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OPPENHEIMER VARIABLE ACCOUNT FUNDS
SEMIANNUAL REPORT
JUNE 30, 1998
[LOGO]
OPPENHEIMER FUNDS-Registered Trademark-
THE RIGHT WAY TO INVEST
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
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 ART ZIMMER, PORTFOLIO MANAGER
In a period of excitement and volatility for stock markets here and abroad,
money market funds(1), such as Oppenheimer Money Fund, generally continued to
provide stable returns. Yields moved in a very narrow range, as the Federal
Reserve Board, which raises and lowers short-term interest rates based on its
view of inflation, stayed on the sidelines for the entire six-month period.
Two opposing forces have kept the Fed from raising or lowering rates. On one
hand, the U.S. economy continues to grow at a strong pace, with the unemployment
rate at just 4.3% and consumer confidence soaring. On the other hand, the Asian
financial crisis shows no signs of easing, which has weakened global demand for
goods and services. Since the United States is a major exporter to Asia,
slackening demand and devalued currencies in the Far East have created a
dampening effect on inflation. Remarkably, seven years into an economic
expansion, U.S. inflation is still below 2%.
For the six-month period ended June 30, 1998, Oppenheimer Money Fund produced a
compounded annualized yield of 5.33%. Without compounding, the corresponding
yield was 5.20%. The seven-day annualized yields, with and without compounding
on June 30, 1998 were 5.30% and 5.17%, respectively.(2) It is 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.
The supply of money market securities varied considerably during the year. For
example, in January 1998, corporations issued a great deal of commercial paper
to take advantage of very low interest rates. By June, the excess supply was
absorbed by strong demand, which boosted prices and brought yields down.
To be sure, there are still opportunities to add yield to the portfolio without
taking material credit risk. For example, we recently purchased a security
issued by a major insurance company that was offering a slightly higher yield
than the market for commercial paper. In addition, the security carried a "put"
option. In the event that interest rates rise, the put option gives us the right
to sell the security back to the issuer at the price we originally paid for. The
put option is important, because without it, rising interest rates would
decrease the security's relative return.
During the rest of 1998 and beyond, we plan to continue monitoring global events
so that we can position the portfolio accordingly. If the Asian crisis
diminishes and the U.S. economy continues growing, then we would expect the
Federal Reserve Board to raise short-term interest rates to ward off inflation.
In that event, we would keep the portfolio's maturity fairly short to allow us
to reinvest at higher yields. On the other hand, if the U.S. economy should
begin to slow and it looks like the Fed would lower short-term interest rates,
then we would lengthen the portfolio's maturity to lock in higher yields. In
either case, we will continue to invest conservatively, always keeping in mind
your objectives of safety and liquidity.
Thank you for your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Money Fund. We look forward to helping you reach your investment
goals, part of our commitment to you as THE RIGHT WAY TO INVEST.
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1. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
2. Compounded yields assume reinvestment of dividends. Past performance is not
indicative of future results.
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
OPPENHEIMER HIGH INCOME FUND, a series of Oppenheimer Variable Account Funds,
seeks a high level of current income from investing in high-yield, high-risk
fixed-income securities, including unrated securities or securities in the lower
rating categories. These securities may be considered to be speculative.
NARRATIVE BY TOM REEDY, PORTFOLIO MANAGER
Oppenheimer High Income Fund provided a cumulative total return of 4.76%, as of
June 30, 1998.(1)
In part, the Fund's performance was driven by positive domestic economic
conditions. Although basic economic growth in the United States was stronger
than most forecasters expected, inflation remained at historically low levels.
Even record-high employment failed to rekindle inflationary pressures. In our
view, this is primarily because of enormous productivity improvements within the
corporate sector, the result of technological advances, as well as price
competition from foreign exporters.
These economic influences helped high-yield corporate bonds rank as the
top-performing sector of the bond market over the last six months. High-yield
bonds were in great demand by investors who sought to maximize yields in a low
interest-rate environment.
In addition, the Fund's performance over the past six months was the result of
our asset allocation strategy. Our analyses of the U.S. and global economies
helped us identify those industries and market sectors that we believed would
perform best in the prevailing environment.
During the first half of 1998, we continued to find especially attractive
conditions in the telecommunications industry. That's because many large
telecommunications companies have acquired smaller ones in order to enter new
markets or to become more dominant in existing markets.
On the other hand, we tended to avoid industries that we believed had weak
prospects. For example, the Fund limited its investment in bonds issued by
industrial commodities producers, such as steel, paper and chemical
companies.(2) These companies' earnings were hurt by falling demand from Asia.
In addition, a low-inflation environment prevented commodities producers from
raising prices in other markets. Therefore, the credit quality of these
industrial companies tended to erode, and their bond prices fell.
The Fund also benefited from our decision late last year to purchase high-yield
bonds issued by companies and governments in the emerging markets of Latin
America. These bonds declined sharply last Fall in the aftermath of the Asian
crisis, and we were able to buy them at very attractive prices. We held these
bonds as the Latin American markets recovered in 1998, and we took profits
before they declined again in May amid renewed concerns over Asia.
Looking forward, we are cautiously optimistic regarding the second half of this
year. Over the near term, we would not be surprised to see continued volatility
in the financial markets until the Asian crisis and its effects on the U.S.
economy become clearer. Over the longer term, however, we believe that a neutral
U.S. monetary policy, low inflation and slowing economic growth could set the
stage for long-term interest rates to decline further. If our forecast is
correct, a lower interest-rate environment could produce healthy demand for the
higher income levels offered by existing high-yield corporate bonds.
Of course, we will continue to monitor the U.S. economy and high-yield bond
market carefully. Whatever the next six months bring, we intend to remain
vigilant in our efforts to have Oppenheimer Variable Account Funds - Oppenheimer
High Income Fund deliver a high level of current income potential from a broadly
diversified portfolio of high-yield securities. We believe this disciplined
approach to investing remains an effective strategy to help you meet your
financial goals. It's also part of what makes OppenheimerFunds - THE RIGHT WAY
TO INVEST.
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1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
OBJECTIVE
OPPENHEIMER BOND FUND, a series of Oppenheimer Variable Account Funds, primarily
seeks a high level of current income. The Fund invests in fixed-income
securities. Secondarily, the Fund seeks capital growth when this is consistent
with its primary objective of high income.
NARRATIVE BY DAVID NEGRI, CO-PORTFOLIO MANAGER
Oppenheimer Bond Fund provided positive performance for the six-month period
ended June 30, 1998, generating a cumulative total return of 3.94%.(1)
The Fund's performance was driven primarily by positive domestic economic
conditions. Although basic economic growth in the United States was stronger
than most forecasters had expected, inflation remained near historically low
levels. Even record-high employment failed to rekindle inflationary pressures.
In our view, this is primarily because of enormous productivity improvements
within the corporate sector, as well as price competition from imported goods.
Early in the year, some investors feared that the high rate of economic growth
might cause the Federal Reserve Board to raise short-term interest rates.
However, this did not occur. That's because the aftereffects of the Asian
financial crisis are likely to slow U.S. economic growth. Despite some
volatility early in the year, long-term interest rates ended the six-month
period modestly lower than where they began.
Different sectors of the bond market responded differently to these economic
influences. High-yield corporate bonds, which represented the top-performing
sector of the bond market over the last six months, were in great demand by
investors looking to maximize yields in a low interest-rate environment.
Investment-grade corporate bonds and commercial mortgage-backed securities
performed relatively well because of the strong economy and rising corporate
earnings. Prices of U.S. government agency mortgage-backed securities declined,
while U.S. Treasury securities provided returns slightly lower than
investment-grade corporate securities.
In this market environment, we made some modest changes to our allocations among
the various bond market sectors in order to increase our holdings of higher
yielding securities. For example, we took advantage of the Fund's recent
prospectus change to add a small allocation of high-yield corporate bonds to the
portfolio. We kept the Fund's exposure to investment-grade corporate bonds
unchanged while increasing our holdings of commercial mortgage-backed
securities. We also slightly decreased our holdings of mortgage-backed
securities issued by U.S. government agencies. And finally, we established a
small position in bank trust preferred stock, which provided attractive yields
and high credit quality relative to many other fixed-income securities.(2)
Looking forward, we are optimistic regarding the second half of this year. We
believe that the Federal Reserve Board will not tighten U.S. monetary policy
because of the increasing likelihood of an economic slowdown stemming from the
recessions throughout Asia. In fact, we believe that the economic impact of the
Asian crisis is finally starting to affect the U.S. economy, and will probably
constrain economic growth during the second half of this year.
A neutral interest-rate policy, low inflation and slowing economic growth could
set the stage for long-term interest rates to decline further, which may be
especially good for U.S. Treasury bond prices. At the same time, we would expect
healthy demand to support prices of corporate and commercial bonds.
Of course, we will continue to monitor the U.S. economy and bond market
carefully. Whatever the next six months bring, we intend to remain vigilant in
our efforts to deliver solid income potential from a broadly diversified
portfolio of quality securities. That's what makes Oppenheimer Variable Account
Funds - Oppenheimer Bond Fund part of THE RIGHT WAY TO INVEST.
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1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change. The Fund may invest in
below-investment-grade securities, which may entail greater risks, as described
in the prospectus.
3
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
OBJECTIVE
OPPENHEIMER AGGRESSIVE GROWTH FUND, a series of Oppenheimer Variable Account
Funds, primarily seeks capital appreciation by investing in "growth-type"
companies. Prior to May 1, 1998, this Fund was named Oppenheimer Capital
Appreciation Fund.
NARRATIVE BY BRUCE BARTLETT, PORTFOLIO MANAGER
Oppenheimer Aggressive Growth Fund, a series of Oppenheimer Variable Account
Funds, provided a cumulative total return of 17.40% for the six-month period
ended June 30, 1998.(1)
After a challenging year in 1997, the performance of the Fund accelerated
sharply during the first few months of 1998. Our holdings in a number of stocks
were driven higher by a market that favored the Fund's growth style of
investment. In addition, small- and mid-cap stocks participated in the market's
rise, adding to the Fund's positive performance.
During the first half of the year, the Fund's success arose from its aggressive
strategy of investing in industries that represent emerging growth and new
technologies, as well as businesses that provide innovative products and
services. As always, we maintained our disciplined approach of selecting the
stocks of individual companies--small, medium, and large--that met our criteria
for growth.
Consumer cyclicals and technology were the two primary sectors that fueled the
Fund's growth during the period. We dramatically increased our holdings in the
area of consumer cyclicals. In particular, we focused on stocks of specialty
retail companies with strong fundamentals, such as Lowe's and CVS. These
companies benefited from exceptional consumer purchasing power, which was driven
by low unemployment, low interest rates and growing real wages.
Technology was another area of strong growth in which we invested substantially
during the period. We sold some of our technology holdings in the semiconductor
and PC-related businesses, areas that exhibited weakness during the first half
of the year. Instead, we found attractive opportunities in the stocks of
telecommunications equipment and productivity-enhancing software companies.
We also identified substantial growth opportunities in the waste industry.
Allied Waste is an example of one such company that exhibited strong internal
growth, as well as growth through acquisitions. Their stock responded positively
to the company's increasing economies of scale and growing customer base.
On the other hand, the Fund's performance suffered as a result of our holdings
in companies that provide physician practice management services. During the
first half of 1998, we began to doubt the sustainability of revenue and earnings
growth for many of these companies. And, shortly thereafter, stocks of the
companies in question weakened, which in turn constrained the Fund's performance
toward the end of the period. However, we minimized our losses by swiftly
reevaluating our positions, and sharply reducing our holdings in this sector. We
shifted those resources into investments that we believe have better growth
potential.
Looking ahead to the second half of 1998, we believe that the U.S. economy is
likely to show signs of slowing growth. The performance of individual stocks in
such an environment will likely depend on the reliability of each company's
earnings. Accordingly, we are focusing on companies we believe can sustain
strong revenue and earnings growth in the face of a slowing economy. That's what
makes Oppenheimer Variable Account Funds - Oppenheimer Aggressive Growth Fund
part of THE RIGHT WAY TO INVEST.
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1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
4
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
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, PORTFOLIO MANAGER
Oppenheimer Growth Fund provided a cumulative total return of 17.03% for the
six-month period ended June 30, 1998.(1)
The strongest contributors to performance during the first half of the year were
technology and consumer cyclical stocks. Earlier in the year, the Asian economic
crisis caused a decrease in demand in the technology sector, as well as lower
prices for competing products that are produced overseas. In turn, these
conditions led to fears of slowing growth, and lower prices for many
technology-related stocks.
We responded by eliminating certain semiconductor equipment stocks, component
outsourcers, and other technology companies from our portfolio because we
thought the events in Asia would greatly impact those industries. As prices and
valuations fell for attractive companies in the sector, we added to our holdings
in the areas of technology that showed the highest growth potential. For
example, we increased our holdings of software vendors, such as Microsoft and
PeopleSoft, and also initiated positions in telecommunications equipment and
information technology outsourcing companies. These holdings performed strongly
during the first six months of 1998, as stock prices rebounded.(2)
Consumer cyclical stocks surged during the period as a result of the continuing
health of the U.S. economy. We found opportunities among the stocks of
car-rental companies, where prices were relatively low despite high earnings
prospects. The Fund also shared in the positive performance of some retailers
and apparel companies, as well as housing-related stocks. These industries
benefited from low unemployment, low inflation, low interest rates and high
levels of consumer confidence.
On the other hand, we were disappointed by the performance of several oil
service companies that we originally thought had been oversold and represented
good buying opportunities. However, the oil industry performed poorly during the
first six months of the year. As the period progressed, we reevaluated our
holdings and sold the stocks of companies that appeared subject to further price
deterioration.
As always, we select stocks on a company-by-company, investment-by-investment
basis. Buying opportunities among technology and consumer cyclical stocks
enabled us to lower the Fund's cash levels. We thereby positioned the Fund to
share more fully in the equity market's strong showing during the first half of
the year. However, overall valuations remain high in this market making it
difficult for us, as price-sensitive buyers, to find attractive investments at
reasonable valuations.
Going forward, we plan to adhere to our fundamental approach of seeking growth
at the right price. We believe that the U.S. economy's growth is likely to be
slowed by the continuing impact of the events in Asia. As a result, we are
focusing on domestic, consumer-oriented companies, such as advertising agencies
and grocery and drug chains, that have improved their earnings outlook through
restructurings and other positive developments. We are particularly
concentrating on stocks we expect to grow faster than the overall market.
In today's volatile economic environment, we believe our disciplined approach
and emphasis on individual stock selection should serve investors well. That's
why Oppenheimer Variable Account Funds - Oppenheimer Growth Fund continues to be
part of THE RIGHT WAY TO INVEST.
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1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
5
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
OBJECTIVE
OPPENHEIMER MULTIPLE STRATEGIES FUND, a series of Oppenheimer Variable Account
Funds, seeks a total investment return, which includes current income and
capital appreciation, from investments in common stocks and other equity
securities, bonds and other debt securities and money market securities.
NARRATIVE BY RICHARD RUBINSTEIN, CO-PORTFOLIO MANAGER
Oppenheimer Multiple Strategies Fund provided a cumulative total return of 7.09%
for the six-month period ended June 30, 1998.(1)
The first six months of the year proved to be a period of opportunity and
challenge. Although some markets and types of investments performed well, others
disappointed. U.S. and European equity markets showed strength, but Asian
markets experienced a continuation of the economic difficulties that began late
last year. In addition, emerging markets suffered as a result of the Asian
crisis.
Not surprisingly, considering its diversified nature, the Fund shared in both
the markets' strengths and weaknesses. By maintaining the Fund's exposure to a
wide range of U.S. and global equities and bonds, we positioned the Fund to take
advantage of attractive investments, while actively managing risk.
The Fund's exposure to equities was about 51% of the portfolio at the end of the
period. This enabled the Fund to participate in the stock market's positive
performance. Two of our largest and most successful areas of industry focus were
health care and banks. Health care stocks, including major drug companies, added
a strong growth component to the portfolio. We also invested in smaller
biotechnology companies we believed to be undervalued and were bringing
innovative, new products to market. Our bank holdings included several European
institutions, where U.S.-style management changes have improved efficiency,
lowered costs, raised revenue growth rates and increased profitability.(2)
On the other hand, our equity holdings in technology suffered as a result of the
overall weakness within that sector. We responded by focusing tightly on
companies with dominant franchises in their specific markets, such as Intel and
Xerox. We believe these market leaders are likely to be among the first to
rebound when conditions again become favorable for the sector. They have the
resources to take advantage of competitors' weaknesses, as well as the size to
attract the interest of many institutional investors.
The Fund's bond portfolio over the period consisted of a mix of U.S. Treasuries,
mortgage-backed instruments, high-yield corporate bonds and foreign bonds from a
combination of developed and emerging countries. Cash holdings allowed us to
increase our allocations to attractive opportunities in the bond markets, such
as mortgage-backed securities and Treasury bonds. These investments performed
well, supported by a beneficial environment of falling interest rates.
We also invested in certain emerging market bonds. However, falling spreads (the
difference between the return from high-yield bonds and U.S. Treasury bonds)
made it increasingly difficult to find attractive, high-yield bond investments.
As an alternative, we found attractive opportunities among REITs (Real Estate
Investment Trusts) and electric utility stocks. A REIT is a company that buys
and manages real estate and/or mortgages on behalf of its shareholders. Although
both REITs and electric utility stocks are equity investments, they may offer
bond-like yields, along with the potential for modest capital appreciation.
While REITs failed to provide capital appreciation during the period, electric
utilities proved to be among the strongest performers in the Fund's portfolio.
Looking ahead, we remain cautiously optimistic about the market's prospects over
the coming months. While many domestic equities appear somewhat overvalued and
earnings seem to be slowing, market fundamentals, such as consumer spending and
money flows, remain strong. And although Asian economies continue to struggle,
the rest of the world has thus far weathered the situation fairly well. In
Europe, companies are beginning to benefit from the management changes and
corporate restructurings that helped U.S. companies become more efficient over
the past decade. Latin America has also learned some difficult lessons and
appears to be on track toward better economic growth.
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1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio and allocations are subject to change.
6
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Our diversified investment approach positions the Fund to participate in rising
markets, while providing protection against unexpected market declines. In
particular, the Fund is positioned to take advantage of exceptional values that
may become available during market corrections.
Whatever direction the market and economy take, we believe broad diversification
is the key to managing risk while attempting to produce above-average returns.
We plan to rigorously maintain our disciplined strategy of diversification, not
just among asset types, but also among investment styles, including growth,
value, contrarian, high-yield and international. By drawing on the various
talents of OppenheimerFunds' investment professionals, we aim to maintain a
"portfolio for all seasons," one that is positioned to confront the challenges
and take advantage of the opportunities that may arise. That's what makes
Oppenheimer Variable Account Multiple Strategies Fund part of THE RIGHT WAY TO
INVEST.
7
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
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, PORTFOLIO MANAGER
Oppenheimer Global Securities Fund performed well for the six-month period ended
June 30, 1998, generating a cumulative total return, of 12.19%.(1)
We attribute this performance to our disciplined investment approach, in which
we select stocks on a company-by-company basis, rather than according to broad
economic trends. Our "bottom-up" strategy was particularly important over the
past six months because of the widely divergent performance of the global stock
markets.
Fortunately, our investment discipline led us to invest about 50% of the
portfolio in Europe, the top-performing market over the past six months.
European companies have benefited from preparations for the European Monetary
Union (EMU), which is expected to eliminate trade and currency barriers and
create a single European marketplace. Companies that have traditionally
dominated their national markets are now attempting to succeed in the larger
continental market. In addition, like American companies over the past several
years, European firms are restructuring to reduce costs and boost
productivity.(2)
While the U.S. stocks in our portfolio provided positive returns, most of those
gains were achieved in the first four months of the year. May and June saw
heightened volatility amid renewed concerns about the Asian crisis's effect on
U.S. corporate earnings.
We found few Asian companies that we considered attractive. A combination of
economic forces, including ill-advised economic policies and a weak banking
system, led to last year's massive currency devaluations in many Asian
countries. Economic difficulties, numerous corporate bankruptcies and steep
market declines followed.
Finally, while we continued to find attractive investments in growing Latin
American companies, stocks there have also declined in the aftermath of the
Asian crisis. In our opinion, that sell-off was unwarranted by the region's
fundamentals, and we believe Latin American stock prices should rise when
investors realize that the region does not share Asia's economic problems.
Within these markets, we continued to invest in companies we expect to benefit
from our long-term investment themes. For example, the telecommunications and
media theme contributed substantially to the Fund's performance. We believe the
introduction of digital television in Europe, scheduled for later this year,
will create higher earnings for many media companies. We established positions
in digital broadcasters and content developers, such as Canal Plus, the French
pay television and satellite television producer, and Carlton Communications in
the United Kingdom.
We also saw positive contributions from companies participating in our capital
markets development and corporate restructuring themes, especially in Europe.
Banks, brokerage firms and other financial services providers are expected to
benefit greatly from EMU because of the elimination of cross-border trade
barriers. We've received especially good returns from Italian and Portuguese
financial stocks over the past six months as more investors have recognized
their growth prospects.
Our outlook varies depending on which region of the world we're considering. As
explained earlier, we believe that EMU will have long-lasting benefits for many
European companies. Although we expect the U.S. economy to remain healthy, we
believe that corporate earnings growth will moderate, and we do not expect
dramatic increases in domestic stock prices.
