. Enterprises, Inc.,
11.25% Gtd. Sub. Nts., 4/15/02 200,000 210,500
- ----------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Nts.,
Series B, 9/1/07 1,000,000 1,020,000
------------
2,098,121
- ----------------------------------------------------------------------
MANUFACTURING - 5.3%
- ----------------------------------------------------------------------
AEROSPACE - 2.4%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05(11) 1,700,000 1,827,500
- ----------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts.,
8/1/04(4) 700,000 731,500
- ----------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 700,000 742,000
12.25% Pass-Through Certificates,
12/1/02 950,000 1,059,250
- ----------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts., Series 1997-1, 1/1/01(2) 500,000 505,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
AEROSPACE (CONTINUED)
Kitty Hawk, Inc., 9.95% Sr. Nts.,
11/15/04(4) $ 525,000 $ 530,250
- ----------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Cl. B, 6/15/04(2) 340,067 350,847
- ----------------------------------------------------------------------
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04(4) 1,200,000 1,212,000
------------
6,958,347
- ----------------------------------------------------------------------
AUTOMOTIVE - 0.9%
Aftermarket Technology Corp., 12%
Sr. Sub. Nts., Series B, 8/1/04 300,000 334,500
- ----------------------------------------------------------------------
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., 7/15/07(4) 450,000 472,500
- ----------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Gtd. Sr. Sub. Nts., 4/15/06 100,000 113,000
- ----------------------------------------------------------------------
Delco Remy International, Inc.,
8.625% Sr. Nts., 12/15/07 225,000 229,219
- ----------------------------------------------------------------------
Hayes Wheels International, Inc.:
11% Sr. Sub. Nts., 7/15/06 600,000 672,000
9.125% Sr. Sub. Nts., 7/15/07 300,000 311,625
- ----------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts.,
7/15/06 300,000 330,750
------------
2,463,594
- ----------------------------------------------------------------------
CAPITAL GOODS - 2.0%
Burke Industries, Inc., 10% Sr.
Nts., 8/15/07(4) 375,000 387,187
- ----------------------------------------------------------------------
Clark-Schwebel, Inc., 10.50% Sr.
Nts., 4/15/06 725,000 793,875
- ----------------------------------------------------------------------
Communications & Power Industries,
Inc., 12% Sr. Sub. Nts., Series B,
8/1/05 1,050,000 1,176,000
- ----------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 675,000 700,313
- ----------------------------------------------------------------------
Insilco Corp., 10.25% Unsec. Sr.
Sub. Nts., 8/15/07(4) 825,000 868,313
- ----------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 475,000 522,500
- ----------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub.
Nts., 7/1/07 450,000 451,125
- ----------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Gtd. Sr. Sub. Nts.,
6/15/07(2) 535,000 541,688
- ----------------------------------------------------------------------
Synthetic Industries, Inc., 9.25%
Sr. Sub. Nts., 2/15/07 170,000 180,200
- ----------------------------------------------------------------------
Titan Wheel International, Inc.,
8.75% Sr. Sub. Nts., 4/1/07 150,000 157,875
------------
5,779,076
- ----------------------------------------------------------------------
MEDIA - 11.8%
- ----------------------------------------------------------------------
BROADCASTING - 2.1%
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 600,000 616,500
- ----------------------------------------------------------------------
Chancellor Radio Broadcasting Co.,
8.75% Sr. Sub. Nts., 6/15/07 450,000 460,125
- ----------------------------------------------------------------------
Jacor Communications Co., 8.75%
Gtd. Sr. Sub. Nts., 6/15/07(4) 455,000 465,238
- ----------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875%
Sr. Sub. Nts., 7/15/03(11) 1,000,000 1,062,842
- ----------------------------------------------------------------------
Paxson Communications Corp.,
11.625% Sr. Sub. Nts., 10/1/02 495,000 532,125
- ----------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(6) 400,000 398,000
- ----------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 9/30/05 100,000 105,750
9% Gtd. Sr. Sub. Nts., 7/15/07 1,300,000 1,332,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
BROADCASTING (CONTINUED)
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 $ 650,000 $ 646,750
9% Sr. Sub. Nts., Series B, 1/15/06 425,000 427,125
------------
6,046,955
- ----------------------------------------------------------------------
CABLE TELEVISION - 3.0%
Adelphia Communications Corp.:
10.50% Sr. Unsec. Nts., Series B,
7/15/04 340,000 368,050
9.25% Sr. Nts., 10/1/02 700,000 717,500
9.875% Sr. Nts., Series B, 3/1/07 200,000 212,500
- ----------------------------------------------------------------------
Cablevision Systems Corp.:
10.50% Sr. Sub. Debs., 5/15/16 250,000 291,875
9.875% Sr. Sub. Debs., 4/1/23 450,000 497,250
9.875% Sr. Sub. Nts., 5/15/06 100,000 110,250
- ----------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(9) 200,000 184,000
- ----------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd.
Nts., 7/1/02 2,000,000 2,170,000
- ----------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(9) 1,230,000 1,051,650
- ----------------------------------------------------------------------
FrontierVision Holdings
LP/FrontierVision Holdings Capital
Corp., 0%/11.875% Sr. Disc. Nts.,
9/15/07(9) 135,000 99,900
- ----------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(3) 885,000 955,800
- ----------------------------------------------------------------------
Knology Holdings, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/11.875% sr. disc.
nts., 10/15/07 and one warrant to
purchase .003734 shares of
preferred stock)(2)(9)(12) 500,000 275,000
- ----------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 945,000 1,006,425
- ----------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07 CAD 1,000,000 682,409
- ----------------------------------------------------------------------
TCI Satellite Entertainment, Inc.,
10.875% Sr. Sub. Nts., 2/15/07(4) 100,000 105,250
------------
8,727,859
- ----------------------------------------------------------------------
DIVERSIFIED MEDIA - 5.5%
Ackerley Communications, Inc.,
10.75% Sr. Sec. Nts., Series A,
10/1/03 750,000 802,500
- ----------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg.
Bonds, 6/24/10(4) 462,719 453,127
- ----------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr.
Sub. Nts., 2/15/06 160,000 169,600
- ----------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07(4) 200,000 213,500
- ----------------------------------------------------------------------
ITT Promedia CVA, 9.125% Sr. Sub.
Nts., 9/15/07(4) DEM 19,775,000 11,589,215
- ----------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub.
Nts., Series B, 1/15/07 425,000 470,688
- ----------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 700,000 722,750
9.625% Sr. Sub. Nts., 12/1/06 815,000 881,219
- ----------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr.
Sub. Nts., 6/15/07 400,000 418,000
- ----------------------------------------------------------------------
Universal Outdoor, Inc., 9.75% Sr.
Sub. Nts., Series B, 10/15/06 250,000 281,250
------------
16,001,849
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
ENTERTAINMENT/FILM - 0.8%
Ascent Entertainment Group, Inc.,
0%/11.875% Sr. Sec. Disc. Nts.,
12/15/04(4)(9) $ 1,000,000 $ 577,500
- ----------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01 1,600,000 1,688,000
------------
2,265,500
- ----------------------------------------------------------------------
PUBLISHING/PRINTING - 0.4%
American Lawyer Media Holdings,
Inc., 9.75% Sr. Nts., 12/15/07(4) 625,000 637,500
- ----------------------------------------------------------------------
Hollinger International Publishing,
Inc., 9.25% Gtd. Sr. Sub. Nts.,
3/15/07 200,000 211,000
- ----------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub.
Nts., 2/15/07 350,000 378,000
------------
1,226,500
- ----------------------------------------------------------------------
OTHER - 1.5%
- ----------------------------------------------------------------------
CONGLOMERATES - 0.1%
Maxxam Group, Inc., 0%/12.25% Sr.
Sec. Disc. Nts., 8/1/03(9) 200,000 199,000
- ----------------------------------------------------------------------
ENVIRONMENTAL - 0.1%
Allied Waste Industries, Inc.,
0%/11.30% Sr. Disc. Nts.,
6/1/07(4)(9) 450,000 317,250
- ----------------------------------------------------------------------
SERVICES - 1.3%
Borg-Warner Security Corp., 9.625%
Sr. Sub. Nts., 3/15/07 100,000 104,500
- ----------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(2)(9) 750,000 618,750
- ----------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr.
Nts., 12/1/07(4) 200,000 202,500
- ----------------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 150,000 150,000
- ----------------------------------------------------------------------
Oxford Automotive, Inc., 10.125%
Sr. Unsec. Sub. Nts., 6/15/07 1,000,000 1,056,250
- ----------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc.:
0%/13.625% Sr. Disc. Nts.,
6/30/05(9) 600,000 648,000
6.75% Cv. Gtd. Sr. Sub. Nts.,
9/15/03 950,000 1,126,938
------------
3,906,938
- ----------------------------------------------------------------------
RETAIL - 2.8%
- ----------------------------------------------------------------------
SPECIALTY RETAILING - 0.4%
Eye Care Centers of America, Inc.,
12% Sr. Nts., 10/1/03 630,000 683,550
- ----------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625%
Sr. Nts., 5/1/03(2) 95,000 100,225
- ----------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07(2) 300,000 307,500
- ----------------------------------------------------------------------
Specialty Retailers, Inc., 8.50%
Gtd. Sr. Nts., 7/15/05 145,000 148,625
------------
1,239,900
- ----------------------------------------------------------------------
SUPERMARKETS - 2.4%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., 12/1/04(4) 475,000 499,938
10.625% Sr. Sub. Nts., 7/31/07(4) 1,600,000 1,696,000
- ----------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr.
Nts., 6/15/04 1,100,000 1,237,500
- ----------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., 7/1/07(4) 1,575,000 1,638,000
- ----------------------------------------------------------------------
Shoppers Food Warehouse Corp.,
9.75% Sr. Nts., 6/15/04(4) 1,000,000 1,025,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
SUPERMARKETS (CONTINUED)
Stater Brothers Holdings, Inc., 9%
Sr. Unsec. Sub. Nts., 7/1/04 $ 750,000 $ 787,500
------------
6,883,938
- ----------------------------------------------------------------------
TECHNOLOGY - 14.0%
- ----------------------------------------------------------------------
INFORMATION TECHNOLOGY - 8.4%
Amphenol Corp., 9.875% Sr. Sub.
Nts., 5/15/07 275,000 292,875
- ----------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14%
Sr. Disc. Nts., 10/1/07(4)(9) 1,919,000 901,930
- ----------------------------------------------------------------------
Cellular Communications
International, Inc., Zero Coupon
Sr. Disc. Nts., 12.52%, 8/15/00(8) 2,315,000 1,863,575
- ----------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub.
Disc. Nts., 9/1/03(9) 2,000,000 2,015,000
- ----------------------------------------------------------------------
Clearnet Communications, Inc.,
0%/14.75% Sr. Disc. Nts.,
12/15/05(9) 575,000 455,688
- ----------------------------------------------------------------------
Computervision Corp., 11.375% Sr.
Sub. Nts., 8/15/99 155,000 156,744
- ----------------------------------------------------------------------
Concentic Network Corp., Units
(each unit consists of $1,000
principal amount of 12.75% sr.
nts., 12/15/07 and one warrant to
purchase 6.34 shares of common
stock)(4)(12) 615,000 632,681
- ----------------------------------------------------------------------
Consorcio Ecuatoriano de Telecom
SA, 14% Nts., 5/1/02(2) 15,000 15,150
- ----------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Disc. Nts.,
11/15/07(4)(9) 800,000 502,000
- ----------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
11/15/05(4) 600,000 616,500
- ----------------------------------------------------------------------
Dial Call Communications, Inc.,
0%/12.25% Sr. Disc. Nts.,
4/15/04(9) 1,200,000 1,149,000
- ----------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub.
Nts., 9/15/07(4) 115,000 113,275
- ----------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 600,000 612,000
- ----------------------------------------------------------------------
Geotek Communications, Inc., 0%/15%
Sr. Sec. Disc. Nts., 7/15/05(9) 250,000 146,250
- ----------------------------------------------------------------------
Iridium LLC/Iridium Capital Corp.,
11.25% Sr. Nts., 7/15/05(4) 500,000 492,500
- ----------------------------------------------------------------------
Metrocall, Inc., 9.75% Sr. Sub.
Nts., 11/1/07(4) 175,000 173,688
- ----------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts.,
10/15/07(4)(9) CAD 1,085,000 428,384
0%/14% Sr. Disc. Nts., Series B,
6/1/06(9) 1,000,000 675,000
- ----------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts., 6/1/06(9) 500,000 368,750
- ----------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts.,
9/15/07(4)(9) 2,000,000 1,270,000
0%/11.50% Sr. Disc. Nts., 9/1/03(9) 700,000 700,000
0%/9.75% Sr. Disc. Nts.,
10/31/07(4)(9) 1,775,000 1,091,625
- ----------------------------------------------------------------------
Occidente y Caribe Celular SA,
0%/14% Sr. Disc. Nts., Series B,
3/15/04(9) 300,000 226,500
- ----------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 245,000 259,700
11.625% Sr. Nts., Series A, 8/15/06 620,000 657,200
- ----------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 600,000 654,000
- ----------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(9) 800,000 598,000
- ----------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 0%/13.50% Sr. Disc.
Nts., Series A, 8/1/07(2)(9) 1,000,000 635,000
- ----------------------------------------------------------------------
Price Communications Wireless,
Inc., 11.75% Sr. Sub. Nts.,
7/15/07(4) 325,000 354,250
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
INFORMATION TECHNOLOGY (CONTINUED)
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts.,
10/1/03(9) $ 500,000 $ 515,000
0%/14% Sr. Sub. Disc. Nts.,
11/15/01(9) 2,050,000 2,285,750
10.75% Sr. Nts., 11/1/04 605,000 657,938
- ----------------------------------------------------------------------
Real Time Data, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/13.50% sub. disc.
nts., 8/15/06 and one warrant to
purchase six ordinary
shares)(2)(9)(12) 1,000,000 380,000
- ----------------------------------------------------------------------
Star Choice Communications, Inc.,
Units (each unit consists of $1,000
principal amount of 13% sr. sec.
nts., 12/15/05 and one warrant to
buy common stock)(12) 700,000 721,000
- ----------------------------------------------------------------------
Teletrac, Inc., 14% Sr. Nts.,
8/1/07(4) 170,000 162,350
- ----------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts.,
3/1/07 300,000 309,000
- ----------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 250,000 286,875
- ----------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 405,000 449,550
9.50% Sr. Nts., 2/1/04 100,000 98,000
- ----------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 475,000 486,875
------------
24,409,603
- ----------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
5.6%
American Communications Services,
Inc., 13.75% Sr. Nts., 7/15/07(4) 325,000 386,750
- ----------------------------------------------------------------------
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts.,
3/1/06(9) 550,000 459,250
0%/11.875% Sr. Disc. Nts.,
11/1/06(9) 420,000 338,100
10% Sr. Nts., 6/1/07 800,000 924,000
- ----------------------------------------------------------------------
BTI Telecom Corp., 10.50% Sr. Nts.,
9/15/07(4) 250,000 256,250
- ----------------------------------------------------------------------
Call-Net Enterprises, Inc.:
0%/9.27% Sr. Disc. Nts., 8/15/07(9) 675,000 460,688
8.375% Sr. Nts., 8/15/07 CAD 100,000 73,383
- ----------------------------------------------------------------------
COLT Telecom Group plc:
10.125% Sr. Nts., 11/30/07 GBP 400,000 671,324
8.875% Sr. Nts., 11/30/07 DEM 250,000 141,734
Units (each unit consists of $1,000
principal amount of 0%/12% sr.
disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary
shares)(9)(12) 1,750,000 1,365,000
- ----------------------------------------------------------------------
Comcast UK Cable Partner Ltd.,
0%/11.20% Sr. Disc. Debs.,
11/15/07(9) 575,000 468,625
- ----------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(9) 600,000 466,500
- ----------------------------------------------------------------------
GST Telecommunications, Inc.,
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(4)(9) 178,000 136,726
- ----------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05(9) 775,000 596,750
- ----------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts.,
5/1/06(9) 115,000 86,825
0%/13.50% Sr. Disc. Nts.,
9/15/05(9) 700,000 570,500
- ----------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/11.25% Sr. Disc. Nts., Series B,
7/15/07(9) 1,465,000 1,051,138
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY
(CONTINUED)
Intermedia Communications, Inc.:
(Continued)
8.50% Sr. Nts., 1/15/08(4) $ 500,000 $ 502,500
8.875% Sr. Nts., 11/1/07(4) 490,000 504,700
- ----------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr.
Disc. Nts., 3/1/07(9) 550,000 398,750
- ----------------------------------------------------------------------
Metronet Communications Corp.,
0%/10.75% Sr. Disc. Nts.,
11/1/07(4)(9) 700,000 432,250
- ----------------------------------------------------------------------
NEXTLINK Communications, Inc.,
9.625% Sr. Nts., 10/1/07 1,100,000 1,144,000
- ----------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon
Nts., 10/15/03(9) 100,000 95,000
10% Sr. Nts., 2/15/07 400,000 423,000
- ----------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(4) 170,000 176,163
Units (each unit consists of $1,000
principal amount of 0%/14% sr.
disc. nts., 6/1/04 and one warrant
to purchase 34 ordinary
shares)(4)(9)(12) 1,150,000 1,098,250
- ----------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07(4)(9) 2,100,000 1,428,000
- ----------------------------------------------------------------------
Teleport Communications Group,
Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(9) 1,650,000 1,348,875
- ----------------------------------------------------------------------
Telewest Communications plc, 0%/11%
Sr. Disc. Debs., 10/1/07(9) 290,000 226,563
- ----------------------------------------------------------------------
UNIFI Communications, Inc., 14% Sr.
Nts., 3/1/04 260,000 205,400
------------
16,436,994
- ----------------------------------------------------------------------
TRANSPORTATION - 2.1%
- ----------------------------------------------------------------------
RAILROADS - 0.8%
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(9) 2,500,000 2,200,000
- ----------------------------------------------------------------------
SHIPPING - 0.8%
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07(4) 1,125,000 1,198,125
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(4)(12) 875,000 988,750
- ----------------------------------------------------------------------
Trico Marine Services, Inc., 8.50%
Gtd. Sr. Nts., 8/1/05(4) 225,000 229,219
------------
2,416,094
- ----------------------------------------------------------------------
TRUCKING - 0.5%
Coach USA, Inc., 9.375% Gtd. Sr.
Sub. Nts., Series B, 7/1/07 960,000 993,600
- ----------------------------------------------------------------------
Road King Infrastructure Finance
(1997) Ltd., 9.50% Gtd. Unsec.
Unsub. Bonds, 7/15/07(2) 200,000 166,000
- ----------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50%
Nts., Series 1993-A, 12/1/11(2) 456,092 377,416
------------
1,537,016
- ----------------------------------------------------------------------
UTILITIES - 0.7%
- ----------------------------------------------------------------------
ELECTRIC UTILITIES - 0.7%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07(4) 545,000 558,625
9.25% Sr. Nts., 2/1/04 135,000 138,375
- ----------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Bonds, Series E, 5/1/11 800,000 904,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ----------------------------------------------------------------------
<S> <C> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
Panda Global Energy Co., 12.50% Sr.
Nts., 4/15/04(2) $ 460,000 $ 420,900
- ----------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec.
Nts., 12/28/08 128,965 123,192
------------
2,145,092
------------
Total Corporate Bonds and Notes
(Cost $161,209,728) 167,452,404
SHARES
- ----------------------------------------------------------------------
COMMON STOCKS - 1.0%
- ----------------------------------------------------------------------
Celcaribe SA(2)(13) 121,950 609,750
- ----------------------------------------------------------------------
CellNet Data Systems, Inc.(13) 4,800 37,200
- ----------------------------------------------------------------------
Coinstar, Inc.(13) 5,250 47,906
- ----------------------------------------------------------------------
ECM Fund, L.P.I.(2) 150 165,375
- ----------------------------------------------------------------------
EchoStar Communications Corp., Cl.
A(13) 4,000 67,000
- ----------------------------------------------------------------------
Equitable Bag, Inc.(2)(13) 3,723 18,615
- ----------------------------------------------------------------------
Grand Union Co.(13) 20,511 43,586
- ----------------------------------------------------------------------
Gulfstream Holding, Inc.(13) 56 --
- ----------------------------------------------------------------------
J. Ray McDermott SA(13) 10,965 471,495
- ----------------------------------------------------------------------
Omnipoint Corp.(2)(13) 46,875 1,040,918
- ----------------------------------------------------------------------
Optel, Inc.(2)(13) 945 10
- ----------------------------------------------------------------------
Station Casinos, Inc.(13) 5,000 50,938
- ----------------------------------------------------------------------
Vail Resorts, Inc.(13) 14,010 363,384
- ----------------------------------------------------------------------
Walter Industries, Inc.(13) 6,455 133,134
------------
Total Common Stocks (Cost
$1,989,139) 3,049,311
- ----------------------------------------------------------------------
PREFERRED STOCKS - 4.6%
- ----------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable Preferred Stock,
Non-Vtg.(2)(13) 455 12,171
- ----------------------------------------------------------------------
BankUnited Capital Trust, 10.25%
Redeemable Trust Preferred
Securities(2) 750,000 774,375
- ----------------------------------------------------------------------
California Federal Bank, 11.50%
Non-Cum., Non-Vtg. 6,000 679,500
- ----------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(2)(13) 62,000 1,550,000
- ----------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum.
Preferred Stock(4)(14) 385 409,062
- ----------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv.
Preferred Stock, Series B 14,000 478,625
- ----------------------------------------------------------------------
Crown American Realty Trust, 11%
Cum. Non-Vtg. Preferred, Series A 4,500 235,125
- ----------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable Exchangeable
Preferred Stock, Series
B(4)(13)(14) 825 864,188
- ----------------------------------------------------------------------
El Paso Electric Co., 11.40%
Preferred Stock, Series A(14) 9,049 1,002,177
- ----------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, l2% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A(2) 20 555
- ----------------------------------------------------------------------
Golden State Bancorp, 8.75% Cv.
Preferred Stock, Series A 6,500 592,313
- ----------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable Preferred Stock 230 269,100
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
- ----------------------------------------------------------------------
Intermedia Communications, Inc.,
13.50% Exchangeable
Preferred Stock, Series B(14) 280 $ 339,500
- ----------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv. 15,300 336,600
- ----------------------------------------------------------------------
Navistar International Corp., $6.00
Cv., Series G 2,500 149,375
- ----------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Sr. Exchangeable Preferred(14) 17,669 1,099,895
- ----------------------------------------------------------------------
Prime Retail, Inc., 8.50% Cv.
Preferred Stock, Series B 14,500 348,000
- ----------------------------------------------------------------------
PRIMEDIA, Inc.:
11.625% Preferred Stock, Series
B(14) 8,668 936,144
9.20% Preferred Stock, Series
E(2)(13) 2,500 250,625
- ----------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable, Series B(13) 22,000 1,083,500
- ----------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625%
Cum., Series E, Non-Vtg.(14) 212 242,210
- ----------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Sr. Exchangeable
Preferred Stock, Non-Vtg.(4)(14) 500 531,250
- ----------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv. Preferred Stock, Series B 30,000 870,000
9.20% Sr. Preferred Stock 13,000 333,125
------------
Total Preferred Stocks (Cost
$12,064,850) 13,387,415
- ----------------------------------------------------------------------
OTHER SECURITIES - 0.0%
- ----------------------------------------------------------------------
Intermedia Communications, Inc.,
Depositary Shares representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E, Non-Vtg.
(4)(13) (Cost $137,505) 5,660 160,602
UNITS
- ----------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.4%
- ----------------------------------------------------------------------
American Communications Services,
Inc. Wts., Exp. 11/05(2) 475 45,362
- ----------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(2) 6,000 60
- ----------------------------------------------------------------------
Ames Department Stores, Inc.,
Litigation Trust(2) 39,658 398
- ----------------------------------------------------------------------
Australis Media Ltd. Wts., Exp.
5/00(2) 125 --
- ----------------------------------------------------------------------
Capital Gaming International, Inc.
Wts., Exp. 2/99(2) 21,112 --
- ----------------------------------------------------------------------
CellNet Data Systems, Inc. Wts.,
Exp. 6/02(2) 1,919 3,838
- ----------------------------------------------------------------------
Cellular Communications
International, Inc. Wts., Exp.
8/03(2) 2,920 49,640
- ----------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 31,000
- ----------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05 660 3,795
- ----------------------------------------------------------------------
Eye Care Centers of America, Inc.
Wts., Exp. 10/03(2) 630 2,205
- ----------------------------------------------------------------------
Foamex LP/JPS Automotive Corp.
Wts., Exp. 7/99(2) 500 10,000
- ----------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp.
11/02 14,410 82,857
- ----------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(2) 52,500 52,500
- ----------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 9/04 14,000 28,000
- ----------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(2) 5,940 74,250
- ----------------------------------------------------------------------
IHF Capital, Inc. Wts.:
Exp. 11/99(2) 250 40,000
Series I Wts., Exp. 11/99(2) 400 20,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS NOTE 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES
(CONTINUED)
- ----------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 950 $ --
- ----------------------------------------------------------------------
Jewel Recovery LP, Participation
Units of Limited Partners' Interest 2,360 --
- ----------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 6/06(2) 3,200 2,000
Wts., Exp. 6/06(2) 3,200 41,600
- ----------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts.,
Exp. 2/09(2) 16,000 160
- ----------------------------------------------------------------------
Occidente y Caribe Celular SA Wts.,
Exp. 3/04(2) 1,200 16,500
- ----------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 166,547
- ----------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(2) 800 10,000
- ----------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(2) 3,440 34
- ----------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(2) 28,000 357,000
Exp. 6/05(2) 1,600 20,400
- ----------------------------------------------------------------------
Teletrac, Inc. Wts., Exp. 8/07(2) 170 935
- ----------------------------------------------------------------------
Trizec Hahn Corp. Wts., Exp. 7/99 3,970 18,449
- ----------------------------------------------------------------------
UNIFI Communications, Inc. Wts.,
Exp. 3/07(2) 260 390
- ----------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(2) 1,440 17,280
------------
Total Rights, Warrants and
Certificates (Cost $369,452) 1,095,200
PRINCIPAL
AMOUNT(1)
- ----------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 8.7%
- ----------------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts., 9%, 8/10/98 $ 15,000,000 15,000,000
- ----------------------------------------------------------------------
Canadian Imperial Bank of Commerce,
U.S. Dollar Nts. Linked to the
Ministry of Finance of the Russian
Federation GKO, Zero Coupon, 9.86%,
9/17/98(8) 1,250,000 1,079,625
- ----------------------------------------------------------------------
Goldman Sachs Group, LP, Taiwanese
Dollar Linked Nts., 5.75%, 6/12/98 40,000 40,392
- ----------------------------------------------------------------------
ING (U.S.) Financial Holdings
Corp., PT Polysindo Linked Nts.,
Zero Coupon, 10.43%, 7/15/98(2)(8) 200,000 180,074
- ----------------------------------------------------------------------
Merrill Lynch & Co., Inc., U.S.
Dollar Nts. Linked to the Ministry
of Finance of Ukraine OVGZ's, Zero
Coupon, 11.52%, 10/19/98(8) 235,000 198,316
- ----------------------------------------------------------------------
Morgan Guaranty Trust Co. of New
York, 2 Times Leveraged Nts. on The
Emerging Markets Bond Index, Zero
Coupon:
5.781%, 1/29/98(8) 4,000,000 4,163,600
5.75%, 2/4/98(8) 1,500,000 1,614,300
5.906%, 5/20/98(8) 500,000 546,150
5.906%, 5/22/98(8) 500,000 517,350
- ----------------------------------------------------------------------
Shoshone Partners Loan Trust, 7.50%
Sr. Nts., 5/31/02(2)(3) 1,979,000 2,098,870
------------
Total Structured Instruments (Cost
$25,091,176) 25,438,677
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
DATE STRIKE CONTRACTS NOTE 1
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
PUT OPTIONS PURCHASED - 0.0%
- -----------------------------------------------------------------------------
The Emerging Bond Market Index Put
Opt. (Cost $8,190) 2/98 $341.01 390 $ 4,758
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(1)
- ---------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 25.5%
- ---------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 6.60%,
dated 12/31/97, to be repurchased
at $74,177,188 on 1/2/98,
collateralized by U.S. Treasury
Bonds, 8%-10.625%,
8/15/15-11/15/21, with a value of
$54,960,145, and U.S. Treasury
Nts., 5.875%-7.50%,
9/30/01-12/31/01, with a value of
$20,712,858 (Cost $74,150,000) $74,150,000 74,150,000
- ---------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$305,080,290) 108.3% 315,552,124
- ---------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (8.3) (24,229,333)
----------- -------------
NET ASSETS 100.0% $291,322,791
----------- -------------
----------- -------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C> <C> <C>
ARP - Argentine Peso IDR - Indonesian Rupiah
CAD - Canadian Dollar JPY - Japanese Yen
DEM - German Mark TRL - Turkish Lira
GBP - British Pound Sterling
</TABLE>
2. Identifies issues considered to be illiquid or restricted - See Note 8 of
Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $53,485,828 or 18.36% of the Fund's net
assets as of December 31, 1997.
5. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
6. Represents the current interest rate for an increasing rate security.
7. When-issued security to be delivered and settled after December 31, 1997.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
10. Non-income producing - issuer is in default of interest payment.
11. Securities with an aggregate market value of $3,871,217 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
12. 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.
13. Non-income producing security.
14. Interest or dividend is paid in kind.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 51.1%
- --------------------------------------------------------------------
GOVERNMENT AGENCY - 36.7%
- --------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 23.4%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 1092, Cl. K,
8.50%, 6/15/21 $ 3,000,000 $ 3,265,168
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 151, Cl. F,
9%, 5/15/21 1,000,000 1,085,287
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 1712, Cl. B,
6%, 3/15/09 1,000,000 975,000
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 1714, Cl. M,
7%, 8/15/23 2,000,000 2,010,000
Government National Mortgage Assn.,
Gtd. Multiclass Mtg. Participation
Certificates, Series 26, Cl. B, 6%,
5/25/15 6,499,999 6,327,947
Gtd. Multiclass Mtg. Participation
Certificates, 7%, 4/1/26 4,748,012 4,800,953
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Series 1610, Cl. PM, 6.25%, 4/15/22 5,000,000 4,975,000
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 2,951,250
Interest-Only Stripped Mtg.-Backed
Security, Series 177, Cl. B,
9.063%-10.208%, 7/1/26(2) 42,823,288 12,519,121
- --------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 3/1/11 827,885 833,358
7%, 1/1/13(3) 8,850,000 8,980,006
7%, 1/25/28(3) 45,450,000 45,776,785
7%, 11/1/25 1,173,366 1,186,449
7%, 4/1/04 225,391 225,418
7.50%, 1/1/08 258,228 265,451
7.50%, 1/1/26 4,554,544 4,670,822
7.50%, 4/1/08 223,295 229,541
8%, 5/1/17 605,292 634,177
Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
8.75%, 11/25/05 2,773,827 2,922,213
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Trust 1989-17, Cl. E, 10.40%,
4/25/19 1,229,023 1,383,413
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Trust 1997-25, Cl. B, 7%, 12/18/22 1,370,000 1,387,044
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Trust G93-31, Cl. PN, 7%, 9/25/23 5,000,000 5,163,355
Interest-Only Stripped Mtg.-Backed
Security, Trust 276, Cl. 2,
12.324%, 10/1/24(2) 20,577,744 6,250,490
Principal-Only Stripped Mtg.-Backed
Security, Trust 277-C1, 8.42%,
4/1/27(4) 3,912,338 3,061,405
-------------
121,879,653
- --------------------------------------------------------------------
GNMA/GUARANTEED - 13.3%
Government National Mortgage Assn.:
6%, 8/20/27 11,923,744 12,091,393
6.875%, 10/20/24 1,978,481 2,034,749
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------
<S> <C> <C>
GNMA/GUARANTEED (CONTINUED)
Government National Mortgage Assn.:
(Continued)
6.875%, 10/20/25 $ 3,701,878 $ 3,802,532
7%, 1/1/28(3) 24,025,000 24,201,688
7%, 1/15/09 299,533 306,642
7%, 5/15/09 312,455 319,576
7.50%, 1/15/27 2,922,203 2,995,054
7.50%, 12/1/27(3) 11,000,000 11,268,180
7.50%, 4/15/27 2,962,971 3,036,839
7.50%, 6/15/27 2,961,869 3,035,709
7.50%, 7/15/26 5,876,735 6,025,064
-------------
69,117,426
- --------------------------------------------------------------------
PRIVATE - 14.4%
- --------------------------------------------------------------------
COMMERCIAL - 10.9%
Asset Securitization Corp.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-MD7, Cl.
A6, 8.11%, 1/13/30(5) 500,000 528,047
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-D5, Cl. A6,
7.184%, 2/14/41(2) 3,000,000 3,007,500
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-D5, Cl. PS1,
1.367%, 2/14/41(2) 18,750,000 2,036,133
- --------------------------------------------------------------------
BKB Commercial Mortgage Trust,
Commercial Mtg. Obligations, Series
1997-C1, Cl. C, 7.45%, 10/25/00(6) 810,722 814,523
- --------------------------------------------------------------------
Capital Lease Funding
Securitization LP, Interest-Only
Stripped Mtg.-Backed Security,
Series 1997-CTL1, 10.611%,
6/22/24(2)(6) 33,119,181 1,583,097
- --------------------------------------------------------------------
Commercial Mortgage Acceptance
Corp., Collateralized Mtg.
Obligation, Series 1996-C1, Cl. D,
7.658%, 12/25/20(5)(6) 2,500,000 2,583,594
- --------------------------------------------------------------------
CRIIMI MAE Trust I, Collateralized
Mtg. Obligations, Series 1996-C1,
Cl. A-2, 7.56%, 8/30/05(7) 2,000,000 2,047,188
- --------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates:
Series 1994-C1, Cl. 2-D, 8.70%,
9/25/25(6) 1,500,000 1,556,250
Series 1994-C1, Cl. 2-E, 8.70%,
9/25/25(6) 1,500,000 1,558,050
- --------------------------------------------------------------------
First Union-Lehman Brothers
Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-C1, 7.083%,
4/18/27(2) 17,027,190 1,327,921
- --------------------------------------------------------------------
General Motors Acceptance Corp.:
Collateralized Mtg. Obligations,
Series 1995-C2, Cl. D, 7.192%,
1/15/08 3,500,000 3,508,750
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-C1, Cl. X,
8.905%, 7/15/27(2) 19,479,477 1,960,122
- --------------------------------------------------------------------
GS Mortgage Securities Corp. II,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-CL1, Cl. F, 7.353%,
7/13/30 1,000,000 1,018,125
Series 1997-CL1, Cl. F, 7.823%,
7/13/30 4,000,000 4,143,750
- --------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D, 7.42%,
4/25/28 2,000,000 2,039,531
Series 1997-C2, Cl. D, 7.075%,
12/10/29 4,000,000 3,988,750
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D-1, 7.51%,
2/15/28(5)(6) $ 1,000,000 $ 1,016,563
Series 1997-XL1, Cl. F, 7.42%,
10/3/30(5) 2,500,000 2,510,938
- --------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates:
Series-DMC, Cl. B, 8.562%,
8/12/11(6) 1,600,000 1,697,000
Series-DMC, Cl. C, 8.921%,
8/12/11(7) 3,500,000 3,737,344
- --------------------------------------------------------------------
Potomac Gurnee Financial Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1, Cl. C, 7.217%,
12/21/26(6) 250,000 255,825
Series 1, Cl. D, 7.683%,
12/21/26(6) 500,000 515,800
- --------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,530,900
Series 1995-C1, Cl. D, 6.90%,
2/25/27 3,000,000 2,987,119
- --------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
E, 7.30%, 10/20/34 4,000,000 4,027,500
Multiclass Pass-Through
Certificates, Series 1996-C3, Cl.
C, 7.375%, 6/25/30(5)(6) 3,000,000 3,029,063
Multiclass Pass-Through
Certificates, Series 1996-CFL, Cl.
D, 7.034%, 2/25/28 1,800,000 1,800,000
-------------
56,809,383
- --------------------------------------------------------------------
MANUFACTURED HOUSING - 0.1%
Green Tree Financial Corp., Series
1994-6, Cl. A3, 7.70%, 1/15/20 606,220 608,494
- --------------------------------------------------------------------
MULTI-FAMILY - 0.5%
Countrywide Funding Corp., Mtg.