However, we remain optimistic about Latin America. Stock valuations are very
low, but earnings growth is strong. This combination could drive stock prices
higher when investor confidence returns to the region.
On the other hand, we are less optimistic about Japan and Asia. In our view,
despite recent efforts by the U.S. government to support Asia's economies, the
region's problems require fundamental economic change.
No matter what the future brings, we will continue to strive to help our
shareholders participate in the world's most attractive companies. In our view,
this disciplined approach to global investing is part of THE RIGHT WAY TO
INVEST.
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1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
8
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
OBJECTIVE
OPPENHEIMER STRATEGIC BOND FUND, a series of Oppenheimer Variable Account Funds,
primarily seeks a high level of current income from debt securities. The Fund
primarily invests in three sectors: foreign fixed-income securities, U.S.
government securities and lower rated high-yield domestic corporate bonds
(commonly known as "junk bonds.") Investing in foreign securities entails
additional expenses and risks including foreign currency fluctuations while
investing in junk bonds carries a greater risk of default.
NARRATIVE BY DAVID NEGRI, CO-PORTFOLIO MANAGER
Oppenheimer Strategic Bond Fund provided positive performance during the first
six months of 1998, generating a cumulative total return of 3.30%.(1)
The Fund's performance was driven primarily by positive economic conditions in
the United States, Europe and Latin America. Although basic economic growth in
the United States was stronger than most forecasters expected, inflation
remained at near historically low levels. In our view, this is primarily because
of enormous productivity improvements within the corporate sector, as well as
price competition from imports.
In Europe, the economic effects of the impending formation of the European
Monetary Union (EMU), scheduled for January 1, 1999, have been very positive.
EMU is expected to eliminate trade and currency barriers, creating a single
European marketplace and economy.
In the U.S. bond market, the likelihood that the aftereffects of the Asian
financial crisis will soon slow economic growth helped prevent the Federal
Reserve from tightening monetary policy during the first half of 1998. Despite
some volatility early in the year, long-term U.S. interest rates ended the
six-month period lower than where they began.
About two-thirds of the Fund's assets were invested in domestic bonds as of June
30, 1998. High-yield corporate bonds performed well because they were in great
demand by investors looking to maximize yields in a low interest-rate
environment. U.S. government securities generally provided returns slightly
higher than or equal to their coupons.(2)
The foreign bond sector accounted for about 15% of the Fund's assets. We
maintained a lower-than-average position in the developed markets of Europe,
Canada, Australia and New Zealand because interest rates there have been
generally lower than in the United States. However, the Fund benefited from
positive changes in these nations' currency exchange rates.
Our exposure to the emerging markets was focused primarily on debt of Latin
America, including Argentina and Mexico, which offered attractive premiums to
Brady bonds. Brady bonds are securities issued by foreign governments, backed by
the U.S. Federal Reserve Bank, and are often U.S.-dollar denominated. In Eastern
Europe, we held modest positions in Poland, Russia and Bulgaria. And while we
had no exposure to Southeast Asia when the crisis began, we recently established
some small positions, primarily in Korea, in attractively priced bonds.
Looking forward, we are optimistic regarding the second half of 1998. In the
United States, we believe that the Federal Reserve Board will refrain from
tightening monetary policy. That's because the Asian crisis's aftermath is
likely to constrain U.S. economic growth during the second half of this year. We
remain optimistic about the European economy as EMU approaches. And, in our
opinion, Latin America also remains attractive as its economies continue to
expand.
Of course, we will continue to monitor the global economies and bond markets
carefully. Whatever the next six months bring, we intend to remain vigilant in
our efforts to deliver solid income potential from a broadly diversified
portfolio of fixed-income securities. In our view, this disciplined approach to
investing is part of THE RIGHT WAY TO INVEST.
- ----------------------------
1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
9
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
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 MIKE LEVINE, PORTFOLIO MANAGER
Oppenheimer Growth & Income Fund continued to perform well during the first half
of 1998. For the six-month period ended June 30, 1998, the Fund provided a
cumulative total return of 13.09%.(1)
In general, the Fund's strong performance can be explained by three factors: 1)
being fully invested in a strong market; 2) capitalizing on opportunities in the
financial and technology sectors, as well as in consumer-oriented industries,
including airlines, entertainment and retail; and 3) good individual stock
selection. Specific stocks that have contributed to the Fund's strong
performance include Chase Manhattan, Time Warner and Waters Corp., a
manufacturer of analytical instruments.
Our basic strategy for the Fund is to buy the stocks of individual companies
that exhibit positive fundamentals at reasonable prices. But, we also take a
contrarian approach at times to look for new investment ideas among
underperforming securities. As an example, during the first half of 1998, we
increased our holdings in the oil services sector where, despite a recent
decline in oil prices, we believed that the long-term fundamentals were
extremely positive. We still view these stocks favorably and believe that oil
service stocks will rebound sharply when prices recover.(2)
Another feature of the Fund that has worked to its advantage is the flexibility
to invest in convertible securities, which made up about 15% of the portfolio at
the end of the period. Convertible securities are debt or preferred instruments
that may be converted to shares of the issuer's common stock at a future date.
Therefore, their performance is linked to movements in both interest rates and
the underlying stock. The convertible securities market has done well over the
past six months, comparing favorably to most fixed-income alternatives.
While our outlook for the rest of 1998 is cautious due to high valuations of
stocks, slowing corporate earnings growth and the continuing impact of the Asian
economic crisis, we nevertheless continue to see a number of attractive
investment opportunities in the market. We also believe that the key to the
Fund's potential for continued good performance is its flexibility to invest in
attractive market opportunities as they arise.
Thank you for your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Growth & Income Fund. We look forward to helping you reach your
investment goals, part of our commitment to you as THE RIGHT WAY TO INVEST.
- ----------------------------
1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
10
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
OBJECTIVE
OPPENHEIMER SMALL CAP GROWTH FUND, a series of Oppenheimer Variable Account
Funds, seeks capital appreciation. In seeking its objective, the Fund emphasizes
investments in securities of growth-type companies with market capitalizations
less than $1 billion.
NARRATIVE BY JAY TRACEY, CO-PORTFOLIO MANAGER
The Fund commenced operations on May 1, 1998. In our view, this brief period is
too short a time-frame to realistically evaluate the Fund's ability to generate
long-term growth.
The Fund's first month, May, was very difficult for small-capitalization growth
stocks. Although almost all sectors of the U.S. stock market suffered set-backs
in May, small-capitalization stocks declined more sharply than large-
capitalization stocks. Furthermore, within the small-cap market, growth-oriented
stocks generally fell more than value-oriented stocks. In June,
small-capitalization stocks recovered somewhat, but not enough to offset May's
decline.
We believe the small-cap stock market's sell-off was related to concerns over
the ongoing financial crisis in Asia. Even though most small U.S. companies
derive their revenues from domestic sources, rather than from overseas markets,
small-cap stocks declined because of a "flight to quality" among both domestic
and overseas investors. When faced with the possibility of increased market
volatility, investors shifted their assets toward well-known blue-chip stocks
with track records of consistent growth and ready liquidity in the financial
markets.
In our opinion, the sharp decline of small-cap stocks in May was not justified
by these companies' fundamentals. In fact, the majority of our holdings continue
to report earnings that either meet or exceed most analysts' expectations.
Even in this difficult market environment, we continued to find investment
opportunities in companies that we believe have excellent growth prospects. We
identified these stocks using a highly disciplined investment approach in which
we consider investments on a company-by-company basis rather than according to
broader economic trends or market conditions.
When analyzing individual companies, we first look for a history of earnings
growth at a rate that we believe is sustainable. Often, sustainable long-term
growth is the result of expansion into new markets or the development of
innovative product and services. We particularly like companies that can finance
a superior rate of expansion without borrowing or issuing additional shares of
stock.
Such criteria led us to a number of companies with good growth prospects. For
example, as of June 30, the Fund's largest concentration of assets was in the
commercial services sector. Many services companies are growing because of gains
in their market share. These companies are also benefiting from consolidation
within their respective industries, whether consumer, business or healthcare
focused. Service companies are also less sensitive to changes in the economy.
So, they tend to provide relatively stable performance. We also found a number
of attractive stocks in the technology sector, especially software companies
with innovative business ideas, and consulting services companies that make
their business customers more productive by increasing the efficiency of their
operations.(1)
Despite the recent weakness in small-cap growth stocks, our outlook remains
generally positive. While U.S. corporate earnings growth has begun to slow, this
trend has so far mostly affected large-capitalization companies. In spite of
liquidity concerns, we expect more investors to turn to small-capitalization
growth stocks when they realize that large-capitalization stocks may have
difficulty generating the high growth rates of the past several years.
Accordingly, we intend to adhere to our "bottom-up," growth-oriented investment
approach as we navigate through short-term economic influences and market
conditions. In our opinion, maintaining a long-term perspective and a
disciplined approach are important parts of THE RIGHT WAY TO INVEST.
- ----------------------------
1. The Fund's portfolio is subject to change.
11
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
- --------------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF DEPOSIT - 1.5%
- --------------------------------------------------------------------------------------
Deutsche Bank AG, 5.65%, 1/22/99 $2,000,000 $ 2,000,000
- --------------------------------------------------------------------------------------
DIRECT BANK OBLIGATIONS - 1.4%
- --------------------------------------------------------------------------------------
Abbey National PLC guaranteeing commercial paper of Abbey
National North America Corp., 5.47%, 10/30/98 2,000,000 1,963,230
- --------------------------------------------------------------------------------------
LETTERS OF CREDIT - 8.9%
- --------------------------------------------------------------------------------------
ABN Amro Bank PLC guaranteeing commercial paper of Glencore
Finance (Bermuda) Ltd., Series B, 5.60%, 7/22/98 3,000,000 2,990,200
- --------------------------------------------------------------------------------------
Barclays Bank PLC guaranteeing commercial paper of Banca
Serfin SA, Institcion de Banca Multiple Group Financiero
Serfin, Nassau Branch, 5.42%, 11/23/98 3,000,000 2,934,387
- --------------------------------------------------------------------------------------
Barclays Bank PLC guaranteeing commercial paper of Banco
Nacional de Comericio Exterior, SNC, Series A, 5.47%,
10/14/98 2,500,000 2,460,115
- --------------------------------------------------------------------------------------
Credit Suisse guaranteeing commercial paper of Daewoo
International (America) Corp., 5.52%, 12/2/98 3,000,000 2,929,160
- --------------------------------------------------------------------------------------
Credit Suisse guaranteeing commercial paper of Minmetals
Capitals & Securities, Inc., 5.40%, 8/24/98 700,000 694,246
------------
Total Letters of Credit 12,008,108
- --------------------------------------------------------------------------------------
SHORT-TERM NOTES - 86.4%
- --------------------------------------------------------------------------------------
ASSET-BACKED - 23.2%
Asset Backed Capital Finance, Inc., 5.47%, 10/22/98(1) 5,000,000 4,914,151
- --------------------------------------------------------------------------------------
Cooperative Assn. of Tractor Dealers, Series A, 5.40%,
7/17/98 2,600,000 2,593,760
- --------------------------------------------------------------------------------------
Cooperative Assn. of Tractor Dealers, Series A, 5.42%,
8/21/98 2,300,000 2,282,340
- --------------------------------------------------------------------------------------
CXC, Inc., 5.50%, 12/16/98(1) 2,000,000 1,948,667
- --------------------------------------------------------------------------------------
CXC, Inc., 5.515%, 12/7/98(1) 2,000,000 1,951,284
- --------------------------------------------------------------------------------------
CXC, Inc., 5.523%, 11/16/98(1) 2,000,000 1,957,657
- --------------------------------------------------------------------------------------
Enterprise Funding Corp., 5.49%, 12/14/98(1) 2,000,000 1,949,370
- --------------------------------------------------------------------------------------
Enterprise Funding Corp., 5.63%, 7/31/98(1) 3,000,000 2,985,925
- --------------------------------------------------------------------------------------
Preferred Receivables Funding Corp., 5.52%, 11/12/98(1) 2,425,000 2,375,174
- --------------------------------------------------------------------------------------
Sigma Finance, Inc., 5.44%, 9/10/98(1) 3,000,000 2,967,813
- --------------------------------------------------------------------------------------
Sigma Finance, Inc., 5.58%, 8/28/98(1) 2,500,000 2,477,525
- --------------------------------------------------------------------------------------
SMM Trust, 5.656%, 7/29/98(2)(3) 3,000,000 3,000,000
------------
31,403,666
- --------------------------------------------------------------------------------------
BANK HOLDING COMPANIES - 1.3%
Morgan (J.P.) & Co., Inc., 5.37%, 7/17/98 1,729,000 1,724,850
- --------------------------------------------------------------------------------------
BEVERAGES - 3.6%
Coca-Cola Enterprises, Inc., 5.48%, 10/23/98(1) 5,000,000 4,913,233
- --------------------------------------------------------------------------------------
BROKER/DEALERS - 16.6%
Bear Stearns Cos., Inc., 5.45%, 10/22/98 2,000,000 1,965,786
- --------------------------------------------------------------------------------------
Bear Stearns Cos., Inc., 5.47%, 10/28/98 2,500,000 2,454,797
- --------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 5.46%, 9/18/98 3,000,000 2,964,055
</TABLE>
12
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------------------------
BROKER/DEALERS (CONTINUED)
Lehman Brothers Holdings, Inc., 5.658%, 7/20/98(2) $2,000,000 $ 2,000,000
- --------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co., 6.50%, 7/1/98(2) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------
Republic New York Securities Corp., 6.75%, 7/1/98(2) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc., 5.717%, 7/20/98(2) 3,000,000 3,000,000
------------
22,384,638
- --------------------------------------------------------------------------------------
COMMERCIAL FINANCE - 4.4%
Countrywide Home Loans, 5.57%, 8/3/98 2,500,000 2,487,236
- --------------------------------------------------------------------------------------
FINOVA Capital Corp., 5.55%, 11/13/98 2,000,000 1,958,375
- --------------------------------------------------------------------------------------
FINOVA Capital Corp., 5.56%, 11/6/98 1,500,000 1,470,347
------------
5,915,958
- --------------------------------------------------------------------------------------
CONSUMER FINANCE - 2.2%
Beneficial Corp., 5.505%, 9/23/98 3,000,000 2,961,465
- --------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 10.3%
General Electric Capital Services, 6.50%, 7/1/98 5,500,000 5,500,000
- --------------------------------------------------------------------------------------
Household Finance Corp., 5.556%, 7/29/98(2) 5,000,000 4,997,440
- --------------------------------------------------------------------------------------
Prudential Funding Corp., 5.50%, 11/18/98 3,500,000 3,425,139
------------
13,922,579
- --------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 4.8%
Baxter International, Inc., 5.55%, 7/20/98 2,000,000 1,994,142
- --------------------------------------------------------------------------------------
Baxter International, Inc., 5.55%, 7/27/98(1) 2,500,000 2,489,979
- --------------------------------------------------------------------------------------
Baxter International, Inc., 5.625%, 8/14/98 2,000,000 1,986,250
------------
6,470,371
- --------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 1.5%
Atlas Copco AB, 5.56%, 7/7/98(1) 2,000,000 1,998,147
- --------------------------------------------------------------------------------------
INSURANCE - 11.1%
AIG Life Insurance Co., 5.645%, 7/1/98(2) 3,000,000 3,000,000
- --------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Co., 5.649%, 7/1/98(2)(3)(4) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------
Protective Life Insurance Co., 5.682%, 7/1/98(2) 5,000,000 5,000,000
- --------------------------------------------------------------------------------------
Travelers Insurance Co., 5.664%, 7/1/98(2)(3) 2,000,000 2,000,000
------------
15,000,000
- --------------------------------------------------------------------------------------
LEASING & FACTORING - 3.7%
American Honda Finance Corp., 5.687%, 7/20/98(2)(3) 3,000,000 3,000,000
- --------------------------------------------------------------------------------------
American Honda Finance Corp., 5.70%, 7/17/98 2,000,000 1,994,933
------------
4,994,933
- --------------------------------------------------------------------------------------
NONDURABLE HOUSEHOLD GOODS - 1.5%
Avon Capital Corp., 5.65%, 7/8/98(1) 2,000,000 1,997,803
- --------------------------------------------------------------------------------------
OIL-INTEGRATED - 2.2%
Fina Oil & Chemical Co., 5.52%, 8/14/98(1) 3,000,000 2,979,760
------------
Total Short-Term Notes 116,667,403
- --------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 1.5%
- --------------------------------------------------------------------------------------
Finnish Export Credit Ltd., 5.55%, 7/15/98 2,000,000 1,995,683
</TABLE>
13
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
VALUE
NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 99.7% $134,634,424
- --------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.3 421,906
---------- ------------
NET ASSETS 100.0% $135,056,330
---------- ------------
---------- ------------
</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. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $37,906,488, or 28.07% of the
Fund's net assets, and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.
2. 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 June 30, 1998. This instrument may
also have a demand feature which allows, on up to 30 days' notice, the recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature.
3. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or contractual
restrictions on resale. Such securities amount to $13,000,000, or 9.63% 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.
4. Put obligation redeemable at full face value on the date reported.
See accompanying Notes to Financial Statements.
14
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 2.9%
- ------------------------------------------------------------------------------------------
Amresco Commercial Mortgage Funding I Corp.,
Multiclass Mtg. Pass-Through Certificates,
Series 1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 180,625
- ------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates, Series 1997-D4:
Cl. B1, 7.525%, 4/14/29(3) 167,000 161,651
Cl. B2, 7.525%, 4/14/29(3) 167,000 158,128
Cl. B3, 7.525%, 4/14/29(3) 166,000 153,394
- ------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates, Series
1993-C1:
Cl. E, 7.76%, 12/25/03(2)(3) 250,000 253,875
Cl. F, 7.76%, 12/25/03(2)(3) 700,000 563,500
- ------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. F, 7.50%, 6/20/13(2) 300,000 296,550
Cl. G, 7.50%, 6/20/14(2) 500,000 472,500
Cl. H, 7.50%, 8/20/14(2) 225,000 183,375
- ------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates,
Series 1997-CHL1:
6.929%, 2/25/11(2)(3) 1,500,000 1,321,500
8.129%, 5/25/08(2)(3) 300,000 308,610
- ------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. E, 7.438%, 2/15/28(2)(3) 835,342 814,197
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(2) 300,000 280,219
- ------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through Certificates, Series 1997-MC1,
Cl. F, 7.452%,
5/20/07(2) 254,890 247,243
Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1,
Cl. G, 7.15%,
6/15/06(4) 750,000 713,906
- ------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 650,527 654,451
Series 1994-C2, Cl. G, 8%, 4/25/25 720,488 722,244
Series 1995-C1, Cl. F, 6.90%, 2/25/27 647,865 614,896
- ------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl.
1, 7.132%, 4/25/26 1,463,375 1,090,672
- ------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates,
Series 1996-C3, Cl. E, 8.458%, 6/25/30(4) 650,000 661,680
------------
Total Mortgage-Backed Obligations (Cost $8,824,937) 9,853,216
- ------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 0.9%
- ------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Capitalization Bonds, 8%,
4/15/14 2,320,420 1,714,210
- ------------------------------------------------------------------------------------------
PT Hutama Karya Promissory Nts., Zero Coupon,
2/10/98(2)(5)(IDR) 1,000,000,000 16,892
- ------------------------------------------------------------------------------------------
Russia (Government of) Principal Loan Debs., 3.313%,
12/15/20(6) 3,000,000 1,420,785
------------
Total Foreign Government Obligations (Cost $3,531,283) 3,151,887
- ------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 66.7%
- ------------------------------------------------------------------------------------------
AEROSPACE - 2.3%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 1,000,000 1,070,000
</TABLE>
15
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------
AEROSPACE (CONTINUED)
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 $ 700,000 $ 740,250
- ------------------------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 700,000 745,500
9.25% Sr. Nts., 4/15/08(4) 1,325,000 1,325,000
- ------------------------------------------------------------------------------------------
Constellation Finance LLC, 9.80% Airline Receivable
Asset-Backed Nts.,
Series 1997-1, 1/1/01(2) 800,000 812,000
- ------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr.
Nts., Cl. B, 6/15/04(2) 331,061 341,821
- ------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 872,561 933,641
- ------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,850,000 1,951,750
------------
7,919,962
- ------------------------------------------------------------------------------------------
CHEMICALS - 1.0%
ClimaChem, Inc., 10.75% Gtd. Sr. Unsec. Nts., Series B,
12/1/07 120,000 125,700
- ------------------------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 275,000 281,875
- ------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B,
9/15/07 330,000 323,400
- ------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Gtd. Nts., 10/15/07 825,000 810,562
- ------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 600,000 597,000
- ------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub.
Nts., Series B, 8/1/07 775,000 794,375
- ------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.25% Sr. Sub. Nts., 4/1/07 330,000 328,350
------------
3,261,262
- ------------------------------------------------------------------------------------------
CONSUMER DURABLES - 0.7%
Holmes Products Corp., 9.875% Gtd. Sr. Unsec. Sub. Nts.,
Series B, 11/15/07 425,000 439,875
- ------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B,
7/15/02 800,000 832,000
- ------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B,
11/15/04(7) 780,000 588,900
- ------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 350,000 410,711
------------
2,271,486
- ------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES - 2.0%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs., 7/1/09(4)(7) 1,080,000 572,400
10.50% Sr. Nts., 7/1/08(4) 510,000 515,100
- ------------------------------------------------------------------------------------------
Galey & Lord, Inc., 9.125% Sr. Unsec. Sub. Nts., 3/1/08 500,000 485,000
- ------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Sub. Nts., 5/1/08(4) 720,000 722,700
- ------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 8.625% Sr. Unsec. Sub. Nts.,
2/1/08 1,750,000 1,760,937
- ------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
10.133%, 3/15/01(8) 1,800,000 1,404,000
- ------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08(4) 1,000,000 1,020,000
- ------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 235,000 251,450
------------
6,731,587
- ------------------------------------------------------------------------------------------
ENERGY - 4.4%
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 900,000 884,250
- ------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts.,
11/15/07 1,040,000 1,042,600
- ------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 275,000 300,437
- ------------------------------------------------------------------------------------------
Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B,
2/15/08 800,000 784,000
</TABLE>
16
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (CONTINUED)
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 $ 800,000 $ 768,000
- ------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(2) 1,000,000 1,025,000
- ------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., 5/1/05(4) 500,000 481,250
- ------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Nts., 2/15/08 1,100,000 1,097,250
- ------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 495,000 534,600
- ------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Gtd. Sr. Sec. Nts., 6/1/08(4) 1,420,000 1,356,100
- ------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., 5/15/08(4) 1,150,000 1,187,375
- ------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 1,175,000 1,063,375
- ------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 800,000 816,000
- ------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 1,000,000 1,010,000
- ------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada),
Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 225,000 237,375
- ------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 1,100,000 1,113,750
- ------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc.:
0%/11.375% Sr. Disc. Nts., 2/15/09(4)(7) 720,000 428,400
0%/9.875% Sr. Disc. Nts., 2/15/08(4)(7) 1,325,000 841,375
------------
14,971,137
- ------------------------------------------------------------------------------------------
FINANCIAL - 2.0%
Bakrie Investindo, Zero Coupon Promissory Nts.,
3/26/98(2)(5)(IDR) 1,000,000,000 16,892
- ------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 517,000 591,965
- ------------------------------------------------------------------------------------------
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub.
Nts., 6/1/06 900,000 897,750
- ------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(2) 79,380 79,579
- ------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 800,000 876,000
- ------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd. Bonds, 8/1/27 450,000 492,750
- ------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 850,000 964,750
- ------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon Nts., Series 2,
7/15/98(2)(5)(IDR) 657,200,000 8,881
- ------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec.
Nts., Series B, 4/1/08 1,900,000 1,885,750
- ------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04 600,000 597,000
- ------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Gtd. Debs., 1/1/28(2) 550,000 578,875
------------
6,990,192
- ------------------------------------------------------------------------------------------
FOOD & DRUG - 1.9%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 475,000 496,375
10.625% Sr. Sub. Nts., Series B, 7/31/07 1,625,000 1,702,187
- ------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03(7) 2,100,000 1,774,500
- ------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series
B, 7/1/07 1,520,000 1,611,200
- ------------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9% Sr. Unsec. Sub. Nts.,
7/1/04 775,000 794,375
------------
6,378,637
- ------------------------------------------------------------------------------------------
FOOD/TOBACCO - 1.9%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., 7/1/08(4) 520,000 525,850
- ------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts.,
12/15/07(4)(7) 750,000 491,250
- ------------------------------------------------------------------------------------------
Eagle Family Foods, Inc., 8.75% Sr. Sub. Nts., 1/15/08(4) 480,000 470,400
</TABLE>
17
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
FOOD/TOBACCO (CONTINUED)
Favorite Brands International, Inc., 10.75% Sr. Nts.,
5/15/06(4) $ 400,000 $ 406,000
- ------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., 2/1/05(4) 1,250,000 1,275,000
- ------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Sub. Nts., 3/15/10(4) 600,000 619,500
- ------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Sub. Nts., 2/15/08(4) 925,000 938,875
- ------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub.
Nts., 11/15/07 1,175,000 1,233,750
- ------------------------------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07 600,000 630,000
------------
6,590,625
- ------------------------------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.4%
Four M Corp., 12% Sr. Nts., Series B, 6/1/06(2) 230,000 247,250
- ------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts.,
8/1/07 1,250,000 1,306,250
------------
1,553,500
- ------------------------------------------------------------------------------------------
GAMING/LEISURE - 4.4%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(4)(7) 450,000 274,500
- ------------------------------------------------------------------------------------------
Apoca, Inc., 9.25% Sr. Sub. Nts., 3/15/08(4) 940,000 937,650
- ------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Promissory Nts.,
8/1/95(9) 9,500 --
- ------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 840,000 875,700
- ------------------------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06(4) 1,160,000 1,168,700
- ------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 680,000 748,000
- ------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05(4) 1,600,000 1,648,000
- ------------------------------------------------------------------------------------------
Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 120,000 133,500
- ------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 400,000 448,000
- ------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,300,000 1,382,875
- ------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr.
Sec. Nts.,
Series B, 11/15/02 725,000 917,125
- ------------------------------------------------------------------------------------------
Outboard Marine Corp., 10.75% Sr. Nts., 6/1/08(4) 1,100,000 1,116,500
- ------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(7) 1,180,000 789,125
9.25% Sr. Nts., 4/1/06 520,000 539,500
- ------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 125,000 134,375
9.50% Gtd. Sr. Sub. Nts., 4/15/07 1,205,000 1,268,262
- ------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 1,125,000 1,310,625
- ------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.75% Sr. Unsec. Nts., 4/1/06 1,000,000 1,023,750
- ------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 200,000 208,000
------------
14,924,187
- ------------------------------------------------------------------------------------------
HEALTHCARE - 1.8%
Fresenius Medical Care Capital Trust II, 7.875% Gtd. Nts.,
2/1/08(2) 1,050,000 1,034,250
- ------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust III, 7.375% Gtd. Nts.,
2/1/08(4)(DEM) 1,225,000 687,783
- ------------------------------------------------------------------------------------------
Integrated Health Services, Inc.:
10.25% Sr. Sub. Nts., 4/30/06 35,000 37,625
9.50% Sr. Sub. Nts., 9/15/07 815,000 855,750
- ------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08(4) 1,525,000 1,521,187
</TABLE>
18
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(4) $ 1,200,000 $ 1,236,000
- ------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(4) 680,000 693,600
------------
6,066,195
- ------------------------------------------------------------------------------------------
HOUSING - 1.0%
Engle Homes, Inc., 9.25% Sr. Nts., 2/1/08 1,300,000 1,287,000
- ------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,438,500
9.25% Sr. Nts., Series B, 3/15/07 625,000 645,312
------------
3,370,812
- ------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 4.5%
Amazon.Com, Inc., 0%/10% Sr. Disc. Nts., 5/1/08(4)(7) 1,500,000 918,750
- ------------------------------------------------------------------------------------------
Bell Technology Group Ltd., Units (each unit consists of
$1,000 principal amount of 13% sr. nts., 5/1/05 and one
warrant to purchase one share of common stock)(4)(10) 1,800,000 1,827,000
- ------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 625,000 664,062
- ------------------------------------------------------------------------------------------
Covad Communications Group, Inc., Units (each unit consists
of $1,000 principal amount of 0%/13.50% sr. disc. nts.,
3/15/08 and one warrant to purchase 6.4792 common
shares)(4)(7)(10) 900,000 472,500
- ------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 1,125,000 1,125,000
- ------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 646,875
- ------------------------------------------------------------------------------------------
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08(4) 865,000 868,784
- ------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Disc. Nts., 2/15/08(4)(7) 2,035,000 1,215,913
- ------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 3,110,000 3,187,750
- ------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 375,000 408,750
- ------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 275,000 318,656
- ------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Nts., 4/1/05(4) 1,480,000 1,528,100
13.50% Sr. Nts., 6/15/04(4) 385,000 442,750
- ------------------------------------------------------------------------------------------
WAM!Net, Inc., Units (each unit consists of $1,000 principal
amount of 0%/13.25% sr. disc. nts., 3/1/05 and three
warrants to purchase 6.03 shares of common stock)(4)(7)(10) 1,750,000 1,111,250
- ------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 500,000 522,500
------------
15,258,640
- ------------------------------------------------------------------------------------------
MANUFACTURING - 3.2%
American Standard Cos., Inc., 7.625% Sr. Nts., 2/15/10 1,500,000 1,481,250
- ------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 400,000 404,000
- ------------------------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 725,000 812,000
12.50% Debs., Series B, 7/15/07(2)(12) 620,000 660,300
- ------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Sub. Nts.,
3/1/08(4) 850,000 862,750
- ------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08(4) 635,000 635,000
- ------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts.,
8/1/07 725,000 746,750
- ------------------------------------------------------------------------------------------
Insilco Corp., 10.25% Sr. Unsec. Sub. Nts., 8/15/07 850,000 892,500
- ------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series
B, 6/1/05 500,000 550,625
</TABLE>
19
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING (CONTINUED)
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(7) $ 200,000 $ 210,500
- ------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Sub. Nts., 7/1/08(4) 560,000 574,000
- ------------------------------------------------------------------------------------------
Polymer Group, Inc.:
8.75% Sr. Sub. Nts., 3/1/08(4) 1,500,000 1,505,625
9% Sr. Sub. Nts., 7/1/07 450,000 457,313
- ------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Gtd. Sr. Sub.
Nts., Series B, 6/15/07 560,000 575,400
- ------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Sub. Nts., 4/1/08(4) 630,000 622,125
------------
10,990,138
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING - 1.7%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts.,
7/1/07 625,000 659,375
- ------------------------------------------------------------------------------------------
Chancellor Media Corp., 8.75% Gtd. Sr. Unsec. Sub. Nts.,
Series B, 6/15/07 975,000 1,018,875
- ------------------------------------------------------------------------------------------
Jacor Communications Co., 8% Sr. Sub. Nts., 2/15/10 1,180,000 1,197,700
- ------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,042,676
- ------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(11) 400,000 410,000
- ------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 9% Gtd. Sr. Sub. Nts.,
7/15/07 1,300,000 1,358,500
- ------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 25,000 27,125
------------
5,714,251
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS VIDEO - 4.2%
Adelphia Communications Corp.:
10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 373,150
8.375% Sr. Nts., Series B, 2/1/08 1,100,000 1,100,000
9.25% Sr. Nts., 10/1/02 390,000 406,575
9.875% Sr. Nts., Series B, 3/1/07 140,000 151,900
- ------------------------------------------------------------------------------------------
Cablevision Systems Corp. Holdings, Inc.:
10.50% Sr. Sub. Debs., 5/15/16 250,000 293,125
7.875% Sr. Debs., 2/15/18 1,000,000 1,057,500
9.875% Sr. Sub. Debs., 4/1/23 450,000 498,375
- ------------------------------------------------------------------------------------------
Cablevision Systems Corp. Holdings, Inc., 9.875% Sr. Sub.
Nts., 5/15/06 550,000 603,625
- ------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts.,
6/1/04(7) 200,000 196,000
- ------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Sr. Nts., 7/1/02 1,585,000 1,771,238
- ------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04(7) 2,005,000 1,849,613
- ------------------------------------------------------------------------------------------
Falcon Holding Group LP:
0%/9.285% Sr. Disc. Debs., 4/15/10(4)(7) 1,000,000 652,500
8.375% Sr. Debs., 4/15/10(4) 2,025,000 2,035,125
- ------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(3) 885,000 951,375
- ------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 1,020,000 1,127,100
- ------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 500,000 344,886
- ------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 0%/12.25% Sr. Sub. Disc.
Nts., 2/15/07(7) 425,000 289,000
- ------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc.
Nts., Series B, 2/15/08(7) 1,040,000 644,800
------------
14,345,887
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA - 2.0%
Chancellor Media Corp., 10.50% Sr. Sub. Nts., Series B,
1/15/07 450,000 502,875
- ------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(4) 457,873 457,837
</TABLE>
20
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA (CONTINUED)
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 $ 225,000 $ 234,000
- ------------------------------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01 1,600,000 1,674,000
- ------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 1,225,000 1,260,219
9.625% Sr. Sub. Nts., 12/1/06 815,000 876,125
- ------------------------------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr. Sub. Nts., 2/1/08(4) 1,800,000 1,773,000
------------
6,778,056
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS - 9.9%
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(7) 225,000 180,000
10.125% Sr. Nts., 11/30/07(GBP) 400,000 720,360
8.875% Sr. Nts., 11/30/07(DEM) 250,000 152,378
Units (each unit consists of $1,000 principal amount of
0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase
7.8 ordinary shares)(7)(10) 1,775,000 1,766,125
- ------------------------------------------------------------------------------------------
Convergent Communications, Inc., Units (each unit consists
of $1,000 principal amount of 13% sr. nts., 4/1/08 and four
warrants to purchase 10.8 shares of common stock)(4)(10) 800,000 772,000
- ------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(7) 2,100,000 1,743,000
- ------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(4) 400,000 417,000
- ------------------------------------------------------------------------------------------
DTI Holdings, Inc., Units (each unit consists of $1,000
principal amount of 0%/12.50% sr. disc. nts., 3/1/08 and
five warrants to purchase 7.76 shares of common
stock)(4)(6)(7) 1,250,000 681,250
- ------------------------------------------------------------------------------------------
e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07(12) 725,000 830,125
- ------------------------------------------------------------------------------------------
FaciliCom International, Inc., 10.50% Sr. Nts., 1/15/08(4) 1,325,000 1,311,750
- ------------------------------------------------------------------------------------------
Firstworld Communications, Inc., Units (each unit consists
of $1,000 principal amount of 0%/13% sr. disc. nts., 4/15/08
and one warrant to purchase 7.9002 shares of series b common
stock)(4)(7)(10) 1,875,000 834,375
- ------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Disc. Nts.,
2/15/08(4)(7) 1,820,000 1,094,275
- ------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08(4) 750,000 784,688
- ------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc.
Nts., 12/15/05(4)(7) 178,000 144,403
- ------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 12.75% Sr. Sub. Nts., 11/15/07 1,000,000 1,175,000
- ------------------------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(7) 115,000 90,275
0%/13.50% Sr. Disc. Nts., 9/15/05(7) 1,025,000 871,250
- ------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/11.25% Sr. Disc. Nts., Series B, 7/15/07(7) 500,000 368,125
8.50% Sr. Nts., Series B, 1/15/08 925,000 929,625
8.60% Sr. Nts., 6/1/08(4) 1,000,000 1,017,500
8.875% Sr. Nts., 11/1/07 460,000 472,650
- ------------------------------------------------------------------------------------------
ITC Deltacom, Inc.:
11% Sr. Nts., 6/1/07 750,000 849,375
8.875% Sr. Nts., 3/1/08 1,000,000 1,025,000
- ------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., Units (each unit consists of
$1,000 principal amount of 0%/12.50% sr. disc. nts., 2/15/08
and one warrant to purchase .21785 ordinary
shares)(4)(7)(10) 2,455,000 1,436,175
- ------------------------------------------------------------------------------------------
Level 3 Communications, Inc., 9.125% Sr. Nts., 5/1/08(4) 1,350,000 1,321,313
</TABLE>
21
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS (CONTINUED)
Long Distance International, Inc., Units (each unit consists
of $1,000 principal amount of 12.25% sr. nts., 4/15/08 and
one warrant to purchase 15.0874 shares of common
stock)(4)(10) $ 800,000 $ 796,000
- ------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts., 3/1/07(7) 270,000 202,500
8.375% Sr. Nts., 3/15/08(4) 665,000 669,988
- ------------------------------------------------------------------------------------------
Metronet Communications Corp., 0%/9.95% Sr. Disc.Nts.,
6/15/08(4)(7) 475,000 296,281
- ------------------------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Gtd. Sr. Disc. Nts.,
11/1/07(7)(DEM) 700,000 260,399
- ------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Nts., 4/15/08(4)(7) 2,000,000 1,232,500
9% Sr. Nts., 3/15/08(4) 800,000 804,000
9.625% Sr. Nts., 10/1/07 1,125,000 1,158,750
- ------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(7) 100,000 99,500
10% Sr. Nts., 2/15/07 425,000 456,875
9.50% Sr. Unsub. Nts., Series REGS, 4/1/08(GBP) 1,000,000 1,646,657
- ------------------------------------------------------------------------------------------
Onepoint Communications Corp., Units (each unit consists of
$1,000 principal amount of 14.50% sr. nts., 6/1/08 and one
warrant to purchase one share of common stock @ $.01 per
share)(4)(10) 540,000 510,300
- ------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc., 9% Cv. Sub. Nts., 6/1/06(4) 170,000 178,500
- ------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 0%/9.47% Sr. Disc.
Nts., 10/15/07(7) 2,000,000 1,505,000
- ------------------------------------------------------------------------------------------
RSL Communications plc:
0%/10.125% Sr. Disc. Nts., 3/1/08(4)(7) 720,000 432,000
9.125% Sr. Nts., 3/1/08(4) 500,000 487,500
- ------------------------------------------------------------------------------------------
TeleWest Communications plc, 0%/11% Sr. Disc. Debs.,
10/1/07(7) 790,000 659,650
- ------------------------------------------------------------------------------------------
Viatel, Inc.:
Units (each unit consists of $1,000 principal amount of
0%/12.50% sr. disc. nts., 4/15/08 and .49 shares of series a
preferred stock)(4)(7)(10) 1,000,000 610,000
Units (each unit consists of $1,000 principal amount of
11.25% sr. nts., and .483 shares of series a preferred
stock)(4)(10) 580,000 609,000
------------
33,603,417
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS - 7.0%
American Mobile Satellite Corp./AMSC Acquisition Co., Inc.,
Units (each unit consists of $1,000 principal amount of
12.25% sr. nts., 4/1/08 and one warrant to purchase 3.75749
shares of common stock)(4)(10) 875,000 826,875
- ------------------------------------------------------------------------------------------
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(4) 400,000 404,500
- ------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts.,
10/1/07(7) 2,319,000 1,298,640
- ------------------------------------------------------------------------------------------
Cellular Communications International, Inc., 0%/9.50% Bonds,
4/1/05(4)(7)(XEU) 2,750,000 2,181,418
- ------------------------------------------------------------------------------------------
Crown Castle International Corp., 0%/10.625% Sr. Unsec.
Disc. Nts., 11/15/07(7) 940,000 646,250
- ------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07(12) 240,000 258,000
- ------------------------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts.,
Series B, 7/15/05(7) 226,000 19,210
- ------------------------------------------------------------------------------------------
Iridium LLC/Iridium Capital Corp., 13% Sr. Nts., Series A,
7/15/05 200,000 215,500
- ------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts.,
Series B, 6/1/06(7) 870,000 650,325
- ------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc.
Nts., 6/1/06(7) 300,000 233,250
</TABLE>
22
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS (CONTINUED)
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts., 9/15/07(7) $ 2,000,000 $ 1,355,000
0%/9.75% Sr. Disc. Nts., 10/31/07(7) 1,500,000 982,500
- ------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06 1,920,000 2,030,400
- ------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts.,
8/15/04 1,200,000 1,365,000
- ------------------------------------------------------------------------------------------
Orbital Imaging Corp., 11.625% Sr. Nts., 3/1/05(4) 750,000 774,375
- ------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts.,
1/15/07(7) 1,150,000 879,750
- ------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Disc. Nts.,
3/15/08(4)(7) 2,000,000 1,320,000
- ------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50% Sr.
Disc. Nts.,
Series B, 8/1/07(7) 1,800,000 1,264,500
- ------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
11.75% Sr. Sub. Nts., 7/15/07 425,000 469,625
9.125% Sr. Sec. Nts., 12/15/06(4) 800,000 803,000
- ------------------------------------------------------------------------------------------
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)(7)(10) 1,000,000 535,000
- ------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., 5/15/08(4) 2,100,000 2,110,500
- ------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Disc. Nts.,
3/1/08(4)(7) 3,100,000 1,953,000
- ------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts.,
7/15/08(4)(7) 1,640,000 918,400
- ------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.:
0%/12.50% Sr. Disc. Nts., 8/15/06(7) 400,000 343,000
11% Sr. Nts., 8/15/06 25,000 28,938
------------
23,866,956
- ------------------------------------------------------------------------------------------
METALS/MINERALS - 1.8%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 1,440,000 1,512,000
- ------------------------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 700,000 787,500
- ------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 320,000 344,800
- ------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., 5/15/08(4) 1,500,000 1,537,500
- ------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub.
Nts., 2/1/08(4) 400,000 410,000
- ------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Sec.
Nts., 8/1/07 850,000 873,375
- ------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 540,000 567,000
------------
6,032,175
- ------------------------------------------------------------------------------------------
RETAIL - 1.4%
Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(4) 1,030,000 1,035,150
- ------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc.:
12% Sr. Nts., 10/1/03 630,000 680,400
9.125% Sr. Sub. Nts., 5/1/08(4) 910,000 910,000
- ------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 480,000 483,600
- ------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 605,250
- ------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts.,
6/1/08(4) 600,000 615,750
- ------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 333,125
------------
4,663,275
- ------------------------------------------------------------------------------------------
SERVICE - 2.3%
Allied Waste Industries, Inc., 0%/11.30% Sr. Disc. Nts.,
6/1/07(7) 450,000 330,750
</TABLE>
23
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICE (CONTINUED)
Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 $ 125,000 $ 140,625
- ------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(7) 775,000 631,625
- ------------------------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 750,000 806,250
- ------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Nts., 4/15/08(4)(7) 1,000,000 560,000
- ------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub.