Pass-Through Certificates, Series
1993-12, Cl. B1, 6.625%, 2/25/24 1,000,000 971,044
- --------------------------------------------------------------------
Merrill Lynch Trust, Collateralized
Mtg. Obligations, Gtd. Multiclass
Mtg. Participation Certificates,
Series 43, Cl. E, 6.50%, 8/27/15 500,000 497,810
- --------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates,
Series 1991-M5, Cl. A, 9%, 3/25/17 1,226,291 1,240,916
-------------
2,709,770
- --------------------------------------------------------------------
OTHER - 0.1%
GE Capital Mortgage Services, Inc.,
Series 1994-14, Cl. A1, 6.50%,
4/25/24 68,492 68,256
- --------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VI:
Interest-Only Stripped Mtg.-Backed
Security, Series 1987-3, Cl. B,
7.102%, 10/23/17(2) 111,586 31,820
Principal-Only Stripped Mtg.-Backed
Security, Series 1987-3, Cl. A,
15.181%, 10/23/17(4) 113,751 96,866
-------------
196,942
- --------------------------------------------------------------------
RESIDENTIAL - 2.8%
Contimortgage Home Equity Loan
Trust, Series 1995-2, Cl. A2,
7.95%, 4/15/10 25,452 25,437
- --------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl.
E, 7.50%, 3/1/11(6) 4,500,000 4,658,850
- --------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1,
8.116%, 7/25/06(5)(6) 4,024,000 4,225,602
- --------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-HF1, Cl. E, 7.55%,
7/15/29(6) 1,500,000 1,518,984
Series 1997-WF1, Cl. E, 7.49%,
5/15/09(6) 1,000,000 1,008,750
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------
<S> <C> <C>
RESIDENTIAL (CONTINUED)
NationsBank Trust, Lease
Pass-Through Certificates, Series
1997A-1, 7.442%, 1/10/11(5) $ 2,500,000 $ 2,604,688
- --------------------------------------------------------------------
Ryland Mortgage Securities Corp.
III, Sub. Bonds, Series 1992-A, Cl.
1A, 8.268%, 3/29/30(5) 346,586 352,435
-------------
14,394,746
-------------
Total Mortgage-Backed Obligations
(Cost $263,590,350) 265,716,414
- --------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 24.8%
- --------------------------------------------------------------------
U.S. Treasury Bonds:
10.375%, 11/15/09(8) 500,000 625,156
10.375%, 11/15/12 500,000 664,844
12.75%, 11/15/10 1,000,000 1,427,501
7.25%, 5/15/16 33,000,000 37,578,783
9.25%, 2/15/16 8,300,000 11,259,473
- --------------------------------------------------------------------
U.S. Treasury Nts.:
5.75%, 11/30/02 3,667,000 3,671,587
6.375%, 8/15/02 14,250,000 14,624,077
6.50%, 10/15/06 8,840,000 9,259,909
6.625%, 5/15/07 4,000,000 4,236,252
6.75%, 6/30/99(9) 22,150,000 22,503,027
7.25%, 5/15/04 1,000,000 1,079,688
7.25%, 8/15/04 13,665,000 14,775,295
7.50%, 11/15/01 3,150,000 3,341,955
7.875%, 1/15/98 1,900,000 1,902,377
9.25%, 8/15/98(9) 2,000,000 2,044,376
-------------
Total U.S. Government Obligations
(Cost $124,042,603) 128,994,300
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
0.7%
- -------------------------------------------------------------------------
Lithuania (Republic of) Bonds,
7.125%, 7/22/02(6) 950,000 930,990
- -------------------------------------------------------------------------
Ontario, Canada (Province of)
Bonds, 8%, 10/17/01 750,000 798,300
- -------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts.,
Zero Coupon, 27.053%, 3/17/98(10) IDR 1,000,000,000 168,151
- -------------------------------------------------------------------------
South Africa (Republic of) Bonds:
Series 150, 12%, 2/28/05 ZAR 4,777,350 906,523
Series 162, 12.50%, 1/15/02 ZAR 3,665,780 724,547
Series 175, 9%, 10/15/02 ZAR 905,340 154,973
-------------
Total Foreign Government
Obligations (Cost $3,878,519) 3,683,484
- -------------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.2%
- -------------------------------------------------------------------------
Colombia (Republic of) 1989-1990
Integrated Loan Facility Bonds,
6.75%, 7/1/01 (Cost
$1,085,369)(5)(6) 1,143,214 1,091,770
- -------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 0.4%
- -------------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority:
Exchangeable Revenue Bonds,
University of Miami, Prerefunded,
MBIA Insured, 7.65%, 4/1/10 175,000 192,019
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES
(CONTINUED)
- -------------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority: (Continued)
Revenue Bonds, University of Miami,
MBIA Insured, 7.65%, 4/1/10 $ 205,000 $ 223,144
Taxable Exchange Revenue Bonds,
University of Miami, MBIA Insured,
7.65%, 4/1/10 120,000 130,621
- -------------------------------------------------------------------------
Pinole, CA Redevelopment Agency Tax
Allocation Taxable Bonds, Pinole
Vista Redevelopment, Series B,
8.35%, 8/1/17 670,000 712,887
- -------------------------------------------------------------------------
Port of Portland, OR Special
Obligation Taxable Revenue Bonds,
PAMCO Project, 9.20%, 5/15/22 500,000 607,190
-------------
Total Municipal Bonds and Notes
(Cost $1,664,376) 1,865,861
- -------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 34.4%
- -------------------------------------------------------------------------
BASIC INDUSTRY - 1.3%
- -------------------------------------------------------------------------
CHEMICALS - 0.4%
Quantum Chemical Corp., 10.375%
First Mtg. Nts., 6/1/03 2,100,000 2,203,589
- -------------------------------------------------------------------------
PAPER - 0.9%
Boise Cascade Corp., 9.90% Nts.,
3/15/00 750,000 803,701
- -------------------------------------------------------------------------
Fletcher Challenge Capital Canada,
Inc., 7.75% Nts., 6/20/06 1,800,000 1,943,305
- -------------------------------------------------------------------------
Potlatch Corp., 9.46% Medium-Term
Nts., 4/2/02 500,000 559,844
- -------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95%
Timber Collateralized Nts., 7/20/15 1,412,832 1,466,254
-------------
4,773,104
- -------------------------------------------------------------------------
CONSUMER RELATED - 3.1%
- -------------------------------------------------------------------------
CONSUMER PRODUCTS - 1.3%
Harman International Industries,
Inc., 7.32% Nts., 7/1/07 5,000,000 5,218,230
- -------------------------------------------------------------------------
Procter & Gamble Co., 9.36% Debs.,
Series A, 1/1/21 500,000 644,266
- -------------------------------------------------------------------------
Toro Co., 7.125% Nts., 6/15/07 1,000,000 1,030,664
-------------
6,893,160
- -------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO - 0.5%
Bass America, Inc., 6.75% Gtd.
Nts., 8/1/99 750,000 762,071
- -------------------------------------------------------------------------
Coca-Cola Enterprises, Inc., 6.95%
Debs., 11/15/26 1,000,000 1,015,027
- -------------------------------------------------------------------------
Gruma SA de CV, 7.625% Bonds,
10/15/07(7) 700,000 689,261
-------------
2,466,359
- -------------------------------------------------------------------------
HEALTHCARE - 0.2%
Roche Holdings, Inc., 2.75% Bonds,
4/14/00 1,250,000 1,171,875
- -------------------------------------------------------------------------
HOTEL/GAMING - 0.9%
Circus Circus Enterprises, Inc.,
6.75% Nts., 7/15/03 375,000 373,046
- -------------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr.
Nts., 4/15/07 4,000,000 4,306,608
-------------
4,679,654
- -------------------------------------------------------------------------
TEXTILE/APPAREL - 0.2%
Fruit of the Loom, Inc., 7% Debs.,
3/15/11 1,097,000 1,081,372
- -------------------------------------------------------------------------
ENERGY - 3.9%
- -------------------------------------------------------------------------
BP America, Inc., 10.875% Nts.,
8/1/01 CAD 1,000,000 808,427
- -------------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts.,
5/15/99 500,000 516,919
- -------------------------------------------------------------------------
Colorado International Gas Corp.,
10% Sr. Debs., 6/15/05 500,000 604,269
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------
ENERGY (CONTINUED)
- -------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr.
Nts., 12/1/06(7) $ 2,000,000 $ 2,013,104
- -------------------------------------------------------------------------
Enron Corp., 9.875% Debs., 6/15/03 375,000 434,418
- -------------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts.,
9/15/07 4,000,000 4,108,420
- -------------------------------------------------------------------------
Global Marine, Inc., 7.125% Nts.,
9/1/07(6) 8,000,000 8,080,000
- -------------------------------------------------------------------------
HNG Internorth/Enron Corp., 9.625%
Debs., 3/15/06 500,000 600,241
- -------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts.,
3/15/02 400,000 425,942
- -------------------------------------------------------------------------
Mitchell Energy & Development
Corp., 9.25% Sr. Nts., 1/15/02 55,000 60,515
- -------------------------------------------------------------------------
Saga Petroleum ASA, 7.25% Debs.,
9/23/27 1,000,000 1,026,844
- -------------------------------------------------------------------------
Texaco Capital, Inc., 8.875% Gtd.
Debs., 9/1/21 500,000 626,775
- -------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875%
Debs., 1/1/21 750,000 997,500
-------------
20,303,374
- -------------------------------------------------------------------------
FINANCIAL SERVICES - 10.6%
- -------------------------------------------------------------------------
BANKS & THRIFTS - 1.3%
Banco Ganadero SA, 9.75%
Medium-Term Nts., 8/26/99(7) 125,000 127,344
- -------------------------------------------------------------------------
BankAmerica Corp., 7.75% Sub. Nts.,
7/15/02 750,000 793,961
- -------------------------------------------------------------------------
Banque Centrale de Tunisie, 7.50%
Nts., 9/19/07 900,000 846,802
- -------------------------------------------------------------------------
Chase Manhattan Corp. (New),
10.125% Sub. Nts., 11/1/00 750,000 827,285
- -------------------------------------------------------------------------
Citicorp Capital I, 7.933% Gtd.
Bonds, 2/15/27 2,000,000 2,138,990
- -------------------------------------------------------------------------
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 750,000 857,208
9% Sub. Nts., 6/15/99 150,000 156,123
- -------------------------------------------------------------------------
First Fidelity Bancorp, 8.50% Sub.
Capital Nts., 4/1/98 850,000 854,519
- -------------------------------------------------------------------------
Suntrust Banks, Inc., 8.875% Debs.,
2/1/98 500,000 501,029
-------------
7,103,261
- -------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 5.6%
Aeltus CBO II Ltd./Aeltus CBO II
Corp., 7.982% Sr. Sec. Sub. Bonds,
8/6/09(6) 5,000,000 5,062,500
- -------------------------------------------------------------------------
American General Finance Corp.,
5.875% Sr. Nts., 7/1/00 196,000 194,883
- -------------------------------------------------------------------------
Fleet Mtg. Group, Inc., 6.50% Nts.,
9/15/99 500,000 503,650
- -------------------------------------------------------------------------
Ford Motor Credit Co., 6.75% Nts.,
8/15/08 1,000,000 1,012,842
- -------------------------------------------------------------------------
Guangdong Enterprises Holdings
Ltd., 8.875% Sr. Nts., 5/22/07(7) 610,000 563,829
- -------------------------------------------------------------------------
Household Finance Corp., 8.95%
Debs., 9/15/99 500,000 522,488
- -------------------------------------------------------------------------
Household International BV, 6% Gtd.
Sr. Nts., 3/15/99 131,000 131,269
- -------------------------------------------------------------------------
HSBC Americas Capital Trust II,
8.38% Capital Securities,
5/15/27(7) 3,000,000 3,198,993
- -------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.56% Nts., 12/16/07 2,000,000 2,010,162
6.875% Nts., 3/1/03 750,000 770,451
- -------------------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co., 7% Debs., 10/1/13 1,000,000 1,018,604
- -------------------------------------------------------------------------
Norsk Hydro AS, 8.75% Bonds,
10/23/01 1,000,000 1,077,500
- -------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75%
Sr. Nts., 5/15/99 1,000,000 1,023,932
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Rank Group Finance plc, 6.75% Gtd.
Nts., 11/30/04 $ 3,000,000 $ 3,010,500
- -------------------------------------------------------------------------
Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,035,115
- -------------------------------------------------------------------------
SunAmerica, Inc., 9.95% Debs.,
2/1/12 3,000,000 3,765,333
- -------------------------------------------------------------------------
U.S. Leasing International, Inc.,
6.625% Sr. Nts., 5/15/03 750,000 761,647
- -------------------------------------------------------------------------
Washington Mutual Capital I, 8.375%
Gtd. Bonds, 6/1/27 3,000,000 3,271,428
-------------
28,935,126
- -------------------------------------------------------------------------
INSURANCE - 3.7%
Aetna Services, Inc., 7.125% Nts.,
8/15/06 1,000,000 1,031,609
- -------------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs.,
2/3/27 2,000,000 2,209,596
- -------------------------------------------------------------------------
CNA Financial Corp., 6.25% Nts.,
11/15/03 2,195,000 2,166,584
- -------------------------------------------------------------------------
Liberty Mutual Insurance Co.,
7.697% Nts., 10/15/2097(6) 7,000,000 7,359,044
- -------------------------------------------------------------------------
Prudential Insurance Co. of
America:
6.875% Nts., 4/15/03(7) 3,000,000 3,035,838
7.65% Surplus Nts., 7/1/07(7) 3,000,000 3,186,858
- -------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts.,
1/15/99 196,000 201,222
-------------
19,190,751
- -------------------------------------------------------------------------
MANUFACTURING - 0.5%
- -------------------------------------------------------------------------
AUTOMOTIVE - 0.5%
Chrysler Corp., 7.40% Debs.,
8/1/2097 2,000,000 2,141,498
- -------------------------------------------------------------------------
Johnson Controls, Inc., 7.70%
Debs., 3/1/15 500,000 564,073
-------------
2,705,571
- -------------------------------------------------------------------------
MEDIA - 4.2%
- -------------------------------------------------------------------------
CABLE TELEVISION - 0.5%
TKR Cable I, Inc., 10.50% Sr.
Debs., 10/30/07 2,200,000 2,445,617
- -------------------------------------------------------------------------
DIVERSIFIED MEDIA - 3.4%
GSP I Corp., 10.15% First Mtg.
Bonds, 6/24/10(7) 1,110,527 1,087,506
- -------------------------------------------------------------------------
News America Holdings, Inc.,
10.125% Gtd. Sr. Debs., 10/15/12 500,000 591,928
- -------------------------------------------------------------------------
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 1,295,000 1,481,516
- -------------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs.,
2/1/23 12,000,000 14,791,788
-------------
17,952,738
- -------------------------------------------------------------------------
ENTERTAINMENT/FILM - 0.1%
Columbia Pictures Entertainment,
Inc., 9.875% Sr. Sub. Nts., 2/1/98 500,000 501,292
- -------------------------------------------------------------------------
PUBLISHING/PRINTING - 0.2%
Reed Elsevier, Inc., 6.625% Nts.,
10/15/23(7) 600,000 587,754
- -------------------------------------------------------------------------
Reed Publishing (USA), Inc., 7.66%
Medium-Term Nts., 2/19/99 500,000 508,750
-------------
1,096,504
- -------------------------------------------------------------------------
OTHER - 3.0%
- -------------------------------------------------------------------------
CONGLOMERATES - 0.2%
Tenneco, Inc. (New):
10.20% Debs., 3/15/08 400,000 512,797
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
CONGLOMERATES (CONTINUED)
Tenneco, Inc. (New): (Continued)
8.075% Nts., 10/1/02 $ 650,000 $ 696,023
-------------
1,208,820
- -------------------------------------------------------------------------
SERVICES - 2.8%
Archer Daniels Midland Co., 7.125%
Debs., 3/1/13 750,000 800,963
- -------------------------------------------------------------------------
Comcast Cable Communications, Inc.,
8.125% Unsec. Nts., 5/1/04 5,000,000 5,404,590
- -------------------------------------------------------------------------
ENSCO International, Inc.:
6.75% Nts., 11/15/07 5,000,000 5,035,175
7.20% Nts., 11/15/27 3,000,000 3,055,386
-------------
14,296,114
- -------------------------------------------------------------------------
RETAIL - 1.0%
- -------------------------------------------------------------------------
SPECIALTY RETAILING - 1.0%
Staples, Inc., 7.125% Sr. Nts.,
8/15/07 5,000,000 5,104,230
- -------------------------------------------------------------------------
TECHNOLOGY - 3.4%
- -------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.8%
U.S. Cellular Corp., 7.25% Nts.,
8/15/07 4,000,000 4,088,556
- -------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
2.6%
Bell Cablemedia plc, 0%/11.95% Sr.
Disc. Nts., 7/15/04(11) 2,100,000 1,984,500
- -------------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27 CAD 3,000,000 1,948,549
- -------------------------------------------------------------------------
U S West Capital Funding, Inc.:
7.30% Gtd. Unsec. Nts., 1/15/07 5,000,000 5,194,145
7.95% Gtd. Bonds, 2/1/2097 4,000,000 4,446,788
-------------
13,573,982
</TABLE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
TRANSPORTATION - 1.4%
- --------------------------------------------------------------------
AIR TRANSPORTATION - 1.2%
UAL Corp., 9.125% Debs., 1/15/12 5,000,000 6,015,535
- --------------------------------------------------------------------
RAILROADS - 0.2%
Kansas City Southern Industries,
Inc., 6.625% Nts., 3/1/05 750,000 758,272
- --------------------------------------------------------------------
Union Pacific Corp., 9.65%
Medium-Term Nts., 4/17/00 400,000 429,143
-------------
1,187,415
- --------------------------------------------------------------------
UTILITIES - 2.0%
- --------------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Cleveland Electric Illuminating
Co./Toledo Edison Co., 7.13% Sec.
Nts., Series B, 7/1/07 3,000,000 3,173,586
- --------------------------------------------------------------------
Long Island Lighting Co., 7% Nts.,
3/1/04 150,000 151,842
- --------------------------------------------------------------------
Public Service Co. of Colorado,
8.75% First Mtg. Bonds, 3/1/22 750,000 828,344
- --------------------------------------------------------------------
South Carolina Electric & Gas Co.,
9% Mtg. Bonds, 7/15/06 500,000 583,366
-------------
4,737,138
- --------------------------------------------------------------------
GAS UTILITIES - 0.5%
Consolidated Natural Gas Co.,
6.625% Debs., 12/1/13 1,000,000 1,018,392
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------
<S> <C> <C>
GAS UTILITIES (CONTINUED)
National Fuel Gas Co., 7.75% Debs.,
2/1/04 $ 500,000 $ 532,226
- --------------------------------------------------------------------
Texas Gas Transmission Corp.,
8.625% Nts., 4/1/04 500,000 555,629
- --------------------------------------------------------------------
Washington Gas Light Co., 8.75%
First Mtg. Bonds, 7/1/19 500,000 518,978
-------------
2,625,225
- --------------------------------------------------------------------
TELEPHONE UTILITIES - 0.6%
Alltel Corp., 6.50% Debs., 11/1/13 1,000,000 1,003,891
- --------------------------------------------------------------------
GTE Corp.:
8.85% Debs., 3/1/98 750,000 753,043
9.375% Debs., 12/1/00 500,000 541,604
- --------------------------------------------------------------------
Northern Telecom Ltd., 6.875% Nts.,
10/1/02 500,000 513,475
-------------
2,812,013
-------------
Total Corporate Bonds and Notes
(Cost $175,107,227) 179,152,375
SHARES
- --------------------------------------------------------------------
PREFERRED STOCKS - 0.6%
- --------------------------------------------------------------------
Allstate Financing I, 7.95% Gtd.
Quarterly Income Preferred
Securities, Series A (Cost
$3,000,000) 120,000 3,112,500
PRINCIPAL
AMOUNT(1)
- --------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 0.9%
- --------------------------------------------------------------------
Canadian Imperial Bank of Commerce
(New York Branch) Canadian Dollar
Three Month Banker's Acceptance
Linked Maximum Rate Nts., 8.66%,
4/13/98 $ 500,000 494,700
- --------------------------------------------------------------------
Canadian Imperial Bank of Commerce,
U.S. Dollar Nts. Linked to the
Ministry of Finance of the Russian
Federation GKO, Zero Coupon,
9.857%, 9/17/98(10) 2,300,000 1,986,510
- --------------------------------------------------------------------
Goldman Sachs Group, LP:
South Korean Won Linked Nts.,
5.60%, 1/20/98 100,000 103,530
Taiwanese Dollar Linked Nts.,
5.75%, 6/12/98 200,000 201,960
- --------------------------------------------------------------------
Lehman Brothers Holdings, Inc.
Greek Drachma/Swiss Franc Linked
Nts., Zero Coupon, 14.709%,
1/15/98(10) 800,000 832,000
- --------------------------------------------------------------------
Merrill Lynch & Co., Inc., Units,
9.75%, 6/15/99 (representing debt
of Chemical Banking Corp., sub.
capital nts., and equity of
Citicorp, 7.75% preferred, series
22)(6) 1,000,000 1,172,800
- --------------------------------------------------------------------
Morgan Guaranty Trust Co. of New
York, Japanese Government Bond 193
Currency Protected Bank Nts.,
8.14%, 4/29/98 10,000 5,871
-------------
Total Structured Instruments (Cost
$4,976,564) 4,797,371
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.6%
- --------------------------------------------------------------------
Repurchase agreement with Smith,
Barney, Harris, Upham & Co., Inc.,
6.625%, dated 12/31/97, to be
repurchased at $13,504,969 on
1/2/98, collateralized by U.S.
Treasury Bonds, 8.875%-11.25%,
2/15/15-2/15/19, with a value of
$13,829,656 (Cost $13,500,000) $ 13,500,000 $ 13,500,000
- --------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$590,845,008) 115.7% 601,914,075
- --------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (15.7) (81,836,047)
--------------- -------------
NET ASSETS 100.0% $520,078,028
--------------- -------------
--------------- -------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C> <C> <C>
CAD - Canadian Dollar IDR - Indonesian Rupiah
ZAR - South African Rand
</TABLE>
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. When-issued security to be delivered and settled after December 31, 1997.
4. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
5. Represents the current interest rate for a variable rate security.
6. Identifies issues considered to be illiquid or restricted - See Note 8 of
Notes to Financial Statements.
7. 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 $20,275,019 or 3.90% of the Fund's net
assets as of December 31, 1997.
8. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
9. Securities with an aggregate market value of $2,349,157 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
10. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 88.0%
- ---------------------------------------------------------------
CONSUMER CYCLICALS - 13.5%
- ---------------------------------------------------------------
LEISURE & ENTERTAINMENT - 3.5%
CKE Restaurants, Inc. 273,500 $11,521,187
- ---------------------------------------------------------------
Landry's Seafood Restaurants,
Inc.(1) 340,000 8,160,000
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(1) 150,000 4,312,500
- ---------------------------------------------------------------
Signature Resorts, Inc.(1) 320,000 7,000,000
------------
30,993,687
- ---------------------------------------------------------------
RETAIL: GENERAL - 2.1%
Jones Apparel Group, Inc.(1) 219,600 9,442,800
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(1) 130,000 3,022,500
- ---------------------------------------------------------------
North Face, Inc. (The)(1) 165,000 3,630,000
- ---------------------------------------------------------------
Vans, Inc.(1) 150,000 2,268,750
------------
18,364,050
- ---------------------------------------------------------------
RETAIL: SPECIALTY - 7.9%
Cendant Corp.(1) 570,310 19,604,406
- ---------------------------------------------------------------
Fred Meyer, Inc.(1) 170,000 6,183,750
- ---------------------------------------------------------------
General Nutrition Cos., Inc. 550,000 18,700,000
- ---------------------------------------------------------------
Linens 'N Things, Inc.(1) 300,500 13,109,312
- ---------------------------------------------------------------
Petco Animal Supplies, Inc.(1) 330,000 7,920,000
- ---------------------------------------------------------------
TJX Cos., Inc. 120,000 4,125,000
------------
69,642,468
- ---------------------------------------------------------------
CONSUMER NON-CYCLICALS - 16.7%
- ---------------------------------------------------------------
HEALTHCARE/DRUGS - 3.0%
BioChem Pharma, Inc.(1) 360,000 7,515,000
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(1) 230,000 10,551,250
- ---------------------------------------------------------------
Human Genome Sciences, Inc.(1) 120,000 4,770,000
- ---------------------------------------------------------------
Incyte Pharmaceuticals, Inc.(1) 62,800 2,826,000
- ---------------------------------------------------------------
Nuerocrine Biosciences, Inc.(1) 105,000 826,875
------------
26,489,125
- ---------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
12.5%
AmeriSource Health Corp., Cl. A(1) 136,600 8,025,250
- ---------------------------------------------------------------
Covance, Inc.(1) 300,000 5,962,500
- ---------------------------------------------------------------
ESC Medical Systems Ltd.(1) 292,100 11,318,875
- ---------------------------------------------------------------
FPA Medical Management, Inc.(1) 460,000 8,567,500
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(1) 340,000 9,435,000
- ---------------------------------------------------------------
Integ, Inc.(1) 111,500 446,000
- ---------------------------------------------------------------
McKesson Corp. 70,000 7,573,125
- ---------------------------------------------------------------
MedPartners, Inc.(1) 175,000 3,915,625
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/SUPPLIES & SERVICES
(CONTINUED)
Parexel International Corp.(1) 235,000 $ 8,695,000
- ---------------------------------------------------------------
Pediatrix Medical Group, Inc.(1) 200,000 8,550,000
- ---------------------------------------------------------------
PhyCor, Inc.(1) 159,000 4,293,000
- ---------------------------------------------------------------
Quintiles Transnational Corp.(1) 150,000 5,737,500
- ---------------------------------------------------------------
Renal Treatment Centers, Inc.(1) 405,000 14,630,625
- ---------------------------------------------------------------
Total Renal Care Holdings, Inc.(1) 454,333 12,494,157
------------
109,644,157
- ---------------------------------------------------------------
HOUSEHOLD GOODS - 1.2%
Blyth Industries, Inc.(1) 352,500 10,552,969
- ---------------------------------------------------------------
ENERGY - 5.6%
- ---------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 5.6%
Calpine Corp.(1) 232,500 3,458,437
- ---------------------------------------------------------------
Coflexip SA, Sponsored ADR 80,000 4,440,000
- ---------------------------------------------------------------
Cooper Cameron Corp.(1) 80,000 4,880,000
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 153,800 7,401,625
- ---------------------------------------------------------------
Global Industries Ltd.(1) 300,000 5,100,000
- ---------------------------------------------------------------
Halliburton Co. 200,000 10,387,500
- ---------------------------------------------------------------
Nabors Industries, Inc.(1) 200,000 6,287,500
- ---------------------------------------------------------------
Santa Fe International Corp. 180,000 7,323,750
------------
49,278,812
- ---------------------------------------------------------------
FINANCIAL - 11.9%
- ---------------------------------------------------------------
BANKS - 1.4%
Providian Financial Corp. 120,000 5,422,500
- ---------------------------------------------------------------
TCF Financial Corp. 200,000 6,787,500
------------
12,210,000
- ---------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.7%
Affiliated Managers Group, Inc.(1) 190,000 5,510,000
- ---------------------------------------------------------------
Arm Financial Group, Inc., Cl. A 300,000 7,912,500
- ---------------------------------------------------------------
Associates First Capital Corp., Cl.
A 161,000 11,451,125
- ---------------------------------------------------------------
C.I.T. Group, Inc., Cl. A(1) 234,700 7,569,075
------------
32,442,700
- ---------------------------------------------------------------
INSURANCE - 6.8%
ACE Ltd. 50,000 4,825,000
- ---------------------------------------------------------------
CapMAC Holdings, Inc. 100,600 3,495,850
- ---------------------------------------------------------------
Conseco, Inc. 300,000 13,631,250
- ---------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 250,000 10,312,500
- ---------------------------------------------------------------
Executive Risk, Inc. 135,000 9,424,687
- ---------------------------------------------------------------
EXEL Ltd. 70,000 4,436,250
- ---------------------------------------------------------------
Frontier Insurance Group, Inc. 200,000 4,575,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
INSURANCE (CONTINUED)
Travelers Property Casualty Corp.,
Cl. A 200,000 $ 8,800,000
------------
59,500,537
- ---------------------------------------------------------------
INDUSTRIAL - 12.5%
- ---------------------------------------------------------------
INDUSTRIAL SERVICES - 10.0%
AccuStaff, Inc.(1) 330,000 7,590,000
- ---------------------------------------------------------------
Affiliated Computer Services, Inc.,
Cl. A(1) 200,000 5,262,500
- ---------------------------------------------------------------
Allied Waste Industries, Inc.(1) 604,300 14,087,744
- ---------------------------------------------------------------
American Disposal Services, Inc.(1) 175,400 6,402,100
- ---------------------------------------------------------------
Cambridge Technology Partners,
Inc.(1) 486,600 20,254,725
- ---------------------------------------------------------------
CIBER, Inc.(1) 231,300 13,415,400
- ---------------------------------------------------------------
Newpark Resources, Inc.(1) 346,800 6,069,000
- ---------------------------------------------------------------
U.S. Rentals, Inc.(1) 181,500 4,265,250
- ---------------------------------------------------------------
United Rentals, Inc.(1) 125,000 2,414,063
- ---------------------------------------------------------------
USA Waste Services, Inc.(1) 196,600 7,716,550
------------
87,477,332
- ---------------------------------------------------------------
MANUFACTURING - 2.5%
Tyco International Ltd. 410,000 18,475,625
- ---------------------------------------------------------------
U.S. Filter Corp.(1) 108,600 3,251,213
------------
21,726,838
- ---------------------------------------------------------------
TECHNOLOGY - 27.8%
- ---------------------------------------------------------------
COMPUTER HARDWARE - 1.3%
Telxon Corp. 480,000 11,460,000
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 16.6%
Aspen Technologies, Inc.(1) 315,700 10,812,725
- ---------------------------------------------------------------
Cap Gemini SA 105,000 8,613,479
- ---------------------------------------------------------------
Citrix Systems, Inc.(1) 240,000 18,240,000
- ---------------------------------------------------------------
Compuware Corp.(1) 310,000 9,920,000
- ---------------------------------------------------------------
Harbinger Corp.(1) 276,500 7,776,563
- ---------------------------------------------------------------
HBO & Co. 380,000 18,240,000
- ---------------------------------------------------------------
Hypercom Corp.(1) 183,200 2,587,700
- ---------------------------------------------------------------
JDA Software Group, Inc.(1) 400,000 14,000,000
- ---------------------------------------------------------------
Oracle Corp.(1) 100,000 2,231,250
- ---------------------------------------------------------------
Rogue Wave Software, Inc.(1) 150,000 1,659,375
- ---------------------------------------------------------------
Saville Systems Ireland plc,
Sponsored ADR(1) 450,000 18,675,000
- ---------------------------------------------------------------
Synopsys, Inc.(1) 275,000 9,831,250
- ---------------------------------------------------------------
USWeb Corp.(1) 310,000 2,906,250
- ---------------------------------------------------------------
Versant Object Technology Corp.(1) 225,000 3,107,813
- ---------------------------------------------------------------
Visio Corp.(1) 440,000 16,885,000
------------
145,486,405
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
ELECTRONICS - 2.4%
Lernout & Hauspie Speech Products
NV(1) 177,500 $ 8,253,750
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 185,000 6,983,750
- ---------------------------------------------------------------
Waters Corp.(1) 150,000 5,643,750
------------
20,881,250
- ---------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY -
7.5%
Advanced Fibre Communications,
Inc.(1) 110,000 3,203,750
- ---------------------------------------------------------------
Allen Telecom, Inc.(1) 121,200 2,234,625
- ---------------------------------------------------------------
Comverse Technology, Inc.(1) 120,000 4,680,000
- ---------------------------------------------------------------
Newbridge Networks Corp.(1) 210,000 7,323,750
- ---------------------------------------------------------------
Nextel Communications, Inc., Cl.
A(1) 350,000 9,100,000
- ---------------------------------------------------------------
Pacific Gateway Exchange, Inc.(1) 50,000 2,690,625
- ---------------------------------------------------------------
Scientific-Atlanta, Inc. 170,000 2,847,500
- ---------------------------------------------------------------
Tel-Save Holdings, Inc.(1) 130,000 2,583,750
- ---------------------------------------------------------------
Teledata Communications Ltd.(1) 234,800 4,285,100
- ---------------------------------------------------------------
Tellabs, Inc.(1) 170,000 8,988,750
- ---------------------------------------------------------------
Uniphase Corp.(1) 203,000 8,399,125
- ---------------------------------------------------------------
WinStar Communications, Inc. 380,000 9,476,250
------------
65,813,225
------------
Total Common Stocks (Cost
$605,998,270) 771,963,555
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND
NOTES - 0.3%
- ---------------------------------------------------------------
United Waste Systems, Inc., 4.50%
Cv. Sub. Nts., 6/1/01 (Cost
$2,000,000)(2) $ 2,000,000 2,775,000
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS - 12.2%
- ---------------------------------------------------------------
Repurchase agreement with Smith,
Barney, Harris, Upham & Co., Inc.,
6.625%, dated 12/31/97, to be
repurchased at $107,289,474 on
1/2/98, collateralized by U.S.