Nts., 2/1/08 2,050,000 2,044,875
- ------------------------------------------------------------------------------------------
Newcor, Inc., 9.875% Sr. Sub. Nts., 3/1/08(4) 1,500,000 1,518,750
- ------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(7) 400,000 452,000
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 950,000 1,109,125
- ------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Units (each unit consists of $1,000
principal amount of 0%/12.75% sr. disc. nts., 3/15/08 and
one warrant to purchase two shares of cl. c common
stock)(4)(7)(10) 600,000 324,000
------------
7,918,000
- ------------------------------------------------------------------------------------------
TRANSPORTATION - 3.3%
American Communication Lines LLC, 10.25% Bonds, 6/30/08(4) 650,000 661,375
- ------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B,
7/15/07 500,000 507,500
- ------------------------------------------------------------------------------------------
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., Series B, 7/1/07 1,010,000 1,055,450
- ------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts.,
4/15/06 125,000 139,063
- ------------------------------------------------------------------------------------------
Golden Ocean Group Ltd., 10% Gtd. Sr. Unsec. Nts.,
8/31/01(4) 240,000 186,000
- ------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 600,000 675,000
- ------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 25,000 26,125
- ------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 1,175,000 1,230,813
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66
warrants)(4)(10) 500,000 567,500
- ------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts.,
6/15/07 1,525,000 1,578,375
- ------------------------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred
Ship Mtg. Nts., 5/30/08(4) 700,000 661,500
- ------------------------------------------------------------------------------------------
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 1,496,250
- ------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr.
Disc. Nts.,
Series B, 12/15/03(7) 2,600,000 2,431,000
------------
11,215,951
- ------------------------------------------------------------------------------------------
UTILITY - 1.6%
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 25,000 27,375
8.75% Sr. Nts., 7/15/07 545,000 562,713
- ------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E,
5/1/11 555,000 635,475
- ------------------------------------------------------------------------------------------
ESI Tractebel Acquisition Corp., 7.99% Bonds, 12/30/11(4) 1,000,000 1,017,494
- ------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 7.75% Sr. Unsec. Nts., Series G,
10/1/08 2,400,000 2,475,000
- ------------------------------------------------------------------------------------------
US Xchange LLC, 15% Sr. Nts., 7/1/08(4) 800,000 820,000
------------
5,538,057
------------
Total Corporate Bonds and Notes (Cost $222,847,827) 226,954,385
</TABLE>
24
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------
PREFERRED STOCKS - 6.5%
- ------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A(2)(13) 62,000 $ 1,550,000
- ------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cv. Cum. Preferred Stock(4) 29,575 1,253,241
- ------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Sr. Cum. Exchangeable Preferred
Stock(2)(12) 407 430,402
- ------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Exchangeable Preferred
Stock(4)(12) 500 496,250
- ------------------------------------------------------------------------------------------
Dobson Communications Corp., 12.25% Preferred Stock(4)(12) 1,028 1,071,690
- ------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable
Preferred Stock(12) 1,581 1,774,672
- ------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Preferred Stock(2)(13) 8,000 466,000
- ------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable Preferred Stock, Series B(2)(12) 771 861,592
- ------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Preferred Stock, Series A(12) 9,571 1,050,417
- ------------------------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale California, l2% Non-Cum.
Exchangeable Perpetual Preferred Stock, Series A(2) 20 545
- ------------------------------------------------------------------------------------------
Golden State Bancorp, 8.75% Cv. Preferred Stock, Series A 6,500 563,469
- ------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc., 12.875% Sr. Preferred
Stock, Series B(12) 549 546,255
- ------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable Preferred
Stock(2)(12) 247 300,722
- ------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 13.50% Exchangeable
Preferred Stock, Series B(2)(12) 742 874,632
- ------------------------------------------------------------------------------------------
Intermedia Communications, Inc., Depositary Shares
Representing one one-hundredth 7% Cum. Cv. Jr. Preferred
Stock, Series E, Non-Vtg.(4) 5,660 210,128
- ------------------------------------------------------------------------------------------
Nebco Evans Holdings Co., 11.25% Nts., 3/1/08(2)(12) 6,159 629,758
- ------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Preferred Stock(4) 749 773,343
- ------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr. Exchangeable
Preferred(12) 22,743 1,336,151
- ------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable
Preferred Stock(4)(12) 40 393,000
- ------------------------------------------------------------------------------------------
Prime Retail, Inc., 8.50% Cv. Preferred Stock, Series B 14,245 292,023
- ------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Preferred Stock 14,000 1,365,000
9.20% Preferred Stock, Series F 2,500 254,375
- ------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Sr. Exchangeable Preferred
Stock(2)(12) 1,000 1,005,000
- ------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable Preferred Stock, Series
B, Non-Vtg. 15,000 753,750
- ------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Units (each unit consists of one
share of preferred stock and 37 cl. c shares of common
stock)(2)(10)(12) 196 1,749,300
- ------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625% Cum., Series E, Non-Vtg.(12) 2,126 240,770
- ------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 14.25% Cum. Sr.
Exchangeable Preferred Stock, Non-Vtg.(2)(12) 562 592,910
- ------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv. Preferred Stock, Series B 30,000 855,000
9.20% Sr. Preferred Stock 8,950 227,666
------------
Total Preferred Stocks (Cost $21,590,147) 21,918,061
</TABLE>
25
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------
COMMON STOCKS - 0.5%
- ------------------------------------------------------------------------------------------
Celcaribe SA(2)(13) 121,950 $ 548,775
- ------------------------------------------------------------------------------------------
Coinstar, Inc. 5,250 48,563
- ------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(2) 150 132,750
- ------------------------------------------------------------------------------------------
Equitable Bag, Inc.(2)(13) 3,723 14,892
- ------------------------------------------------------------------------------------------
Gulfstream Holding, Inc.(13) 56 --
- ------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(13) 851 5,611
- ------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(13) 140 5,871
- ------------------------------------------------------------------------------------------
Omnipoint Corp.(2)(13) 46,875 1,021,436
- ------------------------------------------------------------------------------------------
Optel, Inc.(2)(13) 945 9
------------
Total Common Stocks (Cost $1,061,231) 1,777,907
UNITS
- ------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.4%
- ------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99(2) 6,000 60
- ------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(2) 39,658 397
- ------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd., Australia Media Ltd. Wts., Exp.
5/00(2) 125 1
- ------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 21,112 --
- ------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 10/07(2) 1,919 10,794
- ------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 31,000
- ------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/05(2) 660 2,939
- ------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/07 750 101,250
- ------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/05(2) 475 92,528
- ------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(2) 500 10,000
- ------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/05(2) 52,500 525
- ------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(2) 13,117 131
Exp. 9/04(2) 14,000 15,750
- ------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(2) 5,940 175,307
- ------------------------------------------------------------------------------------------
IHF Capital, Inc. Wts., Exp. 11/99(2) 250 7,531
- ------------------------------------------------------------------------------------------
IHF Capital, Inc., Series I Wts., Exp. 11/99(2) 400 4,050
- ------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 950 --
- ------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited Partners'
Interest 2,360 --
- ------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/06(2) 3,200 88,874
- ------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 163,430
- ------------------------------------------------------------------------------------------
Orbital Imaging Corp. Wts., Exp. 3/05(2) 750 33,750
- ------------------------------------------------------------------------------------------
Orion Network Systems, Inc. Wts., Exp. 1/07(2) 800 12,100
- ------------------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/07(2) 8,600 130,075
- ------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03(2) 28,000 350,000
- ------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/05(2) 1,600 16,000
- ------------------------------------------------------------------------------------------
Trizec Hahn Corp. Wts., Exp. 7/99 3,970 12,419
- ------------------------------------------------------------------------------------------
United International Holdings, Inc. Wts., Exp. 11/99(2) 1,440 29,067
- ------------------------------------------------------------------------------------------
Venezuela Government Wts., Exp. 4/20 3,570 --
------------
Total Rights, Warrants and Certificates (Cost $339,332) 1,287,978
</TABLE>
26
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 9.1%
- ------------------------------------------------------------------------------------------
AIG International, Inc., Goldman Sachs Commodity Excess
Return Index Linked Nts., 5.79%, 11/30/99 $ 500,000 $ 440,834
- --------------------------------------------------------------------------------------------
Bank of America NT & SA (London Branch), Goldman Sachs
Excess Return Commodity Index Linked Nts., 5.50%, 1/5/00 500,000 504,750
- --------------------------------------------------------------------------------------------
Bankers Trust, Lehman High Yield Index Nts., 8.438%, 8/5/98 2,500,000 2,484,875
- --------------------------------------------------------------------------------------------
Bear Stearns High Yield Composite Index Linked Nts., 9%:
2/5/99 1,500,000 1,500,600
8/10/98 15,000,000 15,619,500
- --------------------------------------------------------------------------------------------
Chase Manhattan Bank USA, National Assn., Chase Physical
Commodity Excess Return Index Linked Nts., 5.875%, 11/30/99 500,000 458,800
- --------------------------------------------------------------------------------------------
Commercial Bank International SA, Energy Linked Nts.,
7/1/99(6) 500,000 588,100
- --------------------------------------------------------------------------------------------
Goldman Sachs Group LP, High Yield Index Nts., 8%, 3/4/99 1,500,000 1,492,500
- --------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, Leveraged Nts. on The
Emerging Markets Bond Index, 9.50%, 10/29/98 3,000,000 2,791,941
- --------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts.:
5/31/02 (representing a basket of reference loans and a
total return swap between Chase Manhattan Bank and the
Trust)(2) 3,000,000 3,000,000
9.719%, 4/28/02 (representing a basket of reference loans
and a total return swap between Chase Manhattan Bank and the
Trust)(2)(3) 2,000,000 2,214,712
------------
Total Structured Instruments (Cost $30,560,000) 31,096,612
- --------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 13.4%
- --------------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings,
Inc., 5.90%, dated 6/30/98, to be repurchased at $45,507,457
on 7/1/98, collateralized by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19, with a value of $46,709,786
(Cost $45,500,000) 45,500,000 45,500,000
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $334,254,757) 100.4% 341,540,046
- --------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.4) (1,422,143)
-------------- ------------
NET ASSETS 100.0% $340,117,903
-------------- ------------
-------------- ------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
CAD - Canadian Dollar
DEM - German Mark
GBP - British Pound Sterling
IDR - Indonesian Rupiah
XEU - European Currency Units
2. Identifies issues considered to be illiquid or restricted - See Note 7 of
Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $85,549,065 or 25.15% of the Fund's net
assets as of June 30, 1998.
5. Issuer is in default.
6. When-issued security to be delivered and settled after June 30, 1998.
27
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
7. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Non-income producing - issuer is in default of interest payment.
10. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
11. Represents the current interest rate for an increasing rate security.
12. Interest or dividend is paid in kind.
13. Non-income producing security.
See accompanying Notes to Financial Statements.
28
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 45.5%
- ------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 27.4%
- ------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 21.6%
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 $ 3,208,430
Series 151, Cl. F, 9%, 5/15/21 1,000,000 1,067,022
Series 1541, Cl. H, 7%, 10/15/22 4,750,000 4,935,535
Series 1712, Cl. B, 6%, 3/15/09 1,000,000 993,430
Series 1714, Cl. M, 7%, 8/15/23 2,000,000 2,037,500
Gtd. Multiclass Mtg. Participation Certificates, 7%, 4/1/26 4,370,881 4,438,761
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 2,997,180
Interest-Only Stripped Mtg.-Backed Security, Series 177, Cl.
B, 6.35%-7.28%, 7/1/26(2) 39,237,118 8,883,529
- ------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. - Government National
Mortgage Assn., Gtd. Multiclass Mtg. Participation
Certificates, Series 26, Cl. B, 6%, 5/25/15 6,499,999 6,384,918
- ------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 3/1/11 758,981 764,295
6.50%, 7/1/28-7/25/12(3) 32,975,000 33,005,849
7%, 4/1/04-11/1/25 1,218,050 1,233,402
7%, 7/1/12-8/25/27(3) 29,060,000 29,539,003
7.50%, 1/1/08-1/1/26 3,868,685 3,970,371
8%, 5/1/17 595,155 620,462
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, 8.75%,
11/25/05 2,334,390 2,436,178
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates:
Trust 1989-17, Cl. E, 10.40%, 4/25/19 1,061,648 1,176,105
Trust 1997-25, Cl. B, 7%, 12/18/22 1,370,000 1,393,426
Trust G93-31, Cl. PN, 7%, 9/25/23 5,000,000 5,252,084
Interest-Only Stripped Mtg.-Backed Security, Trust 276, Cl.
2, 11.924%, 10/1/24(2) 19,577,416 5,148,249
Principal-Only Stripped Mtg.-Backed Security:
Trust 277-C1, 6.843%, 4/1/27(4) 810,688 690,605
Trust 294, Cl. 1, 3.576%, 2/1/28(4) 4,022,499 3,171,489
------------
123,347,823
- ------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 5.8%
Government National Mortgage Assn.:
7%, 1/15/09-5/15/09 582,891 598,118
7%, 7/1/28(3) 18,425,000 18,718,694
7.50%, 7/15/26-6/15/27 13,355,830 13,734,495
------------
33,051,307
- ------------------------------------------------------------------------------------------
PRIVATE - 18.1%
- ------------------------------------------------------------------------------------------
COMMERCIAL - 15.1%
Asset Securitization Corp.:
Commercial Mtg. Pass-Through Certificates:
Series 1997-D5, Cl. A6, 7.18%, 2/14/41(5) 3,000,000 3,020,625
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 5,400,000 4,814,437
Series 1997-MD7, Cl. A6, 7.97%, 1/13/30(5) 500,000 538,437
</TABLE>
29
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Asset Securitization Corp.: (Continued)
Series 1998-MD6, Cl. A3, 6.979%, 3/15/30 $ 6,000,000 $ 6,270,937
Interest-Only Stripped Mtg.-Backed Security, Series 1997-D5,
Cl. PS1, 1.367%, 2/14/41(2) 18,607,236 1,985,741
- ------------------------------------------------------------------------------------------
BKB Commercial Mortgage Trust, Commercial Mtg. Obligations,
Series 1997-C1, Cl. C, 7.45%, 10/25/00(6) 815,000 815,255
- ------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only
Stripped Mtg.-Backed Security, Series 1997-CTL1, 10.611%,
6/22/24(2)(6) 32,063,182 1,516,589
- ------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Collateralized Mtg.
Obligations,
Series 1996-C1, Cl. D, 7.71%, 2/25/20(5)(6) 2,500,000 2,552,344
- ------------------------------------------------------------------------------------------
CRIIMI MAE Trust I, Collateralized Mtg. Obligations,
Series 1996-C1, Cl. A2, 7.56%, 8/30/05(7) 2,000,000 2,020,625
- ------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C1, Cl. AX,
1.071%, 4/11/30(2) 25,250,000 1,994,750
- ------------------------------------------------------------------------------------------
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 1,549,500
Cl. 2-E, 8.70%, 9/25/25(6) 1,500,000 1,563,750
- ------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security:
Series 1997-C1, 6.993%, 4/18/27(2) 8,158,602 598,829
Series 1997-C1, 7.319%, 4/18/27(2) 16,938,450 1,243,256
Series 1998-C2, 8.15%, 5/18/28(2) 30,000,000 1,366,992
Series 1998-C2, Cl. E, 6.778%, 11/15/35(2) 2,000,000 1,893,750
- ------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
Collateralized Mtg. Obligations:
Series 1997-C2, Cl. D, 7.192%, 1/15/08 3,500,000 3,550,312
Series 1998-C1, Cl. E, 7.153%, 3/15/11 3,500,000 3,568,906
Interest-Only Stripped Mtg.-Backed Security:
Series 1997-C1, Cl. X, 7.956%, 7/15/27(2) 9,539,722 921,179
Series 1997-C1, Cl. X, 8.449%, 7/15/27(2) 19,177,825 1,851,859
- ------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg.
Pass-Through Certificates:
Series 1997-CL1, Cl. F, 6.845%, 7/13/30 1,000,000 1,023,437
Series 1997-CL1, Cl. F, 7.823%, 7/13/30 4,000,000 4,117,500
- ------------------------------------------------------------------------------------------
Lehman Brothers Commercial Conduit Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security, Series 1998-C1,
Cl. IO, 8.841%, 2/18/28(2) 44,839,844 2,998,665
- ------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D, 7.42%, 4/25/28 2,000,000 2,063,437
Series 1997-C2, Cl. D, 6.87%, 12/10/29(5) 4,000,000 4,050,000
- ------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D-1, 7.438%, 2/15/28(5)(6) 1,000,000 1,036,875
Series 1997-RR, 7.67%, 4/30/39(6) 4,300,000 4,199,219
Series 1997-XL1, Cl. F, 7.414%, 10/3/30(5) 2,500,000 2,558,594
- ------------------------------------------------------------------------------------------
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates, Series-DMC:
Cl. B, 8.562%, 8/12/11(6) 1,600,000 1,717,000
Cl. C, 8.921%, 8/12/11(6) 4,400,000 4,758,875
</TABLE>
30
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through
Certificates, Series 1:
Cl. C, 7.217%, 12/26/26(6) $ 250,000 $ 256,000
Cl. D, 7.683%, 12/21/26(6) 500,000 516,250
- ------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,525,664
Series 1995-C1, Cl. D, 6.90%, 2/25/27 3,000,000 2,998,500
- ------------------------------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through Certificates,
Series 1997-LLI, Cl. E, 7.30%, 10/20/34 4,000,000 4,111,250
Multiclass Pass-Through Certificates:
Series 1996-C3, Cl. C, 7.375%, 6/25/30(5)(6) 3,000,000 3,044,062
Series 1996-CFL, Cl. D, 7.034%, 2/25/28 1,800,000 1,815,188
------------
86,428,589
- ------------------------------------------------------------------------------------------
MANUFACTURED HOUSING - 0.0%
Green Tree Financial Corp., Series 1994-6, Cl. A3, 7.70%,
1/15/20 187,084 187,377
- ------------------------------------------------------------------------------------------
MULTI-FAMILY - 0.4%
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-12, Cl. B1, 6.625%, 2/25/24 1,000,000 985,547
- ------------------------------------------------------------------------------------------
Merrill Lynch Trust, Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation Certificates, Series 43, Cl.
E, 6.50%, 8/27/15 500,000 501,560
- ------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1991-M5, Cl. A, 9%, 3/25/17 796,662 796,725
------------
2,283,832
- ------------------------------------------------------------------------------------------
OTHER - 0.0%
GE Capital Mortgage Services, Inc., Series 1994-14, Cl. A1,
6.50%, 4/25/24(6) 18,515 18,446
- ------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Interest-Only
Stripped Mtg.-Backed Security, Series 1987-3:
Cl. B, 7.102%, 10/23/17(2) 90,042 25,226
Cl. A, Zero Coupon, 8.864%, 10/23/17(4) 32,228 26,871
Cl. A, 8.864%, 10/23/17(4) 97,383 81,194
------------
151,737
- ------------------------------------------------------------------------------------------
RESIDENTIAL - 2.6%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(6) 5,006,000 5,298,851
- ------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, 8.129%, 7/25/06(5)(6) 4,024,000 4,255,380
- ------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates:
Series 1997-HF1, Cl. E, 7.55%, 7/15/29(6) 1,500,000 1,540,313
Series 1997-WF1, Cl. E, 7.49%, 5/15/09(6) 1,000,000 1,028,750
- ------------------------------------------------------------------------------------------
NationsBank Trust, Lease Pass-Through Certificates, Series
1997A-1, 7.442%, 1/10/11(5) 2,500,000 2,630,469
- ------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III, Sub. Bonds,
Series 1992-A, Cl. 1A, 8.23%, 3/29/30(5) 328,791 333,621
------------
15,087,384
------------
Total Mortgage-Backed Obligations (Cost $261,742,762) 260,538,049
</TABLE>
31
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 25.5%
- ------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
10.375%, 11/15/09 $ 500,000 $ 625,626
10.375%, 11/15/12 500,000 669,844
12.75%, 11/15/10 1,000,000 1,425,313
7.25%, 5/15/16 33,000,000 38,682,204
9.25%, 2/15/16 8,300,000 11,552,571
- ------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.75%, 11/30/02 3,667,000 3,697,942
6.375%, 8/15/02 14,250,000 14,686,421
6.50%, 10/15/06 8,840,000 9,392,509
6.625%, 5/15/07 4,000,000 4,300,004
6.75%, 6/30/99(8) 22,150,000 22,419,964
7.25%, 5/15/04 1,000,000 1,085,313
7.25%, 8/15/04 13,665,000 14,877,782
7.50%, 11/15/01 19,400,000 20,551,894
9.25%, 8/15/98(8) 2,000,000 2,010,002
------------
Total U.S. Government Obligations (Cost $139,612,602) 145,977,389
- ------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 0.1%
- ------------------------------------------------------------------------------------------
Ontario, Canada (Province of) Bonds, 8%, 10/17/01 750,000 796,432
- ------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon,
3/17/99(6)(9)(IDR) 1,000,000,000 16,892
------------
Total Foreign Government Obligations (Cost $1,102,252) 813,324
- ------------------------------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.2%
- ------------------------------------------------------------------------------------------
Colombia (Republic of) 1989-1990 Integrated Loan Facility
Bonds,
6.688%, 7/1/01(5)(6) (Cost $888,005) 928,319 891,187
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 0.9%
- ------------------------------------------------------------------------------------------
Dade Cnty., FL Educational Facilities Authority Exchangeable
Revenue Bonds, University of Miami, Prerefunded, MBIA
Insured, 7.65%, 4/1/10 175,000 189,441
- ------------------------------------------------------------------------------------------
Dade Cnty., FL Educational Facilities Authority Revenue
Bonds, University of Miami, MBIA Insured, 7.65%, 4/1/10 205,000 221,168
- ------------------------------------------------------------------------------------------
Dade Cnty., FL Educational Facilities Authority Taxable
Exchange Revenue Bonds, University of Miami, MBIA Insured,
7.65%, 4/1/10 120,000 129,465
- ------------------------------------------------------------------------------------------
Pinole, CA Redevelopment Agency Tax Allocation Taxable
Bonds,
Pinole Vista Redevelopment, Series B, 8.35%, 8/1/17 670,000 710,629
- ------------------------------------------------------------------------------------------
Port of Portland, OR Special Obligation Taxable Revenue
Bonds,
PAMCO Project, 9.20%, 5/15/22 500,000 624,150
- ------------------------------------------------------------------------------------------
Virgin Islands Public Finance Authority Taxable Revenue
Refunding Bonds,
Sr. Lien Loan Nts., Series B, 6.99%, 10/1/01 3,265,000 3,287,071
------------
Total Municipal Bonds and Notes (Cost $4,928,437) 5,161,924
- ------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 38.3%
- ------------------------------------------------------------------------------------------
AEROSPACE - 0.5%
Atlas Air, Inc., 8.01% Nts., 1/2/10(7) 3,000,000 3,018,543
</TABLE>
32
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------
CHEMICALS - 0.1%
ClimaChem, Inc., 10.75% Gtd. Sr. Unsec. Nts., Series B,
12/1/07 $ 300,000 $ 314,250
- ------------------------------------------------------------------------------------------
CONSUMER DURABLES - 0.2%
Toro Co., 7.125% Nts., 6/15/07 1,000,000 1,044,577
- ------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES - 1.3%
AKI Holdings, Inc., 10.50% Sr. Nts., 7/1/08(7) 300,000 303,000
- ------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 1,097,000 1,031,009
- ------------------------------------------------------------------------------------------
Harman International Industries, Inc., 7.32% Nts., 7/1/07 5,000,000 5,081,015
- ------------------------------------------------------------------------------------------
Procter & Gamble Co., 9.36% Debs., Series A, 1/1/21 500,000 664,904
- ------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08(7) 500,000 510,000
------------
7,589,928
- ------------------------------------------------------------------------------------------
ENERGY - 5.8%
BP America, Inc., 10.875% Unsec. Unsub. Nts., 8/1/01(CAD) 1,000,000 776,499
- ------------------------------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts., 5/15/99 500,000 511,137
- ------------------------------------------------------------------------------------------
Colorado International Gas Corp., 10% Sr. Debs., 6/15/05 500,000 608,070
- ------------------------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr. Nts., 12/1/06(7) 2,000,000 2,056,552
- ------------------------------------------------------------------------------------------
Enron Corp., 9.875% Debs., 6/15/03 375,000 433,967
- ------------------------------------------------------------------------------------------
ENSCO International, Inc.:
6.75% Nts., 11/15/07 5,000,000 5,082,575
7.20% Debs., 11/15/27 3,000,000 3,123,900
- ------------------------------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts., 9/15/07 4,000,000 4,121,120
- ------------------------------------------------------------------------------------------
Global Marine, Inc., 7.125% Nts., 9/1/07 8,000,000 8,386,648
- ------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., 5/1/05(7) 300,000 288,750
- ------------------------------------------------------------------------------------------
HNG Internorth/Enron Corp., 9.625% Debs., 3/15/06 500,000 605,742
- ------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 400,000 430,199
- ------------------------------------------------------------------------------------------
Mitchell Energy & Development Corp., 9.25% Sr. Nts., 1/15/02 55,000 60,085
- ------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Gtd. Sr. Sec. Nts., 6/1/08(7) 400,000 382,000
- ------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., 5/15/08(7) 1,000,000 1,032,500
- ------------------------------------------------------------------------------------------
Saga Petroleum ASA, 7.25% Debs., 9/23/27 1,000,000 1,038,201
- ------------------------------------------------------------------------------------------
Talisman Energy, Inc., 7.25% Debs., 10/15/27 2,500,000 2,620,690
- ------------------------------------------------------------------------------------------
Texaco Capital, Inc., 8.875% Gtd. Debs., 9/1/21 500,000 652,962
- ------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 750,000 1,023,120
------------
33,234,717
- ------------------------------------------------------------------------------------------
FINANCIAL - 12.9%
Aeltus CBO II Ltd./Aeltus CBO II Corp., 7.982% Sr. Sec. Sub.
Bonds, 8/6/09(7) 5,000,000 5,025,000
- ------------------------------------------------------------------------------------------
Aetna Services, Inc., 7.125% Nts., 8/15/06 1,000,000 1,043,574
- ------------------------------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs., 2/3/27 2,000,000 2,304,660
- ------------------------------------------------------------------------------------------
American General Finance Corp., 5.875% Sr. Nts., 7/1/00 196,000 195,725
- ------------------------------------------------------------------------------------------
BankAmerica Corp., 7.75% Sub. Nts., 7/15/02 750,000 795,499
- ------------------------------------------------------------------------------------------
Banque Centrale de Tunisie, 7.50% Nts., 9/19/07 900,000 870,352
- ------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 10.125% Sub. Nts., 11/1/00 750,000 816,457
</TABLE>
33
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (CONTINUED)
Citicorp Capital I, 7.933% Gtd. Bonds, 2/15/27 $ 2,000,000 $ 2,179,044
- ------------------------------------------------------------------------------------------
CNA Financial Corp., 6.25% Nts., 11/15/03 2,195,000 2,189,840
- ------------------------------------------------------------------------------------------
Equity Office Properties Operating LP, 6.625% Sr. Nts.,
2/15/05(7) 1,000,000 999,769
- ------------------------------------------------------------------------------------------
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 750,000 843,993
9% Sub. Nts., 6/15/99 150,000 154,133
- ------------------------------------------------------------------------------------------
Fleet Mtg. Group, Inc., 6.50% Nts., 9/15/99 500,000 503,158
- ------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.75% Nts., 8/15/08 1,000,000 1,036,828
- ------------------------------------------------------------------------------------------
Household Finance Corp.:
6.40% Sr. Unsec. Unsub. Nts., Series EMTN, 6/17/08 2,000,000 2,002,918
8.95% Debs., 9/15/99 500,000 516,335
- ------------------------------------------------------------------------------------------
Household International BV, 6% Gtd. Sr. Nts., 3/15/99 131,000 131,426
- ------------------------------------------------------------------------------------------
HSBC Americas Capital Trust II, 8.38% Capital Securities,
5/15/27(7) 3,000,000 3,313,305
- ------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 6.625% Sr. Sub. Nts.,
2/15/08 3,000,000 3,038,487
- ------------------------------------------------------------------------------------------
Liberty Mutual Insurance Co., 7.697% Nts., 10/15/2097(7) 7,000,000 7,739,263
- ------------------------------------------------------------------------------------------
Long Island Savings Bank, 6.20% Nts., 4/2/01 4,000,000 4,007,960
- ------------------------------------------------------------------------------------------
Lumbermens Mutual Casualty Co., 8.30% Surplus Nts.,
12/1/37(7) 2,000,000 2,217,948
- ------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.56% Nts., 12/16/07 2,000,000 2,046,742
6.875% Nts., 3/1/03 750,000 775,023
- ------------------------------------------------------------------------------------------
Metropolitan Life Insurance Co., 6.30% Nts., 11/1/03(7) 3,000,000 2,995,650
- ------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co., 7% Debs., 10/1/13 1,000,000 1,061,661
- ------------------------------------------------------------------------------------------
Norsk Hydro AS, 8.75% Bonds, 10/23/01 1,000,000 1,075,000
- ------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,000,000 1,015,133
- ------------------------------------------------------------------------------------------
Prudential Insurance Co. of America:
6.875% Nts., 4/15/03(7) 3,000,000 3,077,238
8.30% Nts., 7/1/25(7) 3,000,000 3,474,135
- ------------------------------------------------------------------------------------------
Rank Group Finance plc, 6.75% Gtd. Nts., 11/30/04 3,000,000 3,047,901
- ------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc., 6.25% Bonds, 1/15/05 3,000,000 3,000,945
- ------------------------------------------------------------------------------------------
Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,040,893
- ------------------------------------------------------------------------------------------
SunAmerica, Inc.:
9% Sr. Nts., 1/15/99 196,000 198,857
9.95% Debs., 2/1/12 3,000,000 3,824,532
- ------------------------------------------------------------------------------------------
Travelers Group, Inc., 6.875% Debs., 2/15/2098 1,000,000 1,021,418
- ------------------------------------------------------------------------------------------
U.S. Leasing International, Inc., 6.625% Sr. Nts., 5/15/03 750,000 767,966
- ------------------------------------------------------------------------------------------
Washington Mutual Capital I, 8.375% Gtd. Bonds, 6/1/27 3,000,000 3,331,011
------------
73,679,779
- ------------------------------------------------------------------------------------------
FOOD & DRUG - 0.3%
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,000,000 1,047,500
- ------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03(10) 850,000 718,250
------------
1,765,750
</TABLE>
34
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
FOOD/TOBACCO - 0.4%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., 7/1/08(7) $ 300,000 $ 303,375
- ------------------------------------------------------------------------------------------
Bass America, Inc., 6.75% Gtd. Nts., 8/1/99 750,000 758,404
- ------------------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc., 6.95% Debs., 11/15/26 1,000,000 1,051,620
------------
2,113,399
- ------------------------------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.8%
Boise Cascade Corp., 9.90% Nts., 3/15/00 750,000 789,388
- ------------------------------------------------------------------------------------------
Fletcher Challenge Capital Canada, Inc., 7.75% Nts., 6/20/06 1,800,000 1,932,196
- ------------------------------------------------------------------------------------------
Potlatch Corp., 9.46% Medium-Term Nts., 4/2/02 500,000 557,807
- ------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized
Nts., 7/20/15 1,365,263 1,441,243
------------
4,720,634
- ------------------------------------------------------------------------------------------
GAMING/LEISURE - 0.8%
Circus Circus Enterprises, Inc., 6.75% Nts., 7/15/03 375,000 362,773
- ------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 4,000,000 4,173,660
- ------------------------------------------------------------------------------------------
Premier Parks, Inc., 0%/10% Sr. Disc. Nts., 4/1/08(10) 300,000 200,625
------------
4,737,058
- ------------------------------------------------------------------------------------------
HEALTHCARE - 0.2%
Roche Holdings, Inc., 2.75% Bonds, 4/14/00 1,250,000 1,189,844
- ------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.2%
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 1,000,000 1,025,000
- ------------------------------------------------------------------------------------------
MANUFACTURING - 0.3%
Moll Industries, Inc., 10.50% Sr. Sub. Nts., 7/1/08(7) 250,000 256,250
- ------------------------------------------------------------------------------------------
Tenneco, Inc. (New):
10.20% Debs., 3/15/08 400,000 520,667
8.075% Nts., 10/1/02 650,000 695,595
------------
1,472,512
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING - 0.7%
Time Warner, Inc., 6.95% Debs., 1/15/28 4,000,000 4,067,644
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS VIDEO - 1.4%
Comcast Cable Communications, Inc., 8.125% Unsec. Nts.,
5/1/04 5,000,000 5,443,085
- ------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 2,200,000 2,410,641
------------
7,853,726
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED MEDIA - 3.3%
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(7) 1,098,897 1,098,810
- ------------------------------------------------------------------------------------------
Reed Elsevier, Inc., 6.625% Nts., 10/15/23(7) 600,000 610,950
- ------------------------------------------------------------------------------------------
Reed Publishing (USA), Inc., 7.66% Medium-Term Nts., 2/19/99 500,000 504,783
- ------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 1,295,000 1,520,439
- ------------------------------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs., 2/1/23 12,000,000 15,270,120
------------
19,005,102
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS - 0.7%
Cable & Wire Communications plc, 6.625% Nts., 3/6/05 1,000,000 1,019,179
- ------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.60% Sr. Nts., 6/1/08(7) 1,000,000 1,017,500
</TABLE>
35
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS (CONTINUED)
Onepoint Communications Corp., Units (each unit consists of
$1,000 principal amount of 14.50% sr. nts., 6/1/08 and one
warrant to purchase one share of common stock @ $.01 per
share)(7)(11) $ 200,000 $ 189,000
- ------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27(CAD) 3,000,000 2,049,183
------------
4,274,862
- ------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS COMMUNICATIONS - 1.1%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(7) 400,000 404,500
- ------------------------------------------------------------------------------------------
Price Communications Wireless, Inc., 9.125% Sr. Sec. Nts.,
12/15/06(7) 1,000,000 1,003,750
- ------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Disc. Nts.,
3/1/08(7)(10) 700,000 441,000
- ------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts.,
7/15/08(7)(10) 600,000 336,000
- ------------------------------------------------------------------------------------------
U.S. Cellular Corp., 7.25% Nts., 8/15/07 4,000,000 4,133,536
------------
6,318,786
- ------------------------------------------------------------------------------------------
METALS/MINERALS - 0.1%
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., 5/15/08(7) 750,000 768,750
- ------------------------------------------------------------------------------------------
RETAIL - 1.5%
Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts.,
5/1/08(7) 250,000 250,000
- ------------------------------------------------------------------------------------------
Neiman Marcus Group, Inc., 6.65% Sr. Nts., 6/1/08 3,000,000 3,029,907
- ------------------------------------------------------------------------------------------
Staples, Inc., 7.125% Sr. Nts., 8/15/07 5,000,000 5,199,280
------------
8,479,187
- ------------------------------------------------------------------------------------------
SERVICE - 1.6%
Archer Daniels Midland Co., 7.125% Debs., 3/1/13 750,000 807,025
- ------------------------------------------------------------------------------------------
Arvin Industries, Inc., 6.75% Nts., 3/15/08 2,500,000 2,515,728
- ------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.625% Nts., 6/15/08 3,000,000 2,981,367
- ------------------------------------------------------------------------------------------
Williams Cos., Inc., 6.125% Sec. Nts., 2/15/02 3,000,000 3,004,080
------------
9,308,200
- ------------------------------------------------------------------------------------------
TRANSPORTATION - 1.7%
Chrysler Corp., 7.40% Debs., 8/1/2097 2,000,000 2,166,534
- ------------------------------------------------------------------------------------------
Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 560,839
- ------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 770,265
- ------------------------------------------------------------------------------------------
UAL Corp., 9.125% Debs., 1/15/12 5,000,000 6,084,010
- ------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 400,000 424,248
------------
10,005,896
- ------------------------------------------------------------------------------------------
UTILITY - 2.4%
Alltel Corp., 6.50% Debs., 11/1/13 1,000,000 1,019,231
- ------------------------------------------------------------------------------------------
Cleveland Electric Illuminating Co./Toledo Edison Co., 7.13%
Sec. Nts.,
Series B, 7/1/07 3,000,000 3,185,739
- ------------------------------------------------------------------------------------------
Consolidated Natural Gas Co., 6.625% Debs., 12/1/13 1,000,000 1,038,186
- ------------------------------------------------------------------------------------------
GTE Corp., 9.375% Debs., 12/1/00 500,000 536,349
- ------------------------------------------------------------------------------------------
Long Island Lighting Co., 7% Nts., 3/1/04 150,000 156,789
- ------------------------------------------------------------------------------------------
National Fuel Gas Co., 7.75% Debs., 2/1/04 500,000 534,166
- ------------------------------------------------------------------------------------------
Northern Telecom Ltd., 6.875% Nts., 10/1/02 500,000 517,660
</TABLE>
36
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY (CONTINUED)
Public Service Co. of Colorado, 8.75% First Mtg. Bonds,
3/1/22 $ 750,000 $ 825,419
- ------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 587,173
- ------------------------------------------------------------------------------------------
TE Products Pipeline Co., 6.45% Sr. Nts., 1/15/08 4,000,000 4,004,940
- ------------------------------------------------------------------------------------------
Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 559,350
- ------------------------------------------------------------------------------------------
Washington Gas Light Co., 8.75% First Mtg. Bonds, 7/1/19 500,000 511,289
------------
13,476,291
------------
Total Corporate Bonds and Notes (Cost $212,739,309) 219,464,435
SHARES
- ------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.5%
- ------------------------------------------------------------------------------------------
Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred
Securities, Series A (Cost $3,000,000) 120,000 3,067,500
PRINCIPAL
AMOUNT(1)
- ------------------------------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 1.3%
- ------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Lehman High Yield Index Nts., 8.50%, 3/8/99 $ 6,000,000 6,000,000
- ------------------------------------------------------------------------------------------
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)(11) 1,000,000 1,166,500
------------
Total Structured Instruments (Cost $7,100,540) 7,166,500
- ------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.7%
- ------------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings,
Inc., 5.90%, dated 6/30/98, to be repurchased at $15,202,491
on 7/1/98, collateralized by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19, with a value of $15,604,148
(Cost $15,200,000) 15,200,000 15,200,000
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $646,313,907) 115.0% 658,280,308
- ------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (15.0) (85,684,219 )
-------------- ------------
NET ASSETS 100.0% $572,596,089
-------------- ------------
-------------- ------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
CAD - Canadian Dollar
IDR - Indonesian Rupiah
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 June 30, 1998.
37
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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 $44,101,663 or 7.70% of the Fund's net
assets as of June 30, 1998.