Treasury Bonds, 8.875%-11.25%,
2/15/15-2/15/19, with a value of
$109,868,933 (Cost $107,250,000) 107,250,000 107,250,000
- ---------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$715,248,270) 100.5% 881,988,555
- ---------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (0.5) (4,181,082 )
------------ ------------
NET ASSETS 100.0% $877,807,473
------------ ------------
------------ ------------
</TABLE>
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $2,775,000 or 0.32% of the Fund's net
assets as of December 31, 1997.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 78.9%
- ---------------------------------------------------------------
BASIC MATERIALS - 2.2%
- ---------------------------------------------------------------
CHEMICALS - 2.2%
Crompton & Knowles Corp. 38,200 $ 1,012,300
- ---------------------------------------------------------------
Ferro Corp. 80,000 1,945,000
- ---------------------------------------------------------------
Morton International, Inc. 127,000 4,365,625
- ---------------------------------------------------------------
Praxair, Inc. 45,600 2,052,000
- ---------------------------------------------------------------
Scotts Co. (The), Cl. A(1) 56,000 1,694,000
------------
11,068,925
- ---------------------------------------------------------------
CONSUMER CYCLICALS - 14.0%
- ---------------------------------------------------------------
AUTOS & HOUSING - 2.4%
Arvin Industries, Inc. 54,300 1,808,869
- ---------------------------------------------------------------
Autoliv, Inc. 54,889 1,797,615
- ---------------------------------------------------------------
Centex Corp. 39,000 2,454,562
- ---------------------------------------------------------------
Furniture Brands International,
Inc.(1) 60,100 1,232,050
- ---------------------------------------------------------------
Magna International, Inc., Cl. A 22,000 1,381,875
- ---------------------------------------------------------------
Pulte Corp. 22,000 919,875
- ---------------------------------------------------------------
Toll Brothers, Inc.(1) 90,000 2,407,500
------------
12,002,346
- ---------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.5%
Callaway Golf Co. 82,200 2,347,837
- ---------------------------------------------------------------
Carnival Corp., Cl. A 75,000 4,153,125
- ---------------------------------------------------------------
Disney (Walt) Co. 7,000 693,437
------------
7,194,399
- ---------------------------------------------------------------
MEDIA - 1.5%
Chancellor Media Corp.(1) 30,000 2,238,750
- ---------------------------------------------------------------
New York Times Co. 78,000 5,157,750
------------
7,396,500
- ---------------------------------------------------------------
RETAIL: GENERAL - 4.1%
CVS Corp. 114,500 7,335,156
- ---------------------------------------------------------------
Dayton Hudson Corp. 30,000 2,025,000
- ---------------------------------------------------------------
Federated Department Stores,
Inc.(1) 65,000 2,799,062
- ---------------------------------------------------------------
Jones Apparel Group, Inc.(1) 76,500 3,289,500
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(1) 62,000 1,441,500
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(1) 95,800 3,364,975
------------
20,255,193
- ---------------------------------------------------------------
RETAIL: SPECIALTY - 4.5%
Bed Bath & Beyond, Inc.(1) 21,000 808,500
- ---------------------------------------------------------------
Cendant Corp.(1) 110,000 3,781,250
- ---------------------------------------------------------------
Ethan Allen Interiors, Inc. 70,500 2,718,656
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
RETAIL: SPECIALTY (CONTINUED)
Gap, Inc. 25,500 $ 903,656
- ---------------------------------------------------------------
Intimate Brands, Inc., Cl. A 95,000 2,285,937
- ---------------------------------------------------------------
Nine West Group, Inc.(1) 43,600 1,130,875
- ---------------------------------------------------------------
Ross Stores, Inc. 60,000 2,182,500
- ---------------------------------------------------------------
Stride Rite Corp. 35,000 420,000
- ---------------------------------------------------------------
Tiffany & Co. 44,000 1,586,750
- ---------------------------------------------------------------
TJX Cos., Inc. 92,000 3,162,500
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(1) 75,500 3,161,562
------------
22,142,186
- ---------------------------------------------------------------
CONSUMER NON-CYCLICALS - 14.0%
- ---------------------------------------------------------------
FOOD - 4.3%
Hershey Foods Corp. 20,000 1,238,750
- ---------------------------------------------------------------
JP Foodservice, Inc.(1) 32,600 1,204,162
- ---------------------------------------------------------------
Kroger Co.(1) 49,000 1,809,937
- ---------------------------------------------------------------
McCormick & Co., Inc., Non-Vtg. 13,000 364,000
- ---------------------------------------------------------------
Richfood Holdings, Inc. 87,200 2,463,400
- ---------------------------------------------------------------
Safeway, Inc.(1) 152,000 9,614,000
- ---------------------------------------------------------------
Smithfield Foods, Inc.(1) 82,000 2,706,000
- ---------------------------------------------------------------
Suiza Foods Corp.(1) 29,750 1,771,984
------------
21,172,233
- ---------------------------------------------------------------
HEALTHCARE/DRUGS - 3.8%
Biogen, Inc.(1) 26,000 945,750
- ---------------------------------------------------------------
Lilly (Eli) & Co. 74,180 5,164,782
- ---------------------------------------------------------------
Pfizer, Inc. 90,000 6,710,625
- ---------------------------------------------------------------
Schering-Plough Corp. 92,800 5,765,200
------------
18,586,357
- ---------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
4.5%
Becton, Dickinson & Co. 25,000 1,250,000
- ---------------------------------------------------------------
HealthCare COMPARE Corp.(1) 70,800 3,619,650
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(1) 88,000 2,442,000
- ---------------------------------------------------------------
Lincare Holdings, Inc.(1) 82,700 4,713,900
- ---------------------------------------------------------------
Medtronic, Inc. 35,000 1,830,937
- ---------------------------------------------------------------
Minimed, Inc.(1) 46,800 1,819,350
- ---------------------------------------------------------------
Oxford Health Plans, Inc.(1) 54,800 852,825
- ---------------------------------------------------------------
Renal Treatment Centers, Inc.(1) 50,000 1,806,250
- ---------------------------------------------------------------
VISX, Inc.(1) 11,000 243,375
- ---------------------------------------------------------------
WellPoint Health Networks, Inc.(1) 88,400 3,734,900
------------
22,313,187
- ---------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Blyth Industries, Inc.(1) 25,000 748,437
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TOBACCO - 1.2%
Philip Morris Cos., Inc. 102,000 $ 4,621,875
- ---------------------------------------------------------------
RJR Nabisco Holdings Corp. 40,000 1,500,000
------------
6,121,875
- ---------------------------------------------------------------
ENERGY - 5.8%
- ---------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 3.8%
BJ Services Co.(1) 25,000 1,798,437
- ---------------------------------------------------------------
ENSCO International, Inc. 68,000 2,278,000
- ---------------------------------------------------------------
Global Marine, Inc.(1) 100,000 2,450,000
- ---------------------------------------------------------------
Halliburton Co. 89,800 4,663,987
- ---------------------------------------------------------------
Nabors Industries, Inc.(1) 53,900 1,694,481
- ---------------------------------------------------------------
Smith International, Inc.(1) 38,000 2,332,250
- ---------------------------------------------------------------
Varco International, Inc.(1) 166,200 3,562,913
------------
18,780,068
- ---------------------------------------------------------------
OIL-INTEGRATED - 2.0%
Camco International, Inc. 48,500 3,088,844
- ---------------------------------------------------------------
Mobil Corp. 18,200 1,313,813
- ---------------------------------------------------------------
Phillips Petroleum Co. 33,000 1,604,625
- ---------------------------------------------------------------
Royal Dutch Petroleum Co., NY
Shares 10,000 541,875
- ---------------------------------------------------------------
Texaco, Inc. 29,000 1,576,875
- ---------------------------------------------------------------
USX-Marathon Group 58,000 1,957,500
------------
10,083,532
- ---------------------------------------------------------------
FINANCIAL - 17.8%
- ---------------------------------------------------------------
BANKS - 5.6%
Banc One Corp. 127,262 6,911,917
- ---------------------------------------------------------------
BankBoston Corp. 23,000 2,160,563
- ---------------------------------------------------------------
Barnett Banks, Inc. 38,000 2,731,250
- ---------------------------------------------------------------
Chase Manhattan Corp. (New) 15,640 1,712,580
- ---------------------------------------------------------------
Credito Italiano 1,320,000 4,072,746
- ---------------------------------------------------------------
Fleet Financial Group, Inc. 20,000 1,498,750
- ---------------------------------------------------------------
Greenpoint Financial Corp. 12,000 870,750
- ---------------------------------------------------------------
Societe Generale 21,500 2,930,586
- ---------------------------------------------------------------
Star Banc Corp. 43,500 2,495,813
- ---------------------------------------------------------------
State Street Corp. 39,200 2,280,950
------------
27,665,905
- ---------------------------------------------------------------
DIVERSIFIED FINANCIAL - 8.1%
Associates First Capital Corp., Cl.
A 55,000 3,911,875
- ---------------------------------------------------------------
Countrywide Credit Industries, Inc. 10,000 428,750
- ---------------------------------------------------------------
Fannie Mae 36,000 2,054,250
- ---------------------------------------------------------------
Finova Group, Inc. 60,800 3,021,000
- ---------------------------------------------------------------
Franklin Resources, Inc. 23,100 2,008,256
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Freddie Mac 60,000 $ 2,516,250
- ---------------------------------------------------------------
Green Tree Financial Corp. 128,000 3,352,000
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc. 44,000 3,209,250
- ---------------------------------------------------------------
MGIC Investment Corp. 32,200 2,141,300
- ---------------------------------------------------------------
Money Store, Inc. (The) 40,000 840,000
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 40,200 2,376,825
- ---------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 30,500 1,917,688
- ---------------------------------------------------------------
Schwab (Charles) Corp. 30,000 1,258,125
- ---------------------------------------------------------------
Travelers Group, Inc. 203,499 10,963,509
------------
39,999,078
- ---------------------------------------------------------------
INSURANCE - 4.1%
ACE Ltd. 25,800 2,489,700
- ---------------------------------------------------------------
Allstate Corp. 27,500 2,499,063
- ---------------------------------------------------------------
Conseco, Inc. 90,000 4,089,375
- ---------------------------------------------------------------
Equitable Cos., Inc. 69,000 3,432,750
- ---------------------------------------------------------------
Executive Risk, Inc. 40,000 2,792,500
- ---------------------------------------------------------------
Progressive Corp. 15,000 1,798,125
- ---------------------------------------------------------------
SunAmerica, Inc. 78,500 3,355,875
------------
20,457,388
- ---------------------------------------------------------------
INDUSTRIAL - 5.9%
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
Emerson Electric Co. 37,000 2,088,188
- ---------------------------------------------------------------
General Electric Co. 18,000 1,320,750
------------
3,408,938
- ---------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.7%
Rayonier, Inc. 32,400 1,379,025
- ---------------------------------------------------------------
Southdown, Inc. 36,900 2,177,100
------------
3,556,125
- ---------------------------------------------------------------
INDUSTRIAL SERVICES - 0.7%
Corrections Corp. of America(1) 55,000 2,038,438
- ---------------------------------------------------------------
Kent Electronics Corp.(1) 56,000 1,407,000
------------
3,445,438
- ---------------------------------------------------------------
MANUFACTURING - 2.3%
Aeroquip-Vickers, Inc. 35,000 1,717,188
- ---------------------------------------------------------------
AGCO Corp. 25,200 737,100
- ---------------------------------------------------------------
American Standard Cos., Inc.(1) 50,000 1,915,625
- ---------------------------------------------------------------
Illinois Tool Works, Inc. 45,000 2,705,625
- ---------------------------------------------------------------
MascoTech, Inc. 97,000 1,782,375
- ---------------------------------------------------------------
Sealed Air Corp.(1) 38,000 2,346,500
------------
11,204,413
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 1.5%
Canadian Pacific Ltd. (New) 90,000 $ 2,452,500
- ---------------------------------------------------------------
Kansas City Southern Industries,
Inc. 153,000 4,857,750
------------
7,310,250
- ---------------------------------------------------------------
TECHNOLOGY - 18.2%
- ---------------------------------------------------------------
COMPUTER HARDWARE - 5.7%
Adaptec, Inc.(1) 167,200 6,207,300
- ---------------------------------------------------------------
Cabletron Systems, Inc.(1) 87,000 1,305,000
- ---------------------------------------------------------------
Compaq Computer Corp. 82,000 4,627,875
- ---------------------------------------------------------------
EMC Corp.(1) 84,000 2,304,750
- ---------------------------------------------------------------
Gateway 2000, Inc.(1) 80,600 2,629,575
- ---------------------------------------------------------------
International Business Machines
Corp. 37,000 3,868,813
- ---------------------------------------------------------------
Quantum Corp.(1) 40,000 802,500
- ---------------------------------------------------------------
Seagate Technology, Inc.(1) 180,000 3,465,000
- ---------------------------------------------------------------
Sun Microsystems, Inc.(1) 36,000 1,435,500
- ---------------------------------------------------------------
Western Digital Corp.(1) 85,000 1,365,313
------------
28,011,626
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 7.3%
BMC Software, Inc.(1) 58,400 3,832,500
- ---------------------------------------------------------------
Computer Associates International,
Inc. 39,000 2,062,125
- ---------------------------------------------------------------
First Data Corp. 93,000 2,720,250
- ---------------------------------------------------------------
Gartner Group, Inc., Cl. A(1) 91,000 3,389,750
- ---------------------------------------------------------------
HBO & Co. 65,000 3,120,000
- ---------------------------------------------------------------
Microsoft Corp.(1) 69,000 8,918,250
- ---------------------------------------------------------------
Network Associates, Inc.(1) 75,900 4,013,213
- ---------------------------------------------------------------
Peoplesoft, Inc.(1) 130,800 5,101,200
- ---------------------------------------------------------------
Structural Dynamics Research
Corp.(1) 60,600 1,363,500
- ---------------------------------------------------------------
Sungard Data Systems, Inc.(1) 54,000 1,674,000
------------
36,194,788
- ---------------------------------------------------------------
ELECTRONICS - 2.4%
Analog Devices, Inc.(1) 28,333 784,470
- ---------------------------------------------------------------
LSI Logic Corp.(1) 50,000 987,500
- ---------------------------------------------------------------
Sanmina Corp.(1) 49,000 3,319,750
- ---------------------------------------------------------------
Teradyne, Inc.(1) 30,000 960,000
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 48,200 1,819,550
- ---------------------------------------------------------------
Waters Corp.(1) 100,000 3,762,500
------------
11,633,770
- ---------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY -
2.8%
Ascend Communications, Inc.(1) 25,750 630,875
- ---------------------------------------------------------------
Newbridge Networks Corp.(1) 30,000 1,046,250
- ---------------------------------------------------------------
Pairgain Technologies, Inc.(1) 85,000 1,646,875
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY
(CONTINUED)
Tellabs, Inc.(1) 128,200 $ 6,778,575
- ---------------------------------------------------------------
WorldCom, Inc. 125,000 3,781,250
------------
13,883,825
- ---------------------------------------------------------------
UTILITIES - 1.0%
- ---------------------------------------------------------------
ELECTRIC UTILITIES - 0.6%
American Electric Power Co., Inc. 11,550 596,269
- ---------------------------------------------------------------
CalEnergy, Inc.(1) 59,500 1,710,625
- ---------------------------------------------------------------
CMS Energy Corp. 16,200 713,813
------------
3,020,707
- ---------------------------------------------------------------
TELEPHONE UTILITIES - 0.4%
Cincinnati Bell, Inc. 23,600 731,600
- ---------------------------------------------------------------
LCI International, Inc.(1) 42,000 1,291,500
------------
2,023,100
------------
Total Common Stocks (Cost
$298,431,087) 389,680,589
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS - 20.5%
- ---------------------------------------------------------------
Repurchase agreement with Smith,
Barney, Harris, Upham & Co., Inc.,
6.625%, dated 12/31/97, to be
repurchased at $101,537,358 on
1/2/98, collateralized by U.S.
Treasury Bonds, 8.875%-11.25%,
2/15/15-2/15/19, with a value of
$103,978,524 (Cost $101,500,000) $101,500,000 101,500,000
- ---------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$399,931,087) 99.4% 491,180,589
- ---------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.6 2,725,385
------------ ------------
NET ASSETS 100.0% $493,905,974
------------ ------------
------------ ------------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 48.2%
- ---------------------------------------------------------------
BASIC MATERIALS - 2.2%
- ---------------------------------------------------------------
CHEMICALS - 0.9%
Bayer AG, Sponsored ADR 51,000 $ 1,906,069
- ---------------------------------------------------------------
Ecolab, Inc.(1) 14,000 776,125
- ---------------------------------------------------------------
IMC Global, Inc. 47,700 1,562,175
- ---------------------------------------------------------------
Potash Corp. of Saskatchewan, Inc. 20,000 1,660,000
------------
5,904,369
- ---------------------------------------------------------------
METALS - 0.9%
Alumax, Inc.(2) 58,000 1,972,000
- ---------------------------------------------------------------
Brush Wellman, Inc. 78,000 1,911,000
- ---------------------------------------------------------------
De Beers Consolidated Mines Ltd.,
ADR 52,300 1,068,881
- ---------------------------------------------------------------
Oregon Metallurgical Corp.(2) 30,000 1,001,250
------------
5,953,131
- ---------------------------------------------------------------
PAPER - 0.4%
Aracruz Celulose SA, Sponsored ADR 66,499 955,923
- ---------------------------------------------------------------
MacMillan Bloedel Ltd. 103,880 1,077,986
- ---------------------------------------------------------------
MacMillan Bloedel Ltd. 24,200 257,125
------------
2,291,034
- ---------------------------------------------------------------
CONSUMER CYCLICALS - 9.3%
- ---------------------------------------------------------------
AUTOS & HOUSING - 0.7%
Dana Corp. 33,000 1,567,500
- ---------------------------------------------------------------
General Motors Corp.(1) 5,000 303,125
- ---------------------------------------------------------------
IRSA Inversiones y Representaciones
SA 357,510 1,330,181
- ---------------------------------------------------------------
Toll Brothers, Inc.(2) 46,000 1,230,500
------------
4,431,306
- ---------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.5%
Alaska Air Group, Inc.(1)(2) 54,000 2,092,500
- ---------------------------------------------------------------
AMR Corp.(1)(2) 21,500 2,762,750
- ---------------------------------------------------------------
Berjaya Sports Toto Berhad 410,000 1,049,929
- ---------------------------------------------------------------
Brunswick Corp. 36,000 1,091,250
- ---------------------------------------------------------------
Callaway Golf Co. 22,500 642,656
- ---------------------------------------------------------------
Cheesecake Factory (The)(2) 30,000 915,000
- ---------------------------------------------------------------
Circus Circus Enterprises, Inc.(2) 83,000 1,701,500
- ---------------------------------------------------------------
Cracker Barrel Old Country Store,
Inc.(1) 70,000 2,336,250
- ---------------------------------------------------------------
Disney (Walt) Co.(1) 5,000 495,312
- ---------------------------------------------------------------
Global Motorsport Group, Inc.(2) 59,000 685,875
- ---------------------------------------------------------------
International Game Technology(1) 100,000 2,525,000
- ---------------------------------------------------------------
Mirage Resorts, Inc.(2) 47,500 1,080,625
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
Nintendo Co. Ltd. 32,000 $ 3,150,258
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(1)(2) 26,800 770,500
- ---------------------------------------------------------------
Primadonna Resorts, Inc.(2) 48,000 801,000
- ---------------------------------------------------------------
Shangri-La Asia Ltd. 535,000 452,262
- ---------------------------------------------------------------
Shimano, Inc. 85,000 1,568,976
- ---------------------------------------------------------------
SkyWest, Inc.(1) 60,000 1,777,500
- ---------------------------------------------------------------
Time Warner, Inc. 23,000 1,426,000
- ---------------------------------------------------------------
West Marine, Inc.(1)(2) 73,000 1,633,384
------------
28,958,527
- ---------------------------------------------------------------
MEDIA - 1.3%
CBS Corp.(1) 113,026 3,327,203
- ---------------------------------------------------------------
Comcast Corp., Cl. A Special(1) 57,000 1,799,062
- ---------------------------------------------------------------
South China Morning Post Holdings
Ltd. 1,706,000 1,199,972
- ---------------------------------------------------------------
U S West Media Group(2) 72,000 2,079,000
------------
8,405,237
- ---------------------------------------------------------------
RETAIL: GENERAL - 1.0%
Cone Mills Corp.(2) 261,000 2,022,750
- ---------------------------------------------------------------
Dayton Hudson Corp. 20,000 1,350,000
- ---------------------------------------------------------------
Federated Department Stores,
Inc.(2) 41,000 1,765,562
- ---------------------------------------------------------------
Neiman-Marcus Group, Inc.(2) 50,500 1,527,625
------------
6,665,937
- ---------------------------------------------------------------
RETAIL: SPECIALTY - 1.8%
AutoZone, Inc.(1)(2) 60,000 1,740,000
- ---------------------------------------------------------------
Books-A-Million, Inc.(2) 300,000 1,743,750
- ---------------------------------------------------------------
Circuit City Stores, Inc. - CarMax
Group(2) 65,000 585,000
- ---------------------------------------------------------------
Costco Cos., Inc.(1)(2) 14,900 664,912
- ---------------------------------------------------------------
General Nutrition Cos., Inc.(1) 75,000 2,550,000
- ---------------------------------------------------------------
Gymboree Corp.(1)(2) 61,900 1,694,512
- ---------------------------------------------------------------
Movie Gallery, Inc.(2) 80,000 235,000
- ---------------------------------------------------------------
Toys 'R' Us, Inc.(2) 73,000 2,294,937
------------
11,508,111
- ---------------------------------------------------------------
CONSUMER NON-CYCLICALS - 7.9%
- ---------------------------------------------------------------
BEVERAGES - 0.3%
Diageo plc 200,000 1,837,915
- ---------------------------------------------------------------
FOOD - 0.7%
Chiquita Brands International, Inc. 90,000 1,468,125
- ---------------------------------------------------------------
Groupe Danone 10,413 1,860,743
- ---------------------------------------------------------------
Nestle SA, Sponsored ADR 12,000 900,482
------------
4,229,350
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS - 3.3%
Abbott Laboratories 33,000 $ 2,163,562
- ---------------------------------------------------------------
American Home Products Corp. 38,500 2,945,250
- ---------------------------------------------------------------
Astra AB Free, Series A 80,000 1,386,375
- ---------------------------------------------------------------
BioChem Pharma, Inc.(2) 46,500 970,687
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 11,000 1,040,875
- ---------------------------------------------------------------
Genzyme Corp. (General
Division)(1)(2) 72,000 1,998,000
- ---------------------------------------------------------------
Johnson & Johnson(1) 40,000 2,635,000
- ---------------------------------------------------------------
Mylan Laboratories, Inc.(1) 95,000 1,989,062
- ---------------------------------------------------------------
Novartis AG 2,106 3,422,040
- ---------------------------------------------------------------
SmithKline Beecham plc, ADR 46,000 2,366,125
------------
20,916,976
- ---------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
2.6%
Acuson Corp.(2) 48,000 795,000
- ---------------------------------------------------------------
Alternative Living Services,
Inc.(2) 73,000 2,158,062
- ---------------------------------------------------------------
Apache Medical Systems, Inc.(2) 287,000 367,719
- ---------------------------------------------------------------
Biomet, Inc. 80,000 2,050,000
- ---------------------------------------------------------------
Boston Scientific Corp.(2) 16,000 734,000
- ---------------------------------------------------------------
Innovasive Devices, Inc.(2) 110,000 1,003,750
- ---------------------------------------------------------------
Manor Care, Inc.(1) 34,985 1,224,475
- ---------------------------------------------------------------
MedPartners, Inc.(2) 100,000 2,237,500
- ---------------------------------------------------------------
Oxford Health Plans, Inc.(2) 42,000 653,625
- ---------------------------------------------------------------
United Healthcare Corp.(1) 41,000 2,037,187
- ---------------------------------------------------------------
United States Surgical Corp. 51,000 1,494,937
- ---------------------------------------------------------------
WellPoint Health Networks,
Inc.(1)(2) 39,981 1,689,197
------------
16,445,452
- ---------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Wella AG 1,550 1,094,801
- ---------------------------------------------------------------
Wella AG, Preference 200 146,826
------------
1,241,627
- ---------------------------------------------------------------
TOBACCO - 0.8%
Imperial Tobacco Group plc 220,000 1,386,416
- ---------------------------------------------------------------
Philip Morris Cos., Inc. 73,500 3,330,469
- ---------------------------------------------------------------
PT Hanjaya Mandala Sampoerna 492,000 385,245
------------
5,102,130
- ---------------------------------------------------------------
ENERGY - 3.6%
- ---------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.0%
Global Marine, Inc.(1)(2) 54,000 1,323,000
- ---------------------------------------------------------------
Transocean Offshore, Inc.(1) 43,000 2,072,062
- ---------------------------------------------------------------
Weatherford Enterra, Inc.(1)(2) 33,000 1,443,750
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
ENERGY SERVICES & PRODUCERS
(CONTINUED)
Western Atlas, Inc.(1)(2) 19,000 $ 1,406,000
------------
6,244,812
- ---------------------------------------------------------------
OIL-INTEGRATED - 2.6%
Atlantic Richfield Co. 32,000 2,564,000
- ---------------------------------------------------------------
Enron Corp. 35,000 1,454,688
- ---------------------------------------------------------------
Kerr-McGee Corp. 30,000 1,899,375
- ---------------------------------------------------------------
Occidental Petroleum Corp. 41,000 1,201,813
- ---------------------------------------------------------------
Ranger Oil Ltd. 161,213 1,098,397
- ---------------------------------------------------------------
Royal Dutch Petroleum Co., NY
Shares 30,800 1,668,975
- ---------------------------------------------------------------
Talisman Energy, Inc.(2) 43,900 1,342,138
- ---------------------------------------------------------------
Total SA, Sponsored ADR 17,501 971,306
- ---------------------------------------------------------------
Unocal Corp. 62,000 2,406,375
- ---------------------------------------------------------------
YPF SA, Cl. D, ADR 62,000 2,119,625
------------
16,726,692
- ---------------------------------------------------------------
FINANCIAL - 7.8%
- ---------------------------------------------------------------
BANKS - 4.6%
ABN Amro Holding NV 66,000 1,285,993
- ---------------------------------------------------------------
Akbank T.A.S. 3,721,215 327,890
- ---------------------------------------------------------------
Banco Frances del Rio de la Plata
SA 100,050 928,634
- ---------------------------------------------------------------
Chase Manhattan Corp. (New)(1) 72,000 7,884,000
- ---------------------------------------------------------------
Credit Suisse Group 5,500 852,216
- ---------------------------------------------------------------
Credito Italiano 485,000 1,496,426
- ---------------------------------------------------------------
Deutsche Bank AG 12,000 839,579
- ---------------------------------------------------------------
Fleet Financial Group, Inc. 5,000 374,688
- ---------------------------------------------------------------
NationsBank Corp. 120,000 7,297,500
- ---------------------------------------------------------------
PNC Bank Corp. 32,000 1,826,000
- ---------------------------------------------------------------
Societe Generale 21,200 2,889,694
- ---------------------------------------------------------------
UBS, Bearer 880 1,274,251
- ---------------------------------------------------------------
Wells Fargo & Co. 5,800 1,968,738
------------
29,245,609
- ---------------------------------------------------------------
DIVERSIFIED FINANCIAL - 1.5%
American Express Co.(1) 30,400 2,713,200
- ---------------------------------------------------------------
Freddie Mac 34,000 1,425,875
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc.(1) 36,000 2,625,750
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 45,800 2,707,925
------------
9,472,750
- ---------------------------------------------------------------
INSURANCE - 1.7%
ACE Ltd.(1) 31,500 3,039,750
- ---------------------------------------------------------------
Cigna Corp. 7,500 1,297,969
- ---------------------------------------------------------------
Equitable Cos., Inc.(1) 35,100 1,746,225
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
INSURANCE (CONTINUED)
Everest Reinsurance Holdings, Inc. 8,300 $ 342,375
- ---------------------------------------------------------------
Skandia Forsakrings AB 36,000 1,699,191
- ---------------------------------------------------------------
UNUM Corp. 48,600 2,642,625
------------
10,768,135
- ---------------------------------------------------------------
INDUSTRIAL - 3.8%
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
General Electric Co.(1) 6,800 498,950
- ---------------------------------------------------------------
Methode Electronics, Inc., Cl. A(1) 100,000 1,625,000
- ---------------------------------------------------------------
Rockwell International Corp. 36,300 1,896,675
------------
4,020,625
- ---------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.5%
Owens Corning 60,000 2,047,500
- ---------------------------------------------------------------
Wolverine Tube, Inc.(2) 40,000 1,240,000
------------
3,287,500
- ---------------------------------------------------------------
INDUSTRIAL SERVICES - 0.3%
Calgon Carbon Corp. 101,000 1,085,750
- ---------------------------------------------------------------
Children's Comprehensive Services,
Inc.(2) 40,000 740,000
- ---------------------------------------------------------------
UNOVA, Inc.(2) 4,800 78,900
------------
1,904,650
- ---------------------------------------------------------------
MANUFACTURING - 1.2%
AGCO Corp. 72,000 2,106,000
- ---------------------------------------------------------------
Citic Pacific Ltd. 55,000 218,630
- ---------------------------------------------------------------
Cognex Corp.(2) 48,000 1,308,000
- ---------------------------------------------------------------
Eaton Corp. 9,000 803,250
- ---------------------------------------------------------------
Hutchison Whampoa Ltd. 35,000 219,533
- ---------------------------------------------------------------
Tenneco, Inc. 48,000 1,896,000
- ---------------------------------------------------------------
Westinghouse Air Brake Co. 50,000 1,281,250
------------
7,832,663
- ---------------------------------------------------------------
TRANSPORTATION - 1.2%
Burlington Northern Santa Fe Corp. 31,000 2,881,063
- ---------------------------------------------------------------
Canadian National Railway Co. 23,000 1,081,677
- ---------------------------------------------------------------
Spartan Motors, Inc. 130,000 804,375
- ---------------------------------------------------------------
Stolt-Nielsen SA 64,200 1,360,238
- ---------------------------------------------------------------
Stolt-Nielsen SA, Sponsored ADR 17,650 386,094
- ---------------------------------------------------------------
Transportacion Maritima Mexicana SA
de CV, Sponsored ADR, L Shares(2) 130,000 958,750
------------
7,472,197
- ---------------------------------------------------------------
TECHNOLOGY - 11.4%
- ---------------------------------------------------------------
AEROSPACE/DEFENSE - 0.4%
Lockheed Martin Corp. 18,000 1,773,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (CONTINUED)
Raytheon Co., Cl. A 15,502 $ 764,442
------------
2,537,442
- ---------------------------------------------------------------
COMPUTER HARDWARE - 2.4%
Cabletron Systems, Inc.(2) 95,000 1,425,000
- ---------------------------------------------------------------
Canon, Inc. 40,000 935,233
- ---------------------------------------------------------------
Hewlett-Packard Co. 39,000 2,437,500
- ---------------------------------------------------------------
International Business Machines
Corp. 55,000 5,750,938
- ---------------------------------------------------------------
Iomega Corp.(1)(2) 92,000 1,144,250
- ---------------------------------------------------------------
Quantum Corp.(2) 9,900 198,619
- ---------------------------------------------------------------
Xerox Corp.(1) 42,700 3,151,794
------------
15,043,334
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.1%
America Online, Inc.(1)(2) 22,850 2,037,934
- ---------------------------------------------------------------
Computer Associates International,
Inc.(1) 75,962 4,016,517
- ---------------------------------------------------------------
Electronic Arts, Inc.(1)(2) 38,500 1,455,781
- ---------------------------------------------------------------
First Data Corp. 75,000 2,193,750
- ---------------------------------------------------------------
Inference Corp., Cl. A(2) 160,000 630,000
- ---------------------------------------------------------------
Novell, Inc.(2) 200,000 1,500,000
- ---------------------------------------------------------------
Rational Software Corp.(2) 133,000 1,512,875
- ---------------------------------------------------------------
Sabre Group Holdings, Inc.(1)(2) 66,100 1,908,638
- ---------------------------------------------------------------
SELECT Software Tools Ltd., ADR(2) 150,000 843,750
- ---------------------------------------------------------------
Symantec Corp.(1)(2) 67,364 1,477,798
- ---------------------------------------------------------------
Synopsys, Inc.(2) 15,000 536,250
- ---------------------------------------------------------------
Transition Systems, Inc.(2) 65,000 1,438,125
------------
19,551,418
- ---------------------------------------------------------------
ELECTRONICS - 3.9%
CAE, Inc. 131,066 1,025,800
- ---------------------------------------------------------------
Credence Systems Corp.(2) 29,100 862,088
- ---------------------------------------------------------------
Dynatech Corp.(2) 40,000 1,875,000
- ---------------------------------------------------------------
General Motors Corp., Cl. H 27,000 997,313
- ---------------------------------------------------------------
Input/Output, Inc.(1)(2) 138,000 4,096,875
- ---------------------------------------------------------------
Intel Corp.(1) 130,000 9,132,500
- ---------------------------------------------------------------
Keyence Corp. 7,700 1,142,968
- ---------------------------------------------------------------
LSI Logic Corp.(2) 75,000 1,481,250
- ---------------------------------------------------------------
Nokia Corp., A Shares, Sponsored
ADR(1) 9,800 686,000
- ---------------------------------------------------------------
Novellus Systems, Inc.(1)(2) 8,400 271,425
- ---------------------------------------------------------------
SGS-Thomson Microelectronics
NV(1)(2) 17,500 1,068,594
- ---------------------------------------------------------------
Teradyne, Inc.(2) 15,000 480,000
- ---------------------------------------------------------------
Xilinx, Inc.(2) 45,000 1,577,813
------------
24,697,626
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY -
1.6%
Airtouch Communications, Inc.(1)(2) 59,000 $ 2,452,188
- ---------------------------------------------------------------
Cisco Systems, Inc.(1)(2) 36,000 2,007,000
- ---------------------------------------------------------------
ECI Telecommunications Ltd.(1) 59,000 1,504,500
- ---------------------------------------------------------------
MCI Communications Corp. 57,000 2,440,313
- ---------------------------------------------------------------
Newbridge Networks Corp.(1)(2) 18,500 645,188
- ---------------------------------------------------------------
QUALCOMM, Inc.(2) 19,000 959,500
- ---------------------------------------------------------------
Tellabs, Inc.(2) 7,000 370,125
------------
10,378,814
- ---------------------------------------------------------------
UTILITIES - 2.2%
- ---------------------------------------------------------------
ELECTRIC UTILITIES - 1.2%
Allegheny Energy, Inc. 42,000 1,365,000
- ---------------------------------------------------------------
Houston Industries, Inc. 80,000 2,135,000
- ---------------------------------------------------------------
PacifiCorp 60,000 1,638,750
- ---------------------------------------------------------------
Southern Co. 60,000 1,552,500
- ---------------------------------------------------------------
Union Electric Co. 18,500 800,125
------------
7,491,375
- ---------------------------------------------------------------
TELEPHONE UTILITIES - 1.0%
BCE, Inc. 40,000 1,332,500
- ---------------------------------------------------------------
Qwest Communications International,
Inc.(2) 20,000 1,190,000
- ---------------------------------------------------------------
SBC Communications, Inc. 19,000 1,391,750
- ---------------------------------------------------------------
Telecomunicacoes Brasileiras SA 6,860,000 697,667
- ---------------------------------------------------------------
U S West Communications Group(1) 44,000 1,985,500
------------
6,597,417
------------
Total Common Stocks (Cost
$223,270,684) 307,164,161
- ---------------------------------------------------------------
PREFERRED STOCKS - 0.0%
- ---------------------------------------------------------------
Time Warner, Inc., 10.25%
Exchangeable Preferred, Series M
(Cost $0)(3) 1 1,183
- ---------------------------------------------------------------
OTHER SECURITIES - 0.1%
- ---------------------------------------------------------------
Pantry Pride, Inc., $14.875
Exchangeable, Series B (Cost
$782,000)(4) 8,000 803,000
UNITS
- ---------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.1%
- ---------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(4) 6,000 60
- ---------------------------------------------------------------
Gaylord Container Corp. Wts., Exp.
11/02 9,232 53,084
- ---------------------------------------------------------------
IHF Capital, Inc., Series I Wts.,
Exp. 11/99(4) 1,000 50,000
- ---------------------------------------------------------------
PerSeptive Biosystems, Inc. Wts.,
Exp. 9/03 249 700
- ---------------------------------------------------------------
Terex Corp. Rts., Exp. 5/02(4) 4,000 81,000
------------
Total Rights, Warrants and
Certificates (Cost $20,772) 184,844
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 1.7%
- ---------------------------------------------------------------
Government National Mortgage Assn.:
7%, 1/1/28(6) $ 6,000,000 $ 6,043,140
8%, 4/15/23 2,848,896 2,966,727
8%, 7/15/22 1,256,791 1,310,344
- ---------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 673,355 679,496
------------
Total Mortgage-Backed Obligations
(Cost $10,886,646) 10,999,707
</TABLE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 9.1%
- --------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS:
7.26%, 11/15/18(10) 18,600,000 5,308,384
7.10%, 11/15/18(10) 24,500,000 6,977,992
7.31%, 8/15/19(10) 26,800,000 7,295,228
- --------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02 15,000,000 15,093,765
6.25%, 2/15/07 8,800,000 9,086,009
6.375%, 8/15/02 5,000,000 5,131,255
9.25%, 8/15/98 9,000,000 9,199,692
------------
Total U.S. Government Obligations
(Cost $53,411,213) 58,092,325
- --------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
15.9%
- --------------------------------------------------------------------
ARGENTINA - 6.6%
Argentina (Republic of) Bonds,
Bonos de Consolidacion de Deudas,
Series I, 5.66%, 4/1/01(7) 2,103,652 1,982,009
- --------------------------------------------------------------------
Argentina (Republic of) Floating
Rate Bonds, Series L, 6.69%,
3/31/05(7) 8,880,000 7,958,700
- --------------------------------------------------------------------
Argentina (Republic of) Nts.,
9.50%, 11/30/02(7) 15,000,000 14,906,250
- --------------------------------------------------------------------
Argentina (Republic of) Par Bonds,
5.50%, 3/31/23(8) 23,750,000 17,470,975
------------
42,317,934
- --------------------------------------------------------------------
AUSTRALIA - 0.6%
Queensland Treasury Corp.
Exchangeable Gtd. Nts., 10.50%,
5/15/03 AUD 1,800,000 1,414,755
- --------------------------------------------------------------------
Treasury Corp. of Victoria Gtd.