8. Securities with an aggregate market value of $2,313,570 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
9. Issuer is in default.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
11. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
38
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 96.9%
- -----------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 20.7%
- -----------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 5.9%
Landry's Seafood Restaurants, Inc.(1) 340,000 $ 6,151,875
- -----------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1) 200,000 7,800,000
- -----------------------------------------------------------------------------------------
Premier Parks, Inc.(1) 158,400 10,553,400
- -----------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 244,400 19,429,800
- -----------------------------------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1) 145,000 6,651,875
- -----------------------------------------------------------------------------------------
Starbucks Corp.(1) 250,000 13,359,375
--------------
63,946,325
- -----------------------------------------------------------------------------------------
MEDIA - 0.5%
Young & Rubicam, Inc.(1) 186,300 5,961,600
- -----------------------------------------------------------------------------------------
RETAIL: GENERAL - 4.5%
CVS Corp. 640,000 24,920,000
- -----------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(1) 379,200 13,864,500
- -----------------------------------------------------------------------------------------
Kohl's Corp.(1) 200,000 10,375,000
--------------
49,159,500
- -----------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 9.8%
Ethan Allen Interiors, Inc. 150,000 7,490,625
- -----------------------------------------------------------------------------------------
Fred Meyer, Inc.(1) 220,000 9,350,000
- -----------------------------------------------------------------------------------------
General Nutrition Cos., Inc. 500,000 15,562,500
- -----------------------------------------------------------------------------------------
Guitar Center, Inc.(1) 40,000 1,205,000
- -----------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 644,000 19,682,250
- -----------------------------------------------------------------------------------------
Lowe's Cos., Inc. 600,000 24,337,500
- -----------------------------------------------------------------------------------------
Pier 1 Imports, Inc. 280,000 6,685,000
- -----------------------------------------------------------------------------------------
Restoration Hardware, Inc.(1) 83,500 2,097,937
- -----------------------------------------------------------------------------------------
Stage Stores, Inc.(1) 270,000 12,217,500
- -----------------------------------------------------------------------------------------
TJX Cos., Inc. 340,000 8,202,500
--------------
106,830,812
- -----------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 14.2%
- -----------------------------------------------------------------------------------------
FOOD - 1.0%
Twinlab Corp.(1) 255,000 11,140,312
- -----------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 1.8%
BioChem Pharma, Inc.(1) 360,000 9,540,000
- -----------------------------------------------------------------------------------------
Biogen, Inc.(1) 150,000 7,350,000
- -----------------------------------------------------------------------------------------
CliniChem Development, Inc. 9,000 51,750
- -----------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. 62,800 2,143,050
--------------
19,084,800
- -----------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 10.1%
Cardinal Health, Inc. 200,000 18,750,000
- -----------------------------------------------------------------------------------------
Covance, Inc.(1) 300,000 6,750,000
</TABLE>
39
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/SUPPLIES & SERVICES (CONTINUED)
HEALTHSOUTH Corp.(1) 595,000 $ 15,879,062
- -----------------------------------------------------------------------------------------
McKesson Corp. 170,000 13,812,500
- -----------------------------------------------------------------------------------------
Medical Manager Corp.(1) 104,400 2,884,050
- -----------------------------------------------------------------------------------------
Orthodontic Centers of America, Inc.(1) 350,000 7,328,125
- -----------------------------------------------------------------------------------------
Quintiles Transnational Corp.(1) 200,000 9,837,500
- -----------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc.(1) 995,008 34,327,776
--------------
109,569,013
- -----------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 1.3%
Blyth Industries, Inc.(1) 410,800 13,659,100
- -----------------------------------------------------------------------------------------
ENERGY - 2.7%
- -----------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 2.7%
Coflexip SA, Sponsored ADR 85,000 5,195,625
- -----------------------------------------------------------------------------------------
Global Industries Ltd.(1) 400,000 6,750,000
- -----------------------------------------------------------------------------------------
Halliburton Co. 200,000 8,912,500
- -----------------------------------------------------------------------------------------
Santa Fe International Corp. 180,000 5,445,000
- -----------------------------------------------------------------------------------------
Stolt Comex Seaway SA(1) 117,500 2,276,562
- -----------------------------------------------------------------------------------------
Stolt Comex Seaway SA, ADR(1) 58,750 1,028,125
--------------
29,607,812
- -----------------------------------------------------------------------------------------
FINANCIAL - 7.3%
- -----------------------------------------------------------------------------------------
BANKS - 2.1%
Fifth Third Bancorp 127,800 8,051,400
- -----------------------------------------------------------------------------------------
National Commerce Bancorp 95,300 3,990,687
- -----------------------------------------------------------------------------------------
Providian Financial Corp. 145,000 11,391,562
--------------
23,433,649
- -----------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 4.5%
Affiliated Managers Group, Inc.(1) 190,000 7,053,750
- -----------------------------------------------------------------------------------------
Amvescap plc, Sponsored ADR 150,000 7,368,750
- -----------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 216,000 16,605,000
- -----------------------------------------------------------------------------------------
Finova Group, Inc. 150,000 8,493,750
- -----------------------------------------------------------------------------------------
Freddie Mac 205,000 9,647,812
--------------
49,169,062
- -----------------------------------------------------------------------------------------
INSURANCE - 0.7%
MBIA, Inc. 97,030 7,265,121
- -----------------------------------------------------------------------------------------
INDUSTRIAL - 11.5%
- -----------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 8.5%
AccuStaff, Inc.(1) 330,000 10,312,500
- -----------------------------------------------------------------------------------------
Affiliated Computer Services, Inc., Cl. A(1) 200,000 7,700,000
- -----------------------------------------------------------------------------------------
Allied Waste Industries, Inc.(1) 654,300 15,703,200
- -----------------------------------------------------------------------------------------
American Disposal Services, Inc.(1) 297,900 13,964,063
- -----------------------------------------------------------------------------------------
Central Parking Corp. 26,200 1,192,100
- -----------------------------------------------------------------------------------------
CIBER, Inc.(1) 402,600 15,298,800
</TABLE>
40
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (CONTINUED)
U.S. Rentals, Inc.(1) 181,500 $ 7,157,906
- -----------------------------------------------------------------------------------------
United Rentals, Inc.(1) 100,000 4,200,000
- -----------------------------------------------------------------------------------------
USA Waste Services, Inc.(1) 344,600 17,014,625
--------------
92,543,194
- -----------------------------------------------------------------------------------------
MANUFACTURING - 3.0%
Tyco International Ltd. 525,000 33,075,000
- -----------------------------------------------------------------------------------------
TECHNOLOGY - 39.4%
- -----------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.0%
Gulfstream Aerospace Corp.(1) 242,200 11,262,300
- -----------------------------------------------------------------------------------------
COMPUTER HARDWARE - 3.6%
Dell Computer Corp.(1) 100,000 9,281,250
- -----------------------------------------------------------------------------------------
EMC Corp.(1) 150,000 6,721,875
- -----------------------------------------------------------------------------------------
Telxon Corp. 397,500 12,869,063
- -----------------------------------------------------------------------------------------
Waters Corp.(1) 175,000 10,314,063
--------------
39,186,251
- -----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 24.1%
Aspen Technologies, Inc.(1) 125,700 6,347,850
- -----------------------------------------------------------------------------------------
AXENT Technologies, Inc.(1) 65,000 1,990,625
- -----------------------------------------------------------------------------------------
Cambridge Technology Partners, Inc.(1) 486,600 26,580,525
- -----------------------------------------------------------------------------------------
Cap Gemini SA 116,666 18,290,734
- -----------------------------------------------------------------------------------------
Citrix Systems, Inc.(1) 360,000 24,615,000
- -----------------------------------------------------------------------------------------
Compuware Corp.(1) 340,000 17,382,500
- -----------------------------------------------------------------------------------------
Electronic Arts, Inc.(1) 200,000 10,800,000
- -----------------------------------------------------------------------------------------
Harbinger Corp.(1) 327,250 7,915,359
- -----------------------------------------------------------------------------------------
HBO & Co. 760,000 26,790,000
- -----------------------------------------------------------------------------------------
I2 Technologies, Inc.(1) 225,000 7,903,125
- -----------------------------------------------------------------------------------------
JDA Software Group, Inc.(1) 420,000 18,375,000
- -----------------------------------------------------------------------------------------
Lernout & Hauspie Speech Products NV(1) 317,600 18,956,750
- -----------------------------------------------------------------------------------------
Microsoft Corp.(1) 75,000 8,128,125
- -----------------------------------------------------------------------------------------
Network Associates, Inc.(1) 300,000 14,362,500
- -----------------------------------------------------------------------------------------
Peoplesoft, Inc.(1) 150,000 7,050,000
- -----------------------------------------------------------------------------------------
Saville Systems Ireland plc, Sponsored ADR(1) 450,000 22,556,250
- -----------------------------------------------------------------------------------------
Sungard Data Systems, Inc.(1) 150,000 5,756,250
- -----------------------------------------------------------------------------------------
Visio Corp.(1) 380,500 18,168,875
--------------
261,969,468
- -----------------------------------------------------------------------------------------
ELECTRONICS - 2.1%
Sanmina Corp.(1) 260,000 11,277,500
- -----------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 370,000 11,423,750
--------------
22,701,250
- -----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 8.6%
Ascend Communications, Inc.(1) 200,000 9,912,500
</TABLE>
41
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Broadcom Corp., Cl. A(1) 4,500 $ 331,313
- -----------------------------------------------------------------------------------------
CIENA Corp.(1) 225,000 15,665,625
- -----------------------------------------------------------------------------------------
Cisco Systems, Inc. 75,000 6,904,688
- -----------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A(1) 400,000 9,950,000
- -----------------------------------------------------------------------------------------
Northern Telecom Ltd. 150,000 8,512,500
- -----------------------------------------------------------------------------------------
Tellabs, Inc.(1) 170,000 12,176,250
- -----------------------------------------------------------------------------------------
Uniphase Corp.(1) 223,000 14,000,219
- -----------------------------------------------------------------------------------------
WinStar Communications, Inc.(1) 380,000 16,316,250
--------------
93,769,345
- -----------------------------------------------------------------------------------------
UTILITIES - 1.1%
- -----------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 1.1%
Qwest Communications International, Inc.(1) 116,610 4,066,774
- -----------------------------------------------------------------------------------------
WorldCom, Inc.(1) 155,000 7,507,813
--------------
11,574,587
--------------
Total Common Stocks (Cost $748,434,098) 1,054,908,501
- -----------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.8%
- -----------------------------------------------------------------------------------------
L & H Capital Trust, Inc., 4.75% Cv. Preferred Income Equity
Redeemable Securities(2) (Cost $6,695,000) 132,500 8,446,875
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 1.0%
- -----------------------------------------------------------------------------------------
Comverse Technology, Inc., 4.50% Cv. Sub. Nts., 7/1/05(3) $ 5,000,000 5,093,750
- -----------------------------------------------------------------------------------------
Concentra Managed Care, Inc., 4.50% Cv. Sub. Nts.,
3/15/03(2) 2,300,000 2,075,750
- -----------------------------------------------------------------------------------------
United Waste Systems, Inc., 4.50% Cv. Sub. Nts., 6/1/01 2,000,000 3,362,500
--------------
Total Corporate Bonds and Notes (Cost $9,300,000) 10,532,000
- -----------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.6%
- -----------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings,
Inc., 5.90%, dated 6/30/98, to be repurchased at $28,004,589
on 7/1/98, collateralized by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19, with a value of $28,744,483
(Cost $28,000,000) 28,000,000 28,000,000
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $792,429,098) 101.3% 1,101,887,376
- -----------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.3) (13,943,749)
----------- --------------
NET ASSETS 100.0% $1,087,943,627
----------- --------------
----------- --------------
</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 $10,522,625 or 0.97% of the Fund's net
assets as of June 30, 1998.
3. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements.
See accompanying Notes to Financial Statements.
42
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 87.4%
- ---------------------------------------------------------------------------------------
BASIC MATERIALS - 2.8%
- ---------------------------------------------------------------------------------------
CHEMICALS - 2.8%
Crompton & Knowles Corp. 100,200 $ 2,523,787
- ---------------------------------------------------------------------------------------
Dexter Corp. 27,800 884,387
- ---------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 35,000 2,611,875
- ---------------------------------------------------------------------------------------
Ferro Corp. 85,000 2,151,562
- ---------------------------------------------------------------------------------------
Morton International, Inc. 139,000 3,475,000
- ---------------------------------------------------------------------------------------
PPG Industries, Inc. 95,000 6,608,437
------------
18,255,048
- ---------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 19.6%
- ---------------------------------------------------------------------------------------
AUTOS & HOUSING - 4.9%
Arvin Industries, Inc. 49,300 1,790,206
- ---------------------------------------------------------------------------------------
Boston Properties, Inc. 88,200 3,042,900
- ---------------------------------------------------------------------------------------
Budget Group, Inc., Cl. A(1) 238,600 7,620,287
- ---------------------------------------------------------------------------------------
Centex Corp. 136,000 5,134,000
- ---------------------------------------------------------------------------------------
Hertz Corp., Cl. A 65,000 2,880,312
- ---------------------------------------------------------------------------------------
Magna International, Inc., Cl. A 22,000 1,509,750
- ---------------------------------------------------------------------------------------
Pulte Corp. 44,000 1,314,500
- ---------------------------------------------------------------------------------------
Republic Industries, Inc.(1) 206,000 5,150,000
- ---------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 120,000 3,442,500
------------
31,884,455
- ---------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.0%
Callaway Golf Co. 147,700 2,907,844
- ---------------------------------------------------------------------------------------
Carnival Corp., Cl. A 290,000 11,491,250
- ---------------------------------------------------------------------------------------
CKE Restaurants, Inc. 120,000 4,950,000
- ---------------------------------------------------------------------------------------
Delta Air Lines, Inc. 23,100 2,985,675
- ---------------------------------------------------------------------------------------
Harrah's Entertainment, Inc.(1) 70,000 1,627,500
- ---------------------------------------------------------------------------------------
Time Warner, Inc. 30,000 2,563,125
------------
26,525,394
- ---------------------------------------------------------------------------------------
MEDIA - 2.8%
Belo (A.H.) Corp., Cl. A 98,200 2,393,625
- ---------------------------------------------------------------------------------------
New York Times Co. 78,000 6,181,500
- ---------------------------------------------------------------------------------------
Omnicom Group, Inc. 135,000 6,733,125
- ---------------------------------------------------------------------------------------
Young & Rubicam, Inc.(1) 97,200 3,110,400
------------
18,418,650
- ---------------------------------------------------------------------------------------
RETAIL: GENERAL - 5.5%
CVS Corp. 300,000 11,681,250
- ---------------------------------------------------------------------------------------
Dayton Hudson Corp. 68,000 3,298,000
- ---------------------------------------------------------------------------------------
Federated Department Stores, Inc.(1) 60,000 3,228,750
</TABLE>
43
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL: GENERAL (CONTINUED)
Jones Apparel Group, Inc.(1) 153,000 $ 5,594,062
- ---------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 111,800 6,987,500
- ---------------------------------------------------------------------------------------
WestPoint Stevens, Inc.(1) 154,400 5,095,200
------------
35,884,762
- ---------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 2.4%
Ethan Allen Interiors, Inc. 80,000 3,995,000
- ---------------------------------------------------------------------------------------
Gap, Inc. 35,500 2,187,687
- ---------------------------------------------------------------------------------------
Intimate Brands, Inc., Cl. A 45,000 1,240,312
- ---------------------------------------------------------------------------------------
Nine West Group, Inc.(1) 100,500 2,694,656
- ---------------------------------------------------------------------------------------
Tiffany & Co. 30,000 1,440,000
- ---------------------------------------------------------------------------------------
TJX Cos., Inc. 184,000 4,439,000
------------
15,996,655
- ---------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 13.2%
- ---------------------------------------------------------------------------------------
FOOD - 4.4%
Hershey Foods Corp. 20,000 1,380,000
- ---------------------------------------------------------------------------------------
Keebler Foods Co.(1) 100,400 2,761,000
- ---------------------------------------------------------------------------------------
Kroger Co.(1) 79,000 3,387,125
- ---------------------------------------------------------------------------------------
McCormick & Co., Inc., Non-Vtg. 94,900 3,389,709
- ---------------------------------------------------------------------------------------
Richfood Holdings, Inc. 92,200 1,907,387
- ---------------------------------------------------------------------------------------
Safeway, Inc.(1) 310,000 12,613,125
- ---------------------------------------------------------------------------------------
Smithfield Foods, Inc.(1) 82,000 2,501,000
- ---------------------------------------------------------------------------------------
U.S. Foodservice, Inc.(1) 27,600 967,725
------------
28,907,071
- ---------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.2%
Lilly (Eli) & Co. 40,000 2,642,500
- ---------------------------------------------------------------------------------------
Pfizer, Inc. 85,000 9,238,437
- ---------------------------------------------------------------------------------------
Schering-Plough Corp. 102,800 9,419,050
------------
21,299,987
- ---------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.9%
Baxter International, Inc. 53,000 2,852,062
- ---------------------------------------------------------------------------------------
Becton, Dickinson & Co. 51,000 3,958,875
- ---------------------------------------------------------------------------------------
First Health Group Corp.(1) 157,600 4,491,600
- ---------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 88,000 2,348,500
- ---------------------------------------------------------------------------------------
Lincare Holdings, Inc.(1) 70,000 2,944,375
- ---------------------------------------------------------------------------------------
Medtronic, Inc. 45,000 2,868,750
- ---------------------------------------------------------------------------------------
Minimed, Inc.(1) 46,800 2,451,150
- ---------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc.(1) 101,750 3,510,375
------------
25,425,687
- ---------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 1.1%
Avon Products, Inc. 90,000 6,975,000
</TABLE>
44
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
TOBACCO - 0.6%
Philip Morris Cos., Inc. 62,000 $ 2,441,250
- ---------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 63,000 1,496,250
------------
3,937,500
- ---------------------------------------------------------------------------------------
ENERGY - 2.9%
- ---------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.9%
BJ Services Co.(1) 50,000 1,453,125
- ---------------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 42,200 2,579,475
- ---------------------------------------------------------------------------------------
Global Industries Ltd.(1) 45,100 761,062
- ---------------------------------------------------------------------------------------
Halliburton Co. 101,800 4,536,462
- ---------------------------------------------------------------------------------------
Varco International, Inc.(1) 166,200 3,292,837
------------
12,622,961
- ---------------------------------------------------------------------------------------
OIL-INTEGRATED - 1.0%
Mobil Corp. 18,200 1,394,575
- ---------------------------------------------------------------------------------------
Texaco, Inc. 29,000 1,730,937
- ---------------------------------------------------------------------------------------
Total SA, Sponsored ADR 55,000 3,595,625
------------
6,721,137
- ---------------------------------------------------------------------------------------
FINANCIAL - 16.1%
- ---------------------------------------------------------------------------------------
BANKS - 5.1%
Banc One Corp. 124,488 6,947,998
- ---------------------------------------------------------------------------------------
BankBoston Corp. 30,000 1,668,750
- ---------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 31,280 2,361,640
- ---------------------------------------------------------------------------------------
Credito Italiano SpA 1,265,000 6,621,937
- ---------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 35,000 2,922,500
- ---------------------------------------------------------------------------------------
Greenpoint Financial Corp. 20,000 752,500
- ---------------------------------------------------------------------------------------
NationsBank Corp. 45,125 3,452,063
- ---------------------------------------------------------------------------------------
Skandinaviska Enskilda Banken Group 160,000 2,738,576
- ---------------------------------------------------------------------------------------
Star Banc Corp. 50,500 3,225,688
- ---------------------------------------------------------------------------------------
State Street Corp. 39,200 2,724,400
- ---------------------------------------------------------------------------------------
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) 9,500 280,250
------------
33,696,302
- ---------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 7.1%
Associates First Capital Corp., Cl. A 70,000 5,381,250
- ---------------------------------------------------------------------------------------
CMAC Investment Corp. 52,800 3,247,200
- ---------------------------------------------------------------------------------------
Fannie Mae 36,000 2,187,000
- ---------------------------------------------------------------------------------------
Finova Group, Inc. 60,800 3,442,800
- ---------------------------------------------------------------------------------------
Franklin Resources, Inc. 71,200 3,844,800
- ---------------------------------------------------------------------------------------
Freddie Mac 60,000 2,823,750
- ---------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 65,000 5,996,250
- ---------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 40,200 3,673,275
</TABLE>
45
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Price (T. Rowe) Associates, Inc. 61,000 $ 2,291,313
- ---------------------------------------------------------------------------------------
Schwab (Charles) Corp. 30,000 975,000
- ---------------------------------------------------------------------------------------
Travelers Group, Inc. 208,499 12,640,252
------------
46,502,890
- ---------------------------------------------------------------------------------------
INSURANCE - 3.9%
Conseco, Inc. 173,000 8,087,750
- ---------------------------------------------------------------------------------------
Equitable Cos., Inc. 82,000 6,144,875
- ---------------------------------------------------------------------------------------
Life Re Corp. 60,500 4,961,000
- ---------------------------------------------------------------------------------------
Progressive Corp. 15,000 2,115,000
- ---------------------------------------------------------------------------------------
SunAmerica, Inc. 78,500 4,508,844
------------
25,817,469
- ---------------------------------------------------------------------------------------
INDUSTRIAL - 6.2%
- ---------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
Emerson Electric Co. 45,000 2,716,875
- ---------------------------------------------------------------------------------------
General Electric Co. 14,000 1,274,000
------------
3,990,875
- ---------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 1.3%
Owens-Illinois, Inc.(1) 42,800 1,915,300
- ---------------------------------------------------------------------------------------
Rayonier, Inc. 32,400 1,490,400
- ---------------------------------------------------------------------------------------
Southdown, Inc. 70,300 5,017,663
------------
8,423,363
- ---------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.7%
AccuStaff, Inc.(1) 116,000 3,625,000
- ---------------------------------------------------------------------------------------
Corrections Corp. of America(1) 55,000 1,292,500
------------
4,917,500
- ---------------------------------------------------------------------------------------
MANUFACTURING - 2.4%
American Standard Cos., Inc.(1) 58,400 2,609,750
- ---------------------------------------------------------------------------------------
Cooper Industries, Inc. 43,000 2,362,313
- ---------------------------------------------------------------------------------------
Herman Miller, Inc. 120,000 2,917,500
- ---------------------------------------------------------------------------------------
Illinois Tool Works, Inc. 49,000 3,267,688
- ---------------------------------------------------------------------------------------
Tyco International Ltd. 75,000 4,725,000
------------
15,882,251
- ---------------------------------------------------------------------------------------
TRANSPORTATION - 1.2%
Kansas City Southern Industries, Inc. 153,000 7,592,625
- ---------------------------------------------------------------------------------------
TECHNOLOGY - 24.4%
- ---------------------------------------------------------------------------------------
COMPUTER HARDWARE - 5.9%
Compaq Computer Corp. 235,000 6,668,125
- ---------------------------------------------------------------------------------------
Dell Computer Corp.(1) 65,000 6,032,813
- ---------------------------------------------------------------------------------------
EMC Corp.(1) 98,000 4,391,625
- ---------------------------------------------------------------------------------------
Gateway 2000, Inc.(1) 115,600 5,852,250
- ---------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 180,000 4,286,250
</TABLE>
46
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER HARDWARE (CONTINUED)
Sun Microsystems, Inc.(1) 68,000 $ 2,953,750
- ---------------------------------------------------------------------------------------
Waters Corp.(1) 100,000 5,893,750
- ---------------------------------------------------------------------------------------
Western Digital Corp.(1) 217,000 2,563,313
------------
38,641,876
- ---------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 10.5%
BMC Software, Inc.(1) 156,800 8,143,800
- ---------------------------------------------------------------------------------------
Cambridge Technology Partners, Inc.(1) 91,300 4,987,263
- ---------------------------------------------------------------------------------------
Computer Associates International, Inc. 41,000 2,278,063
- ---------------------------------------------------------------------------------------
Computer Sciences Corp. 40,000 2,560,000
- ---------------------------------------------------------------------------------------
Gartner Group, Inc., Cl. A(1) 91,000 3,185,000
- ---------------------------------------------------------------------------------------
HBO & Co. 130,000 4,582,500
- ---------------------------------------------------------------------------------------
Microsoft Corp.(1) 180,000 19,507,500
- ---------------------------------------------------------------------------------------
Network Associates, Inc.(1) 127,350 6,096,881
- ---------------------------------------------------------------------------------------
Peoplesoft, Inc.(1) 166,000 7,802,000
- ---------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(1) 120,300 3,436,069
- ---------------------------------------------------------------------------------------
Sungard Data Systems, Inc.(1) 163,300 6,266,638
------------
68,845,714
- ---------------------------------------------------------------------------------------
ELECTRONICS - 2.3%
LSI Logic Corp.(1) 63,000 1,452,938
- ---------------------------------------------------------------------------------------
Texas Instruments, Inc. 103,000 6,006,188
- ---------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 246,400 7,607,600
------------
15,066,726
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 5.7%
CIENA Corp.(1) 94,300 6,565,638
- ---------------------------------------------------------------------------------------
Cisco Systems, Inc. 120,000 11,047,500
- ---------------------------------------------------------------------------------------
General Instrument Corp.(1) 210,000 5,709,375
- ---------------------------------------------------------------------------------------
Newbridge Networks Corp.(1) 67,000 1,603,813
- ---------------------------------------------------------------------------------------
Premisys Communications, Inc.(1) 110,000 2,736,250
- ---------------------------------------------------------------------------------------
Tellabs, Inc.(1) 110,000 7,878,750
- ---------------------------------------------------------------------------------------
Uniphase Corp.(1) 35,900 2,253,847
------------
37,795,173
- ---------------------------------------------------------------------------------------
UTILITIES - 2.2%
- ---------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.2%
Qwest Communications International, Inc.(1) 118,942 4,148,102
- ---------------------------------------------------------------------------------------
SBC Communications, Inc. 70,000 2,800,000
- ---------------------------------------------------------------------------------------
WorldCom, Inc.(1) 161,000 7,798,438
------------
14,746,540
------------
Total Common Stocks (Cost $415,248,197) 574,773,611
</TABLE>
47
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 13.3%
- ---------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings,
Inc., 5.90%, dated 6/30/98, to be repurchased at $87,114,275
on 7/1/98, collateralized by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19, with a value of $89,415,875
(Cost $87,100,000) $87,100,000 $87,100,000
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $502,348,197) 100.7% 661,873,611
- ---------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.7) (4,393,694)