Bonds, 8.25%, 10/15/03 AUD 3,000,000 2,164,829
------------
3,579,584
- --------------------------------------------------------------------
BRAZIL - 1.3%
Brazil (Federal Republic of) Par
Bonds, 5.25%, 4/15/24(8) 11,500,000 8,308,750
- --------------------------------------------------------------------
CANADA - 2.4%
Canada (Government of) Bonds:
8.50%, 4/1/02 CAD 1,500,000 1,171,955
8.75%, 12/1/05 CAD 12,200,000 10,251,018
9.75%, 12/1/01 CAD 3,000,000 2,418,333
9.75%, 6/1/01 CAD 2,000,000 1,589,161
------------
15,430,467
- --------------------------------------------------------------------
DENMARK - 0.9%
Denmark (Kingdom of) Bonds, 8%,
3/15/06 DKK 32,100,000 5,431,095
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
<S> <C> <C> <C>
- --------------------------------------------------------------------
GREAT BRITAIN - 1.2%
United Kingdom Treasury Bonds,
6.75%, 11/26/04 GBP 2,680,000 $ 4,490,982
- --------------------------------------------------------------------
United Kingdom Treasury Nts., 13%,
7/14/00 GBP 1,590,000 2,986,545
------------
7,477,527
- --------------------------------------------------------------------
IRELAND - 0.3%
Ireland (Government of) Bonds,
9.25%, 7/11/03 IEP 1,110,000 1,890,321
- --------------------------------------------------------------------
MEXICO - 0.6%
United Mexican States
Collateralized Fixed Rate Par
Bonds, Series A, 6.25%, 12/31/19 4,450,000 3,726,875
- --------------------------------------------------------------------
NEW ZEALAND - 1.0%
New Zealand (Government of) Bonds,
8%, 2/15/01 NZD 10,440,000 6,159,839
- --------------------------------------------------------------------
PHILIPPINES - 0.4%
Philippines (Republic of) Bonds,
8.60%, 6/15/27 1,500,000 1,383,750
- --------------------------------------------------------------------
Philippines (Republic of) Par
Bonds, Series B, 6.50%,
12/1/17(4)(8) 1,675,000 1,417,469
------------
2,801,219
- --------------------------------------------------------------------
POLAND - 0.3%
Poland (Republic of) Bonds, 15%,
10/12/99 PLZ 9,000,000 2,236,265
- --------------------------------------------------------------------
SOUTH AFRICA - 0.3%
Eskom Depositary Receipts, Series
E168, 11%, 6/1/08 ZAR 12,570,000 2,178,925
------------
Total Foreign Government
Obligations (Cost $95,796,002) 101,538,801
</TABLE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND
NOTES - 8.5%
- ----------------------------------------------------------------
BASIC MATERIALS - 1.2%
- ----------------------------------------------------------------
CHEMICALS - 0.4%
Harris Chemical North America,
Inc., 10.75% Gtd. Sr. Sub. Nts.,
10/15/03 100,000 107,250
- ----------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., 9/15/07(9) 500,000 495,000
- ----------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 85,000 94,562
- ----------------------------------------------------------------
Quantum Chemical Corp., 10.375%
First Mtg. Nts., 6/1/03 500,000 524,664
- ----------------------------------------------------------------
Sterling Chemicals, Inc., 11.75%
Sr. Unsec. Sub. Nts., 8/15/06 1,115,000 1,142,875
-------------
2,364,351
- ----------------------------------------------------------------
METALS - 0.3%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 1,150,000 1,184,500
- ----------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07(9) 500,000 515,000
-------------
1,699,500
- ----------------------------------------------------------------
PAPER - 0.5%
APP International Finance Co. BV,
11.75% Gtd. Sec. Nts., 10/1/05 500,000 461,250
- ----------------------------------------------------------------
Aracruz Celulose SA, 10.375% Debs.,
1/31/02 430,000 439,675
- ----------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr.
Nts., 6/15/07 500,000 487,500
- ----------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr.
Nts., 3/1/03 425,000 439,875
- ----------------------------------------------------------------
Riverwood International Corp.,
10.625% Sr. Unsec. Nts., 8/1/07 500,000 510,000
- ----------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts.,
Series B, 12/15/04 750,000 836,250
-------------
3,174,550
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS - 3.1%
- ----------------------------------------------------------------
AUTOS & HOUSING - 0.7%
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., 7/15/07(9) $ 500,000 $ 525,000
- ----------------------------------------------------------------
Chrysler Financial Corp., 13.25%
Nts., 10/15/99 500,000 559,926
- ----------------------------------------------------------------
Coleman Escrow Corp., Zero Coupon
Sr. First Priority Disc. Nts.,
11.13%, 5/15/01(10) 770,000 513,975
- ----------------------------------------------------------------
Hayes Wheels International, Inc.,
11% Sr. Sub. Nts., 7/15/06 500,000 560,000
- ----------------------------------------------------------------
Icon Health & Fitness, Inc., 13%
Sr. Sub. Nts., Series B, 7/15/02 1,000,000 1,122,500
- ----------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75%
Sr. Nts., 10/15/04 500,000 497,500
- ----------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub.
Nts., 7/15/05 345,000 388,125
-------------
4,167,026
- ----------------------------------------------------------------
LEISURE & ENTERTAINMENT - 0.7%
Casino America, Inc., 12.50% Sr.
Nts., 8/1/03 250,000 272,812
- ----------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 315,000 322,087
9.75% Sr. Sub. Nts., 6/1/02 350,000 361,375
- ----------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd.
First Mtg. Nts., 12/1/03 755,000 815,400
- ----------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr.
Nts., 7/15/07 750,000 793,125
- ----------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01 600,000 633,000
- ----------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50%
Gtd. Sr. Sub. Nts., 4/15/07 750,000 796,875
- ----------------------------------------------------------------
Station Casinos, Inc., 10.125% Sr.
Sub. Nts., 3/15/06 445,000 471,700
-------------
4,466,374
- ----------------------------------------------------------------
MEDIA - 1.5%
American Telecasting, Inc.,
0%/14.50% Sr. Disc. Nts.,
6/15/04(11) 229,000 76,715
- ----------------------------------------------------------------
Cablevision Systems Corp., 9.875%
Sr. Sub. Nts., 5/15/06 250,000 275,625
- ----------------------------------------------------------------
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 400,000 411,000
- ----------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(11) 540,000 496,800
- ----------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03 550,000 594,000
- ----------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr.
Sub. Nts., 12/1/06 150,000 162,187
- ----------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875%
Sr. Sub. Nts., 7/15/03 1,000,000 1,062,842
- ----------------------------------------------------------------
Rogers Cablesystems Ltd., 10%
Second Priority Sr. Sec. Debs.,
12/1/07 1,000,000 1,105,000
- ----------------------------------------------------------------
SCI Television, Inc., 11% Sr. Sec.
Nts., 6/30/05(4) 500,000 528,365
- ----------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 502,500
9% Gtd. Sr. Sub. Nts., 7/15/07 450,000 461,250
- ----------------------------------------------------------------
TCI Satellite Entertainment, Inc.,
10.875% Sr. Sub. Nts., 2/15/07(9) 200,000 210,500
- ----------------------------------------------------------------
Time Warner Entertainment LP,
10.15% Sr. Nts., 5/1/12 500,000 651,878
- ----------------------------------------------------------------
Time Warner, Inc., 9.125% Debs.,
1/15/13 500,000 598,423
- ----------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr.
Debs., 10/30/07 1,000,000 1,111,644
- ----------------------------------------------------------------
Universal Outdoor, Inc., 9.75% Sr.
Sub. Nts., Series B, 10/15/06 500,000 562,500
- ----------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr.
Sub. Debs., 6/15/07 900,000 895,500
-------------
9,706,729
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
RETAIL: GENERAL - 0.1%
CMI Industries, Inc., 9.50% Sr.
Sub. Nts., 10/1/03(4) $ 25,000 $ 24,688
- ----------------------------------------------------------------
Dan River, Inc., 10.125% Sr. Sub.
Nts., 12/15/03 500,000 536,875
-------------
561,563
- ----------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
Finlay Fine Jewelry Corp., 10.625%
Sr. Nts., 5/1/03(4) 750,000 791,250
- ----------------------------------------------------------------
CONSUMER NON-CYCLICALS - 0.9%
- ----------------------------------------------------------------
FOOD - 0.6%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., 12/1/04(9) 300,000 315,750
10.625% Sr. Sub. Nts., 7/31/07(9) 800,000 848,000
- ----------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr.
Nts., 6/15/04 850,000 956,250
- ----------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., 7/1/07(9) 800,000 832,000
- ----------------------------------------------------------------
RJR Nabisco, Inc., 8.625%
Medium-Term Nts., 12/1/02 500,000 532,428
- ----------------------------------------------------------------
Stater Brothers Holdings, Inc., 9%
Sr. Unsec. Sub. Nts., 7/1/04 500,000 525,000
-------------
4,009,428
- ----------------------------------------------------------------
HEALTHCARE/DRUGS - 0.0%
Integrated Health Services, Inc.,
9.50% Sr. Sub. Nts., 9/15/07(9) 220,000 226,600
- ----------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
0.1%
Genesis Health Ventures, Inc.,
9.25% Sr. Sub. Nts., 10/1/06 340,000 348,075
- ----------------------------------------------------------------
Magellan Health Services, Inc.,
11.25% Sr. Sub. Nts., Series A,
4/15/04 355,000 395,381
-------------
743,456
- ----------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts.:
Series B, 13.17%, 3/15/98(10) 500,000 494,888
10.09%, 3/15/01(10) 1,000,000 695,000
-------------
1,189,888
- ----------------------------------------------------------------
ENERGY - 0.1%
- ----------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.1%
J. Ray McDermott SA, 9.375% Sr.
Sub. Bonds, 7/15/06 750,000 807,188
- ----------------------------------------------------------------
FINANCIAL - 0.3%
- ----------------------------------------------------------------
BANKS - 0.1%
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 250,000 285,736
9% Sub. Nts., 6/15/99 250,000 260,205
-------------
545,941
- ----------------------------------------------------------------
DIVERSIFIED FINANCIAL - 0.2%
Saul (B.F.) Real Estate Investment
Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 950,000 1,021,250
- ----------------------------------------------------------------
INDUSTRIAL - 0.6%
- ----------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.2%
American Standard Cos., Inc.,
10.875% Sr. Nts., 5/15/99(4) 500,000 527,500
- ----------------------------------------------------------------
Building Materials Corp. of
America, 8.625% Sr. Nts., Series B,
12/15/06 100,000 103,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL MATERIALS (CONTINUED)
Triangle Pacific Corp., 10.50% Sr.
Nts., 8/1/03 $ 850,000 $ 896,750
-------------
1,527,750
- ----------------------------------------------------------------
INDUSTRIAL SERVICES - 0.0%
Allied Waste North America, Inc.,
10.25% Sr. Sub. Nts., 12/1/06 285,000 314,213
- ----------------------------------------------------------------
MANUFACTURING - 0.3%
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 500,000 550,000
- ----------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub.
Nts., 7/1/07 500,000 501,250
- ----------------------------------------------------------------
Synthetic Industries, Inc., 9.25%
Sr. Sub. Nts., 2/15/07 80,000 84,800
- ----------------------------------------------------------------
Terex Corp., 13.25% Sr. Sec. Nts.,
5/15/02 665,000 761,425
-------------
1,897,475
- ----------------------------------------------------------------
TRANSPORTATION - 0.1%
Navigator Gas Transport plc, 10.50%
First Priority Ship Mtg. Nts.,
6/30/07(9) 500,000 532,500
- ----------------------------------------------------------------
TECHNOLOGY - 1.6%
- ----------------------------------------------------------------
AEROSPACE/DEFENSE - 0.2%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 925,000 994,375
- ----------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts.,
8/1/04(9) 500,000 522,500
-------------
1,516,875
- ----------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY -
1.4%
Call-Net Enterprises, Inc.,
0%/13.25% Sr. Disc. Nts.,
12/1/04(11) 800,000 733,000
- ----------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05(11) 500,000 385,000
- ----------------------------------------------------------------
ICG Holdings, Inc., 0%/13.50% Sr.
Disc. Nts., 9/15/05(11) 800,000 652,000
- ----------------------------------------------------------------
Intermedia Communications, Inc.,
8.50% Sr. Nts., 1/15/08(9) 500,000 502,500
- ----------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts.,
6/1/06(11) 750,000 553,125
- ----------------------------------------------------------------
NTL, Inc., 0%/10.875% Sr. Deferred
Coupon Nts., 10/15/03(11) 500,000 475,000
- ----------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 590,000 625,400
11.625% Sr. Nts., Series A, 8/15/06 110,000 116,600
- ----------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 200,000 218,000
- ----------------------------------------------------------------
PriCellular Wireless Corp., 14% Sr.
Sub. Disc. Nts., 11/15/01 1,000,000 1,115,000
- ----------------------------------------------------------------
Teleport Communications Group,
Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(11) 1,500,000 1,226,250
- ----------------------------------------------------------------
Telewest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(11) 1,000,000 781,250
9.625% Sr. Debs., 10/1/06 500,000 521,250
- ----------------------------------------------------------------
USA Mobile Communications, Inc. II,
9.50% Sr. Nts., 2/1/04 1,000,000 980,000
-------------
8,884,375
- ----------------------------------------------------------------
UTILITIES - 0.7%
- ----------------------------------------------------------------
ELECTRIC UTILITIES - 0.5%
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 750,000 810,000
- ----------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06(4) 800,000 876,000
8.75% Sr. Nts., 7/15/07(9) 400,000 410,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
First PV Funding Corp.:
10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16(4) $ 741,000 $ 787,313
10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16 18,000 18,000
-------------
2,901,313
- ----------------------------------------------------------------
GAS UTILITIES - 0.2%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds,
6/1/17(4) 989,000 1,092,845
-------------
Total Non-Convertible Corporate
Bonds and Notes (Cost $51,489,616) 54,142,440
- ----------------------------------------------------------------
CORPORATE BONDS AND NOTES - 0.2%
- ----------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.,
12.75% Sr. Sub. Nts., 2/1/03 (Cost
$1,043,750) 1,000,000 1,072,500
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS - 16.9%
- ----------------------------------------------------------------
Repurchase agreement with Smith,
Barney, Harris, Upham & Co., Inc.,
6.625%, dated 12/31/97, to be
repurchased at $107,839,676 on
1/2/98, collateralized by U.S.
Treasury Bonds, 8.875%-11.25%,
2/15/15-2/15/19, with a value of
$110,432,364 (Cost $107,800,000) 107,800,000 107,800,000
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$544,500,683) 100.7% 641,798,961
- ----------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (0.7) (4,254,131)
------------ -------------
NET ASSETS 100.0% $637,544,830
------------ -------------
------------ -------------
</TABLE>
1. A sufficient amount of securities has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL DATE PRICE RECEIVED NOTE 1
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ACE Ltd. 6,200 2/23 $ 90.00 $ 26,163 $ 50,375
AMR Corp. 5,000 5/18 120.00 62,348 73,750
Airtouch Communications, Inc. 14,000 1/20 40.00 20,579 31,500
Alaska Air Group, Inc. 11,000 1/20 35.00 14,304 38,500
America Online, Inc. 6,000 4/20 90.00 65,818 60,750
American Express Co. 7,600 4/18 90.00 39,671 40,850
AutoZone, Inc. 12,000 6/22 35.00 13,890 9,000
CBS Corp. 22,500 7/20 35.00 44,324 28,125
Chase Manhattan Corp., New 9,000 3/23 125.00 62,728 15,750
Cisco Systems, Inc. 8,000 4/18 63.38 42,759 36,000
Comcast Corp., 20,000 1/19 20.00 17,099 225,000
Computer Associates International,
Inc. 10,000 1/20 53.38 37,199 33,750
Costco Cos., Inc. 10,000 4/20 40.00 43,449 17,500
Costco Cos., Inc. 4,900 4/20 45.00 11,184 18,375
Cracker Barrel Old Country Store,
Inc. 14,000 3/23 35.00 20,579 22,750
Disney (Walt) Co. 5,000 1/20 90.00 6,725 45,625
ECI Telecommunications Ltd. 14,000 2/23 35.00 32,829 3,500
Ecolab, Inc. 6,000 4/20 55.00 18,569 27,000
Electronic Arts, Inc. 14,700 3/23 45.00 43,658 25,725
Equitable Cos., Inc. 11,000 1/19 35.00 21,669 165,000
General Electric Co. 6,800 3/23 80.00 18,495 10,200
General Motors Corp. 5,000 3/23 70.00 26,099 10,000
General Nutrition Cos., Inc. 15,000 7/20 40.00 42,674 34,687
Genzyme Corp. (General Division) 13,000 4/20 35.00 40,234 6,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
1. Outstanding written call options (continued)
<TABLE>
<CAPTION>
SHARES
SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL DATE PRICE RECEIVED NOTE 1
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Global Marine, Inc. 8,400 1/19 $ 25.00 $ 20,747 $ 9,450
Global Marine, Inc. 8,400 4/20 35.00 31,247 7,350
Gymboree Corp. 8,000 7/21 30.00 33,759 22,000
Input/Output, Inc. 27,000 2/23 30.00 53,188 72,563
Intel Corp. 17,000 1/19 97.50 53,931 1,063
Intel Corp. 7,000 4/18 115.00 17,289 875
International Game Technology 20,000 4/20 25.00 31,899 52,500
Iomega Corp. 20,000 2/24 17.50 20,324 5,000
Johnson & Johnson 9,000 7/20 70.00 32,354 30,375
Manor Care, Inc. 8,800 7/21 40.00 20,635 15,400
Merrill Lynch & Co., Inc. 2,600 1/19 60.00 7,397 32,500
Merrill Lynch & Co., Inc. 7,200 4/20 80.00 33,983 25,200
Methode Electronics, Inc. 18,000 4/20 30.00 19,709 1,125
Mylan Laboratories, Inc. 11,500 7/21 25.00 28,404 17,250
Newbridge Networks Corp. 7,800 3/23 70.00 41,690 975
Newbridge Networks Corp. 2,900 6/22 65.00 4,263 544
Nokia Corp., A Shares, Sponsored
ADR 9,800 1/20 85.00 70,754 1,225
Novellus Systems, Inc. 8,400 3/23 57.50 95,421 525
Outback Steakhouse, Inc. 10,000 2/23 30.00 17,943 11,875
Outback Steakhouse, Inc. 10,000 5/18 35.00 8,780 8,125
SGS-Thomson Microelectronics NV 1,800 4/20 100.00 16,145 450
Sabre Group Holdings, Inc. 6,400 5/18 40.00 14,608 1,200
SkyWest, Inc. 13,000 4/20 22.50 20,734 97,500
Symantec Corp. 17,600 1/19 20.00 54,470 45,100
Symantec Corp. 17,600 4/18 25.00 43,471 36,300
Symantec Corp. 17,600 7/20 30.00 58,870 34,100
Transocean Offshore, Inc. 7,000 2/23 60.00 36,539 4,375
U S West Communications Group 10,000 4/21 47.50 20,324 13,750
United Healthcare Corp. 8,200 6/23 60.00 25,378 15,375
Weatherford Enterra, Inc. 5,000 3/23 50.00 11,566 7,186
WellPoint Health Networks, Inc. 2,300 1/19 50.00 12,581 432
West Marine, Inc. 13,800 1/20 30.00 20,285 1,725
Western Atlas, Inc. 4,800 3/23 85.00 26,855 50,400
Xerox Corp. 8,000 4/20 90.00 19,260 5,500
----------- -------------
$ 1,797,849 $ 1,659,525
----------- -------------
----------- -------------
</TABLE>
2. Non-income producing security.
3. Interest or dividend is paid in kind.
4. Identifies issues considered to be illiquid or restricted - See Note 6 of
Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
5. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C> <C> <C>
AUD - Australian Dollar IEP - Irish Punt
CAD - Canadian Dollar NZD - New Zealand Dollar
DKK - Danish Krone PLZ - Polish Zloty
GBP - British Pound Sterling ZAR - South African Rand
</TABLE>
6. When-issued security to be delivered and settled after December 31, 1997.
7. Represents the current interest rate for a variable rate security.
8. Represents the current interest rate for an increasing rate security.
9. 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 $5,935,350 or 0.93% of the Fund's net
assets as of December 31, 1997.
10. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 75.0%
- ---------------------------------------------------------------
BASIC MATERIALS - 1.3%
- ---------------------------------------------------------------
CHEMICALS - 0.5%
Minerals Technologies, Inc. 100,000 $ 4,543,750
- ---------------------------------------------------------------
GOLD & PLATINUM - 0.4%
Newmont Mining Corp. 120,500 3,539,687
- ---------------------------------------------------------------
METALS - 0.4%
Cia de Minas Buenaventura SA,
Sponsored ADR 46,000 736,000
- ---------------------------------------------------------------
De Beers Consolidated Mines Ltd.,
ADR 150,400 3,073,800
------------
3,809,800
- ---------------------------------------------------------------
CONSUMER CYCLICALS - 14.3%
- ---------------------------------------------------------------
AUTOS & HOUSING - 3.1%
Brazil Realty SA, GDR(1) 60,000 1,236,534
- ---------------------------------------------------------------
Brisa-Auto Estradas de Portugal
SA(2) 70,300 2,521,088
- ---------------------------------------------------------------
IRSA Inversiones y Representaciones
SA 1,714,678 6,379,770
- ---------------------------------------------------------------
Porsche AG, Preference 11,000 18,475,643
- ---------------------------------------------------------------
Solidere, GDR(1) 110,000 1,443,750
------------
30,056,785
- ---------------------------------------------------------------
LEISURE & ENTERTAINMENT - 5.7%
Callaway Golf Co. 220,800 6,306,600
- ---------------------------------------------------------------
Corporacion Interamericana de
Entretenimiento SA, Cl. B(2) 434,200 3,371,566
- ---------------------------------------------------------------
Granada Group plc 406,200 6,215,772
- ---------------------------------------------------------------
International Game Technology 350,000 8,837,500
- ---------------------------------------------------------------
Nintendo Co. Ltd. 300,000 29,533,670
- ---------------------------------------------------------------
Resorts World Berhad 563,000 949,080
------------
55,214,188
- ---------------------------------------------------------------
MEDIA - 4.2%
Canal Plus 80,100 14,899,261
- ---------------------------------------------------------------
Grupo Televisa SA, Sponsored GDR(1) 267,100 10,333,431
- ---------------------------------------------------------------
Havas SA 200,000 14,395,277
- ---------------------------------------------------------------
Reed International plc 33,200 333,227
------------
39,961,196
- ---------------------------------------------------------------
RETAIL: GENERAL - 1.2%
Credit Saison Co. Ltd. 290,000 7,181,912
- ---------------------------------------------------------------
PT Matahari Putra Prima(2) 542,000 46,019
- ---------------------------------------------------------------
Sonae Investimentos 118,000 4,777,910
------------
12,005,841
- ---------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
Giordano International Ltd. 2,100,000 725,001
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
RETAIL: SPECIALTY (CONTINUED)
Wolford AG 4,550 $ 275,140
------------
1,000,141
- ---------------------------------------------------------------
CONSUMER NON-CYCLICALS - 13.5%
- ---------------------------------------------------------------
BEVERAGES - 2.6%
Cadbury Schweppes plc 1,000,000 10,094,545
- ---------------------------------------------------------------
Cia Cervejaria Brahma, Preference 4,700,000 3,158,546
- ---------------------------------------------------------------
Diageo plc 700,000 6,432,701
- ---------------------------------------------------------------
Fraser & Neave Ltd. 127,000 550,228
- ---------------------------------------------------------------
South African Breweries Ltd. 178,900 4,411,516
------------
24,647,536
- ---------------------------------------------------------------
FOOD - 3.3%
Cresud SA, Sponsored ADR(2) 95,000 1,876,250
- ---------------------------------------------------------------
Dairy Farm International Holdings
Ltd. 7,080,216 7,646,633
- ---------------------------------------------------------------
Disco SA, Sponsored ADR(2) 93,200 4,188,175
- ---------------------------------------------------------------
Great Atlantic & Pacific Tea Co.,
Inc. (The) 593,300 17,613,594
------------
31,324,652
- ---------------------------------------------------------------
HEALTHCARE/DRUGS - 4.0%
Amgen, Inc.(2) 150,000 8,118,750
- ---------------------------------------------------------------
BioChem Pharma, Inc.(2) 198,900 4,152,037
- ---------------------------------------------------------------
Genzyme Corp. (General Division)(2) 200,000 5,550,000
- ---------------------------------------------------------------
Gilead Sciences, Inc.(2) 72,700 2,780,775
- ---------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 200,000 9,575,000
- ---------------------------------------------------------------
Novartis AG 5,000 8,124,502
------------
38,301,064
- ---------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
1.3%
Gehe AG 69,990 3,542,235
- ---------------------------------------------------------------
United States Surgical Corp. 307,000 8,998,937
------------
12,541,172
- ---------------------------------------------------------------
HOUSEHOLD GOODS - 2.3%
Wella AG, Preference 29,900 21,950,532
- ---------------------------------------------------------------
TOBACCO - 0.0%
PT Gudang Garam 79,500 125,625
- ---------------------------------------------------------------
PT Hanjaya Mandala Sampoerna 100,000 78,302
------------
203,927
- ---------------------------------------------------------------
ENERGY - 2.0%
- ---------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.6%
Coflexip SA, Sponsored ADR 70,000 3,885,000
- ---------------------------------------------------------------
Global Marine, Inc.(2) 100,000 2,450,000
- ---------------------------------------------------------------
Transocean Offshore, Inc. 120,818 5,821,917
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
ENERGY SERVICES & PRODUCERS
(CONTINUED)
Western Atlas, Inc.(2) 49,300 $ 3,648,200
------------
15,805,117
- ---------------------------------------------------------------
OIL-INTEGRATED - 0.4%
British Petroleum Co. plc, ADR 51,818 4,129,247
- ---------------------------------------------------------------
FINANCIAL - 17.6%
- ---------------------------------------------------------------
BANKS - 14.1%
Amalgamated Banks of South Africa
Ltd. 150,000 863,069
- ---------------------------------------------------------------
Banco Bradesco SA, Preference 655,260,951 6,458,550
- ---------------------------------------------------------------
Banco Espirito Santo e Comercial de
Lisboa SA 90,000 2,681,235
- ---------------------------------------------------------------
Banco Frances del Rio de la Plata
SA, Sponsored ADR 63,250 1,731,469
- ---------------------------------------------------------------
Banco Latinoamericano de
Exportaciones SA, Cl. E 66,100 2,734,887
- ---------------------------------------------------------------
Banco Pinto & Sotto Mayor SA 131,700 1,887,626
- ---------------------------------------------------------------
Banco Rio de la Plata SA, ADR(2) 223,300 3,126,200
- ---------------------------------------------------------------
Bankers Trust New York Corp. 40,000 4,497,500
- ---------------------------------------------------------------
Banque Libanaise Pour Le Comm SAL,
GDR, Cl. B(2) 50,000 907,500
- ---------------------------------------------------------------
Barclays plc 97,000 2,582,394
- ---------------------------------------------------------------
Cie Financiere de Paribas, Series A 180,300 15,674,711
- ---------------------------------------------------------------
Credito Italiano 4,000,000 12,341,654
- ---------------------------------------------------------------
Deutsche Bank AG 150,000 10,494,743
- ---------------------------------------------------------------
Industrial Finance Corp. 1,048,000 161,068
- ---------------------------------------------------------------
Istituto Bancario San Paolo di
Torino 1,000,000 9,558,843
- ---------------------------------------------------------------
Long-Term Credit Bank of Japan Ltd.
(The) 2,043,000 3,283,983
- ---------------------------------------------------------------
National Westminster Bank plc 487,600 8,099,201
- ---------------------------------------------------------------
Northern Trust Corp. 7,600 530,100
- ---------------------------------------------------------------
PT Pan Indonesia Bank 2,908,500 370,422
- ---------------------------------------------------------------
Societe Generale 97,000 13,221,713
- ---------------------------------------------------------------
UBS, Bearer 20,000 28,960,249
- ---------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR
Representing 500 Units of one
Preferred Share of Unibanco and one
Preferred Share of Unibanco
Holdings SA(2) 145,500 4,683,281
------------
134,850,398
- ---------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.1%
American Express Co. 24,500 2,186,625
- ---------------------------------------------------------------
Associates First Capital Corp., Cl.
A 160,000 11,380,000
- ---------------------------------------------------------------
Fannie Mae 150,000 8,559,375
- ---------------------------------------------------------------
First NIS Regional Fund(1)(2) 180,000 3,105,000
- ---------------------------------------------------------------
Housing Development Finance Corp.
Ltd.(3) 22,290 1,749,542
- ---------------------------------------------------------------
Industrial Credit & Investment
Corp. of India Ltd., GDR(1) 162,500 2,112,500
- ---------------------------------------------------------------
ING Groep NV 10,500 442,328
------------
29,535,370
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
INSURANCE - 0.4%
American International Group, Inc. 23,700 $ 2,577,375
- ---------------------------------------------------------------
Reinsurance Australia Corp. Ltd. 577,000 1,503,815
------------
4,081,190
- ---------------------------------------------------------------
INDUSTRIAL - 6.7%
- ---------------------------------------------------------------
INDUSTRIAL SERVICES - 5.4%
Adecco SA 40,000 11,614,266
- ---------------------------------------------------------------
Atos SA(2) 50,000 6,449,616
- ---------------------------------------------------------------
Grupo Elektra SA de CV, CPO 1,461,000 2,577,017
- ---------------------------------------------------------------
IHC Caland NV 45,000 2,335,210
- ---------------------------------------------------------------
Rentokil Group plc 2,500,000 11,065,332
- ---------------------------------------------------------------
UNOVA, Inc.(2) 49,300 810,369
- ---------------------------------------------------------------
VBH Holding AG 247,000 3,296,918
- ---------------------------------------------------------------
WPP Group plc 3,000,000 13,303,080
------------
51,451,808
- ---------------------------------------------------------------
MANUFACTURING - 1.0%
Powerscreen International plc 738,303 7,379,944
- ---------------------------------------------------------------
Societe BIC SA 35,932 2,623,885
------------
10,003,829
- ---------------------------------------------------------------
TRANSPORTATION - 0.3%
Guangshen Railway Co. Ltd.,
Sponsored ADR 220,200 2,958,938
- ---------------------------------------------------------------
TECHNOLOGY - 16.6%
- ---------------------------------------------------------------
AEROSPACE/DEFENSE - 1.3%
Rolls-Royce plc 3,164,038 12,234,373
- ---------------------------------------------------------------
COMPUTER HARDWARE - 2.6%
International Business Machines
Corp. 100,000 10,456,250
- ---------------------------------------------------------------
Iomega Corp.(2) 700,000 8,706,250
- ---------------------------------------------------------------
Sun Microsystems, Inc.(2) 142,000 5,662,250
------------
24,824,750
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 4.2%
Cap Gemini SA 300,000 24,609,940
- ---------------------------------------------------------------
First Data Corp. 87,000 2,544,750
- ---------------------------------------------------------------
Microsoft Corp.(2) 58,000 7,496,500
- ---------------------------------------------------------------
Misys plc 194,914 5,869,030
------------
40,520,220
- ---------------------------------------------------------------
ELECTRONICS - 3.4%
Intel Corp. 20,000 1,405,000
- ---------------------------------------------------------------
Keyence Corp. 27,500 4,082,030
- ---------------------------------------------------------------
National Semiconductor Corp.(2) 350,000 9,078,125
- ---------------------------------------------------------------
Sony Corp. 200,000 17,843,259
------------
32,408,414
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY -
5.1%
Alcatel Alsthom SA 150,000 $19,074,573
- ---------------------------------------------------------------
Cisco Systems, Inc.(2) 61,650 3,436,988
- ---------------------------------------------------------------
Newbridge Networks Corp.(2) 80,000 2,790,000
- ---------------------------------------------------------------
QUALCOMM, Inc.(2) 231,400 11,685,700
- ---------------------------------------------------------------
SK Telecom Co. Ltd. 8,457 2,586,698
- ---------------------------------------------------------------
Telecom Italia Mobile SpA 2,000,000 9,236,444
------------
48,810,403
- ---------------------------------------------------------------
UTILITIES - 3.0%
- ---------------------------------------------------------------
TELEPHONE UTILITIES - 3.0%
CPT Telefonica del Peru SA, Cl. B 3,400,031 7,595,917
- ---------------------------------------------------------------
Portugal Telecom SA 375,000 17,419,621
- ---------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR 250,000 3,506,250
------------
28,521,788
------------
Total Common Stocks (Cost
$617,877,896) 719,236,116
- ---------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- ---------------------------------------------------------------
Marschollek, Lautenschlaeger und
Partner AG, Non-Vtg. Preferred
Stock
(Cost $1,603,264) 13,257 3,428,452
UNITS
- ---------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.0%
- ---------------------------------------------------------------
Banco Bradesco SA, Preference, Rts.
Exp. 2/98 28,015,796 --
- ---------------------------------------------------------------
American Satellite Network, Inc.
Wts., Exp. 6/99 6,250 --
- ---------------------------------------------------------------
PT Pan Indonesia Bank Wts., Exp.
6/00 415,500 3,685
------------
Total Rights, Warrants and
Certificates (Cost $0) 3,685
PRINCIPAL
AMOUNT
- ---------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 7.7%
- ---------------------------------------------------------------
U.S. Treasury Bonds:
STRIPS, 6.98%, 11/15/18(4)(5) $ 86,770,000 24,763,898
STRIPS, 6.93%, 8/15/19(5) 180,000,000 48,997,800
------------
Total U.S. Government Obligations
(Cost $61,980,756) 73,761,698
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS - 17.3%
- ---------------------------------------------------------------
Repurchase agreement with Smith,
Barney, Harris, Upham & Co., Inc.,
6.625%, dated 12/31/97, to be
repurchased at $165,760,987 on
1/2/98, collateralized by U.S.
Treasury Bonds, 8.875%-11.25%,
2/15/15-2/15/19, with a value of
$169,746,221
(Cost $165,700,000) 165,700,000 165,700,000
- ---------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$847,161,916) 100.3% 962,129,951
- ---------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (0.3) (3,019,731 )
------------ ------------
NET ASSETS 100.0% $959,110,220
------------ ------------
------------ ------------
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
1. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $18,231,215 or 1.90% of the Fund's net
assets as of December 31, 1997.
2. Non-income producing security.
3. Identifies issues considered to be illiquid or restricted - See Note 7 of
Notes to Financial Statements.
4. Securities with an aggregate market value of $8,561,910 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
5. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY MARKET VALUE PERCENT
- ------------------------------------------------------------
United States $411,474,565 42.8%
- ------------------------------------------------------------
France 114,833,976 11.9
- ------------------------------------------------------------
Great Britain 97,313,846 10.1
- ------------------------------------------------------------
Japan 61,924,854 6.4
- ------------------------------------------------------------
Germany 61,188,523 6.4
- ------------------------------------------------------------
Switzerland 48,699,017 5.1
- ------------------------------------------------------------
Italy 31,136,942 3.2
- ------------------------------------------------------------
Portugal 29,287,479 3.0
- ------------------------------------------------------------
Argentina 17,301,863 1.8
- ------------------------------------------------------------
Mexico 16,282,015 1.7
- ------------------------------------------------------------
Brazil 15,536,910 1.6
- ------------------------------------------------------------
South Africa 8,348,385 0.9
- ------------------------------------------------------------
Peru 8,331,917 0.9
- ------------------------------------------------------------
Singapore 8,196,861 0.9
- ------------------------------------------------------------
India 7,368,292 0.8
- ------------------------------------------------------------
Canada 4,152,037 0.4
- ------------------------------------------------------------
Russia 3,105,000 0.3
- ------------------------------------------------------------
China 2,958,938 0.3
- ------------------------------------------------------------
The Netherlands 2,777,538 0.3
- ------------------------------------------------------------
Panama 2,734,888 0.3
- ------------------------------------------------------------
Korea, Republic of (South) 2,586,698 0.3
- ------------------------------------------------------------
Lebanon 2,351,250 0.2
- ------------------------------------------------------------
Australia 1,503,815 0.2
- ------------------------------------------------------------
Malaysia 949,080 0.1
- ------------------------------------------------------------
Hong Kong 725,001 0.1
- ------------------------------------------------------------
Indonesia 624,053 0.1
- ------------------------------------------------------------
Austria 275,140 0.0
- ------------------------------------------------------------
Thailand 161,068 0.0
------------- -------
Total $962,129,951 100.0%
------------- -------
------------- -------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 22.6%
- --------------------------------------------------------------------------
GOVERNMENT AGENCY - 18.7%
- --------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 9.2%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 151, Cl. F,
9%, 5/15/21 $ 1,500,000 $ 1,627,931
Interest-Only Stripped Mtg.-Backed
Security, Series 177, Cl. B,
13.03%, 7/1/26(2) 11,852,995 3,465,149
- --------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.375%, 8/15/07 AUD 1,250,000 819,614
7%, 1/1/13(3) 10,000,000 10,146,900
7%, 9/26/00 NZD 1,120,000 632,904
7.50%, 8/1/25 928,642 952,350
Interest-Only Stripped Mtg.-Backed
Security, Trust 249, Cl. 2, 4.99%,
10/25/23(2) 3,728,368 1,138,318
Sr. Unsub. Medium-Term Nts., 6.50%,
7/10/02 AUD 430,000 287,024
-------------
19,070,190
- --------------------------------------------------------------------------
GNMA/GUARANTEED - 9.5%
Government National Mortgage Assn.:
6.875%, 11/20/25 556,633 571,679
7%, 1/1/28(3) 10,000,000 10,071,900
7.50%, 2/15/27 4,591,784 4,706,257
8%, 11/15/25 2,508,396 2,601,934
8%, 5/15/26 1,652,123 1,713,202
-------------
19,664,972
- --------------------------------------------------------------------------
PRIVATE - 3.9%
- --------------------------------------------------------------------------
COMMERCIAL - 2.8%
Amresco Commercial Mortgage Funding
I Corp., Multiclass Mtg. Pass-
Through Certificates, Series
1997-C1, Cl. E, 7%, 6/17/29(4) 100,000 92,438
- --------------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-D5, Cl. B1, 6.93%,
2/14/41 300,000 273,984
Series 1997-D5, Cl. B2, 6.93%,
2/14/41 250,000 223,906
- --------------------------------------------------------------------------
CRIIMI MAE Trust I, Collateralized
Mtg. Obligations, Series 1996-C1,
Cl. A-2, 7.56%, 8/30/05(5) 100,000 102,359
- --------------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C2, Cl.
F, 7.46%, 1/17/35 150,000 140,859
- --------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates, Series 1994-C1, Cl.
2-G, 8.70%, 9/25/25(4) 153,594 157,695
- --------------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-CHL1, 8.116%,
2/25/11(4)(6) 600,000 510,780
Series 1997-CHL1, 8.116%,
5/25/08(4)(6) 350,000 355,005
- --------------------------------------------------------------------------
General Motors Acceptance Corp.,
Collateralized Mtg. Obligations:
Series 1997-C1, Cl. G, 7.414%,
11/15/11 440,000 411,400
Series 1997-C2, Cl. F, 6.75%,
4/16/29 250,000 214,297
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL (CONTINUED)
General Motors Acceptance Corp.,
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-C1, Cl. X,
8.91%, 7/15/27(2) $ 4,295,474 $ 432,232
- --------------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl.
D, 8.189%, 6/15/21(6) 367,685 375,958
- --------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. F, 7.51%,
2/15/28(4)(6) 162,744 131,111
Series 1997-HF1, Cl. F, 6.86%,
2/15/10(4) 150,000 136,688
Series 1997-RR, Cl. D, 7.74%,
4/30/39 50,000 48,250
Series 1997-RR, Cl. F, 7.74%,
4/30/39 300,000 235,125
Series 1997-XL1, Cl. G, 7.695%,
10/3/30(6) 290,000 282,569
- --------------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates, Series-DMC, Cl. C,
8.921%, 8/12/11(5) 200,000 213,563
- --------------------------------------------------------------------------
Nykredit AS, Mtg.-Backed Security,
Series ANN, 6%, 10/1/26 DKK 3,243,000 461,546
- --------------------------------------------------------------------------
Realkredit Danmark, Mtg.-Backed
Security, 6%, 10/1/26 DKK 3,245,000 461,120
- --------------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. D, 8.25%,
12/25/20 121,210 121,133
Series 1993-C1, Cl. D, 9.45%,
5/25/24 91,000 91,825
Series 1994-C2, Cl. E, 8%, 4/25/25 210,423 212,342
- --------------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
F, 7.30%, 4/12/12(4) 200,000 185,813
Multiclass Pass-Through
Certificates, Series 1995-C4, Cl.
E, 8.77%, 6/25/26(4)(6) 46,290 47,765
-------------
5,919,763
- --------------------------------------------------------------------------
MULTI-FAMILY - 0.8%
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(4) 63,720 60,693
Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl.
G, 7.15%, 6/15/06(5) 800,000 760,250
- --------------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-CL, Cl.
F, 9.19%, 1/20/28(6) 1,000,000 869,375
-------------
1,690,318
- --------------------------------------------------------------------------
RESIDENTIAL - 0.3%
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates:
Series 1997-C1, Cl. F, 7.50%,
6/20/13(4) 100,000 97,000
Series 1997-C1, Cl. G, 7.50%,
6/20/14(4) 100,000 92,470
Series 1997-C1, Cl. H, 7.50%,
8/20/14(4) 60,000 47,376
Series 1997-C2, Cl. H, 7.46%,
1/17/35 100,000 79,969
- --------------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.136%, 4/25/26 393,408 277,845
-------------
594,660
-------------
Total Mortgage-Backed Obligations
(Cost $46,435,758) 46,939,903
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 29.3%
- --------------------------------------------------------------------------
U.S. Treasury Bonds:
10.75%, 2/15/03 $ 5,600,000 $ 6,828,506
11.25%, 2/15/15 690,000 1,081,360
11.625%, 11/15/02 1,085,000 1,352,860
11.625%, 11/15/04 7,215,000 9,573,410
11.875%, 11/15/03 2,495,000 3,245,840
13.125%, 5/15/01 2,800,000 3,428,253
6%, 2/15/26(7) 730,000 729,316
6.50%, 11/15/26 3,170,000 3,384,967
6.875%, 8/15/25(8) 1,100,000 1,226,501
8.125%, 8/15/19 163,000 204,056
9.375%, 2/15/06 900,000 1,107,844
- --------------------------------------------------------------------------
U.S. Treasury Nts.:
10.75%, 5/15/03 8,568,000 10,522,584
14.25%, 2/15/02 400,000 523,875
6.25%, 10/31/01(8)(9) 6,985,000 7,109,424
6.25%, 2/15/03 3,325,000 3,401,894
7.25%, 5/15/04 935,000 1,009,508
7.50%, 10/31/99 1,750,000 1,804,689
7.50%, 5/15/02 4,020,000 4,293,867
-------------
Total U.S. Government Obligations
(Cost $60,289,411) 60,828,754
- --------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
20.1%
- --------------------------------------------------------------------------
ARGENTINA - 1.8%
Argentina (Republic of) Bonds:
5%, 12/20/02 JPY 60,000,000 429,692
Bonos de Consolidacion de Deudas,
Series I, 5.66%, 4/1/01(6) 143,934 135,611
- --------------------------------------------------------------------------
Argentina (Republic of) Floating
Rate Bonds, Series L, 6.69%,
3/31/05(6) 172,800 154,872
- --------------------------------------------------------------------------
Argentina (Republic of) Nts.,
Series REGS, 11.75%, 2/12/07 ARP 440,000 416,976
- --------------------------------------------------------------------------
Argentina (Republic of) Par Bonds,
5.50%, 3/31/23(10) 770,000 566,427
- --------------------------------------------------------------------------
Argentina (Republic of) Unsec.
Unsub. Medium-Term Nts.:
5.50%, 3/27/01 JPY 170,000,000 1,290,614
8.75%, 7/10/02 ARP 320,000 277,651
- --------------------------------------------------------------------------
Banco Hipotecario Nacional
(Argentina) Medium-Term Nts.,
10.625%, 8/7/06(9) 400,000 406,000
-------------
3,677,843
- --------------------------------------------------------------------------
AUSTRALIA - 1.8%
New South Wales Treasury Corp. Gtd.
Bonds, 8%, 12/1/01 AUD 1,610,000 1,126,815
- --------------------------------------------------------------------------
Queensland Treasury Corp.
Exchangeable Gtd. Nts.:
8%, 8/14/01 AUD 1,858,000 1,301,406
8%, 9/14/07 AUD 1,560,000 1,141,743
- --------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd.
Bonds, 8.25%, 10/15/03 AUD 115,000 82,985
-------------
3,652,949
- --------------------------------------------------------------------------
BRAZIL - 1.4%
Banco Estado Minas Gerais, 8.25%,
2/10/00 250,000 238,125
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
BRAZIL (CONTINUED)
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 $ 2,753,727 $ 2,163,397
- --------------------------------------------------------------------------
Brazil (Federal Republic of)
Eligible Interest Bonds, 6.69%,
4/15/06(6) 686,000 593,390
-------------
2,994,912
- --------------------------------------------------------------------------
BULGARIA - 0.2%
Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds,
Tranche A, 2.30%, 7/28/12(10) 510,000 311,100
- --------------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.69%, 7/28/11(6) 160,000 117,200
-------------
428,300
- --------------------------------------------------------------------------
CANADA - 1.2%
Canada (Government of) Bonds:
9.75%, 6/1/01 CAD 1,995,000 1,585,188
Series A-33, 11.50%, 9/1/00 CAD 1,100,000 886,169
-------------
2,471,357
- --------------------------------------------------------------------------
COLOMBIA - 0.2%
Financiera Energetica Nacional SA
Nts., 9.375%, 6/15/06 500,000 504,688
- --------------------------------------------------------------------------
DENMARK - 0.5%
Denmark (Kingdom of) Bonds, 7%,
11/10/24 DKK 5,880,000 958,015
- --------------------------------------------------------------------------
ECUADOR - 0.3%
Ecuador (Republic of) Disc. Bonds,
6.688%, 2/28/25(6) 300,000 226,500
- --------------------------------------------------------------------------
Ecuador (Republic of) Past Due
Interest Bonds, 6.688%, 2/27/15(6) 601,458 393,955
-------------
620,455
- --------------------------------------------------------------------------
GERMANY - 0.5%
Germany (Republic of) Bonds, Series
94, 6.25%, 1/4/24 DEM 1,630,000 952,503
- --------------------------------------------------------------------------
GREAT BRITAIN - 1.3%
United Kingdom Treasury Nts.:
7.25%, 3/30/98 GBP 805,000 1,324,549
7.75%, 9/8/06 GBP 730,000 1,308,496
-------------
2,633,045
- --------------------------------------------------------------------------
HUNGARY - 0.5%
Hungary (Government of) Bonds:
Series 98-I, 23.50%, 5/17/98 HUF 160,000,000 793,312
Series 99-G, 16.50%, 7/24/99 HUF 44,000,000 208,991
-------------
1,002,303
- --------------------------------------------------------------------------
IRELAND - 0.4%
Ireland (Government of) Bonds,
9.25%, 7/11/03 IEP 255,000 434,263
- --------------------------------------------------------------------------
National Treasury Management Agency
(Irish Government) Bonds, 8%,
8/18/06 IEP 235,000 390,495
-------------
824,758
- --------------------------------------------------------------------------
ITALY - 1.3%
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali:
10.50%, 4/1/00 ITL 550,000,000 346,862
10.50%, 4/1/05 ITL 600,000,000 438,293
12%, 1/1/02 ITL 1,535,000,000 1,079,191
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
ITALY (CONTINUED)
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali:
(Continued)
9%, 10/1/03 ITL 1,360,000,000 $ 907,310
-------------
2,771,656
- --------------------------------------------------------------------------
JORDAN - 0.2%
Hashemite (Kingdom of Jordan) Disc.
Bonds, 6.875%, 12/23/23(6) 500,000 417,031
- --------------------------------------------------------------------------
MEXICO - 1.9%
Banco Nacional de Comercio Exterior
SNC International Finance BV Gtd.
Registered Bonds, 11.25%, 5/30/06 265,000 295,475
- --------------------------------------------------------------------------
United Mexican States Bonds:
10.375%, 1/29/03 DEM 725,000 441,723
11.375%, 9/15/16 880,000 998,800
16.50%, 9/1/08(4) GBP 20,000 48,704
- --------------------------------------------------------------------------
United Mexican States
Collateralized Fixed Rate Par
Bonds:
Series B, 6.25%, 12/31/19 600,000 502,500
Series W-A, 6.25%, 12/31/19 250,000 209,375
Series W-B, 6.25%, 12/31/19 1,600,000 1,340,000
- --------------------------------------------------------------------------
United Mexican States Petroleos
Mexicanos Gtd. Unsec. Unsub. Nts.,
7.875%, 3/2/99 CAD 200,000 141,682
-------------
3,978,259
- --------------------------------------------------------------------------
NEW ZEALAND - 1.1%
New Zealand (Government of) Bonds,
7%, 7/15/09 NZD 3,795,000 2,213,013
- --------------------------------------------------------------------------
NORWAY - 0.4%
Norway (Government of) Bonds,
9.50%, 10/31/02 NOK 4,680,000 750,673
- --------------------------------------------------------------------------
PANAMA - 0.1%
Panama (Government of) Past Due
Interest Debs., 6.89%, 7/17/16(6) 225,968 184,447
- --------------------------------------------------------------------------
PERU - 0.1%
Peru (Republic of) Front-Loaded
Interest Reduction Bonds, 3.25%,
3/7/17(6) 455,000 269,588
- --------------------------------------------------------------------------
PHILIPPINES - 0.0%
Philippines (Republic of) Par
Bonds, Series B, 6.50%,
12/1/17(4)(10) 110,000 93,088
- --------------------------------------------------------------------------
POLAND - 0.9%
Poland (Republic of) Bonds:
14%, 2/12/00 PLZ 2,160,000 515,930
15%, 10/12/99 PLZ 1,100,000 273,321
16%, 2/12/99 PLZ 2,150,000 559,562
16%, 6/12/98 PLZ 650,000 176,518
- --------------------------------------------------------------------------
Poland (Republic of) Past Due
Interest Bonds, 4%, 10/27/14(10) 440,000 381,150
-------------
1,906,481
- --------------------------------------------------------------------------
RUSSIA - 0.5%
City of St. Petersburg Sr. Unsub.
Nts., 9.50%, 6/18/02(5) 180,000 164,925
- --------------------------------------------------------------------------
Ministry of Finance (Russian
Government) Unsec. Unsub. Bonds,
10%, 6/26/07(5) 320,000 297,280
- --------------------------------------------------------------------------
Russia (Government of) Bonds, 22%,
4/28/99(11) RUR 1,585,000,000 227,391
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
RUSSIA (CONTINUED)
SBS Agro Finance BV Bonds, 10.25%,
7/21/00 $ 339,000 $ 300,015
-------------
989,611
- --------------------------------------------------------------------------
SOUTH AFRICA - 0.7%
South Africa (Republic of) Bonds:
Series 150, 12%, 2/28/05 ZAR 3,605,570 684,172
Series 162, 12.50%, 1/15/02 ZAR 1,950,240 385,468
Series 175, 9%, 10/15/02 ZAR 2,046,800 350,365
-------------
1,420,005
- --------------------------------------------------------------------------
SPAIN - 0.9%
Spain (Kingdom of) Gtd. Bonds,
Bonos y Obligacion del Estado:
10.30%, 6/15/02 ESP 21,500,000 170,029
10.50%, 10/30/03 ESP 59,550,000 491,550
11.45%, 8/30/98 ESP 12,000,000 82,034
12.25%, 3/25/00 ESP 141,000,000 1,070,298
-------------
1,813,911
- --------------------------------------------------------------------------
SWEDEN - 0.4%
Sweden (Kingdom of) Bonds, Series
1037, 8%, 8/15/07 SEK 6,300,000 910,933
- --------------------------------------------------------------------------
TURKEY - 0.4%
Turkey (Republic of) Treasury
Bills, Zero Coupon, 92.27%,
3/4/98(12) TRL 232,300,000,000 938,223
- --------------------------------------------------------------------------
VENEZUELA - 1.1%
Venezuela (Republic of) Bonds,
9.25%, 9/15/27 970,000 871,545
- --------------------------------------------------------------------------
Venezuela (Republic of)
Collateralized Par Bonds, Series
W-A, 6.75%, 3/31/20 1,000,000 870,000
- --------------------------------------------------------------------------
Venezuela (Republic of) Disc.
Bonds, Series DL, 6.75%,
12/18/07(6) 476,190 428,274
- --------------------------------------------------------------------------
Venezuela (Republic of) New Money
Bonds, Series A, 6.91%, 12/18/05(6) 250,000 223,750
-------------
2,393,569
-------------
Total Foreign Government
Obligations (Cost $43,127,415) 41,771,616
- --------------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.6%
- --------------------------------------------------------------------------
GS Moskovskaya, 19% Nts.,
6/12/98(4) 265,000 258,879
- --------------------------------------------------------------------------
Jamaica (Government of) 1990
Refinancing Agreement Nts., Tranche
A, 6.56%, 10/16/00(4)(6) 37,500 35,625
- --------------------------------------------------------------------------
Russian (Government of) Principal
Loans Debs., 6.719%,
6/2/98(3)(4)(6) 1,535,000 949,781
-------------
Total Loan Participations (Cost
$1,252,430) 1,244,285
- --------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 28.2%
- --------------------------------------------------------------------------
BASIC INDUSTRY - 2.9%
- --------------------------------------------------------------------------
CHEMICALS - 1.0%
ClimaChem, Inc., 10.75% Gtd. Sr.
Unsec. Nts., 12/1/07(5) 150,000 155,250
- --------------------------------------------------------------------------
Harris Chemical North America,
Inc., 10.75% Gtd. Sr. Sub. Nts.,
10/15/03 100,000 107,250
- --------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 50,000 53,875
- --------------------------------------------------------------------------
ISP Holdings, Inc., 9% Sr. Nts.,
Series B, 10/15/03 55,000 57,269
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
CHEMICALS (CONTINUED)
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., 9/15/07(5) $ 150,000 $ 148,500
- --------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 140,000 155,750
- --------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Sr. Nts., 10/15/07(5) 175,000 173,250
- --------------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 200,000 202,500
- --------------------------------------------------------------------------
Polytama International Finance BV,
11.25% Gtd. Sec. Nts., 6/15/07 170,000 126,650
- --------------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Sub. Nts.,
8/1/07(5) 425,000 437,750
- --------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc.,
0%/13.50% Sr. Disc. Nts.,
8/15/08(13) 200,000 123,000
- --------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 50,000 50,250
11.75% Sr. Unsec. Sub. Nts.,
8/15/06(8) 200,000 205,000
-------------
1,996,294
- --------------------------------------------------------------------------
CONTAINERS - 0.1%
Consumers International, Inc.,
10.25% Sr. Sec. Nts., 4/1/05(4) 250,000 275,000
- --------------------------------------------------------------------------
METALS/MINING - 0.2%
Centaur Mining & Exploration Ltd.,
11% Gtd. Sr. Nts., 12/1/07(4) 100,000 100,750
- --------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07(5) 225,000 231,750
-------------
332,500
- --------------------------------------------------------------------------
PAPER - 1.1%
Asia Pulp & Paper International
Finance Co., Zero Coupon Asian
Currency Nts., 14.46%, 1/23/98(12) IDR 200,000,000 36,425
- --------------------------------------------------------------------------
Fletcher Challenge Finance U.S.A.,
Inc., 8.05% Debs., 6/15/03 NZD 80,000 44,890
- --------------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts., 4/30/05 NZD 60,000 37,102
14.50% Cv. Sub. Nts., 9/30/00 NZD 60,000 39,251
- --------------------------------------------------------------------------
Florida Coast Paper Co. LLC, 12.75%
First Mtg. Nts., 6/1/03 130,000 138,450
- --------------------------------------------------------------------------
Four M Corp., 12% Sr. Nts., Series
B, 6/1/06(4) 125,000 133,125
- --------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr.
Nts., 6/15/07 200,000 195,000
- --------------------------------------------------------------------------
Indah Kiat International Finance
Co. BV, 11.375% Gtd. Sec. Nts.,
6/15/99 205,000 198,850
- --------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr.
Nts., 3/1/03 365,000 377,775
- --------------------------------------------------------------------------
Pindo Deli Finance Mauritius Ltd.,
10.75% Gtd. Nts., 10/1/07(4) 125,000 108,125
- --------------------------------------------------------------------------
Repap New Brunswick, Inc., 9.063%
First Priority Sr. Sec. Nts.,
7/15/00(6) 200,000 198,000
- --------------------------------------------------------------------------
Riverwood International Corp.,
10.625% Sr. Unsec. Nts., 8/1/07 450,000 459,000
- --------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts.,
Series B, 12/15/04 200,000 223,000
- --------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr.
Nts., 11/15/07 150,000 156,000
-------------
2,344,993
- --------------------------------------------------------------------------
STEEL - 0.5%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 350,000 360,500
- --------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 300,000 348,000
- --------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 100,000 109,250
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
STEEL (CONTINUED)
Keystone Consolidated Industries,
Inc., 9.625% Sr. Nts., 8/1/07(5) $ 200,000 $ 201,750
-------------
1,019,500
- --------------------------------------------------------------------------
CONSUMER RELATED - 4.2%
- --------------------------------------------------------------------------
CONSUMER PRODUCTS - 1.2%
Coleman Escrow Corp., Zero Coupon
Sr. First Priority Disc. Nts.,
11.13%, 5/15/01(12) 305,000 203,587
- --------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Unsec.
Sub. Nts., 9/1/07 75,000 78,750
- --------------------------------------------------------------------------
Holmes Products Corp., 9.875% Gtd.
Nts., 11/15/07(5) 200,000 204,500
- --------------------------------------------------------------------------
Icon Fitness Corp., 0%/14% Sr.
Disc. Nts., 11/15/06(4)(13) 200,000 114,000
- --------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13%
Sr. Sub. Nts., Series B, 7/15/02 300,000 336,750
- --------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub.
Disc. Nts., Series B, 11/15/04(13) 250,000 218,750
- --------------------------------------------------------------------------
Indorayon International Finance Co.
BV, 10% Gtd. Unsec. Unsub. Nts.,
3/29/01(4) 100,000 89,000
- --------------------------------------------------------------------------
MacAndrews & Forbes Holdings, Inc.,
13% Sub. Debs., 3/1/99(4) 131,000 132,146
- --------------------------------------------------------------------------
Pillowtex Corp., 9% Sr. Sub. Nts.,
12/15/07(5) 200,000 206,000
- --------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts., 10.88%,
3/15/01(12) 450,000 312,750
- --------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub.
Nts., 7/15/05 137,000 154,125
- --------------------------------------------------------------------------
Sealy Mattress Co., 9.875% Sr. Sub.
Nts., 12/15/07(5) 100,000 103,000
- --------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(4) 100,000 120,500
- --------------------------------------------------------------------------
Vitro SA, 13% Nts., 12/7/99(6) MXP 438,000 119,483
- --------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc.,
12% Sr. Nts., 3/1/04 100,000 106,500
-------------
2,499,841
- --------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO - 0.2%
CFP Holdings, Inc., 11.625% Gtd.
Sr. Nts., Series B, 1/15/04 15,000 15,075
- --------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., 12/15/07(5)(13) 100,000 57,750
- --------------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sub. Nts., 11/15/07(5) 200,000 207,000
- --------------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75%
Sr. Sub. Nts., 5/15/07 150,000 153,750
-------------
433,575
- --------------------------------------------------------------------------
HEALTHCARE - 0.4%
Genesis Health Ventures, Inc.,
9.25% Sr. Sub. Nts., 10/1/06 30,000 30,712
- --------------------------------------------------------------------------
Integrated Health Services, Inc.:
10.25% Sr. Sub. Nts., 4/30/06 15,000 15,975
9.50% Sr. Sub. Nts., 9/15/07(5) 150,000 154,500
- --------------------------------------------------------------------------
Kinetics Concepts, Inc., 9.625% Sr.
Sub. Nts., 11/1/07(5) 50,000 51,062
- --------------------------------------------------------------------------
Magellan Health Services, Inc.,
11.25% Sr. Sub. Nts., Series A,
4/15/04 100,000 111,375
- --------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50%
Sr. Sub. Nts., Series B, 4/1/06(4) 100,000 104,000
- --------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07(5) 265,000 272,950
-------------
740,574
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
HOTEL/GAMING - 1.8%
Boyd Gaming Corp.:
9.25% Sr. Unsec. Gtd. Nts., 10/1/03 $ 100,000 $ 105,250
9.50% Sr. Unsec. Sub. Nts., 7/15/07 50,000 52,625
- --------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 275,000 284,625
- --------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr.
Nts., 8/1/03 50,000 54,562
- --------------------------------------------------------------------------
Casino Magic of Louisiana Corp.,
13% First Mtg. Nts., Series B,
8/15/03 150,000 144,750
- --------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd.
First Mtg. Nts., 12/1/03 350,000 378,000
- --------------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375%
Bonds, 2/13/02(4) 50,000 51,375
- --------------------------------------------------------------------------
HMC Acquisition Properties, Inc.,
9% Sr. Nts., Series B, 12/15/07 150,000 156,375
- --------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr.
Nts., 7/15/07 300,000 317,250
- --------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 425,000 447,312
- --------------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02 200,000 257,000
- --------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50%
Gtd. Sr. Sub. Nts., 4/15/07 350,000 371,875
- --------------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts.,
Series B, 3/15/03 350,000 421,750
- --------------------------------------------------------------------------
Signature Resorts, Inc., 9.75% Sr.
Sub. Nts., 10/1/07(5) 200,000 201,000
- --------------------------------------------------------------------------
Station Casinos, Inc., 10.125% Sr.
Sub. Nts., 3/15/06 110,000 116,600
- --------------------------------------------------------------------------
Venetian Casino Resort LLC/Las
Vegas Sands, Inc.:
10% Sr. Sub. Nts., 11/15/05(5) 200,000 183,500
12.25% Mtg. Nts., 11/15/04(5) 150,000 150,937
-------------
3,694,786
- --------------------------------------------------------------------------
RESTAURANTS - 0.3%
Ameriking, Inc., 10.75% Sr. Nts.,
12/1/06 125,000 131,875
- --------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts.,
8/15/03 100,000 106,500
- --------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 79,000 80,777
9.75% Sr. Sub. Nts., 6/1/02 300,000 309,750
-------------
628,902
- --------------------------------------------------------------------------
TEXTILE/APPAREL - 0.3%
CMI Industries, Inc., 9.50% Sr.
Sub. Nts., 10/1/03(4) 10,000 9,875
- --------------------------------------------------------------------------
Dan River, Inc., 10.125% Sr. Sub.
Nts., 12/15/03 50,000 53,687
- --------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero
Coupon Promissory Nts., 9.39%,
7/14/98(12) 100,000 84,682
- --------------------------------------------------------------------------
Tultex Corp., 9.625% Sr. Unsec.
Nts., 4/15/07 200,000 200,000
- --------------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 200,000 211,000
-------------
559,244
- --------------------------------------------------------------------------
ENERGY - 2.6%
Belden & Blake Corp., 9.875% Sr.
Sub. Nts., 6/15/07 580,000 588,700
- --------------------------------------------------------------------------
Chesapeake Energy Corp.:
12% Gtd. Sr. Exchangeable Nts.,
3/1/01 200,000 210,500
9.125% Sr. Unsec. Nts., 4/15/06 100,000 103,250
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
- --------------------------------------------------------------------------
Clark R&M, Inc.:
8.375% Sr. Nts., 11/15/07(5) $ 125,000 $ 126,094
8.875% Sr. Sub. Nts., 11/15/07(5) 250,000 253,750
- --------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 125,000 136,875
- --------------------------------------------------------------------------
Cliffs Drilling Co., 10.25% Sr.
Nts., 5/15/03 50,000 54,687
- --------------------------------------------------------------------------
Dailey International, Inc., 9.75%
Gtd. Sr. Unsec. Nts., 8/15/07(5) 125,000 131,875
- --------------------------------------------------------------------------
DI Industries, Inc., 8.875% Sr.
Nts., 7/1/07 75,000 78,000
- --------------------------------------------------------------------------
Energy Corp. of America, 9.50% Sr.
Sub. Nts., Series A, 5/15/07 245,000 245,612
- --------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub.
Nts., Series B, 2/15/07 190,000 193,325
- --------------------------------------------------------------------------
Forcenergy, Inc., 9.50% Sr. Sub.
Nts., 11/1/06 445,000 473,925
- --------------------------------------------------------------------------
Gothic Energy Corp., 12.25% Sr.
Nts., 9/1/04(4) 200,000 210,000
- --------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr.
Sub. Bonds, 7/15/06 350,000 376,687
- --------------------------------------------------------------------------
National Energy Group, Inc., 10.75%
Sr. Nts., 11/1/06 425,000 445,187
- --------------------------------------------------------------------------
Parker Drilling Corp., 9.75% Gtd.
Sr. Nts., 11/15/06 300,000 324,750
- --------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sub. Debs., 2/1/06 425,000 384,625
- --------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 395,000 402,900
- --------------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts., Series B, 11/15/03 175,000 185,500
- --------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 355,000 362,987
- --------------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts.,
5/15/07 135,000 132,975
-------------
5,422,204
- --------------------------------------------------------------------------
FINANCIAL SERVICES - 2.1%
- --------------------------------------------------------------------------
BANKS & THRIFTS - 1.1%
Alliance & Leicester Building
Society, 8.75% Unsec. Sub. Nts.,
12/7/06 GBP 80,000 143,973
- --------------------------------------------------------------------------
Banco de Colombia, 5.20% Cv. Jr.
Unsec. Sub. Nts., 2/1/99 200,000 212,000
- --------------------------------------------------------------------------
Banco Nacional de Mexico SA, 11%
Sub. Exchangeable Capital Debs.,
7/15/03(4) 130,000 133,575
- --------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 7,000 7,875
- --------------------------------------------------------------------------
First Nationwide Holdings, Inc.,
10.625% Sr. Sub. Nts., 10/1/03 120,000 135,000
- --------------------------------------------------------------------------
Korea Development Bank:
6.50% Bonds, 11/15/02 120,000 96,276
6.625% Bonds, 11/21/03 250,000 201,303
7.125% Bonds, 9/17/01 135,000 115,019
7.375% Bonds, 9/17/04 120,000 98,497
7.90% Nts., 2/1/02 220,000 191,710
- --------------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(4) 150,000 159,000
- --------------------------------------------------------------------------
Ongko International Finance Co. BV,
10.50% Gtd. Nts., 3/29/04(5) 90,000 81,900
- --------------------------------------------------------------------------
Westpac Banking Corp., Zero Coupon
Bills, 19.23%, 3/31/98(12)(17) NZD 1,150,000 654,350
-------------
2,230,478
- --------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 0.8%
Amresco, Inc., 10% Sr. Sub. Nts.,
Series 97-A, 3/15/04 100,000 104,250
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Bakrie Investindo, Zero Coupon
Promissory Nts., 26.54%,
7/10/98(12) IDR 1,000,000,000 $ 148,457
- --------------------------------------------------------------------------
Banco del Atlantico SA, 7.875%
Eurobonds, 11/5/98 370,000 369,691
- --------------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr.
Nts., 9/15/04 25,000 24,906
- --------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd.
Bonds, 8/1/27 150,000 163,500
- --------------------------------------------------------------------------
Ocwen Financial Corp., 11.875%
Nts., 10/1/03 150,000 169,875
- --------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 200,000 215,000
- --------------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04 250,000 251,250
- --------------------------------------------------------------------------
Veritas Capital Trust, 10% Gtd.
Debs., 1/1/28(5) 100,000 102,250
- --------------------------------------------------------------------------
Wilshire Financial Services Group,
Inc., 13% Nts., 1/1/04 60,000 61,350
-------------
1,610,529
- --------------------------------------------------------------------------
INSURANCE - 0.2%
Terra Nova Insurance (UK) Holdings
plc, 10.75% Sr. Nts., 7/1/05 100,000 112,406
- --------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr.
Nts., 12/15/03 200,000 214,000
-------------
326,406
- --------------------------------------------------------------------------
HOUSING RELATED - 0.6%
- --------------------------------------------------------------------------
BUILDING MATERIALS - 0.2%
Building Materials Corp. of
America, 8.625% Sr. Nts., Series B,
12/15/06 50,000 51,750
- --------------------------------------------------------------------------
Falcon Building Products, Inc.,
9.50% Sr. Sub. Nts., 6/15/07 175,000 182,437
- --------------------------------------------------------------------------
Nortek, Inc., 9.25% Sr. Nts.,
Series B, 3/15/07 150,000 153,750
-------------
387,937
- --------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.4%
Continental Homes Holding Corp.,
10% Gtd. Unsec. Bonds, 4/15/06 50,000 54,750
- --------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr.
Gtd. Nts., 3/1/04(4) 50,000 54,750
- --------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc.,
11.25% Gtd. Sub. Nts., 4/15/02 75,000 78,938
- --------------------------------------------------------------------------
International de Ceramica SA, 9.75%
Gtd. Unsec. Unsub. Nts., 8/1/02(4) 70,000 66,850
- --------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75%
Sr. Nts., 10/15/04 400,000 398,000
- --------------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Nts.,
Series B, 9/1/07 150,000 153,000
-------------
806,288
- --------------------------------------------------------------------------
MANUFACTURING - 2.5%
- --------------------------------------------------------------------------
AEROSPACE - 1.0%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 450,000 483,750
- --------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts.,
8/1/04(5) 150,000 156,750
- --------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 125,000 132,500
12.25% Pass-Through Certificates,
12/1/02 350,000 390,250
- --------------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts., Series 1997-1, 1/1/01(4) 125,000 126,250
- --------------------------------------------------------------------------
Kitty Hawk, Inc., 9.95% Sr. Nts.,
11/15/04(5) 100,000 101,000
- --------------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Cl. B, 6/15/04(4) 97,191 100,273
- --------------------------------------------------------------------------
SC International Services, Inc.,
9.25% Sr. Sub. Nts., 9/1/07(5) 325,000 338,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
AEROSPACE (CONTINUED)
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04(5) $ 300,000 $ 303,000
-------------
2,131,773
- --------------------------------------------------------------------------
AUTOMOTIVE - 0.7%
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., 7/15/07(5) 75,000 78,750
- --------------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Gtd. Sr. Sub. Nts., 4/15/06 300,000 339,000
- --------------------------------------------------------------------------
Delco Remy International, Inc.,
8.625% Sr. Nts., 12/15/07 50,000 50,938
- --------------------------------------------------------------------------
Hayes Wheels International, Inc.:
11% Sr. Sub. Nts., 7/15/06 225,000 252,000
9.125% Sr. Sub. Nts., 7/15/07 100,000 103,875
- --------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 300,000 320,250
- --------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts.,
7/15/06 200,000 220,500
-------------
1,365,313
- --------------------------------------------------------------------------
CAPITAL GOODS - 0.8%
Burke Industries, Inc., 10% Sr.
Nts., 8/15/07(5) 150,000 154,875
- --------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 100,000 109,500
12.50% Debs., 7/15/07(5)(14) 45,994 49,444
- --------------------------------------------------------------------------
Communications & Power Industries,
Inc., 12% Sr. Sub. Nts., Series B,
8/1/05 250,000 280,000
- --------------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 155,625
- --------------------------------------------------------------------------
Insilco Corp., 10.25% Unsec. Sr.
Sub. Nts., 8/15/07(5) 300,000 315,750
- --------------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 125,000 137,500
- --------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub.
Nts., 7/1/07 100,000 100,250
- --------------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Gtd. Sr. Sub. Nts.,
6/15/07(4) 140,000 141,750
- --------------------------------------------------------------------------
Synthetic Industries, Inc., 9.25%
Sr. Sub. Nts., 2/15/07 45,000 47,700
- --------------------------------------------------------------------------
Titan Wheel International, Inc.,
8.75% Sr. Sub. Nts., 4/1/07 100,000 105,250
- --------------------------------------------------------------------------
Unifrax Investment Corp., 10.50%
Sr. Nts., 11/1/03(4) 50,000 52,250
-------------
1,649,894
- --------------------------------------------------------------------------
MEDIA - 3.6%
- --------------------------------------------------------------------------
BROADCASTING - 1.2%
Azteca Holdings SA, 11% Sr. Nts.,
6/15/02(5) 155,000 160,425
- --------------------------------------------------------------------------
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 275,000 282,563
- --------------------------------------------------------------------------
Chancellor Radio Broadcasting Co.:
8.125% Sr. Sub. Nts., 12/15/07(5) 200,000 196,750
8.75% Sr. Sub. Nts., 6/15/07 100,000 102,250
- --------------------------------------------------------------------------
Jacor Communications Co., 8.75%
Gtd. Sr. Sub. Nts., 6/15/07(5) 100,000 102,250
- --------------------------------------------------------------------------
Paxson Communications Corp.,
11.625% Sr. Sub. Nts., 10/1/02 95,000 102,125
- --------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(10) 100,000 99,500
- --------------------------------------------------------------------------
SFX Broadcasting, Inc., 10.75% Sr.