----------- ------------
NET ASSETS 100.0% $657,479,917
----------- ------------
----------- ------------
</TABLE>
1. Non-income producing security.
2. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
48
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 50.8%
- ---------------------------------------------------------------------------------------
BASIC MATERIALS - 2.0%
- ---------------------------------------------------------------------------------------
CHEMICALS - 1.2%
Bayer AG, Sponsored ADR 47,000 $ 2,431,973
- ---------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 20,000 1,492,500
- ---------------------------------------------------------------------------------------
IMC Global, Inc. 36,000 1,084,500
- ---------------------------------------------------------------------------------------
Morton International, Inc. 44,000 1,100,000
- ---------------------------------------------------------------------------------------
Potash Corp. of Saskatchewan, Inc. 25,000 1,889,062
------------
7,998,035
- ---------------------------------------------------------------------------------------
METALS - 0.2%
Alumax, Inc.(1) 300 13,912
- ---------------------------------------------------------------------------------------
De Beers Consolidated Mines Ltd., ADR 70,000 1,225,000
------------
1,238,912
- ---------------------------------------------------------------------------------------
PAPER - 0.6%
Aracruz Celulose SA, Sponsored ADR 92,000 1,052,250
- ---------------------------------------------------------------------------------------
MacMillan Bloedel Ltd. 148,773 1,588,350
- ---------------------------------------------------------------------------------------
Wausau-Mosinee Paper Corp. 64,000 1,464,000
------------
4,104,600
- ---------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 9.5%
- ---------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.0%
Chastain Capital Corp. 92,500 1,190,937
- ---------------------------------------------------------------------------------------
Dana Corp. 33,000 1,765,500
- ---------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 357,510 1,051,206
- ---------------------------------------------------------------------------------------
Post Properties, Inc. 28,000 1,078,000
- ---------------------------------------------------------------------------------------
Toll Brothers, Inc.(2) 46,000 1,319,625
------------
6,405,268
- ---------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.5%
Alaska Air Group, Inc.(1)(2) 40,000 2,182,500
- ---------------------------------------------------------------------------------------
AMR Corp.(1)(2) 33,000 2,747,250
- ---------------------------------------------------------------------------------------
Berjaya Sports Toto Berhad 410,000 607,957
- ---------------------------------------------------------------------------------------
Brunswick Corp. 40,000 990,000
- ---------------------------------------------------------------------------------------
Callaway Golf Co. 98,500 1,939,219
- ---------------------------------------------------------------------------------------
Cracker Barrel Old Country Store, Inc.(1) 69,000 2,190,750
- ---------------------------------------------------------------------------------------
Host Marriott Corp.(2) 72,500 1,291,406
- ---------------------------------------------------------------------------------------
International Game Technology(1) 105,000 2,546,250
- ---------------------------------------------------------------------------------------
Luby's Cafeterias, Inc. 79,000 1,387,437
- ---------------------------------------------------------------------------------------
Mirage Resorts, Inc.(2) 150,000 3,196,875
- ---------------------------------------------------------------------------------------
Nintendo Co. Ltd. 32,000 2,962,867
- ---------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1)(2) 6,800 265,200
</TABLE>
49
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
Shangri-La Asia Ltd. 535,000 $ 345,225
- ---------------------------------------------------------------------------------------
Shimano, Inc. 100,000 2,536,297
- ---------------------------------------------------------------------------------------
SkyWest, Inc.(1) 50,000 1,400,000
- ---------------------------------------------------------------------------------------
Time Warner, Inc. 25,000 2,135,937
- ---------------------------------------------------------------------------------------
West Marine, Inc.(2) 105,000 1,890,000
------------
30,615,170
- ---------------------------------------------------------------------------------------
MEDIA - 1.2%
CBS Corp.(1) 113,026 3,588,575
- ---------------------------------------------------------------------------------------
MediaOne Group, Inc.(2) 72,000 3,163,500
- ---------------------------------------------------------------------------------------
South China Morning Post Holdings Ltd. 2,258,000 1,085,496
------------
7,837,571
- ---------------------------------------------------------------------------------------
RETAIL: GENERAL - 1.2%
Cone Mills Corp.(2) 223,000 1,923,375
- ---------------------------------------------------------------------------------------
Dayton Hudson Corp.(1) 36,000 1,746,000
- ---------------------------------------------------------------------------------------
Federated Department Stores, Inc.(1)(2) 41,000 2,206,312
- ---------------------------------------------------------------------------------------
Neiman Marcus Group, Inc.(2) 56,000 2,432,500
------------
8,308,187
- ---------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.6%
AutoZone, Inc.(2) 53,100 1,695,881
- ---------------------------------------------------------------------------------------
Books-A-Million, Inc.(2) 300,000 1,387,500
- ---------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(1) 82,000 2,552,250
- ---------------------------------------------------------------------------------------
Gymboree Corp.(1)(2) 58,000 879,062
- ---------------------------------------------------------------------------------------
JLK Direct Distribution, Inc.(2) 60,000 1,312,500
- ---------------------------------------------------------------------------------------
Petco Animal Supplies, Inc.(1)(2) 60,000 1,196,250
- ---------------------------------------------------------------------------------------
Saks Holdings, Inc.(2) 60,000 1,657,500
------------
10,680,943
- ---------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 7.8%
- ---------------------------------------------------------------------------------------
BEVERAGES - 0.5%
Coca-Cola Amatil Ltd. 55,000 367,833
- ---------------------------------------------------------------------------------------
Diageo plc 155,800 1,853,648
- ---------------------------------------------------------------------------------------
Whitman Corp. 62,000 1,422,125
------------
3,643,606
- ---------------------------------------------------------------------------------------
FOOD - 0.6%
Groupe Danone 10,000 2,751,052
- ---------------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 14,000 1,498,010
------------
4,249,062
- ---------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.9%
Abbott Laboratories 57,000 2,329,875
- ---------------------------------------------------------------------------------------
American Home Products Corp.(1) 77,000 3,984,750
- ---------------------------------------------------------------------------------------
Astra AB Free, Series A 120,000 2,452,681
</TABLE>
50
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS (CONTINUED)
BioChem Pharma, Inc.(2) 60,000 $ 1,590,000
- ---------------------------------------------------------------------------------------
Bristol-Myers Squibb Co.(1) 11,000 1,264,313
- ---------------------------------------------------------------------------------------
Centocor, Inc.(2) 44,000 1,595,000
- ---------------------------------------------------------------------------------------
CliniChem Development, Inc. 1,500 8,625
- ---------------------------------------------------------------------------------------
Genzyme Corp. (General Division)(1)(2) 65,000 1,661,562
- ---------------------------------------------------------------------------------------
Johnson & Johnson(1) 40,000 2,950,000
- ---------------------------------------------------------------------------------------
Mylan Laboratories, Inc.(1) 75,000 2,254,688
- ---------------------------------------------------------------------------------------
Novartis AG 2,000 3,328,035
- ---------------------------------------------------------------------------------------
SmithKline Beecham plc, Sponsored ADR, Cl. A(1) 46,000 2,783,000
------------
26,202,529
- ---------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 1.4%
Acuson Corp.(2) 61,500 1,118,531
- ---------------------------------------------------------------------------------------
Alternative Living Services, Inc.(2) 70,000 1,890,000
- ---------------------------------------------------------------------------------------
Biomet, Inc.(1) 50,000 1,653,125
- ---------------------------------------------------------------------------------------
Boston Scientific Corp.(1)(2) 16,000 1,146,000
- ---------------------------------------------------------------------------------------
Innovasive Devices, Inc.(2) 110,000 1,031,250
- ---------------------------------------------------------------------------------------
Manor Care, Inc.(1) 8,800 338,250
- ---------------------------------------------------------------------------------------
United Healthcare Corp.(1) 32,800 2,082,800
------------
9,259,956
- ---------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.6%
Fort James Corp. 37,000 1,646,500
- ---------------------------------------------------------------------------------------
Wella AG 2,150 2,128,831
- ---------------------------------------------------------------------------------------
Wella AG, Preference 200 225,689
------------
4,001,020
- ---------------------------------------------------------------------------------------
TOBACCO - 0.8%
Imperial Tobacco Group plc 260,000 1,916,291
- ---------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 87,000 3,425,625
------------
5,341,916
- ---------------------------------------------------------------------------------------
ENERGY - 3.5%
- ---------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.3%
Coflexip SA, Sponsored ADR 5,000 305,625
- ---------------------------------------------------------------------------------------
Input/Output, Inc.(1)(2) 138,000 2,458,125
- ---------------------------------------------------------------------------------------
Santa Fe International Corp.(1) 72,500 2,193,125
- ---------------------------------------------------------------------------------------
Schlumberger Ltd. 15,000 1,024,688
- ---------------------------------------------------------------------------------------
Transocean Offshore, Inc. 55,000 2,447,500
- ---------------------------------------------------------------------------------------
Western Atlas, Inc.(1)(2) 7,200 611,100
------------
9,040,163
- ---------------------------------------------------------------------------------------
OIL-INTEGRATED - 2.2%
Comstock Resources, Inc.(2) 60,800 452,200
- ---------------------------------------------------------------------------------------
Enron Corp. 40,000 2,162,500
</TABLE>
51
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED (CONTINUED)
Kerr-McGee Corp. 33,000 $ 1,909,875
- ---------------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 3,330,000 619,009
- ---------------------------------------------------------------------------------------
Royal Dutch Petroleum Co., NY Shares 30,800 1,688,225
- ---------------------------------------------------------------------------------------
Talisman Energy, Inc.(2) 95,510 2,734,346
- ---------------------------------------------------------------------------------------
Total SA, Sponsored ADR 17,501 1,144,128
- ---------------------------------------------------------------------------------------
Unocal Corp. 65,000 2,323,750
- ---------------------------------------------------------------------------------------
YPF SA, Cl. D, ADR 65,000 1,954,063
------------
14,988,096
- ---------------------------------------------------------------------------------------
FINANCIAL - 12.6%
- ---------------------------------------------------------------------------------------
BANKS - 7.0%
ABN Amro Holding NV 62,700 1,467,156
- ---------------------------------------------------------------------------------------
Banc One Corp. 20,000 1,116,250
- ---------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 95,000 698,334
- ---------------------------------------------------------------------------------------
Chase Manhattan Corp. (New)(1) 177,000 13,363,500
- ---------------------------------------------------------------------------------------
Credit Suisse Group 5,225 1,162,595
- ---------------------------------------------------------------------------------------
Credito Italiano SpA 460,700 2,411,641
- ---------------------------------------------------------------------------------------
Deutsche Bank AG 11,400 963,873
- ---------------------------------------------------------------------------------------
Fleet Financial Group, Inc.(1) 19,000 1,586,500
- ---------------------------------------------------------------------------------------
Morgan J.P. & Co., Inc. 10,000 1,171,250
- ---------------------------------------------------------------------------------------
NationsBank Corp.(1) 160,000 12,240,000
- ---------------------------------------------------------------------------------------
PNC Bank Corp. 30,500 1,641,281
- ---------------------------------------------------------------------------------------
Societe Generale 26,200 5,435,003
- ---------------------------------------------------------------------------------------
UBS AG 4,175 1,552,402
- ---------------------------------------------------------------------------------------
Wells Fargo & Co. 6,500 2,398,500
------------
47,208,285
- ---------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 1.6%
American Express Co.(1) 22,800 2,599,200
- ---------------------------------------------------------------------------------------
CRIIMI MAE, Inc. 100,000 1,387,500
- ---------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.(1) 26,200 2,416,950
- ---------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.(1) 45,800 4,184,975
------------
10,588,625
- ---------------------------------------------------------------------------------------
FINANCIAL - 0.2%
Cornerstone Properties, Inc. 68,000 1,198,500
- ---------------------------------------------------------------------------------------
INSURANCE - 1.6%
ACE Ltd. 54,000 2,106,000
- ---------------------------------------------------------------------------------------
Cigna Corp.(1) 28,000 1,932,000
- ---------------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 52,500 2,017,969
- ---------------------------------------------------------------------------------------
Skandia Forsakrings AB 162,000 2,315,752
- ---------------------------------------------------------------------------------------
UNUM Corp. 48,600 2,697,300
------------
11,069,021
</TABLE>
52
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS - 2.2%
Avalon Bay Communities, Inc. 30,732 $ 1,167,816
- ---------------------------------------------------------------------------------------
Brandywine Realty Trust 56,000 1,253,000
- ---------------------------------------------------------------------------------------
Camden Property Trust 40,000 1,190,000
- ---------------------------------------------------------------------------------------
CarrAmerica Realty Corp. 48,000 1,362,000
- ---------------------------------------------------------------------------------------
Chelsea GCA Realty, Inc. 32,000 1,280,000
- ---------------------------------------------------------------------------------------
Developers Diversified Realty Corp. 31,000 1,214,813
- ---------------------------------------------------------------------------------------
JDN Realty Corp. 40,000 1,275,000
- ---------------------------------------------------------------------------------------
Manufactured Home Communities, Inc. 44,000 1,061,500
- ---------------------------------------------------------------------------------------
Security Capital Pacific Trust 52,000 1,170,000
- ---------------------------------------------------------------------------------------
Shurgard Storage Centers, Inc. 44,000 1,221,000
- ---------------------------------------------------------------------------------------
Simon DeBartolo Group, Inc. 37,500 1,218,750
- ---------------------------------------------------------------------------------------
Sunstone Hotel Investors, Inc. 80,000 1,065,000
------------
14,478,879
- ---------------------------------------------------------------------------------------
INDUSTRIAL - 2.8%
- ---------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.5%
Methode Electronics, Inc., Cl. A 105,000 1,627,500
- ---------------------------------------------------------------------------------------
Rockwell International Corp. 36,300 1,744,669
------------
3,372,169
- ---------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.4%
Owens Corning 63,000 2,571,188
- ---------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.1%
Children's Comprehensive Services, Inc.(2) 40,000 595,000
- ---------------------------------------------------------------------------------------
MANUFACTURING - 1.1%
AGCO Corp. 79,000 1,624,438
- ---------------------------------------------------------------------------------------
Cognex Corp.(2) 70,000 1,295,000
- ---------------------------------------------------------------------------------------
Hutchison Whampoa Ltd. 35,000 184,744
- ---------------------------------------------------------------------------------------
Pall Corp. 105,000 2,152,500
- ---------------------------------------------------------------------------------------
Tenneco, Inc. (New) 63,000 2,397,938
------------
7,654,620
- ---------------------------------------------------------------------------------------
TRANSPORTATION - 0.7%
Burlington Northern Santa Fe Corp. 28,000 2,749,250
- ---------------------------------------------------------------------------------------
Stolt-Nielsen SA 64,200 1,099,425
- ---------------------------------------------------------------------------------------
Stolt-Nielsen SA, Sponsored ADR 17,650 306,669
- ---------------------------------------------------------------------------------------
Transportacion Maritima Mexicana SA de CV, Sponsored ADR, L
Shares(2) 130,000 861,250
------------
5,016,594
- ---------------------------------------------------------------------------------------
TECHNOLOGY - 10.6%
- ---------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.3%
Lockheed Martin Corp.(1) 18,000 1,905,750
- ---------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.4%
Adaptec, Inc.(2) 88,000 1,259,500
- ---------------------------------------------------------------------------------------
Cabletron Systems, Inc.(2) 67,500 907,031
</TABLE>
53
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER HARDWARE (CONTINUED)
Canon, Inc. 50,000 $ 1,134,849
- ---------------------------------------------------------------------------------------
Hewlett-Packard Co.(1) 39,000 2,335,125
- ---------------------------------------------------------------------------------------
International Business Machines Corp. 60,000 6,888,750
- ---------------------------------------------------------------------------------------
Xerox Corp.(1) 34,700 3,526,388
------------
16,051,643
- ---------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.8%
America Online, Inc.(1) 33,700 3,572,200
- ---------------------------------------------------------------------------------------
Broderbund Software, Inc.(2) 74,000 1,688,125
- ---------------------------------------------------------------------------------------
Computer Associates International, Inc.(1) 67,499 3,750,441
- ---------------------------------------------------------------------------------------
Electronic Arts, Inc.(1)(2) 27,000 1,458,000
- ---------------------------------------------------------------------------------------
First Data Corp.(1) 80,500 2,681,656
- ---------------------------------------------------------------------------------------
Novell, Inc.(2) 139,000 1,772,250
- ---------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(2) 62,500 1,785,156
- ---------------------------------------------------------------------------------------
Rational Software Corp.(1)(2) 133,000 2,028,250
- ---------------------------------------------------------------------------------------
Sabre Group Holdings, Inc.(2) 66,100 2,511,800
- ---------------------------------------------------------------------------------------
SELECT Software Tools Ltd., ADR(2) 120,000 555,000
- ---------------------------------------------------------------------------------------
Structural Dynamics Research Corp.(2) 167 3,862
- ---------------------------------------------------------------------------------------
Symantec Corp.(1)(2) 49,764 1,300,085
- ---------------------------------------------------------------------------------------
Synopsys, Inc.(1)(2) 31,000 1,418,250
- ---------------------------------------------------------------------------------------
Transition Systems, Inc.(1)(2) 71,400 758,625
------------
25,283,700
- ---------------------------------------------------------------------------------------
ELECTRONICS - 2.6%
Analog Devices, Inc.(2) 22,500 552,656
- ---------------------------------------------------------------------------------------
CAE, Inc. 131,535 1,113,610
- ---------------------------------------------------------------------------------------
Credence Systems Corp.(2) 34,000 646,000
- ---------------------------------------------------------------------------------------
General Motors Corp., Cl. H(1) 42,200 1,988,675
- ---------------------------------------------------------------------------------------
Intel Corp.(1) 108,000 8,005,500
- ---------------------------------------------------------------------------------------
Keyence Corp. 9,000 979,212
- ---------------------------------------------------------------------------------------
Nokia Corp., A Shares, Sponsored ADR(1) 17,100 1,240,819
- ---------------------------------------------------------------------------------------
STMicroelectronics NV(1)(2) 17,500 1,222,813
- ---------------------------------------------------------------------------------------
Teradyne, Inc.(1)(2) 18,500 494,875
- ---------------------------------------------------------------------------------------
Xilinx, Inc.(1)(2) 45,000 1,530,000
------------
17,774,160
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.5%
Airtouch Communications, Inc.(2) 38,000 2,220,625
- ---------------------------------------------------------------------------------------
CIENA Corp.(1)(2) 35,000 2,436,875
- ---------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 36,000 3,314,250
- ---------------------------------------------------------------------------------------
ECI Telecommunications Ltd.(1) 29,800 1,128,675
- ---------------------------------------------------------------------------------------
Newbridge Networks Corp.(2) 10,700 256,131
</TABLE>
54
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
QUALCOMM, Inc.(1)(2) 19,000 $ 1,067,563
------------
10,424,119
- ---------------------------------------------------------------------------------------
UTILITIES - 2.0%
- ---------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Allegheny Energy, Inc. 48,000 1,446,000
- ---------------------------------------------------------------------------------------
Houston Industries, Inc. 76,000 2,346,500
- ---------------------------------------------------------------------------------------
Southern Co. 72,000 1,993,500
------------
5,786,000
- ---------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 1.1%
MCI Communications Corp. 57,000 3,313,124
- ---------------------------------------------------------------------------------------
Qwest Communications International, Inc.(2) 22,000 767,250
- ---------------------------------------------------------------------------------------
SBC Communications, Inc. 44,000 1,760,000
- ---------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 8,100,000 644,298
- ---------------------------------------------------------------------------------------
U S West, Inc.(1) 21,000 987,000
------------
7,471,672
------------
Total Common Stocks (Cost $241,662,064) 342,364,959
- ---------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.7%
- ---------------------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cv.(3) 20,000 1,162,500
- ---------------------------------------------------------------------------------------
ICG Communications, Inc., 6.75% Cv. Preferred Stock(3) 25,000 2,090,625
- ---------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv. Preferred Stock(3) 30,000 1,668,750
- ---------------------------------------------------------------------------------------
Time Warner, Inc., 10.25% Exchangeable Preferred, Series
M(4) 1 1,170
------------
Total Preferred Stocks (Cost $4,231,250) 4,923,045
UNITS
- ---------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ---------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99(5) 6,000 60
- ---------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 9,232 69,240
- ---------------------------------------------------------------------------------------
IHF Capital, Inc., Series I Wts., Exp. 11/99(5) 1,000 10,125
- ---------------------------------------------------------------------------------------
Perkin-Elmer Corp. Wts., Exp. 9/03 249 1,183
- ---------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 5/02(5) 4,000 92,500
------------
Total Rights, Warrants and Certificates (Cost $20,772) 173,108
PRINCIPAL
AMOUNT(6)
- ---------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 2.3%
- ---------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50%, 11/1/27-12/1/27 $ 7,831,380 4,912,050
- ---------------------------------------------------------------------------------------
Government National Mortgage Assn.:
7%, 7/1/28(7) 6,000,000 6,095,640
8%, 7/15/22-4/15/23 3,517,277 3,657,708
</TABLE>
55
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(6) NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- ---------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 $ 660,862 $ 666,707
------------
Total Mortgage-Backed Obligations (Cost $15,214,092) 15,332,105
- ---------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 11.0%
- ---------------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.875%, 8/15/17 2,900,000 3,955,783
STRIPS:
7.101%, 11/15/18(8) 24,500,000 7,674,135
7.258%, 11/15/18(8) 18,600,000 5,826,078
7.313%, 8/15/19(8) 26,800,000 8,042,278
- ---------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02 15,000,000 15,192,195
6.125%, 9/30/00 15,000,000 15,192,195
6.25%, 2/15/07 8,800,000 9,220,754
6.375%, 8/15/02 5,000,000 5,153,130
6.50%, 10/15/06 3,710,000 3,941,879
------------
Total U.S. Government Obligations (Cost $67,756,501) 74,198,427
- ---------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 17.5%
- ---------------------------------------------------------------------------------------
ARGENTINA - 6.2%
Argentina (Republic of) Bonds:
Bonos de Consolidacion de Deudas,
Series I, 5.667%, 4/1/01(9) 1,788,722 1,702,450
Series L, 6.625%, 3/31/05(9) 8,740,000 7,748,010
- ---------------------------------------------------------------------------------------
Argentina (Republic of) Nts., 9.15%, 11/30/02(9) 15,000,000 14,906,250
- ---------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 5.75%, 3/31/23(10) 23,750,000 17,678,906
------------
42,035,616
- ---------------------------------------------------------------------------------------
AUSTRALIA - 0.5%
New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04(AUD) 3,160,000 2,086,477
- ---------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts., 10.50%,
5/15/03(AUD) 1,800,000 1,348,599
------------
3,435,076
- ---------------------------------------------------------------------------------------
CANADA - 2.6%
Canada (Government of) Bonds:
8.50%, 4/1/02(CAD) 1,500,000 1,130,797
8.75%, 12/1/05(CAD) 12,200,000 10,021,468
9.75%, 12/1/01(CAD) 3,000,000 2,321,817
9.75%, 6/1/01(CAD) 2,000,000 1,523,343
Series WL43, 5.75%, 6/1/29(CAD) 3,670,000 2,618,990
------------
17,616,415
- ---------------------------------------------------------------------------------------
DENMARK - 0.8%
Denmark (Kingdom of) Bonds, 8%, 3/15/06(DKK) 32,100,000 5,587,264
- ---------------------------------------------------------------------------------------
GREAT BRITAIN - 1.1%
United Kingdom Treasury Bonds, 6.75%,
11/26/04(GBP) 2,680,000 4,621,123
</TABLE>
56
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(6) NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------
GREAT BRITAIN (CONTINUED)
United Kingdom Treasury Nts., 13%, 7/14/00(GBP) $ 1,590,000 $ 2,944,629
------------
7,565,752
- ---------------------------------------------------------------------------------------
IRELAND - 0.3%
Ireland (Government of) Bonds, 9.25%, 7/11/03(IEP) 1,110,000 1,854,823
- ---------------------------------------------------------------------------------------
MEXICO - 0.6%
United Mexican States Collateralized Fixed Rate Par Bonds,
Series A, 6.25%,
12/31/19 4,450,000 3,696,281
- ---------------------------------------------------------------------------------------
NEW ZEALAND - 4.4%
New Zealand (Government of) Bonds:
10%, 3/15/02(NZD) 16,800,000 9,557,501
8%, 2/15/01(NZD) 19,440,000 10,292,752
- ---------------------------------------------------------------------------------------
New Zealand (Government of) Nts., 6.50%, 2/15/00(NZD) 18,600,000 9,535,485
------------
29,385,738
- ---------------------------------------------------------------------------------------
PHILIPPINES - 0.4%
Philippines (Republic of) Bonds, 8.60%, 6/15/27 1,500,000 1,293,750
- ---------------------------------------------------------------------------------------
Philippines (Republic of) Par Bonds, Series B, 6.50%,
12/1/17(5)(10) 1,675,000 1,476,094
------------
2,769,844
- ---------------------------------------------------------------------------------------
POLAND - 0.4%
Poland (Republic of) Bonds, 15%, 10/12/99(PLZ) 9,000,000 2,439,043
- ---------------------------------------------------------------------------------------
SOUTH AFRICA - 0.2%
Eskom Depositary Receipts, Series E168, 11%, 6/1/08(ZAR) 12,570,000 1,659,194
------------
Total Foreign Government Obligations (Cost $116,588,098) 118,045,046
- ---------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 7.7%
- ---------------------------------------------------------------------------------------
BASIC MATERIALS - 1.1%
- ---------------------------------------------------------------------------------------
CHEMICALS - 0.3%
Harris Chemical North America, Inc., 10.75% Gtd. Sr. Sub.