Sub. Nts., Series B, 5/15/06 150,000 165,000
- --------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 9/30/05 100,000 105,750
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
BROADCASTING (CONTINUED)
Sinclair Broadcast Group, Inc.:
(Continued)
8.75% Sr. Sub. Nts., 12/15/07 $ 150,000 $ 150,750
9% Gtd. Sr. Sub. Nts., 7/15/07 250,000 256,250
- --------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
11% Sr. Nts., 3/15/04 100,000 110,500
- --------------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Gtd. Sr. Nts., Series A,
2/15/04 100,000 103,250
10.50% Gtd. Sr. Nts., Series B,
2/15/07 150,000 155,250
- --------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 273,625
9% Sr. Sub. Nts., Series B, 1/15/06 100,000 100,500
-------------
2,466,738
- --------------------------------------------------------------------------
CABLE TELEVISION - 1.4%
Adelphia Communications Corp.:
10.50% Sr. Unsec. Nts., Series B,
7/15/04 70,000 75,775
9.25% Sr. Nts., 10/1/02 100,000 102,500
- --------------------------------------------------------------------------
American Telecasting, Inc.,
0%/14.50% Sr. Disc. Nts.,
6/15/04(13) 72,000 24,120
- --------------------------------------------------------------------------
Cablevision Systems Corp.:
9.875% Sr. Sub. Debs., 4/1/23 150,000 165,750
9.875% Sr. Sub. Nts., 5/15/06 250,000 275,625
- --------------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(13) 40,000 36,800
- --------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd.
Nts., 7/1/02 250,000 271,250
- --------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(4) 159,783 158,185
- --------------------------------------------------------------------------
EchoStar II, 8.25% Bonds,
11/9/01(4) 147,612 146,136
- --------------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(13) 400,000 342,000
- --------------------------------------------------------------------------
Fundy Cable Ltd./Ltee, 11% Sr. Sec.
Second Priority Nts., 11/15/05(4) 100,000 108,250
- --------------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(6) 175,000 189,000
- --------------------------------------------------------------------------
Knology Holdings, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/11.875% sr. disc.
nts., 10/15/07 and one warrant to
purchase .003734 shares of
preferred stock)(4)(13)(15) 100,000 55,000
- --------------------------------------------------------------------------
Marcus Cable Operating Co.
LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts.,
Series II, 8/1/04(13) 200,000 186,000
- --------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 210,000 223,650
- --------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10%
Second Priority Sr. Sec. Debs.,
12/1/07 200,000 221,000
- --------------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07 CAD 400,000 272,964
- --------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.,
10.875% Sr. Sub. Nts., 2/15/07(5) 100,000 105,250
-------------
2,959,255
- --------------------------------------------------------------------------
DIVERSIFIED MEDIA - 0.8%
Ackerley Communications, Inc.,
10.75% Sr. Sec. Nts., Series A,
10/1/03 200,000 214,000
- --------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07(5) 100,000 106,750
- --------------------------------------------------------------------------
ITT Promedia CVA, 9.125% Sr. Sub.
Nts., 9/15/07(5) DEM 850,000 498,146
- --------------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub.
Nts., Series B, 1/15/07 90,000 99,675
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED MEDIA (CONTINUED)
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 $ 150,000 $ 154,875
9.625% Sr. Sub. Nts., 12/1/06 50,000 54,063
- --------------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr.
Sub. Nts., 6/15/07 150,000 156,750
- --------------------------------------------------------------------------
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 300,000 343,208
- --------------------------------------------------------------------------
Universal Outdoor, Inc.:
9.75% Sr. Sub. Nts., 10/15/06 20,000 22,500
9.75% Sr. Sub. Nts., Series B,
10/15/06 70,000 78,750
-------------
1,728,717
- --------------------------------------------------------------------------
ENTERTAINMENT/FILM - 0.1%
Ascent Entertainment Group, Inc.,
0%/11.875% Sr. Sec. Disc. Nts.,
12/15/04(5)(13) 150,000 86,625
- --------------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01(6) 200,000 211,000
-------------
297,625
- --------------------------------------------------------------------------
PUBLISHING/PRINTING - 0.1%
American Lawyer Media Holdings,
Inc., 9.75% Sr. Nts., 12/15/07(5) 100,000 102,000
- --------------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub.
Nts., 2/15/07 150,000 162,000
-------------
264,000
- --------------------------------------------------------------------------
OTHER - 0.8%
- --------------------------------------------------------------------------
CONGLOMERATES - 0.1%
Cia Latino Americana de
Infraestructura & Servicios SA -
CLISA, 11.625% Gtd. Sr. Nts.,
6/1/04(4) 30,000 30,300
- --------------------------------------------------------------------------
Maxxam Group, Inc., 0%/12.25% Sr.
Sec. Disc. Nts., 8/1/03(13) 25,000 24,875
- --------------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75%
Gtd. Sr. Sec. Sub. Nts., Series B,
12/30/99 85,000 80,750
-------------
135,925
- --------------------------------------------------------------------------
ENVIRONMENTAL - 0.2%
Allied Waste Industries, Inc.,
0%/11.30% Sr. Disc. Nts.,
6/1/07(5)(13) 300,000 211,500
- --------------------------------------------------------------------------
Allied Waste North America, Inc.,
10.25% Sr. Sub. Nts., 12/1/06 250,000 275,625
-------------
487,125
- --------------------------------------------------------------------------
SERVICES - 0.5%
Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03 100,000 102,625
9.625% Sr. Sub. Nts., 3/15/07 100,000 104,500
- --------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(4)(13) 100,000 82,500
- --------------------------------------------------------------------------
Greater Toronto Airport, 5.40%
Debs., 12/3/02 CAD 240,000 165,990
- --------------------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 50,000 50,000
- --------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125%
Sr. Unsec. Sub. Nts., 6/15/07 300,000 316,875
- --------------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc., 6.75% Cv. Gtd. Sr. Sub. Nts.,
9/15/03 125,000 148,281
-------------
970,771
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL - 1.1%
- --------------------------------------------------------------------------
SPECIALTY RETAILING - 0.3%
Central Termica Guemes, 12% Bonds,
11/26/01(4) $ 100,000 $ 101,500
- --------------------------------------------------------------------------
Eye Care Centers of America, Inc.,
12% Sr. Nts., 10/1/03 70,000 75,950
- --------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625%
Sr. Nts., 5/1/03(4) 100,000 105,500
- --------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07(4) 200,000 205,000
- --------------------------------------------------------------------------
Specialty Retailers, Inc., 8.50%
Gtd. Sr. Nts., 7/15/05 75,000 76,875
-------------
564,825
- --------------------------------------------------------------------------
SUPERMARKETS - 0.8%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., 12/1/04(5) 50,000 52,625
10.625% Sr. Sub. Nts., 7/31/07(5) 300,000 318,000
- --------------------------------------------------------------------------
Ralph's Grocery Co.:
11% Sr. Sub. Nts., 6/15/05 50,000 57,125
10.45% Sr. Nts., 6/15/04 325,000 365,625
- --------------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., 7/1/07(5) 375,000 390,000
- --------------------------------------------------------------------------
Shoppers Food Warehouse Corp.,
9.75% Sr. Nts., 6/15/04(5) 400,000 410,000
- --------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9%
Sr. Unsec. Sub. Nts., 7/1/04 125,000 131,250
-------------
1,724,625
- --------------------------------------------------------------------------
TECHNOLOGY - 6.6%
- --------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 3.5%
Amphenol Corp., 9.875% Sr. Sub.
Nts., 5/15/07 75,000 79,875
- --------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec.
Nts., 3/15/04(4)(13) 150,000 159,000
- --------------------------------------------------------------------------
Cellular Communications
International, Inc., Zero Coupon
Sr. Disc. Nts., 12.03%, 8/15/00(12) 475,000 382,375
- --------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub.
Disc. Nts., 9/1/03(13) 50,000 50,375
- --------------------------------------------------------------------------
Clearnet Communications, Inc.,
0%/14.75% Sr. Disc. Nts.,
12/15/05(13) 150,000 118,875
- --------------------------------------------------------------------------
Comcast Cellular Communications,
Inc., 9.50% Sr. Nts., 5/1/07 150,000 157,125
- --------------------------------------------------------------------------
Computervision Corp., 11.375% Sr.
Sub. Nts., 8/15/99 40,000 40,450
- --------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125%
Sr. Deferred Coupon Bonds,
11/15/03(13) 350,000 266,875
- --------------------------------------------------------------------------
Concentic Network Corp., Units
(each unit consists of $1,000
principal amount of 12.75% sr.
nts., 12/15/07 and one warrant to
purchase 6.34 shares of common
stock)(5)(15) 100,000 102,875
- --------------------------------------------------------------------------
Consorcio Ecuatoriano de Telecom
SA, 14% Nts., 5/1/02(4) 70,000 70,700
- --------------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Disc. Nts.,
11/15/07(5)(13) 350,000 219,625
- --------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
11/15/05(5) 150,000 154,125
- --------------------------------------------------------------------------
Dial Call Communications, Inc.,
0%/12.25% Sr. Disc. Nts.,
4/15/04(13) 400,000 383,000
- --------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub.
Nts., 9/15/07(5) 30,000 29,550
- --------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 350,000 357,000
- --------------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts.,
7/15/05(13) 100,000 58,500
12% Cv. Sr. Sub. Nts., 2/15/01(4) 210,000 168,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
INFORMATION TECHNOLOGY (CONTINUED)
Iridium LLC/Iridium Capital Corp.,
11.25% Sr. Nts., 7/15/05(5) $ 125,000 $ 123,125
- --------------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub.
Nts., 9/30/09(5) 150,000 154,500
- --------------------------------------------------------------------------
Metrocall, Inc., 9.75% Sr. Sub.
Nts., 11/1/07(5) 75,000 74,438
- --------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts.,
10/15/07(5)(13) CAD 300,000 118,447
0%/14% Sr. Disc. Nts., Series B,
6/1/06(13) 200,000 135,000
- --------------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts.,
6/1/06(13) 210,000 154,875
- --------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts.,
9/15/07(5)(13) 400,000 254,000
0%/11.50% Sr. Disc. Nts.,
9/1/03(13) 150,000 150,000
0%/9.75% Sr. Disc. Nts.,
10/31/07(5)(13) 500,000 307,500
- --------------------------------------------------------------------------
Occidente y Caribe Celular SA,
0%/14% Sr. Disc. Nts., Series B,
3/15/04(13) 200,000 151,000
- --------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 295,000 312,700
11.625% Sr. Nts., Series A, 8/15/06 80,000 84,800
- --------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 300,000 327,000
- --------------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(13) 150,000 112,125
- --------------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 0%/13.50% Sr. Disc.
Nts., Series A, 8/1/07(4)(13) 150,000 95,250
- --------------------------------------------------------------------------
Price Communications Wireless,
Inc., 11.75% Sr. Sub. Nts.,
7/15/07(5) 225,000 245,250
- --------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts.,
10/1/03(13) 150,000 154,500
0%/14% Sr. Sub. Disc. Nts.,
11/15/01(13) 500,000 557,500
10.75% Sr. Nts., 11/1/04 75,000 81,563
- --------------------------------------------------------------------------
Real Time Data, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/13.50% sub. disc.
nts., 8/15/06 and one warrant to
purchase six ordinary
shares)(4)(13)(15) 300,000 114,000
- --------------------------------------------------------------------------
Star Choice Communications, Inc.,
Units (each unit consists of $1,000
principal amount of 13% sr. sec.
nts., 12/15/05 and one warrant to
buy common stock)(15) 100,000 103,000
- --------------------------------------------------------------------------
Teletrac, Inc., 14% Sr. Nts.,
8/1/07 85,000 81,175
- --------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 150,000 172,125
- --------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 200,000 222,000
9.50% Sr. Nts., 2/1/04 100,000 98,000
- --------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 175,000 179,375
-------------
7,361,573
- --------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
3.1%
American Communications Services,
Inc.:
0%/12.75% Sr. Disc. Nts.,
4/1/06(13) 65,000 50,050
13.75% Sr. Nts., 7/15/07(5) 110,000 130,900
- --------------------------------------------------------------------------
Bell Cablemedia plc, 0%/11.95% Sr.
Disc. Nts., 7/15/04(13) 300,000 283,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY
(CONTINUED)
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts.,
3/1/06(13) $ 300,000 $ 250,500
0%/11.875% Sr. Disc. Nts.,
11/1/06(13) 90,000 72,450
10% Sr. Nts., 6/1/07 300,000 346,500
- --------------------------------------------------------------------------
BTI Telecom Corp., 10.50% Sr. Nts.,
9/15/07(5) 75,000 76,875
- --------------------------------------------------------------------------
Call-Net Enterprises, Inc.:
0%/13.25% Sr. Disc. Nts.,
12/1/04(13) 200,000 183,250
0%/9.27% Sr. Disc. Nts.,
8/15/07(13) 75,000 51,188
8.375% Sr. Nts., 8/15/07 CAD 150,000 110,075
- --------------------------------------------------------------------------
COLT Telecom Group plc:
10.125% Sr. Nts., 11/30/07 GBP 170,000 285,313
8.875% Sr. Nts., 11/30/07 DEM 100,000 56,694
Units (each unit consists of $1,000
principal amount of 0%/12% sr.
disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary
shares)(13)(15) 200,000 156,000
- --------------------------------------------------------------------------
Comcast UK Cable Partner Ltd.,
0%/11.20% Sr. Disc. Debs.,
11/15/07(13) 250,000 203,750
- --------------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(13) 215,000 167,163
- --------------------------------------------------------------------------
GST Telecommunications, Inc.,
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(5)(13) 25,000 19,203
- --------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05(13) 425,000 327,250
- --------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts.,
5/1/06(13) 195,000 147,225
0%/13.50% Sr. Disc. Nts.,
9/15/05(13) 125,000 101,875
- --------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/11.25% Sr. Disc. Nts., Series B,
7/15/07(13) 400,000 287,000
8.50% Sr. Nts., 1/15/08(5) 200,000 201,000
8.875% Sr. Nts., 11/1/07(5) 200,000 206,000
- --------------------------------------------------------------------------
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts.,
3/1/07(13) 140,000 101,500
9.25% Sr. Nts., 7/15/07(5) 75,000 78,938
- --------------------------------------------------------------------------
Metronet Communications Corp.,
0%/10.75% Sr. Disc. Nts.,
11/1/07(5)(13) 175,000 108,063
- --------------------------------------------------------------------------
MGC Communications, Inc., Units
(each unit consists of $1,000
principal amount of 13% sr. sec.
nts., 10/1/04 and one warrant to
purchase 8.07 shares of common
stock at $0.01 per share)(5)(15) 150,000 151,500
- --------------------------------------------------------------------------
Netia Holdings BV:
0%/11% Sr. Gtd. Disc. Nts.,
11/1/07(4)(13) DEM 350,000 111,684
10.25% Sr. Gtd. Nts., 11/1/07(4) 50,000 47,875
- --------------------------------------------------------------------------
NEXTLINK Communications, Inc.,
9.625% Sr. Nts., 10/1/07 350,000 364,000
- --------------------------------------------------------------------------
NTL, Inc., 10% Sr. Nts., 2/15/07 100,000 105,750
- --------------------------------------------------------------------------
Petersburg Long Distance, Inc.,
Units (each unit consists of $1,000
principal amount of 0%/14% sr.
disc. nts., 6/1/04 and one warrant
to purchase 34 ordinary
shares)(5)(13)(15) 300,000 286,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY
(CONTINUED)
PTC International Finance BV,
0%/10.75% Gtd. Sr. Sub. Unsec.
Bonds, 7/1/07(5)(13) $ 134,000 $ 87,435
- --------------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07(5)(13) 700,000 476,000
- --------------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27 CAD 340,000 220,836
- --------------------------------------------------------------------------
Teleport Communications Group,
Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(13) 425,000 347,438
- --------------------------------------------------------------------------
Telewest Communications plc, 0%/11%
Sr. Disc. Debs., 10/1/07(13) 200,000 156,250
- --------------------------------------------------------------------------
UNIFI Communications, Inc., 14% Sr.
Nts., 3/1/04 25,000 19,750
-------------
6,377,280
- --------------------------------------------------------------------------
TRANSPORTATION - 0.7%
- --------------------------------------------------------------------------
RAILROADS - 0.2%
TFM SA de CV, 10.25% Gtd. Sr. Nts.,
6/15/07(5) 200,000 206,000
- --------------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(13) 300,000 264,000
-------------
470,000
- --------------------------------------------------------------------------
SHIPPING - 0.2%
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07(5) 275,000 292,875
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(5)(15) 150,000 169,500
- --------------------------------------------------------------------------
Trico Marine Services, Inc., 8.50%
Gtd. Sr. Nts., 8/1/05(5) 50,000 50,938
-------------
513,313
- --------------------------------------------------------------------------
TRUCKING - 0.3%
Coach USA, Inc., 9.375% Gtd. Sr.
Sub. Nts., Series B, 7/1/07 200,000 207,000
- --------------------------------------------------------------------------
Pycsa Panama SA, 10.28% Sr. Sec.
Bonds, 12/15/12(4) 200,000 194,000
- --------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50%
Nts., Series 1993-A, 12/1/11(4) 242,602 200,753
-------------
601,753
- --------------------------------------------------------------------------
UTILITIES - 0.5%
- --------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.4%
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 150,000 162,000
- --------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06(4) 100,000 109,500
8.75% Sr. Nts., 7/15/07(5) 230,000 235,750
- --------------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Bonds, Series E, 5/1/11 250,000 282,500
- --------------------------------------------------------------------------
First PV Funding Corp., 10.30%
Lease Obligation Bonds, Series
1986A, 1/15/14(4) 144,000 153,720
-------------
943,470
- --------------------------------------------------------------------------
GAS UTILITIES - 0.1%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds,
6/1/17(4) 199,000 219,895
-------------
Total Corporate Bonds and Notes
(Cost $57,018,717) 58,542,921
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES(1) NOTE 1
<S> <C> <C> <C>
- --------------------------------------------------------------------------
COMMON STOCKS - 0.3%
- --------------------------------------------------------------------------
Celcaribe SA(4)(16) 24,390 $ 121,950
- --------------------------------------------------------------------------
Coinstar, Inc.(16) 700 6,388
- --------------------------------------------------------------------------
Optel, Inc.(4)(16) 210 2
- --------------------------------------------------------------------------
Vail Resorts, Inc.(16) 15,500 402,031
-------------
Total Common Stocks (Cost $193,719) 530,371
- --------------------------------------------------------------------------
PREFERRED STOCKS - 1.9%
- --------------------------------------------------------------------------
American Radio Systems Corp.,
11.375% Cum. Exchangeable Preferred 772 91,965
- --------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable Preferred Stock,
Non-Vtg.(4)(16) 2,323 62,140
- --------------------------------------------------------------------------
BankUnited Capital Trust, 10.25%
Redeemable Trust Preferred
Securities(4) 100,000 103,250
- --------------------------------------------------------------------------
California Federal Bank, 11.50%
Non-Cum., Non-Vtg. 1,500 169,875
- --------------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(4)(16) 16,000 400,000
- --------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum.
Preferred Stock(5)(14) 50 53,125
- --------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv.
Preferred Stock, Series B, Non-Vtg. 6,000 205,125
- --------------------------------------------------------------------------
Crown American Realty Trust, 11%
Cum. Non-Vtg. Preferred, Series A 2,000 104,500
- --------------------------------------------------------------------------
Doane Products Co., 14.25% Sr.
Exchangeable Preferred Stock,
Non-Vtg.(16) 5,000 195,000
- --------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr.
Preferred Stock, Series C(4)(14) 10,000 75,000
- --------------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable Exchangeable
Preferred Stock, Series
B(5)(14)(16) 125 130,938
- --------------------------------------------------------------------------
El Paso Electric Co., 11.40%
Preferred Stock, Series A(14) 1,817 201,233
- --------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, 12% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A(4) 20 555
- --------------------------------------------------------------------------
Fresenius Medical Care Trust, 9%
Preferred Securities 275,000 288,750
- --------------------------------------------------------------------------
Golden State Bancorp, 8.75% Cv.
Preferred Stock, Series A 1,000 91,125
- --------------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable Preferred Stock 101 118,170
- --------------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv. 1,800 39,600
- --------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Sr. Exchangeable Preferred(14) 5,708 355,323
- --------------------------------------------------------------------------
Prime Retail, Inc., 8.50% Cv.
Preferred Stock, Series B 6,000 144,000
- --------------------------------------------------------------------------
PRIMEDIA, Inc., 9.20% Preferred
Stock, Series E(4)(16) 1,000 100,250
- --------------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable, Series B(16) 9,000 443,250
- --------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Sr. Exchangeable
Preferred Stock, Non-Vtg.(5)(14) 106 112,625
- --------------------------------------------------------------------------
Time Warner, Inc., 10.25%
Exchangeable Preferred, Series
M(14) 1 1,183
- --------------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv. Preferred Stock, Series B 10,000 290,000
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES(1) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS (CONTINUED)
- --------------------------------------------------------------------------
Walden Residential Properties,
Inc.: (Continued)
9.20% Sr. Preferred Stock 1,000 $ 25,625
-------------
Total Preferred Stocks (Cost
$3,492,228) 3,802,607
- --------------------------------------------------------------------------
OTHER SECURITIES - 0.1%
- --------------------------------------------------------------------------
Intermedia Communications, Inc.,
Depositary Shares representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E,
Non-Vtg.(5)(16) 2,100 59,587
- --------------------------------------------------------------------------
WorldCom, Inc., 8% Cv. Depositary
Shares each Representing 1/100
Share of Dividend Enhanced
Convertible Stock 2,000 210,000
-------------
Total Other Securities (Cost
$207,309) 269,587
UNITS
- --------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.0%
- --------------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(4) 1,500 15
- --------------------------------------------------------------------------
Cellular Communications
International, Inc. Wts., Exp.
8/03(4) 300 5,100
- --------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(4) 16,000 8,000
- --------------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05 165 949
- --------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp.
11/03(4) 200 14,000
- --------------------------------------------------------------------------
Eye Care Centers of America, Inc.
Wts., Exp. 10/03(4) 70 245
- --------------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(4) 7,500 7,500
- --------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 9/04 2,800 5,600
- --------------------------------------------------------------------------
Hyperion Telecommunications, Inc.
Wts., Exp. 4/01(4) 60 3,600
- --------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(4) 825 10,313
- --------------------------------------------------------------------------
IHF Capital, Inc., Series I Wts.,
Exp. 11/99(4) 200 10,000
- --------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 200 --
- --------------------------------------------------------------------------
Mexican Value Rights 1,100 --
- --------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 6/06(4) 600 375
Wts., Exp. 6/06(4) 600 7,800
- --------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts.,
Exp. 2/09(4) 4,100 41
- --------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts.,
Exp. 3/04(4) 800 11,000
- --------------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(4) 150 1,875
- --------------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(4) 516 5
- --------------------------------------------------------------------------
Teletrac, Inc. Wts., Exp. 8/07(4) 85 467
- --------------------------------------------------------------------------
UNIFI Communications, Inc. Wts.,
Exp. 3/07(4) 25 38
- --------------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(4) 200 2,400
-------------
Total Rights, Warrants and
Certificates (Cost $22,677) 89,323
PRINCIPAL
AMOUNT(1)
- --------------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 3.9%
- --------------------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch) Canada Banker's
Acceptance Index Yield Nts.,
8.405%, 5/22/98 $ 400,000 397,000
- --------------------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch) Lehman Brothers
High Yield Bond Index Nts., 12.50%,
2/4/98 250,000 249,600
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C> <C>
- --------------------------------------------------------------------------
STRUCTURED INSTRUMENTS (CONTINUED)
- --------------------------------------------------------------------------
Cargill Financial Services Corp.,
Contingent Promissory Nts., 5.80%,
6/10/99 $ 250,000 $ 209,067
- --------------------------------------------------------------------------
Daiwa Finance Corp. (New York),
Daiwa Physical Commodity Index
Linked Nts., 4.906%, 3/24/98(6) 250,000 231,225
- --------------------------------------------------------------------------
First Boston Corp. (The), Russian
GKO Linked Nts., Zero Coupon,
13.95%, 1/20/98(12) 100,000 98,500
- --------------------------------------------------------------------------
Goldman, Sachs & Co. Argentina
Local Market Securities Trust,
11.30%, 4/1/00 (representing debt
of Argentina (Republic of) Bonos
del Tesoro Bonds, Series 10,
11.30%, 4/1/00 and an interest rate
swap between Goldman Sachs and the
Trust)(4) 130,434 131,087
- --------------------------------------------------------------------------
Goldman Sachs Group, LP:
South Korean Won Linked Nts.,
5.60%, 1/20/98 245,000 253,648
Taiwanese Dollar Linked Nts.,
5.75%, 6/12/98 880,000 888,624
- --------------------------------------------------------------------------
ING (U.S.) Financial Holdings
Corp.:
Czech Koruna/U.S. Dollar Linked
Nts., Zero Coupon, 11.10%,
3/4/98(12) 180,000 145,496
PT Polysindo Linked Nts., Zero
Coupon, 10.43%, 7/15/98(4)(12) 50,000 45,018
- --------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.
Greek Drachma/Swiss Franc Linked
Nts., Zero Coupon, 14.71%,
1/15/98(12) 100,000 104,000
- --------------------------------------------------------------------------
Lehman High Yield Index Nts.:
12.50%, 7/6/98 200,000 200,680
12.50%, 7/8/98 250,000 248,750
- --------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New
York:
2 Times Leveraged Nts. on The
Emerging Markets Bond Index, Zero
Coupon, 2/4/98 100,000 107,620
Japanese Government Bond 193
Currency Protected Bank Nts.,
8.14%, 4/29/98 160,000 93,936
- --------------------------------------------------------------------------
Salomon Brothers, Inc. Chilean Peso
Linked Nts.:
Zero Coupon, 9.33%, 6/24/98(12) 110,000 98,659
Zero Coupon, 9.18%, 9/9/98(12) 110,000 96,195
- --------------------------------------------------------------------------
Salomon, Inc.:
Chilean Peso Indexed Credit Linked
Nts., Zero Coupon, 9.32%,
7/22/98(12) 1,000,000 893,400
Chilean Peso Indexed Enhanced
Access Nts., Zero Coupon, 9.18%,
6/18/98(12) 200,000 180,820
- --------------------------------------------------------------------------
Salomon, Inc. Russian S-Account
Credit Linked Nts.:
Zero Coupon, 13.71%, 4/3/98(12) 400,000 385,140
Zero Coupon, 14.17%, 5/22/98(12) 225,000 211,511
Zero Coupon, 14.10%, 5/7/98(12) 700,000 662,375
Zero Coupon, 9.79%, 7/31/98(12) 400,000 359,260
Zero Coupon, 15.21%, 8/7/98(12) 700,000 624,960
- --------------------------------------------------------------------------
Shoshone Partners Loan Trust, 7.50%
Sr. Nts., 5/31/02(4)(6) 742,000 786,944
- --------------------------------------------------------------------------
Standard Chartered Bank, U.S.
Dollar/Chinese Yuan Linked Nts.,
9.50%, 2/3/98 440,000 435,688
-------------
Total Structured Instruments (Cost
$8,396,216) 8,139,203
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
DATE STRIKE CONTRACTS NOTE 1
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
CALL OPTIONS PURCHASED - 0.1%
- -----------------------------------------------------------------------------------------
German Mark/Japanese Yen Call Opt. 1/98 67.68% DEM/JPY 1,654,846 $ 59,995
- -----------------------------------------------------------------------------------------
German Mark/Japanese Yen Call Opt. 3/98 68.59% DEM/JPY 1,990,000 59,963
- -----------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/27 Call Opt. 1/98 103.406% 1,000 7,031
- -----------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/27 Call Opt. 3/98 100.266% 4,600 148,062
-------------
Total Call Options Purchased (Cost
$192,207) 275,051
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(1)
- ----------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 0.8%
- ----------------------------------------------------------------------
Repurchase agreement with Smith,
Barney, Harris, Upham & Co., Inc.,
6.625%, dated 12/31/97, to be
repurchased at $1,750,644 on
1/2/98, collateralized by U.S.
Treasury Bonds, 8.875%-11.25%,
2/15/15-2/15/19, with a value of
$1,792,733 (Cost $1,750,000) $ 1,750,000 1,750,000
- ----------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$222,378,087) 107.9% 224,183,620
- ----------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (7.9) (16,344,216)
----------------- -------------
NET ASSETS 100.0% $207,839,404
----------------- -------------
----------------- -------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C> <C> <C>
ARP - Argentine Peso ITL - Italian Lira
AUD - Australian Dollar JPY - Japanese Yen
CAD - Canadian Dollar MXP - Mexican Peso
DEM - German Mark NOK - Norwegian Krone
DKK - Danish Krone NZD - New Zealand Dollar
ESP - Spanish Peseta PLZ - Polish Zloty
GBP - British Pound Sterling RUR - Russian Ruble
HUF - Hungarian Forint SEK - Swedish Krona
IDR - Indonesian Rupiah TRL - Turkish Lira
IEP - Irish Punt ZAR - South African Rand
</TABLE>
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. When-issued security to be delivered and settled after December 31, 1997.
4. Identifies issues considered to be illiquid or restricted - See Note 8 of
Notes to Financial Statements.
5. 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 $14,529,773 or 6.99% of the Fund's net
assets as of December 31, 1997.
6. Represents the current interest rate for a variable rate security.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
7. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
8. Securities with an aggregate market value of $1,327,157 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
9. A sufficient amount of securities has been designated to cover outstanding
written options if applicable, as follows:
<TABLE>
<CAPTION>
PRINCIPAL/UNITS EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL DATE PRICE RECEIVED NOTE 1
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Banco Hopotecario Nacional (Argentina)
Medium-Term Nts., 10.625%, 8/7/06 Call
Option 400,000 8/00 100.00 $ 3,680 $ 10,000
German Mark Put Option 1,820,000 3/98 1.82 DEM 11,600 11,266
Japanese Yen Put Option 223,000,000 1/98 125.00 JPY 19,445 69,576
-------- -------------
$34,725 $ 90,842
-------- -------------
-------- -------------
</TABLE>
10. Represents the current interest rate for an increasing rate security.
11. Non-income producing - issuer is in default of interest payment.
12. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
13. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
14. Interest or dividend is paid in kind.
15. 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.
16. Non-income producing security.
17. A sufficient amount of securities has been designated to cover outstanding
interest rate swap transactions. See Note 9 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 79.0%
- ----------------------------------------------------------------
BASIC MATERIALS - 2.5%
- ----------------------------------------------------------------
CHEMICALS - 2.5%
Du Pont (E.I.) De Nemours & Co. 5,000 $ 300,312
- ----------------------------------------------------------------
Ferro Corp. 26,250 638,203
- ----------------------------------------------------------------
IMC Global, Inc. 50,000 1,637,500
- ----------------------------------------------------------------
Olin Corp. 27,500 1,289,062
-------------
3,865,077
- ----------------------------------------------------------------
CONSUMER CYCLICALS - 18.0%
- ----------------------------------------------------------------
AUTOS & HOUSING - 3.4%
Champion Enterprises, Inc.(1) 25,000 514,062
- ----------------------------------------------------------------
General Motors Corp. 15,000 909,375
- ----------------------------------------------------------------
Lear Corp.(1) 17,500 831,250
- ----------------------------------------------------------------
Republic Industries, Inc.(1) 110,000 2,564,375
- ----------------------------------------------------------------
Tower Realty Trust, Inc. 20,000 492,500
-------------
5,311,562
- ----------------------------------------------------------------
LEISURE & ENTERTAINMENT - 6.3%
AMR Corp.(1)(2) 2,500 321,250
- ----------------------------------------------------------------
Brinker International, Inc.(1) 26,500 424,000
- ----------------------------------------------------------------
Callaway Golf Co. 13,500 385,594
- ----------------------------------------------------------------
Circus Circus Enterprises, Inc.(1) 7,500 153,750
- ----------------------------------------------------------------
Delta Air Lines, Inc. 10,000 1,190,000
- ----------------------------------------------------------------
Harrah's Entertainment, Inc. 100,000 1,887,500
- ----------------------------------------------------------------
Host Marriott Corp. 32,500 637,812
- ----------------------------------------------------------------
Mirage Resorts, Inc.(1) 20,000 455,000
- ----------------------------------------------------------------
Nintendo Co. Ltd. 4,000 393,782
- ----------------------------------------------------------------
Time Warner, Inc. 32,500 2,015,000
- ----------------------------------------------------------------
Viacom, Inc., Cl. B(1) 47,500 1,968,281
-------------
9,831,969
- ----------------------------------------------------------------
MEDIA - 3.2%
CBS Corp.(2) 50,000 1,471,875
- ----------------------------------------------------------------
Chancellor Media Corp.(1) 10,000 746,250
- ----------------------------------------------------------------
Comcast Corp., Cl. A Special 20,000 631,250
- ----------------------------------------------------------------
Jacor Communications, Inc.(1) 20,000 1,062,500
- ----------------------------------------------------------------
U S West Media Group(1) 37,500 1,082,812
-------------
4,994,687
- ----------------------------------------------------------------
RETAIL: GENERAL - 2.8%
Dayton Hudson Corp. 2,500 168,750
- ----------------------------------------------------------------
Dillard's, Inc. 25,000 881,250
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
RETAIL: GENERAL (CONTINUED)
Federated Department Stores,
Inc.(1) 75,000 $ 3,229,687
-------------
4,279,687
- ----------------------------------------------------------------
RETAIL: SPECIALTY - 2.3%
Abercrombie & Fitch Co., Cl.
A(1)(2) 35,000 1,093,750
- ----------------------------------------------------------------
AutoZone, Inc.(1) 47,500 1,377,500
- ----------------------------------------------------------------
Nine West Group, Inc.(1) 45,000 1,167,187
-------------
3,638,437
- ----------------------------------------------------------------
CONSUMER NON-CYCLICALS - 7.1%
- ----------------------------------------------------------------
BEVERAGES - 1.2%
Anheuser-Busch Cos., Inc. 41,000 1,804,000
- ----------------------------------------------------------------
FOOD - 0.6%
Unilever NV, NY Shares 16,000 999,000
- ----------------------------------------------------------------
HEALTHCARE/DRUGS - 1.8%
American Home Products Corp. 8,000 612,000
- ----------------------------------------------------------------
Amgen, Inc.(1) 20,000 1,082,500
- ----------------------------------------------------------------
Merck & Co., Inc. 5,000 531,250
- ----------------------------------------------------------------
Schering-Plough Corp. 10,000 621,250
-------------
2,847,000
- ----------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
0.1%
Boston Scientific Corp.(1)(2) 2,500 114,688
- ----------------------------------------------------------------
HOUSEHOLD GOODS - 0.5%
Kimberly-Clark Corp. 15,000 739,687
- ----------------------------------------------------------------
TOBACCO - 2.9%
Philip Morris Cos., Inc. 50,000 2,265,625
- ----------------------------------------------------------------
RJR Nabisco Holdings Corp. 58,500 2,193,750
-------------
4,459,375
- ----------------------------------------------------------------
ENERGY - 4.2%
- ----------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 2.8%
Apache Corp. 8,750 306,797
- ----------------------------------------------------------------
BJ Services Co.(1) 6,250 449,609
- ----------------------------------------------------------------
Coflexip SA, Sponsored ADR 10,000 555,000
- ----------------------------------------------------------------
Cooper Cameron Corp.(1) 12,500 762,500
- ----------------------------------------------------------------
Schlumberger Ltd. 4,500 362,250
- ----------------------------------------------------------------
Stolt Comex Seaway SA(1) 27,500 1,375,000
- ----------------------------------------------------------------
Weatherford Enterra, Inc.(1) 11,000 481,250
-------------
4,292,406
- ----------------------------------------------------------------
OIL-INTEGRATED - 1.4%
Atlantic Richfield Co. 5,500 440,687
- ----------------------------------------------------------------
Enron Corp. 10,000 415,625
- ----------------------------------------------------------------
Mobil Corp. 3,000 216,562
- ----------------------------------------------------------------
Royal Dutch Petroleum Co., NY
Shares 5,000 270,937
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED (CONTINUED)
Texaco, Inc. 3,000 $ 163,125
- ----------------------------------------------------------------
Unocal Corp. 6,000 232,875
- ----------------------------------------------------------------
YPF SA, Cl. D, ADR 10,500 358,969
-------------
2,098,780
- ----------------------------------------------------------------
FINANCIAL - 18.3%
- ----------------------------------------------------------------
BANKS - 10.4%
Banco Rio de la Plata SA, ADR(1) 50,000 700,000
- ----------------------------------------------------------------
Barnett Banks, Inc. 2,500 179,688
- ----------------------------------------------------------------
Chase Manhattan Corp. (New) 34,000 3,723,000
- ----------------------------------------------------------------
Citicorp 4,000 505,750
- ----------------------------------------------------------------
Commercial Federal Corp. 22,500 800,156
- ----------------------------------------------------------------
Compass Bancshares, Inc. 10,000 437,500
- ----------------------------------------------------------------
CoreStates Financial Corp. 21,000 1,681,313
- ----------------------------------------------------------------
Credito Italiano 100,000 308,541
- ----------------------------------------------------------------
First Commerce Corp. 7,500 504,375
- ----------------------------------------------------------------
First International Bancorp, Inc. 15,000 181,875
- ----------------------------------------------------------------
Fleet Financial Group, Inc. 25,000 1,873,438
- ----------------------------------------------------------------
Hubco, Inc. 15,000 586,875
- ----------------------------------------------------------------
J.P. Morgan & Co., Inc. 4,500 507,938
- ----------------------------------------------------------------
KeyCorp 6,500 460,281
- ----------------------------------------------------------------
Mellon Bank Corp. 2,500 151,563
- ----------------------------------------------------------------
NationsBank Corp. 2,500 152,031
- ----------------------------------------------------------------
Societe Generale 7,250 988,221
- ----------------------------------------------------------------
Sovereign Bancorp, Inc. 40,000 830,000
- ----------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR
Representing 500 Units of one
Preferred Share of Unibanco and one
Preferred Share of Unibanco
Holdings SA(1)(3) 13,500 434,531
- ----------------------------------------------------------------
Union Planters Corp. 17,500 1,188,906
-------------
16,195,982
- ----------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.8%
Advanta Corp., Cl. B 13,500 342,563
- ----------------------------------------------------------------
American Express Co. 15,000 1,338,750
- ----------------------------------------------------------------
C.I.T. Group, Inc., Cl. A(1) 16,300 525,675
- ----------------------------------------------------------------
Fannie Mae 7,500 427,969
- ----------------------------------------------------------------
Freddie Mac 9,000 377,438
- ----------------------------------------------------------------
MoneyGram Payment Systems, Inc.(1) 17,000 182,750
- ----------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 18,500 1,093,813
- ----------------------------------------------------------------
Travelers Group, Inc. 30,510 1,643,726
-------------
5,932,684
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
INSURANCE - 4.1%
Allstate Corp. 26,000 $ 2,362,750
- ----------------------------------------------------------------
Cigna Corp. 1,500 259,594
- ----------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 91,700 3,782,625
-------------
6,404,969
- ----------------------------------------------------------------
INDUSTRIAL - 8.3%
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.5%
Raychem Corp. 55,000 2,368,438
- ----------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.5%
Crown Cork & Seal Co., Inc. 15,000 751,875
- ----------------------------------------------------------------
INDUSTRIAL SERVICES - 4.1%
Cognizant Corp. 32,000 1,426,000
- ----------------------------------------------------------------
Mettler-Toledo International,
Inc.(1) 100,000 1,725,000
- ----------------------------------------------------------------
USA Waste Services, Inc.(1) 80,000 3,140,000
-------------
6,291,000
- ----------------------------------------------------------------
MANUFACTURING - 2.2%
American Standard Cos., Inc.(1) 55,000 2,107,188
- ----------------------------------------------------------------
Halter Marine Group, Inc.(1) 22,500 649,688
- ----------------------------------------------------------------
MascoTech, Inc. 40,000 735,000
-------------
3,491,876
- ----------------------------------------------------------------
TECHNOLOGY - 18.4%
- ----------------------------------------------------------------
AEROSPACE/DEFENSE - 0.2%
Boeing Co. 6,500 318,094
- ----------------------------------------------------------------
Raytheon Co., Cl. A 956 47,143
-------------
365,237
- ----------------------------------------------------------------
COMPUTER HARDWARE - 6.8%
Adaptec, Inc.(1) 12,500 464,063
- ----------------------------------------------------------------
Cabletron Systems, Inc.(1) 27,500 412,500
- ----------------------------------------------------------------
Ikon Office Solutions, Inc. 120,000 3,375,000
- ----------------------------------------------------------------
Ingram Micro, Inc., Cl. A(1) 20,000 582,500
- ----------------------------------------------------------------
International Business Machines
Corp. 15,000 1,568,438
- ----------------------------------------------------------------
Iomega Corp.(1) 135,000 1,679,063
- ----------------------------------------------------------------
Seagate Technology, Inc.(1) 17,500 336,875
- ----------------------------------------------------------------
Sun Microsystems, Inc.(1)(2) 25,000 996,875
- ----------------------------------------------------------------
Xerox Corp. 16,000 1,181,000
-------------
10,596,314
- ----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 5.7%
First Data Corp. 115,000 3,363,750
- ----------------------------------------------------------------
PLATINUM Technology, Inc.(1) 35,000 988,750
- ----------------------------------------------------------------
Structural Dynamics Research
Corp.(1) 200,000 4,500,000
-------------
8,852,500
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
ELECTRONICS - 2.8%
Intel Corp. 4,000 $ 281,000
- ----------------------------------------------------------------
LSI Logic Corp.(1) 7,500 148,125
- ----------------------------------------------------------------
Waters Corp.(1) 100,000 3,762,500
- ----------------------------------------------------------------
Xilinx, Inc.(1) 6,000 210,375
-------------
4,402,000
- ----------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY -
2.9%
ADC Telecommunications, Inc.(1) 32,500 1,356,875
- ----------------------------------------------------------------
Bay Networks, Inc.(1) 10,000 255,625
- ----------------------------------------------------------------
Cisco Systems, Inc.(1) 22,500 1,254,375
- ----------------------------------------------------------------
Intermedia Communications, Inc.(1) 503 30,557
- ----------------------------------------------------------------
MCI Communications Corp. 32,500 1,391,406
- ----------------------------------------------------------------
Tellabs, Inc.(1) 2,500 132,188
- ----------------------------------------------------------------
WorldCom, Inc. 2,500 75,625
-------------
4,496,651
- ----------------------------------------------------------------
UTILITIES - 2.2%
- ----------------------------------------------------------------
TELEPHONE UTILITIES - 2.2%
LCI International, Inc.(1) 80,000 2,460,000
- ----------------------------------------------------------------
Telecomunicacoes Brasileiras SA,
Sponsored ADR 7,750 902,391
-------------
3,362,391
-------------
Total Common Stocks (Cost
$107,792,827) 122,788,272
- ----------------------------------------------------------------
PREFERRED STOCKS - 6.1%
- ----------------------------------------------------------------
Automatic Commission Exchange
Security Trust II, 6.50% Cv.
Preferred (exchangeable to common
stock of Republic Industries, Inc.
"TRACES" effective 5/15/00) 75,000 1,762,500
- ----------------------------------------------------------------
Evergreen Media Corp., 6% Cv.
Preferred(4) 20,000 1,547,500
- ----------------------------------------------------------------
Host Marriott Financial Trust,
6.75% Cv. Preferred Stock(4) 12,500 762,500
- ----------------------------------------------------------------
ICG Communications, Inc., 6.75% Cv.
Preferred Stock(4) 35,000 2,213,750
- ----------------------------------------------------------------
Intermedia Communications, Inc., 7%
Cv. Preferred Stock(1)(4) 50,000 2,056,250
- ----------------------------------------------------------------
QUALCOMM Financial Trust I, 5.75%
Cum. Cv. Preferred Securities,
Non-Vtg. 25,000 1,200,000
-------------
Total Preferred Stocks (Cost
$7,862,050) 9,542,500
- ----------------------------------------------------------------
OTHER SECURITIES - 1.8%
- ----------------------------------------------------------------
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated
Preferred Securities 10,000 1,028,750
- ----------------------------------------------------------------
Houston Industries, Inc., 7%
Automatic Common Exchange
Securities, Exchangeable for Time
Warner, Inc. Common Stock 25,000 1,426,562
- ----------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25%
Structured Yield Product
Exchangeable for Stock 10,000 345,000
-------------
Total Other Securities (Cost
$2,239,123) 2,800,312
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 3.2%
- ----------------------------------------------------------------
U.S. Treasury Bonds:
6.375%, 8/15/27 $ 1,150,000 1,212,891
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT NOTE 1
<S> <C> <C>
- ----------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS
(CONTINUED)
- ----------------------------------------------------------------
U.S. Treasury Bonds: (Continued)
6.50%, 11/15/26 $ 3,500,000 $ 3,737,346
-------------
Total U.S. Government Obligations
(Cost $4,488,195) 4,950,237
- ----------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND
NOTES - 8.0%
- ----------------------------------------------------------------
Adaptec, Inc., 4.75% Cv. Sub. Nts.,
2/1/04(5) 1,000,000 1,030,000
- ----------------------------------------------------------------
Continental Airlines, Inc., 6.75%
Cv. Sub. Nts., 4/15/06 500,000 820,000
- ----------------------------------------------------------------
Corporate Express, Inc., 4.50% Cv.
Sub. Nts., 7/1/00 1,250,000 1,110,937
- ----------------------------------------------------------------
Fine Host Corp., 5% Cv. Sub. Nts.,
11/1/04(4) 1,000,000 625,000
- ----------------------------------------------------------------
Interpublic Group Cos., 1.80% Cv.
Sub. Debs., 9/16/04(4) 1,000,000 823,750
- ----------------------------------------------------------------
Loews Corp., 3.125% Cv. Sub. Nts.,
9/15/07 1,000,000 995,000
- ----------------------------------------------------------------
PLATINUM Technology, Inc.:
6.25% Cv. Sub. Nts., 12/15/02(5) 2,000,000 2,117,500
6.75% Cv. Sub. Nts., 11/15/01 500,000 1,046,875
- ----------------------------------------------------------------
Quantum Corp., 7% Cv. Sub. Nts.,
8/1/04 1,250,000 1,175,000
- ----------------------------------------------------------------
Saks Holdings, Inc., 5.50% Cv. Sub.
Nts., 9/15/06 1,500,000 1,280,625
- ----------------------------------------------------------------
Tower Automotive, Inc., 5% Cv. Sub.
Nts., 8/1/04(4) 500,000 520,000
- ----------------------------------------------------------------
U.S. Office Products Co., 5.50% Cv.
Sub. Nts., 5/15/03(4) 1,000,000 903,750
-------------
Total Convertible Corporate Bonds
and Notes (Cost $11,947,833) 12,448,437
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.8%
- ----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 6.60%,
dated 12/31/97, to be repurchased
at $1,200,440 on 1/2/98,
collateralized by U.S. Treasury
Bonds, 8%-10.625%,
8/15/15-11/15/21, with a value of
$889,443, and U.S. Treasury Nts.,
5.875%-7.50%, 9/30/01-12/31/01,
with a value of $335,205 (Cost
$1,200,000) $ 1,200,000 1,200,000
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$135,530,028) 98.9% 153,729,758
- ----------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.1 1,637,992
----------- -------------
NET ASSETS 100.0% $155,367,750
----------- -------------
----------- -------------
</TABLE>
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL DATE PRICE RECEIVED NOTE 1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Abercrombie & Fitch Cl. A 8,000 1/98 $ 35 $22,759 $2,000
AMR Corp. 2,500 1/98 135 9,612 2,188
Boston Scientific Corp. 2,500 1/98 55 1,200 313
CBS Corp. 50,000 1/98 35 17,749 3,125
Sun Microsystems, Inc. 25,000 1/98 50 10,438 1,562
-------- ------
$61,758 $9,188
-------- ------
-------- ------
</TABLE>
3. 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.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $9,452,500 or 6.08% of the Fund's net
assets as of December 31, 1997.
5. Identifies issues considered to be illiquid or restricted - See Note 6 of
Notes to Financial Statements.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
MONEY HIGH INCOME BOND
FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost * )
(including repurchase agreements
**) - see accompanying statements $125,778,964 $315,552,124 $601,914,075
- ----------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts
- -see applicable note -- 211,244 193,971
- ----------------------------------------------------------------------------------
Cash 2,083 10,676 750,383
- ----------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 184,276 3,819,980 7,588,406
Closed forward foreign currency
exchange contracts -- 138,584 1,683
Daily variation on futures
contracts - see applicable note -- -- 171,203
Shares of beneficial interest sold 1,081,045 260,980 352,813
Investments sold -- 2,112,567 32,654,999
- ----------------------------------------------------------------------------------
Other 4,564 5,251 6,192
------------- ------------- -------------
Total assets 127,050,932 322,111,406 643,633,725
- ----------------------------------------------------------------------------------
LIABILITIES:
Bank overdraft -- -- --
- ----------------------------------------------------------------------------------
Options written, at value (premiums
received ***) - see accompanying
statements and notes -- -- --
- ----------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- 62,395 2,803
- ----------------------------------------------------------------------------------
Unrealized depreciation on interest
rate swaps - see applicable note -- -- --
- ----------------------------------------------------------------------------------
Payables and other liabilities:
Closed forward foreign currency
exchange contracts -- 13,758 16,014
Daily variation on futures
contracts - see applicable note -- -- --
Dividends 243,614 -- --
Custodian fees 3,783 38,682 71,463
Registration and filing fees 2,059 27,228 24,389
Shareholder reports 5,704 6,971 7,401
Legal and auditing fees 9,321 14,678 --
Investments purchased (including
those purchased on a when-issued
basis****) - see applicable note -- 30,065,705 122,645,501
Shares of beneficial interest
redeemed -- 387,715 775,130
Other 4,069 171,483 12,996
------------- ------------- -------------
Total liabilities 268,550 30,788,615 123,555,697
- ----------------------------------------------------------------------------------
NET ASSETS $126,782,382 $291,322,791 $520,078,028
------------- ------------- -------------
------------- ------------- -------------
- ----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $126,798,517 $272,156,892 $501,115,939
- ----------------------------------------------------------------------------------
Undistributed net investment income -- 1,776,867 1,857,027
- ----------------------------------------------------------------------------------
Accumulated net realized gain
(loss) from investments and foreign
currency transactions (16,135) 6,730,159 5,563,419
- ----------------------------------------------------------------------------------
Net unrealized appreciation on
investments and translation of
assets and liabilities denominated
in foreign currencies -- 10,658,873 11,541,643
------------- ------------- -------------
Net assets $126,782,382 $291,322,791 $520,078,028
------------- ------------- -------------
------------- ------------- -------------
- ----------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 126,798,538 25,297,573 43,651,270
- ----------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $ 1.00 $ 11.52 $ 11.91
* Cost $125,778,964 $305,080,290 $590,845,008
** Repurchase agreements $ -- $ 74,150,000 $ 13,500,000
*** Premiums received $ -- $ -- $ --
****When-issued $ -- $ 1,480,181 $122,707,112
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
CAPITAL OPPENHEIMER MULTIPLE
APPRECIATION GROWTH STRATEGIES
FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost * )
(including repurchase agreements
**) - see accompanying statements $881,988,555 $491,180,589 $641,798,961
- ----------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts
- -see applicable note -- -- --
- ----------------------------------------------------------------------------------
Cash 14,363 294,871 --
- ----------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 125,802 268,765 4,206,562
Closed forward foreign currency
exchange contracts -- -- --
Daily variation on futures
contracts - see applicable note -- -- --
Shares of beneficial interest sold 619,393 1,707,785 119,130
Investments sold 7,415,298 1,898,266 6,153,594
- ----------------------------------------------------------------------------------
Other 7,782 5,536 8,008
------------- ------------- -------------
Total assets 890,171,193 495,355,812 652,286,255
- ----------------------------------------------------------------------------------
LIABILITIES:
Bank overdraft -- -- 191,501
- ----------------------------------------------------------------------------------
Options written, at value (premiums
received ***) - see accompanying
statements and notes -- -- 1,659,525
- ----------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- -- --
- ----------------------------------------------------------------------------------
Unrealized depreciation on interest
rate swaps - see applicable note -- -- --
- ----------------------------------------------------------------------------------
Payables and other liabilities:
Closed forward foreign currency
exchange contracts -- -- --
Daily variation on futures
contracts - see applicable note -- -- --
Dividends -- -- --
Custodian fees 28,264 14,814 32,669
Registration and filing fees 60,358 41,484 30,771
Shareholder reports 9,099 5,283 5,111
Legal and auditing fees 14,386 10,400 15,420
Investments purchased (including
those purchased on a when-issued
basis****) - see applicable note 11,980,470 -- 12,430,220
Shares of beneficial interest
redeemed 269,803 1,377,532 322,021
Other 1,340 325 54,187
------------- ------------- -------------
Total liabilities 12,363,720 1,449,838 14,741,425
- ----------------------------------------------------------------------------------
NET ASSETS $877,807,473 $493,905,974 $637,544,830
------------- ------------- -------------
------------- ------------- -------------
- ----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $688,711,219 $351,479,268 $505,041,083
- ----------------------------------------------------------------------------------
Undistributed net investment income 2,236,363 3,896,959 1,264,870
- ----------------------------------------------------------------------------------
Accumulated net realized gain
(loss) from investments and foreign
currency transactions 20,119,606 47,279,914 33,831,700
- ----------------------------------------------------------------------------------
Net unrealized appreciation on
investments and translation of
assets and liabilities denominated
in foreign currencies 166,740,285 91,249,833 97,407,177
------------- ------------- -------------
Net assets $877,807,473 $493,905,974 $637,544,830
------------- ------------- -------------
------------- ------------- -------------
- ----------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 21,431,667 15,223,362 37,473,072
- ----------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $ 40.96 $ 32.44 $ 17.01
* Cost $715,248,270 $399,931,087 $544,500,683
** Repurchase agreements $107,250,000 $101,500,000 $107,800,000
*** Premiums received $ -- $ -- $ 1,797,849
****When-issued $ -- $ -- $ 12,187,250
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
GLOBAL STRATEGIC GROWTH &
SECURITIES BOND INCOME
FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost * )
(including repurchase agreements
**) - see accompanying statements $962,129,951 $224,183,620 $153,729,758
- ----------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts
- -see applicable note 1,799,690 595,613 --
- ----------------------------------------------------------------------------------
Cash 2,017,169 699,965 231,605
- ----------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 1,240,888 3,691,367 360,188
Closed forward foreign currency
exchange contracts -- 84,889 --
Daily variation on futures
contracts - see applicable note -- 116,794 --
Shares of beneficial interest sold 137,876 212,467 422,551
Investments sold 1,195,436 11,561,416 677,712
- ----------------------------------------------------------------------------------
Other 76,135 3,937 3,526
------------- ------------- -------------
Total assets 968,597,145 241,150,068 155,425,340
- ----------------------------------------------------------------------------------
LIABILITIES:
Bank overdraft -- -- --
- ----------------------------------------------------------------------------------
Options written, at value (premiums
received ***) - see accompanying
statements and notes -- 90,842 9,188
- ----------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- 36,840 --
- ----------------------------------------------------------------------------------
Unrealized depreciation on interest
rate swaps - see applicable note -- 13,161 --
- ----------------------------------------------------------------------------------
Payables and other liabilities:
Closed forward foreign currency
exchange contracts -- 24,680 --
Daily variation on futures
contracts - see applicable note 148,871 -- --
Dividends -- -- --
Custodian fees 149,388 22,286 10,063
Registration and filing fees 69,677 25,784 25,194
Shareholder reports 2,651 6,995 4,972
Legal and auditing fees 14,856 -- 7,454
Investments purchased (including
those purchased on a when-issued
basis****) - see applicable note 7,860,390 33,068,507 --
Shares of beneficial interest
redeemed 1,241,092 12,563 117
Other -- 9,006 602
------------- ------------- -------------
Total liabilities 9,486,925 33,310,664 57,590
- ----------------------------------------------------------------------------------
NET ASSETS $959,110,220 $207,839,404 $155,367,750
------------- ------------- -------------
------------- ------------- -------------
- ----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $744,137,672 $203,301,751 $127,164,576
- ----------------------------------------------------------------------------------
Undistributed net investment income 18,148,506 885,276 130,085
- ----------------------------------------------------------------------------------
Accumulated net realized gain
(loss) from investments and foreign
currency transactions 80,213,055 1,088,375 9,820,789
- ----------------------------------------------------------------------------------
Net unrealized appreciation on
investments and translation of
assets and liabilities denominated
in foreign currencies 116,610,987 2,564,002 18,252,300
------------- ------------- -------------
Net assets $959,110,220 $207,839,404 $155,367,750
------------- ------------- -------------
------------- ------------- -------------
- ----------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 44,883,946 40,604,565 7,551,181
- ----------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $ 21.37 $ 5.12 $ 20.58
* Cost $847,161,916 $222,378,087 $135,530,028
** Repurchase agreements $165,700,000 $ 1,750,000 $ 1,200,000
*** Premiums received $ -- $ 34,725 $ 61,758
****When-issued $ -- $ 30,736,603 $ --
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
MONEY HIGH INCOME BOND
FUND FUND FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest (net of withholding taxes
of *) $7,577,599 $20,442,056 $33,458,444
- ------------------------------------------------------------------------------
Dividends (net of withholding taxes
of **) -- 1,258,134 258,565
----------- ------------ ------------
Total income 7,577,599 21,700,190 33,717,009
- ------------------------------------------------------------------------------
EXPENSES:
Management fees - see applicable
note 601,698 1,667,490 3,281,556
- ------------------------------------------------------------------------------
Custodian fees and expenses 13,515 103,951 154,627
- ------------------------------------------------------------------------------
Legal and auditing fees 11,852 19,951 16,713
- ------------------------------------------------------------------------------
Insurance expenses 3,192 4,124 11,009
- ------------------------------------------------------------------------------
Trustees' fees and expenses 2,531 3,923 2,633
- ------------------------------------------------------------------------------
Registration and filing fees 6,580 27,204 25,949
- ------------------------------------------------------------------------------
Shareholder reports 1,022 7,350 4,789
- ------------------------------------------------------------------------------
Other 3,155 5,155 --
----------- ------------ ------------
Total expenses 643,545 1,839,148 3,497,276
- ------------------------------------------------------------------------------
NET INVESTMENT INCOME 6,934,054 19,861,042 30,219,733
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain (loss) on:
Investments (including premiums on
written options exercised) 2,232 7,036,521 5,711,116
Closing of futures contracts -- 826,665 1,316,170
Closing and expiration of options
written -- (51,550) (146,182)
Foreign currency transactions -- (1,546,166) (2,842,519)
- ------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation on:
Investments -- 563,196 6,848,511
Translation of assets and
liabilities denominated in foreign
currencies -- (469,986) (408,371)
----------- ------------ ------------
Net realized and unrealized gain 2,232 6,358,680 10,478,725
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $6,936,286 $26,219,722 $40,698,458
----------- ------------ ------------
----------- ------------ ------------
* Interest $ -- $ 10,065 $ 4,337
** Dividends $ -- $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
CAPITAL OPPENHEIMER MULTIPLE
APPRECIATION GROWTH STRATEGIES
FUND FUND FUND
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest (net of withholding taxes
of *) $ 7,105,846 $ 4,639,011 $22,495,840
- -------------------------------------------------------------------------------
Dividends (net of withholding taxes
of **) 720,291 2,269,196 3,524,342
------------ ------------ ------------
Total income 7,826,137 6,908,207 26,020,182
- -------------------------------------------------------------------------------
EXPENSES:
Management fees - see applicable
note 5,324,309 2,859,202 4,068,887
- -------------------------------------------------------------------------------
Custodian fees and expenses 52,443 17,577 91,673
- -------------------------------------------------------------------------------
Legal and auditing fees 19,986 7,969 23,261
- -------------------------------------------------------------------------------
Insurance expenses 5,743 3,820 6,306
- -------------------------------------------------------------------------------
Trustees' fees and expenses 4,447 2,538 8,486
- -------------------------------------------------------------------------------
Registration and filing fees 61,056 41,602 32,647
- -------------------------------------------------------------------------------
Shareholder reports 4,975 5,552 6,420
- -------------------------------------------------------------------------------
Other 3,812 3,172 3,651
------------ ------------ ------------
Total expenses 5,476,771 2,941,432 4,241,331
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,349,366 3,966,775 21,778,851
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain (loss) on:
Investments (including premiums on
written options exercised) 19,490,648 47,415,133 33,641,766
Closing of futures contracts 1,783,530 -- 491,399
Closing and expiration of options
written -- -- 786,716
Foreign currency transactions 19,135 20,660 (722,776)
- -------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation on:
Investments 61,402,694 34,345,899 38,520,567
Translation of assets and
liabilities denominated in foreign
currencies 115,131 (151,565) (6,064,955)
------------ ------------ ------------
Net realized and unrealized gain 82,811,138 81,630,127 66,652,717
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $85,160,504 $85,596,902 $88,431,568
------------ ------------ ------------
------------ ------------ ------------
* Interest $ -- $ -- $ 209
** Dividends $ 6,162 $ 1,341 $ 61,592
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
GLOBAL STRATEGIC GROWTH &
SECURITIES BOND INCOME
FUND FUND FUND
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest (net of withholding taxes
of *) $ 9,183,668 $14,212,979 $ 979,655
- --------------------------------------------------------------------------------
Dividends (net of withholding taxes
of **) 9,092,481 264,213 906,266
------------- ------------ ------------
Total income 18,276,149 14,477,192 1,885,921
- --------------------------------------------------------------------------------
EXPENSES:
Management fees - see applicable
note 5,615,606 1,197,613 709,577
- --------------------------------------------------------------------------------
Custodian fees and expenses 400,943 71,266 20,090
- --------------------------------------------------------------------------------
Legal and auditing fees 24,221 9,307 17,255
- --------------------------------------------------------------------------------
Insurance expenses 5,865 3,511 3,408
- --------------------------------------------------------------------------------
Trustees' fees and expenses 5,100 1,201 2,424
- --------------------------------------------------------------------------------
Registration and filing fees 71,845 26,345 25,431
- --------------------------------------------------------------------------------
Shareholder reports 6,035 8,252 8,542
- --------------------------------------------------------------------------------
Other 2,859 3,649 4,281
------------- ------------ ------------
Total expenses 6,132,474 1,321,144 791,008
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 12,143,675 13,156,048 1,094,913
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain (loss) on:
Investments (including premiums on
written options exercised) 113,207,351 2,473,943 9,650,814
Closing of futures contracts (5,626,341) (369,000) --
Closing and expiration of options
written -- 118,947 262,534
Foreign currency transactions (3,862,454) (1,329,032) (75,881)
- --------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation on:
Investments 58,404,815 1,600,922 15,100,642
Translation of assets and
liabilities denominated in foreign
currencies (24,747,813) (2,042,323) (51,446)
------------- ------------ ------------
Net realized and unrealized gain 137,375,558 453,457 24,886,663
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $149,519,233 $13,609,505 $25,981,576
------------- ------------ ------------
------------- ------------ ------------
* Interest $ -- $ 5,972 $ --
** Dividends $ -- $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
MONEY HIGH INCOME
FUND FUND
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 6,934,054 $ 4,976,254 $ 19,861,042 $ 14,430,943
- -------------------------------------------------------------------------------------------
Net realized gain 2,232 2,966 6,265,470 3,333,591
- -------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation -- -- 93,210 4,840,420
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 6,936,286 4,979,220 26,219,722 22,604,954
- -------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income (6,937,040) (4,976,254) (18,546,183) (15,283,448)
- -------------------------------------------------------------------------------------------
Distributions from net realized
gain -- -- (138,778) --
- -------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net
assets resulting from beneficial
interest transactions - see
applicable note (2,935,384) 64,329,094 92,494,657 50,521,087
- -------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) (2,936,138) 64,332,060 100,029,418 57,842,593
- -------------------------------------------------------------------------------------------
Beginning of period 129,718,520 65,386,460 191,293,373 133,450,780
------------ ------------ ------------ ------------
End of period $126,782,382 $129,718,520 $291,322,791 $191,293,373
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment income $ -- $ -- $ 1,776,867 $ 913,946
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER CAPITAL
BOND APPRECIATION
FUND FUND
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 30,219,733 $ 19,901,086 $ 2,349,366 $ 1,496,337
- -------------------------------------------------------------------------------------------
Net realized gain 4,038,585 2,269,644 21,293,313 29,569,670
- -------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 6,440,140 (4,742,040) 61,517,825 42,247,113
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 40,698,458 17,428,690 85,160,504 73,313,120
- -------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income (27,908,616) (20,181,337) (1,547,409) (1,132,964)
- -------------------------------------------------------------------------------------------
Distributions from net realized
gain (1,447,022) (133,010) (30,466,762) (21,289,429)
- -------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net
assets resulting from beneficial
interest transactions - see
applicable note 82,296,263 218,092,832 207,268,868 241,097,454
- -------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) 93,639,083 215,207,175 260,415,201 291,988,181
- -------------------------------------------------------------------------------------------
Beginning of period 426,438,945 211,231,770 617,392,272 325,404,091
------------ ------------ ------------ ------------
End of period $520,078,028 $426,438,945 $877,807,473 $617,392,272
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment income $ 1,857,027 $ 1,873,402 $ 2,236,363 $ 1,479,312
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER MULTIPLE
GROWTH STRATEGIES
FUND FUND
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,966,775 $ 1,650,969 $ 21,778,851 $ 20,927,009
- -------------------------------------------------------------------------------------------
Net realized gain 47,435,793 17,101,200 34,197,105 18,594,692
- -------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 34,194,334 14,349,688 32,455,612 22,792,094
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 85,596,902 33,101,857 88,431,568 62,313,795
- -------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income (1,639,463) (1,310,185) (21,242,764) (21,290,805)
- -------------------------------------------------------------------------------------------
Distributions from net realized
gain (17,220,011) (8,706,724) (18,354,349) (9,273,309)
- -------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net
assets resulting from beneficial
interest transactions - see
applicable note 141,248,396 145,125,312 104,424,895 71,272,635
- -------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) 207,985,824 168,210,260 153,259,350 103,022,316
- -------------------------------------------------------------------------------------------
Beginning of period 285,920,150 117,709,890 484,285,480 381,263,164
------------ ------------ ------------ ------------
End of period $493,905,974 $285,920,150 $637,544,830 $484,285,480
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment income $ 3,896,959 $ 1,631,413 $ 1,264,870 $ 961,193
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
GLOBAL STRATEGIC
SECURITIES BOND
FUND FUND
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 12,143,675 $ 5,075,730 $ 13,156,048 $ 7,004,776
- -------------------------------------------------------------------------------------------
Net realized gain 103,718,556 11,775,734 894,858 1,835,670
- -------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 33,657,002 59,143,734 (441,401) 1,164,352
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 149,519,233 75,995,198 13,609,505 10,004,798
- -------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income (8,181,958) -- (12,654,390) (6,891,899)
- -------------------------------------------------------------------------------------------
Distributions from net realized
gain -- -- (207,080) --
- -------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net
assets resulting from beneficial
interest transactions - see
applicable note 235,692,756 145,106,158 88,374,959 55,505,898
- -------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) 377,030,031 221,101,356 89,122,994 58,618,797
- -------------------------------------------------------------------------------------------
Beginning of period 582,080,189 360,978,833 118,716,410 60,097,613
------------ ------------ ------------ ------------
End of period $959,110,220 $582,080,189 $207,839,404 $118,716,410
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment income $ 18,148,506 $ 7,724,243 $ 885,276 $ 751,089
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER
GROWTH &
INCOME
1997 FUND1996
<S> <C> <C>
- --------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,094,913 $ 303,556
- --------------------------------------------------------------
Net realized gain 9,837,467 2,657,756
- --------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 15,049,196 2,697,929
------------ -----------
Net increase in net assets
resulting from operations 25,981,576 5,659,241
- --------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income (976,438) (291,690)
- --------------------------------------------------------------
Distributions from net realized
gain (2,670,354) (31,219)
- --------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net
assets resulting from beneficial
interest transactions - see
applicable note 86,023,722 37,384,461
- --------------------------------------------------------------
NET ASSETS:
Total increase (decrease) 108,358,506 42,720,793
- --------------------------------------------------------------
Beginning of period 47,009,244 4,288,451
------------ -----------
End of period $155,367,750 $47,009,244
------------ -----------
------------ -----------
Undistributed net investment income $ 130,085 $ 12,643
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------
Income from investment operations -
net
investment income and net realized
gain .05 .05 .06 .04 .03
Dividends and distributions to
shareholders (.05) (.05) (.06) (.04) (.03)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 5.31% 5.13% 5.62% 4.25% 3.09%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $126,782 $129,719 $ 65,386 $ 89,671 $ 61,221
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $133,707 $ 99,263 $ 75,136 $ 90,264 $ 57,654
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.19% 5.01% 5.52% 4.18% 3.12%
Expenses 0.48% 0.49% 0.51% 0.43% 0.43%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends 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 of less than one full year. Total returns reflect changes
in net investment income only. 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.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 11.13 $ 10.63 $ 9.79 $ 11.02 $ 9.74
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .94 .97 .98 .94 .82
Net realized and unrealized gain
(loss) .37 .58 .94 (1.27) 1.65
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.31 1.55 1.92 (.33) 2.47
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.91) (1.05) (1.08) (.66) (1.19)
Distributions from net realized
gain (.01) -- -- (.24) --
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.92) (1.05) (1.08) (.90) (1.19)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 11.52 $ 11.13 $ 10.63 $ 9.79 $ 11.02
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 12.21% 15.26% 20.37% (3.18)% 26.34%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $291,323 $191,293 $133,451 $ 95,698 $ 93,011
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $223,617 $157,203 $115,600 $101,096 $ 67,000
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.88% 9.18% 9.81% 9.15% 10.50%
Expenses 0.82% 0.81% 0.81% 0.67% 0.68%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 167.6% 125.0% 107.1% 110.1% 135.7%
</TABLE>
1. Assumes a 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 of 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. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $378,724,828 and $329,656,036, respectively.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 11.63 $ 11.84 $ 10.78 $ 11.65 $ 10.99
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .76 .69 .72 .76 .65
Net realized and unrealized gain
(loss) .28 (.15) 1.07 (.98) .76
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.04 .54 1.79 (.22) 1.41
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.72) (.74) (.73) (.62) (.75)
Distributions from net realized
gain (.04) (.01) -- (.03) --
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.76) (.75) (.73) (.65) (.75)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 11.91 $ 11.63 $ 11.84 $ 10.78 $ 11.65
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 9.25% 4.80% 17.00% (1.94)% 13.04%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $520,078 $426,439 $211,232 $135,067 $111,846
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $449,760 $296,253 $170,929 $121,884 $ 87,215
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.72% 6.72% 6.91% 7.30% 7.20%
Expenses 0.78% 0.78% 0.80% 0.57% 0.46%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 116.9% 82.3% 79.4% 35.1% 36.3%
</TABLE>
1. Assumes a 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 of 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. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and mortgage
"dollar rolls") for the period ended December 31, 1997 were $497,189,725 and
$456,241,630, respectively.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 38.71 $ 34.21 $ 25.95 $ 31.64 $ 26.04
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .10 .09 .11 .10 .05
Net realized and unrealized gain
(loss) 4.01 6.59 8.29 (2.22) 6.71
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 4.11 6.68 8.40 (2.12) 6.76
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.09) (.11) (.09) (.04) (.06)
Distributions from net realized
gain (1.77) (2.07) (.05) (3.53) (1.10)
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.86) (2.18) (.14) (3.57) (1.16)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 40.96 $ 38.71 $ 34.21 $ 25.95 $ 31.64
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 11.67% 20.22% 32.52% (7.59)% 27.32%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $877,807 $617,392 $325,404 $185,774 $136,885
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $753,852 $467,080 $240,730 $153,832 $ 98,228
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.31% 0.32% 0.47% 0.50% 0.23%
Expenses 0.73% 0.75% 0.78% 0.57% 0.47%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 87.6% 100.1% 125.5% 96.5% 122.8%
Average brokerage commission
rate(3) $ 0.0626 $ 0.0583 $ 0.0577 -- --
</TABLE>
1. Assumes a 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 of 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. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $762,900,287 and $551,581,444, respectively.
3. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total of related shares
purchased and sold.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 27.24 $ 23.55 $ 17.68 $ 17.70 $ 16.96
- -------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .25 .15 .25 .22 .46
Net realized and unrealized gain
(loss) 6.62 5.46 6.10 (.05) .74
- -------------------------------------------------------------------------------------------
Total income from investment
operations 6.87 5.61 6.35 .17 1.20
- -------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.15) (.25) (.22) (.15) (.14)
Distributions from net realized
gain (1.52) (1.67) (.26) (.04) (.32)
- -------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.67) (1.92) (.48) (.19) (.46)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $ 32.44 $ 27.24 $ 23.55 $ 17.68 $ 17.70
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 26.68% 25.20% 36.65% 0.97% 7.25%
- -------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $493,906 $285,920 $117,710 $ 63,283 $ 56,701
- -------------------------------------------------------------------------------------------
Average net assets (in thousands) $390,447 $152,466 $ 88,803 $ 59,953 $ 46,389
- -------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.02% 1.08% 1.46% 1.38% 1.13%
Expenses, before voluntary
reimbursement by the Manager 0.75% 0.81%(2) 0.79% 0.58% 0.50%
- -------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 66.0% 65.4% 58.2% 53.8% 12.6%
Average brokerage commission
rate(4) $ 0.0549 $ 0.0589 $ 0.0590 -- --
</TABLE>
1. Assumes a 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 of 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. The expense ratio was 0.79% net of the voluntary reimbursement by the
Manager.
3. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $308,605,124 and $200,244,411, respectively.
4. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 15.63 $ 14.55 $ 12.91 $ 13.88 $ 12.47
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .62 .72 .66 .63 .55
Net realized and unrealized gain
(loss) 1.95 1.45 2.00 (.90) 1.41
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.57 2.17 2.66 (.27) 1.96
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.61) (.74) (.65) (.60) (.55)
Distributions from net realized
gain (.58) (.35) (.37) (.10) --
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.19) (1.09) (1.02) (.70) (.55)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 17.01 $ 15.63 $ 14.55 $ 12.91 $ 13.88
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 17.22% 15.50% 21.36% (1.95)% 15.95%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $637,545 $484,285 $381,263 $292,067 $250,290
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $564,369 $428,277 $344,745 $279,949 $199,954
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.86% 4.89% 4.81% 4.90% 4.44%
Expenses 0.75% 0.77% 0.77% 0.56% 0.48%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 41.9% 40.3% 39.0% 31.4% 32.4%
Average brokerage commission
rate(3) $ 0.0217 $ 0.0361 $ 0.0329 -- --
</TABLE>
1. Assumes a 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 of 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. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $258,504,039 and $195,905,788, respectively.
3. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 17.67 $ 15.00 $ 15.09 $ 16.30 $ 9.57
- ----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .25 .15 .12 .04 (.02)
Net realized and unrealized gain
(loss) 3.68 2.52 .19 (.96) 6.75
- ----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 3.93 2.67 .31 (.92) 6.73
- ----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.23) -- -- (.04) --
Distributions from net realized
gain -- -- (.40) (.25) --
- ----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.23) -- (.40) (.29) --
- ----------------------------------------------------------------------------------------
Net asset value, end of period $ 21.37 $ 17.67 $ 15.00 $ 15.09 $ 16.30
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
- ----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 22.42% 17.80% 2.24% (5.72)% 70.32%
- ----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $959,110 $582,080 $360,979 $297,842 $96,425
- ----------------------------------------------------------------------------------------
Average net assets (in thousands) $802,389 $466,750 $332,336 $214,545 $31,696
- ----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.51% 1.09% 0.86% 0.54% 0.72%
Expenses 0.76% 0.81% 0.89% 0.91% 0.92%
- ----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 67.1% 89.9% 131.3% 70.4% 65.1%
Average brokerage commission
rate(3) $ 0.0041 $ 0.0045 $ 0.0092 -- --
</TABLE>
1. Assumes a 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 of 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. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $595,489,366 and $459,609,905, respectively.
3. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993(1)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 5.09 $ 4.91 $ 4.60 $ 5.12 $ 5.00
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .39 .38 .38 .35 .10
Net realized and unrealized gain
(loss) .04 .19 .30 (.54) .11
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations .43 .57 .68 (.19) .21
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.39) (.39) (.37) (.32) (.09 )
Distributions from net realized
gain (.01) -- -- (.01) --
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.40) (.39) (.37) (.33) (.09 )
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 5.12 $ 5.09 $ 4.91 $ 4.60 $ 5.12
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 8.71% 12.07% 15.33% (3.78)% 4.25%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $207,839 $118,716 $ 60,098 $ 20,320 $ 9,887
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $159,934 $ 82,604 $ 37,698 $ 15,389 $ 4,259
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.23% 8.48% 9.32% 8.36% 5.67%(3)
Expenses 0.83% 0.85% 0.85% 0.87% 0.96%(3)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(4) 149.7% 144.3% 87.0% 136.6% 10.9%
</TABLE>
1. For the period from May 3, 1993 (commencement of operations) to December 31,
1993.
2. Assumes a 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 of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $280,894,743 and $221,120,528, respectively.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1996 1995(1)
<S> <C> <C> <C>
- -------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 16.37 $ 12.51 $ 10.00
- -------------------------------------------------------------------
Income from investment operations:
Net investment income .19 .14 .01
Net realized and unrealized gain 4.91 3.91 2.52
- -------------------------------------------------------------------
Total income from investment
operations 5.10 4.05 2.53
- -------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.17) (.14) (.02)
Distributions from net realized
gain (.72) (.05) --
- -------------------------------------------------------------------
Total dividends and distributions
to shareholders (.89) (.19) (.02)
- -------------------------------------------------------------------
Net asset value, end of period $ 20.58 $ 16.37 $ 12.51
-------- -------- --------
-------- -------- --------
- -------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 32.48% 32.51% 25.25%
- -------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $155,368 $ 47,009 $ 4,288
- -------------------------------------------------------------------
Average net assets (in thousands) $ 94,906 $ 21,562 $ 1,809
- -------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.15% 1.41% 0.50%(3)
Expenses 0.83% 1.00% 2.07%(3)
- -------------------------------------------------------------------
Portfolio turnover rate(4) 78.5% 112.6% 23.7%
Average brokerage commission
rate(5) $ 0.0602 $ 0.0618 $ 0.0598
</TABLE>
1. For the period from July 5, 1995 (commencement of operations) to December 31,
1995.
2. Assumes a 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 of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1997 were $155,403,150 and $71,649,903, respectively.
5. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Money Fund (OMF), Oppenheimer High Income Fund (OHIF), Oppenheimer
Bond Fund (OBF), Oppenheimer Capital Appreciation Fund (OCAP), Oppenheimer
Growth Fund (OGF), Oppenheimer Multiple Strategies Fund (OMSF), Oppenheimer
Global Securities Fund (OGSF), Oppenheimer Strategic Bond Fund (OSBF) and
Oppenheimer Growth & Income Fund (OGIF) (collectively, the Funds) are separate
series of Oppenheimer Variable Account Funds (the Trust), a diversified,
open-end management investment company registered under the Investment Company
Act of 1940, as amended. The Trust's investment advisor is OppenheimerFunds,
Inc. (the Manager). The following is a summary of significant accounting
policies consistently followed by the Funds. The Funds' objectives are as
follows:
OPPENHEIMER MONEY FUND seeks the maximum current income from investments in
"money market" securities consistent with low capital risk and the maintenance
of liquidity.
OPPENHEIMER HIGH INCOME FUND seeks a high level of current income from
investment in high yield fixed-income securities.
OPPENHEIMER BOND FUND seeks a high level of current income from investments in
high yield fixed-income securities rated "Baa" or better by Moody's or "BBB" or
better by Standard & Poor's.
OPPENHEIMER CAPITAL APPRECIATION FUND seeks to achieve capital appreciation by
investing in "growth-type" companies.
OPPENHEIMER GROWTH FUND seeks to achieve capital appreciation by investing in
securities of well-known established companies.
OPPENHEIMER MULTIPLE STRATEGIES FUND seeks a total investment return which
includes current income as well as capital appreciation in the value of its
shares from investments in common stocks and other equity securities, bonds and
other debt securities, and "money market" securities.
OPPENHEIMER GLOBAL SECURITIES FUND seeks long-term capital appreciation by
investing a substantial portion of assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special institutions which are
considered to have appreciation possibilities.
OPPENHEIMER STRATEGIC BOND FUND seeks a high level of current income principally
derived from interest on debt securities and to enhance such income by writing
covered call options on debt securities.
OPPENHEIMER GROWTH & INCOME FUND seeks a high total return, which includes
growth in the value of its shares, as well as current income from equity and
debt securities.
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities of OMF are valued on the basis of
amortized cost, which approximates market value. Portfolio securities of OHIF,
OBF, OCAP, OGF, OMSF, OGSF, OSBF and OGIF are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Forward foreign currency exchange contracts are valued
based on the closing prices of the forward currency contract rates in the London
foreign exchange markets on a daily basis as provided by a reliable bank or
dealer. Options are valued based upon the last sale price on the principal
exchange on which the option is traded or, in the absence of any transactions
that day, the value is based upon the last sale on the prior trading date if it
is
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
STRUCTURED NOTES. OHIF and OSBF invest in commodity, foreign currency and
index-linked structured notes whereby the market value and redemption price are
linked to commodity indices, foreign currency exchange rates and bond indices.
The structured notes may be leveraged, which increases the notes' volatility
relative to the face of the security. Fluctuations in values of the securities
are recorded as unrealized gains and losses in the accompanying financial
statements. During the year ended December 31, 1997, the market value of these
securities comprised an average of 5% for OHIF and OSBF, and resulted in
realized and unrealized losses of $646,867 for OHIF and $872,513 for OSBF.
- --------------------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities
that have been purchased by OHIF, OBF, OMSF, OSBF and OGIF on a forward
commitment or when-issued basis can take place a month or more after the
transaction date. During the period, such securities do not earn interest, are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The Funds maintain, in segregated accounts with the custodian,
assets with a market value equal to the amount of their purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Funds' net asset values to the extent the Funds
make such purchases while remaining substantially fully invested. As of December
31, 1997, OHIF, OBF, OMSF and OSBF had entered into outstanding when-issued or
forward commitments as shown below:
<TABLE>
<CAPTION>
OUTSTANDING WHEN-ISSUED
OR
FORWARD COMMITMENTS
<S> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund $ 1,480,181
Oppenheimer Bond Fund 122,707,112
Oppenheimer Multiple Strategies Fund 12,187,250
Oppenheimer Strategic Bond Fund 30,736,603
</TABLE>
In connection with their ability to purchase securities on a when-issued or
forward commitment basis, OHIF, OBF and OSBF may enter into mortgage
"dollar-rolls" in which the Funds sell securities for delivery in the current
month and simultaneously contract with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Funds record each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. OHIF, OMSF and OSBF invest 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 Funds
may acquire securities in default, and are not obligated to dispose of
securities whose issuers subsequently default. At December 31, 1997, securities
with an aggregate market value of $227,391, representing 0.11% of OSBF's net
assets, were in default.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are maintained
in U.S. dollars. Prices of securities purchased by OHIF, OBF, OCAP, OGF, OMSF,
OGSF, OSBF and OGIF that are 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.
For OHIF, OBF, OCAP, OGF, OMSF, OGSF, OSBF and OGIF, 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 Funds'
Statements of Operations.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Funds require the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Funds may be delayed or limited.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL TAXES. The Trust intends for each Fund 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.
Therefore, no federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders of
OHIF, OBF, OCAP, OGF, OMSF, OGSF, OSBF and OGIF are recorded on the ex-dividend
date. OMF intends to declare dividends from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly. To
effect its policy of maintaining a net asset value of $1.00 per share, OMF may
withhold dividends or make distributions of net realized gains.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of premium amortization, paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Funds.
The Funds adjusted the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Changes in classification
during the year ended December 31, 1997 are shown below:
<TABLE>
<CAPTION>
ADJUSTMENTS FOR THE YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------
INCREASE
INCREASE (DECREASE)
(DECREASE) IN ACCUMULATED INCREASE
IN UNDISTRIBUTED NET REALIZED (DECREASE)
NET GAIN IN PAID-IN
INVESTMENT INCOME ON INVESTMENTS CAPITAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund $ (451,938) $ 970,781 $(518,843)
Oppenheimer Bond Fund (2,327,492) 1,641,033 686,459
Oppenheimer Capital Appreciation Fund (44,906) 44,906 --
Oppenheimer Growth Fund (61,766) 120,736 (58,970)
Oppenheimer Multiple Strategies Fund (232,410) 232,410 --
Oppenheimer Global Securities Fund 6,462,546 (6,457,702) (4,844)
Oppenheimer Strategic Bond Fund (367,471) 367,376 95
Oppenheimer Growth & Income Fund (1,033) 1,033 --
</TABLE>
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased by OHIF, OBF, OMSF, OGSF,
OSBF and OGIF is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate, and a market
adjustment is made periodically.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Funds have authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------ ------------------------------
OPPENHEIMER MONEY FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 390,437,217 $ 390,437,217 304,073,729 $ 304,073,729
Dividends and distributions reinvested 6,901,000 6,901,000 4,923,661 4,923,661
Issued in connection with the acquisition
of
Panorama Series Fund, Inc. - -- -- -- --
Money Market Portfolio - Note 9 -- -- 63,968,818 63,968,791
Redeemed (400,273,601) (400,273,601) (308,637,087) (308,637,087)
------------- -------------- ------------- --------------
Net increase (decrease) (2,935,384) $ (2,935,384) 64,329,121 $ 64,329,094
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER HIGH INCOME FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 14,372,458 $ 163,481,515 9,857,582 $ 107,788,590
Dividends and distributions reinvested 1,658,451 18,684,961 1,412,713 15,283,448
Redeemed (7,919,351) (89,671,819) (6,635,862) (72,550,951)
------------- -------------- ------------- --------------
Net increase 8,111,558 $ 92,494,657 4,634,433 $ 50,521,087
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 12,079,029 $ 142,326,116 10,037,878 $ 116,328,846
Dividends and distributions reinvested 2,509,897 29,264,275 1,774,316 20,314,347
Issued in connection with the acquisition
of:
Panorama Series Fund, Inc. - -- -- -- --
Income Portfolio - Note 9 -- -- 9,249,653 107,187,159
Panorama Series Fund, Inc. - -- -- -- --
Government Securities Portfolio - Note 9 -- -- 4,237 48,557
JP Investment Grade Bond Fund, Inc. - Note
9 -- -- 2,594,896 30,151,368
Redeemed (7,613,095) (89,294,128) (4,827,959) (55,937,445)
------------- -------------- ------------- --------------
Net increase 6,975,831 $ 82,296,263 18,833,021 $ 218,092,832
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER CAPITAL APPRECIATION FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 9,511,150 $ 368,762,665 12,247,492 $ 455,862,164
Dividends and distributions reinvested 952,236 32,014,171 643,582 22,422,394
Redeemed (4,981,695) (193,507,968) (6,453,749) (237,187,104)
------------- -------------- ------------- --------------
Net increase 5,481,691 $ 207,268,868 6,437,325 $ 241,097,454
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------ ------------------------------
OPPENHEIMER GROWTH FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 10,437,357 $ 313,824,006 5,738,355 $ 144,756,556
Dividends and distributions reinvested 720,274 18,842,365 430,280 10,016,909
Issued in connection with the acquisition
of JP Capital Appreciation Fund, Inc. -
Note 9 -- -- 3,293,050 90,009,399
Redeemed (6,429,313) (191,417,975) (3,964,366) (99,657,552)
------------- -------------- ------------- --------------
Net increase 4,728,318 $ 141,248,396 5,497,319 $ 145,125,312
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 6,728,904 $ 110,124,465 5,556,735 $ 83,206,142
Dividends and distributions reinvested 2,517,354 39,597,113 2,062,453 30,564,114
Redeemed (2,765,980) (45,296,683) (2,838,629) (42,497,621)
------------- -------------- ------------- --------------
Net increase 6,480,278 $ 104,424,895 4,780,559 $ 71,272,635
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 17,881,768 $ 354,780,849 14,595,634 $ 237,535,239
Dividends and distributions reinvested 446,370 8,181,958 -- --
Redeemed (6,390,329) (127,270,051) (5,717,318) (92,429,081)
------------- -------------- ------------- --------------
Net increase 11,937,809 $ 235,692,756 8,878,316 $ 145,106,158
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 18,907,314 $ 96,727,423 12,624,581 $ 63,274,177
Dividends and distributions reinvested 2,528,920 12,861,470 1,387,256 6,891,899
Redeemed (4,147,991) (21,213,934) (2,946,444) (14,660,178)
------------- -------------- ------------- --------------
Net increase 17,288,243 $ 88,374,959 11,065,393 $ 55,505,898
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 5,209,743 $ 95,997,603 2,942,183 $ 43,552,642
Dividends and distributions reinvested 216,162 3,646,792 21,023 322,909
Redeemed (745,544) (13,620,674) (435,180) (6,491,090)
------------- -------------- ------------- --------------
Net increase 4,680,361 $ 86,023,722 2,528,026 $ 37,384,461
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At December 31, 1997, net unrealized appreciation or depreciation on investments
and options written consisted of the following:
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER CAPITAL
HIGH INCOME OPPENHEIMER APPRECIATION OPPENHEIMER
FUND BOND FUND FUND GROWTH FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Gross appreciation $ 12,810,405 $ 15,832,646 $ 183,508,779 $ 106,896,721
Gross depreciation 2,338,571 4,763,579 16,768,494 15,647,219
-------------- -------------- -------------- --------------
Net unrealized appreciation $ 10,471,834 $ 11,069,067 $ 166,740,285 $ 91,249,502
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL OPPENHEIMER OPPENHEIMER
STRATEGIES SECURITIES STRATEGIC BOND GROWTH &
FUND FUND FUND INCOME FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Gross appreciation $ 112,337,379 $ 144,961,412 $ 5,930,571 $ 22,519,758
Gross depreciation 14,900,777 29,993,377 4,181,155 4,267,458
-------------- -------------- -------------- --------------
Net unrealized appreciation $ 97,436,602 $ 114,968,035 $ 1,749,416 $ 18,252,300
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreements with the Trust. For OHIF, OBF, OCAP, OGF, OMSF, OGSF, OSBF
and OGIF, 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 and 0.60% of average annual net assets over $800
million. In addition, management fees for OHIF, OBF and OSBF are 0.50% of
average annual net assets in excess of $1 billion. Management fees for OMF are
0.45% of the first $500 million of average annual net assets, 0.425% of the next
$500 million, 0.40% of the next $500 million and 0.375% of average annual net
assets in excess of $1.5 billion. For OSBF, the Manager has agreed to limit the
management fee charged so that the ordinary operating expenses of the Fund will
not exceed 1.0% of its average net assets in any fiscal year.
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Funds (except OMF) use forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Funds generally enter into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Funds may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Funds will realize a gain or loss
upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statements of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statements of Assets and Liabilities. Realized gains and losses are reported
with all other foreign currency gains and losses in the Funds' Statements of
Operations.
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS (CONTINUED)
At December 31, 1997, outstanding forward contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS
EXPIRATION CONTRACT OF DECEMBER UNREALIZED UNREALIZED
OPPENHEIMER HIGH INCOME FUND DATES AMOUNT (000'S) 31, 1997 APPRECIATION DEPRECIATION
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -----------------------------
German Mark (DEM) 1/2/98 16,138 DEM $ 8,975,065 $ -- $ 53,947
----------- -------------
CONTRACTS TO SELL
- -----------------------------
Canadian Dollar (CAD) 1/21/98 2,375 CAD 1,661,542 -- 8,448
German Mark (DEM) 2/19/98 23,080 DEM 12,883,786 44,714 --
Indonesian Rupiah (IDR) 2/10/98 2,055,000 IDR 384,240 166,530 --
----------- -------------
211,244 8,448
----------- -------------
Total Unrealized Appreciation and Depreciation $ 211,244 $ 62,395
----------- -------------
----------- -------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- -----------------------------
Canadian Dollar (CAD) 1/21/98 4,000 CAD $ 2,798,387 $ 82,235 $ 1,078
German Mark (DEM) 1/20/98 1,600 DEM 891,392 39,582 --
Greek Drachma (GRD) 1/15/98 168,876 GRD 593,250 6,750 --
Indonesian Rupiah (IDR) 2/10/98-4/6/98 911,340 IDR 169,866 60,641 1,725
Japanese Yen (JPY) 1/12/98 12,400 JPY 95,387 4,722 --
South African Rand (ZAR) 1/29/98 8,446 ZAR 1,712,542 41 --
----------- -------------
Total Unrealized Appreciation and Depreciation $ 193,971 $ 2,803
----------- -------------
----------- -------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -----------------------------
French Franc (FRF) 3/24/98 228,832 FRF $38,246,095 $ 311,565 $ --
Japanese Yen (JPY) 5/26/98 4,919,200 JPY 38,514,965 1,485,035 --
Swiss Franc (CHF) 7/6/98 57,156 CHF 39,996,909 3,090 --
----------- -------------
Total Unrealized Appreciation $1,799,690 $ --
----------- -------------
----------- -------------
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS (CONTINUED)
<TABLE>
<CAPTION>
VALUATION AS
OPPENHEIMER STRATEGIC BOND EXPIRATION CONTRACT OF DECEMBER UNREALIZED UNREALIZED
FUND DATES AMOUNT (000'S) 31, 1997 APPRECIATION DEPRECIATION
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -----------------------------
Canadian Dollar (CAD) 1/20/98 3,594 CAD $ 2,514,335 $ -- $ 32,003
German Mark (DEM) 1/2/98 215 DEM 119,668 -- 719
----------- -------------
-- 32,722
----------- -------------
CONTRACTS TO SELL
- -----------------------------
Australian Dollar (AUD) 1/14/98-1/30/98 6,724 AUD 4,383,521 290,647 --
Canadian Dollar (CAD) 1/21/98 515 CAD 360,292 15,192 --
German Mark (DEM) 2/19/98 605 DEM 337,725 4,562 --
Greek Drachma (GRD) 1/15/98 27,584 GRD 96,901 1,102 --
Indonesian Rupiah (IDR) 2/10/98-3/24/98 1,333,500 IDR 248,972 96,149 302
Irish Punt (IEP) 1/20/98-1/30/98 558 IEP 793,708 36,517 --
Japanese Yen (JPY) 3/23/98 163,000 JPY 1,263,813 27,327 --
Malaysian Ringgit (MYR) 2/3/98 1,558 MYR 401,436 38,564 --
Mexican Peso (MXP) 3/31/98 838 MXP 103,489 -- 3,489
New Zealand Dollar (NZD) 1/28/98-2/11/98 2,885 NZD 1,669,373 85,553 --
South African Rand (ZAR) 1/26/98 2,600 ZAR 530,336 -- 327
----------- -------------
595,613 4,118
----------- -------------
Total Unrealized Appreciation and Depreciation $ 595,613 $ 36,840
----------- -------------
----------- -------------
</TABLE>
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
The Funds (except OMF) may buy and sell interest rate futures contracts in order
to gain exposure to or protect against changes in interest rates. The Funds may
also buy or write put or call options on these futures contracts.
The Funds generally sell futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Funds may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Funds are 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 Funds 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 Funds recognize 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 Statements of Investments. The
Statements of Assets and Liabilities reflect a receivable or payable for the
daily mark to market for variation margin.
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.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS (CONTINUED)
At December 31, 1997, outstanding futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
OPPENHEIMER BOND FUND DATE CONTRACTS DECEMBER 31, 1997 (DEPRECIATION)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -------------------------------------------
U.S. Treasury Nts., 5 yr. 3/98 13 $ 1,412,125 $ 6,828
U.S. Treasury Nts., 10 yr. 3/98 12 1,345,875 9,375
U.S. Treasury Bonds, 30 yr. 3/98 285 34,333,594 278,125
-------------
294,328
-------------
CONTRACTS TO SELL
- -------------------------------------------
U.S. Treasury Nts., 2 yr. 3/98 22 4,570,500 (9,969)
-------------
$ 284,359
-------------
-------------
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -------------------------------------------
U.S. Treasury Nts., 5 yr. 3/98 50 $ 5,431,250 $ 25,781
U.S. Treasury Nts., 10 yr. 3/98 157 17,608,531 122,656
U.S. Treasury Bonds, 30 yr. 3/98 100 12,046,875 141,063
-------------
289,500
-------------
CONTRACTS TO SELL
- -------------------------------------------
German Government Bonds 3/98 4 579,463 (2,725)
Gold 100 oz. 6/98 1 29,360 1,820
Standard & Poors 500 Index 3/98 14 3,426,850 14,900
-------------
13,995
-------------
$ 303,495
-------------
-------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- -------------------------------------------
Standard & Poors 500 Index Futures 3/98 82 $20,071,550 $(148,871)
</TABLE>
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Funds (except OMF) may buy and sell put and call options, or write put and
covered call options on portfolio securities in order to produce incremental
earnings or protect against changes in the value of portfolio securities.
The Funds generally purchase put options or write covered call options to hedge
against adverse movements in the value of portfolio holdings. When an option is
written, the Funds receive a premium and become obligated to sell or purchase
the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Funds will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY (CONTINUED)
Securities designated to cover outstanding call options are noted in the
Statements of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statements of Investments. Options written are reported as a
liability in the Statements of Assets and Liabilities. Gains and losses are
reported in the Statements of Operations.
The risk in writing a call option is that the Funds give up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Funds may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not the
option is exercised. The Funds also have the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not exist.
The Funds may also write over-the-counter options where the completion of the
obligation is dependent upon the credit standing of the counterparty.
Written option activity for the year ended December 31, 1997 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
------------------------------ ----------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPPENHEIMER HIGH INCOME FUND OPTIONS PREMIUMS OPTIONS PREMIUMS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1996 2,460,530 $ 42,285 -- $ --
Options written 173,558,037 477,850 64,036,345 58,865
Options closed or expired (175,634,322) (464,709) (16,136,255) (33,534)
Options exercised (384,245) (55,426) (47,900,090) (25,331)
------------- -------------- --------------- ----------
Options outstanding at December 31, 1997 -- $ -- -- $ --
------------- -------------- --------------- ----------
------------- -------------- --------------- ----------
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1996 6,199,750 $ 80,185 -- $ --
Options written 112,600,092 848,642 61,722,790 117,129
Options closed or expired (118,009,842) (921,295) (54,072,790) (75,278)
Options exercised (790,000) (7,532) (7,650,000) (41,851)
------------- -------------- --------------- ----------
Options outstanding at December 31, 1997 -- $ -- -- $ --
------------- -------------- --------------- ----------
------------- -------------- --------------- ----------
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1996 4,569 $ 1,235,136 -- $ --
Options written 13,114 3,551,560 -- --
Options closed or expired (7,680) (1,917,115) -- --
Options exercised (3,947) (1,071,732) -- --
------------- -------------- --------------- ----------
Options outstanding at December 31, 1997 6,056 $ 1,797,849 -- $ --
------------- -------------- --------------- ----------
------------- -------------- --------------- ----------
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1996 9,375,291 $ 111,246 375 $ 8,992
Options written 126,239,395 643,389 1,808,805,495 174,556
Options closed or expired (133,489,381) (239,934) (1,257,985,870) (135,791)
Options exercised (2,124,905) (511,022) (326,000,000) (16,711)
------------- -------------- --------------- ----------
Options outstanding at December 31, 1997 400 $ 3,679 224,820,000 $ 31,046
------------- -------------- --------------- ----------
------------- -------------- --------------- ----------
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
------------------------------ ----------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPPENHEIMER GROWTH & INCOME FUND OPTIONS PREMIUMS OPTIONS PREMIUMS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at December 31, 1996 -- $ -- -- $ --
Options written 2,525 421,955 1,170 168,966
Options closed or expired (1,080) (207,516) (1,107) (151,583)
Options exercised (565) (152,681) (63) (9,383)
------------- -------------- --------------- ----------
Options outstanding at December 31, 1997 880 $ 61,758 -- $ --
------------- -------------- --------------- ----------
------------- -------------- --------------- ----------
</TABLE>
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES
At December 31, 1997, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily-available market or if its valuation has not
changed for a certain period of time. The Funds intend to invest no more than
10% of their net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid and restricted securities
subject to this 10% limitation at December 31, 1997 are shown below:
<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund $21,897,438 7.52%
Oppenheimer Bond Fund 49,719,055 9.56
Oppenheimer Multiple Strategies Fund 6,979,490 1.09
Oppenheimer Global Securities Fund 1,749,542 0.18
Oppenheimer Strategic Bond Fund 10,129,223 4.87
Oppenheimer Growth & Income Fund 3,147,500 2.03
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES (CONTINUED)
Information concerning restricted securities is as follows:
OPPENHEIMER HIGH INCOME FUND
The aggregate value of restricted securities is $3,045,689.
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST PER PER UNIT AS OF
SECURITY DATE UNIT DECEMBER 31, 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
BONDS
- ------------------------------------------------------
ECM Fund, L.P. I., 14% Sub. Nts., 6/10/02 4/14/92 100.00% 100.25%
STOCKS AND WARRANTS
- ------------------------------------------------------
ECM Fund, L.P. I. 4/14/92 $1,000.00 $1,102.50
CGA Group Ltd., Preferred 6/17/97 25.00 25.00
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 .00 .50
Omnipoint Corp. 1/26/96 16.00 22.21
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 .00 22.21
</TABLE>
OPPENHEIMER BOND FUND
The aggregate value of restricted securities is $1,172,800.
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST PER PER UNIT AS OF
SECURITY DATE UNIT DECEMBER 31, 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
BONDS
- ------------------------------------------------------
Merrill Lynch & Co., Inc., Units, 9.75%, 6/15/99 5/15/95 110.05% 117.28%
</TABLE>
OPPENHEIMER STRATEGIC BOND FUND
The aggregate value of restricted securities is $408,000.
<TABLE>
<CAPTION>
VALUATION
ACQUISITION COST PER PER UNIT AS OF
SECURITY DATE UNIT DECEMBER 31, 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
STOCKS AND WARRANTS
- ------------------------------------------------------
CGA Group Ltd. Preferred 6/17/97 $ 25.00 $ 25.00
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 .00 .50
</TABLE>
- --------------------------------------------------------------------------------
9. ACQUISITIONS
On June 3, 1996, OMF acquired a portion of the net assets of Panorama Series
Fund, Inc. - Money Market Portfolio. The Fund issued 49,302,270 shares of
beneficial interest, valued at $49,302,270, in exchange for the net assets,
resulting in combined net assets of $113,051,628 on June 3, 1996.
On December 2, 1996, OMF acquired the remaining net assets of Panorama Series
Fund, Inc. - Money Market Portfolio. The Fund issued 14,666,548 shares of
beneficial interest, valued at $14,666,521, in exchange for the net assets,
resulting in combined net assets of $124,845,270 on December 2, 1996.
On May 1, June 3 and December 2, 1996, OBF acquired all the net assets of
Panorama Series Fund, Inc. - Income Portfolio. The Fund issued 12,999, 6,743,062
and 2,493,592 shares of beneficial interest, respectively, valued at $148,965,
$77,208,064 and $29,830,130, respectively, in exchange for the net assets,
resulting in combined net assets of $227,552,225, $308,666,225 and $396,656,585.
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
9. ACQUISITIONS (CONTINUED)
On May 1, 1996, OBF acquired a portion of the net assets of Panorama Series
Fund, Inc. - Government Securities Portfolio. The Fund issued 4,237 shares of
beneficial interest valued at $48,557, in exchange for the net assets, resulting
in combined net assets of $227,552,225 on May 1, 1996.
On December 20, 1996, OBF acquired all the net assets of JP Investment Grade
Bond Fund, Inc., pursuant to an agreement and plan of reorganization approved by
the JP Investment Grade Bond Fund, Inc. shareholders on December 3, 1996. The
Fund issued 2,594,896 shares of beneficial interest valued at $30,151,368, in
exchange for the net assets, resulting in combined net assets of $426,447,902 on
December 20, 1996. The net assets acquired included net unrealized appreciation
of $1,017,069. The exchange qualified as a tax-free reorganization for federal
income tax purposes.
On December 20, 1996, OGF acquired all the net assets of JP Capital Appreciation
Fund, Inc., pursuant to an agreement and plan of reorganization approved by the
JP Capital Appreciation Fund, Inc. shareholders on December 3, 1996. The Fund
issued 3,293,050 shares of beneficial interest, valued at $90,009,399, in
exchange for the net assets, resulting in combined net assets of $289,484,969 on
December 20, 1996. The net assets acquired included net unrealized appreciation
of $19,087,888. The exchange qualified as a tax-free reorganization for federal
income tax purposes.
- --------------------------------------------------------------------------------
10. INTEREST RATE SWAP TRANSACTIONS
OSBF entered into an interest rate swap transaction to seek to maintain a total
return or yield spread on a particular investment or portion of its portfolio,
or for other non-speculative purposes. Interest rate swaps involve the exchange
of commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The coupon payments are based on an agreed
upon principal amount and a specified index. Because the principal amount is not
exchanged, it represents neither an asset nor a liability to either
counterparty, and is referred to as a notional principal amount. The Fund
records an increase or decrease to interest income, the amount due or owed by
the Fund at termination or settlement. The Fund enters into swaps only on
securities it owns. Interest rate swaps are subject to credit risks (if the
other party fails to meet its obligations) and also to interest rate risks. The
Fund could be obligated to pay more under its swap agreements than it receives
under them, as a result of interest rate changes. The Fund segregates liquid
assets to cover any amounts it could owe under swaps that exceed the amounts it
is entitled to receive.
As of December 31, 1997, OSBF had entered into the following interest rate swap
agreement:
<TABLE>
<CAPTION>
FLOATING
RATE PAID RATE
BY THE RECEIVED
FUND BY THE NET
NOTIONAL AT FUND AT TERMINATION UNREALIZED
SWAP COUNTERPARTY PRINCIPAL 12/31/97 12/31/97 FLOATING RATE INDEX DATE LOSS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust
Co. 1,110,000 7.50% 7.31% New Zealand Bank Bill 12/8/00 $13,161
</TABLE>
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of Oppenheimer Money Fund, Oppenheimer High
Income Fund, Oppenheimer Bond Fund, Oppenheimer Capital Appreciation Fund,
Oppenheimer Growth Fund, Oppenheimer Multiple Strategies Fund, Oppenheimer
Global Securities Fund, Oppenheimer Strategic Bond Fund and Oppenheimer Growth &
Income Fund (all of which are series of Oppenheimer Variable Account Funds) as
of December 31, 1997, the related statements of operations for the year then
ended, the statements of changes in net assets for the years ended December 31,
1997 and 1996, and the financial highlights for the applicable periods ended
December 31, 1997, 1996, 1995, 1994 and 1993. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1997 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Money
Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund, Oppenheimer Multiple Strategies
Fund, Oppenheimer Global Securities Fund, Oppenheimer Strategic Bond Fund and
Oppenheimer Growth & Income Fund at December 31, 1997, the results of their
operations, the changes in their net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 23, 1998
<PAGE>
Oppenheimer Variable Account Funds
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
In early 1998, shareholders will receive information regarding all dividends and
distributions paid to them by the Funds during calendar year 1997. Regulations
of the U.S. Treasury Department require the Funds to report this information to
the Internal Revenue Service.
Certain distributions paid on March 24, 1997, were designated as a capital gain
distribution in the "28% Rate Group" for federal income tax purposes as shown in
the table below. Whether received in stock or cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets.
Dividends paid by the Funds during the fiscal year ended December 31, 1997 which
are not designated as capital gain distributions should be multiplied by the
percentages listed below to arrive at the net amount eligible for the corporate
dividend-received deduction.
<TABLE>
<CAPTION>
Long-Term Capital Corporate Dividend-
Gain Distribution Received Deduction
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer Money Fund N/A N/A
Oppenheimer High Income Fund $ 0.008 3.98%
Oppenheimer Bond Fund N/A 0.77%
Oppenheimer Capital Appreciation Fund $ 1.250 25.10%
Oppenheimer Growth Fund $ 1.063 10.53%
Oppenheimer Multiple Strategies Fund $ 0.443 12.26%
Oppenheimer Global Securities Fund N/A 6.73%
Oppenheimer Strategic Bond Fund $ 0.008 1.67%
Oppenheimer Growth & Income Fund $ 0.008 9.04%
</TABLE>
The foregoing information is presented to assist shareholders in reporting
distributions received from the Funds to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in the state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
<PAGE>
Oppenheimer Variable Account Funds
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, President and Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Paul LaRocco, Vice President
Robert J. Milnamow, Vice President
David P. Negri, Vice President
Jane Putnam, Vice President
Richard H. Rubinstein, Vice President
Arthur P. Steinmetz, Vice President
Dorothy G. Warmack, Vice President
William Wilby, Vice President
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 The Bank of New York
Securities
- ------------------------------------------------------------------------------------------------------
Independent Auditors Deloitte & Touche LLP
- ------------------------------------------------------------------------------------------------------
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer Variable Account
Funds. This report must be preceded or accompanied by a Prospectus of
Oppenheimer Variable Account Funds. For material information concerning the
Funds, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank,
are not guaranteed by any bank, and are not insured by the FDIC or any
other agency, and involve investment risks, including possible loss of the
principal amount invested.
</TABLE>