Nts., 10/15/03 100,000 105,625
- ---------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B,
9/15/07 500,000 490,000
- ---------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 85,000 94,031
- ---------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts.,
8/15/06 1,115,000 1,120,575
------------
1,810,231
- ---------------------------------------------------------------------------------------
METALS - 0.4%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 1,150,000 1,207,500
- ---------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts.,
2/1/03 1,000,000 1,067,500
- ---------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 472,500
------------
2,747,500
- ---------------------------------------------------------------------------------------
PAPER - 0.4%
APP International Finance Co. BV, 11.75% Gtd. Sec. Nts.,
10/1/05 500,000 441,250
</TABLE>
57
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(6) NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------
PAPER (CONTINUED)
Aracruz Celulose SA, 10.375% Debs., 1/31/02 $ 430,000 $ 425,700
- ---------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 425,000 438,812
- ---------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts.,
8/1/07 500,000 522,500
- ---------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 750,000 833,437
------------
2,661,699
- ---------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 2.3%
- ---------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.5%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B,
7/15/07 500,000 507,500
- ---------------------------------------------------------------------------------------
Chrysler Financial Corp., 13.25% Nts., 10/15/99 500,000 544,088
- ---------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 500,000 562,500
- ---------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B,
7/15/02 1,000,000 1,040,000
- ---------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 400,000 400,500
------------
3,054,588
- ---------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 0.5%
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 250,000 283,750
- ---------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 500,000 550,000
- ---------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05(3) 500,000 515,000
- ---------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 750,000 840,000
- ---------------------------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01 600,000 627,750
- ---------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50% Gtd. Sr. Sub. Nts., 4/15/07 750,000 789,375
------------
3,605,875
- ---------------------------------------------------------------------------------------
MEDIA - 1.3%
American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts.,
6/15/04(11) 157,000 40,035
- ---------------------------------------------------------------------------------------
Cablevision Systems Corp. Holdings, Inc., 9.875% Sr. Sub.
Nts., 5/15/06 250,000 274,375
- ---------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts.,
7/1/07 400,000 422,000
- ---------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts.,
6/1/04(11) 540,000 529,200
- ---------------------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs.,
4/15/10(3)(11) 600,000 391,500
- ---------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B,
11/1/03(9) 550,000 591,250
- ---------------------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 150,000 161,250
- ---------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,042,676
- ---------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec.
Debs., 12/1/07 1,000,000 1,115,000
- ---------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 517,500
9% Gtd. Sr. Sub. Nts., 7/15/07 450,000 470,250
- ---------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts.,
2/15/07 200,000 200,000
- ---------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 500,000 663,705
- ---------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 616,706
- ---------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,095,746
</TABLE>
58
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(6) NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 $ 900,000 $ 938,250
------------
9,069,443
- ---------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 0.8%
- ---------------------------------------------------------------------------------------
FOOD - 0.4%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 300,000 313,500
10.625% Sr. Sub. Nts., Series B, 7/31/07 800,000 838,000
- ---------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series
B, 7/1/07 800,000 848,000
- ---------------------------------------------------------------------------------------
RJR Nabisco, Inc., 8.625% Medium-Term Nts., 12/1/02 500,000 518,632
- ---------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9% Sr. Unsec. Sub. Nts.,
7/1/04 500,000 512,500
------------
3,030,632
- ---------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.0%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts.,
9/15/07 220,000 231,000
- ---------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.2%
Sun Healthcare Group, Inc., 9.375% Sr. Sub. Nts., 5/1/08(3) 1,000,000 1,015,000
- ---------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Revlon Consumer Products Corp., 8.625% Sr. Unsec. Sub. Nts.,
2/1/08 500,000 503,125
- ---------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
10.085%, 3/15/01(8) 1,000,000 780,000
------------
1,283,125
- ---------------------------------------------------------------------------------------
ENERGY - 0.4%
- ---------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.4%
Gothic Production Corp., 11.125% Sr. Sec. Nts., 5/1/05(3) 950,000 914,375
- ---------------------------------------------------------------------------------------
Grey Wolf, Inc., 8.875% Sr. Nts., 7/1/07(3) 1,000,000 970,000
- ---------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 535,000 577,800
------------
2,462,175
- ---------------------------------------------------------------------------------------
FINANCIAL - 0.1%
- ---------------------------------------------------------------------------------------
BANKS - 0.1%
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 250,000 281,331
9% Sub. Nts., 6/15/99 250,000 256,888
------------
538,219
- ---------------------------------------------------------------------------------------
INDUSTRIAL - 0.5%
- ---------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.2%
American Standard Cos., Inc., 10.875% Sr. Nts., 5/15/99(5) 500,000 523,750
- ---------------------------------------------------------------------------------------
Building Materials Corp. of America, 8.625% Sr. Nts., Series
B, 12/15/06 100,000 104,000
- ---------------------------------------------------------------------------------------
Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03 850,000 888,250
------------
1,516,000
- ---------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.0%
Allied Waste North America, Inc., 10.25% Sr. Sub. Nts.,
12/1/06 285,000 313,500
- ---------------------------------------------------------------------------------------
MANUFACTURING - 0.2%
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series
B, 6/1/05 500,000 550,625
</TABLE>
59
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(6) NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING (CONTINUED)
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 $ 500,000 $ 508,125
------------
1,058,750
- ---------------------------------------------------------------------------------------
TRANSPORTATION - 0.1%
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg.
Nts., 6/30/07(3) 500,000 523,750
- ---------------------------------------------------------------------------------------
TECHNOLOGY - 1.9%
- ---------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.2%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 528,750
- ---------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,000,000 1,055,000
------------
1,583,750
- ---------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.2%
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 1,250,000 1,281,250
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.5%
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts.,
12/1/04(11) 800,000 768,000
- ---------------------------------------------------------------------------------------
Convergent Communications, Inc., Units (each unit consists
of $1,000 principal amount of 13% sr. nts., 4/1/08 and four
warrants to purchase 10.8 shares of common stock)(3)(12) 500,000 482,500
- ---------------------------------------------------------------------------------------
FaciliCom International, Inc., 10.50% Sr. Nts., 1/15/08(3) 500,000 495,000
- ---------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08(3) 750,000 784,688
- ---------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(11) 500,000 407,500
- ---------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(11) 800,000 680,000
- ---------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.50% Sr. Nts., Series B,
1/15/08 500,000 502,500
- ---------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc.
Nts., 6/1/06(11) 750,000 583,125
- ---------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(11) 500,000 497,500
0%/9.75% Sr. Nts., 4/1/08(3)(11) 500,000 327,500
- ---------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 590,000 623,925
11.625% Sr. Nts., Series A, 8/15/06 110,000 116,325
- ---------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts.,
8/15/04 200,000 227,500
- ---------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., 5/15/08(3) 750,000 753,750
- ---------------------------------------------------------------------------------------
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc.
Nts., 7/1/07(11) 1,000,000 870,000
- ---------------------------------------------------------------------------------------
TeleWest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(11) 1,000,000 835,000
9.625% Sr. Debs., 10/1/06 500,000 529,375
- ---------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 1,000,000 912,500
------------
10,396,688
- ---------------------------------------------------------------------------------------
UTILITIES - 0.6%
- ---------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.4%
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 750,000 808,125
- ---------------------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 800,000 876,000
8.75% Sr. Nts., 7/15/07 400,000 413,000
</TABLE>
60
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(6) NOTE 1
- ---------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
First PV Funding Corp.:
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16(5) $ 315,000 $ 336,042
10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 6,000 6,000
------------
2,439,167
- ---------------------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Beaver Valley II Funding Corp., 9% Second Lease Obligation
Bonds, 6/1/17(5) 989,000 1,117,570
------------
Total Non-Convertible Corporate Bonds and Notes (Cost
$49,860,320) 51,739,912
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.8%
- ---------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings,
Inc., 5.90%, dated 6/30/98, to be repurchased at $72,911,948
on 7/1/98, collateralized by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19, with a value of $74,838,316
(Cost $72,900,000) 72,900,000 72,900,000
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $568,233,097) 100.8% 679,676,602
- ---------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.8) (5,644,091)
----------- ------------
NET ASSETS 100.0% $674,032,511
----------- ------------
----------- ------------
</TABLE>
1. A sufficient amount of securities has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT MARKET
TO EXPIRATION EXERCISE PREMIUM VALUE NOTE
CALL DATE PRICE RECEIVED 1
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AMR Corp. 12,000 8/98 $75.00 $ 25,319 $ 117,000
Alaska Air Group, Inc. 7,000 10/98 60.00 46,163 15,750
Alaska Air Group, Inc. 4,000 10/98 65.00 18,379 7,000
Alaska Air Group, Inc. 8,600 7/98 50.00 30,916 35,475
Alaska Air Group, Inc. 4,400 7/98 50.00 22,967 18,150
Alumax, Inc. 300 7/98 40.00 441 1,875
America Online, Inc. 8,000 10/98 100.00 76,757 120,000
America Online, Inc. 10,000 10/98 70.00 71,098 377,500
America Online, Inc. 6,600 7/98 55.00 22,175 336,600
American Express Co. 6,500 10/98 115.00 44,304 44,688
American Home Products Corp. 15,600 7/98 52.50 25,115 11,700
Biomet, Inc. 16,000 10/98 35.00 19,519 27,000
Biomet, Inc. 14,000 7/98 30.00 26,704 47,250
Boston Scientific Corp. 12,000 11/98 75.00 68,638 76,500
Boston Scientific Corp. 4,000 8/98 60.00 14,880 49,500
Bristol-Myers Squibb Co. 6,000 12/98 115.00 51,568 59,250
CBS Corp. 22,500 7/98 35.00 44,324 4,219
CIENA Corp. 7,000 1/99 60.00 73,545 101,500
CIENA Corp. 7,000 10/98 60.00 40,914 84,000
Chase Manhattan Corp. 18,000 9/98 70.00 85,227 144,000
Cigna Corp. 3,600 10/98 73.63 16,463 8,775
Cisco Systems, Inc. 12,000 10/98 80.00 43,139 187,500
Cisco Systems, Inc. 6,000 7/98 70.00 20,069 134,250
Computer Associates International,
Inc. 15,000 8/98 60.00 53,923 28,125
Cracker Barrel Old Country Store,
Inc. 14,000 9/98 40.00 25,829 875
Dayton Hudson Corp. 8,000 7/98 37.50 20,379 90,000
ECI Telecommunications Ltd. 15,800 8/98 30.00 41,000 126,400
</TABLE>
61
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
1. Outstanding written call options (continued)
<TABLE>
<CAPTION>
SHARES
SUBJECT MARKET
TO EXPIRATION EXERCISE PREMIUM VALUE NOTE
CALL DATE PRICE RECEIVED 1
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Electronic Arts, Inc. 10,000 12/98 $50.00 $ 62,340 $ 92,500
Electronic Arts, Inc. 11,500 9/98 45.00 38,466 120,750
Federated Department Stores, Inc. 8,000 11/98 55.00 20,259 26,000
First Data Corp. 12,000 8/98 35.00 36,750 6,750
Fleet Financial Group, Inc. 3,800 10/98 95.00 15,560 5,463
General Motors Corp. 7,000 12/98 60.00 36,539 7,875
General Nutrition Cos., Inc. 15,000 7/98 40.00 42,674 938
Genzyme Corp. (General Division) 12,000 10/98 35.00 26,639 1,500
Gymboree Corp. 8,000 7/98 30.00 33,759 500
Hewlett-Packard Co. 7,000 11/98 85.00 27,789 2,625
Input/Output, Inc. 15,000 11/98 30.00 28,612 5,625
Intel Corp. 30,000 10/98 90.00 137,845 41,250
International Game Technology 20,000 10/98 30.00 44,399 7,500
Johnson & Johnson 9,000 7/98 70.00 32,354 41,625
Lockheed Martin Corp. 3,600 9/98 115.00 18,341 7,200
Lockheed Martin Corp. 3,600 9/98 120.00 26,891 3,150
Manor Care, Inc. 8,800 7/98 40.00 20,635 2,750
MediaOne Group, Inc. 14,400 10/98 40.00 27,467 97,200
Merrill Lynch & Co., Inc. 4,800 10/98 105.00 16,055 13,800
Morgan Stanley Dean Witter & Co. 9,000 1/99 90.00 28,979 76,500
Mylan Laboratories, Inc. 11,500 7/98 25.00 28,404 70,438
NationsBank Corp. 28,000 11/98 90.00 55,158 33,250
Nokia Corp., A Shares, Sponsored
ADR 9,800 7/98 42.50 34,377 303,800
Nokia Corp., A Shares, Sponsored
ADR 7,300 7/98 45.00 19,136 199,838
Outback Steakhouse, Inc. 6,800 11/98 45.00 7,141 5,950
Petco Animal Supplies, Inc. 4,000 12/98 22.50 9,380 4,500
QUALCOMM, Inc. 3,800 10/98 65.00 14,136 9,738
Rational Software Corp. 25,000 10/98 20.00 38,311 10,938
SGS-Thomson Microelectronics NV 1,000 10/98 95.00 6,970 750
SGS-Thomson Microelectronics NV 3,000 7/98 75.00 17,534 1,875
Santa Fe International Corp. 9,000 10/98 45.00 25,604 1,125
SkyWest, Inc. 50,000 10/98 22.50 92,997 375,000
SmithKline Beecham plc, ADR 5,300 8/98 75.00 9,116 1,988
Symantec Corp. 17,600 10/98 25.00 105,068 68,200
Symantec Corp. 14,000 10/98 30.00 45,078 28,000
Symantec Corp. 17,600 7/98 30.00 58,870 5,500
Synopsys, Inc. 6,200 9/98 45.00 19,188 25,575
Teradyne, Inc. 3,000 10/98 50.00 24,284 188
Teradyne, Inc. 5,000 7/98 40.00 34,849 313
Transition Systems, Inc. 3,500 12/98 25.00 8,645 1,531
U S West Communications Group 10,000 7/98 55.00 20,949 1,250
United Healthcare Corp. 4,100 12/98 75.00 17,814 8,200
Western Atlas, Inc. 3,000 12/98 85.00 32,534 26,625
Xerox Corp. 6,000 10/98 120.00 18,569 12,000
Xerox Corp. 8,000 7/98 85.00 33,759 135,000
Xilinx, Inc. 9,000 12/98 50.00 61,603 11,250
---------- ----------
$2,591,585 $4,159,200
---------- ----------
---------- ----------
</TABLE>
62
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. Non-income producing security.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $12,094,938 or 1.79% of the Fund's net
assets as of June 30, 1998.
4. Interest or dividend is paid in kind.
5. Identifies issues considered to be illiquid or restricted - See Note 6 of
Notes to Financial Statements.
6. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <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>
7. When-issued security to be delivered and settled after June 30, 1998.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Represents the current interest rate for a variable rate security.
10. Represents the current interest rate for an increasing rate security.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
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.
See accompanying Notes to Financial Statements.
63
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 86.9%
- ------------------------------------------------------------------------------------------
BASIC MATERIALS - 1.4%
- ------------------------------------------------------------------------------------------
CHEMICALS - 0.5%
Minerals Technologies, Inc. 100,000 $ 5,087,500
- ------------------------------------------------------------------------------------------
GOLD & PLATINUM - 0.6%
Barrick Gold Corp. 200,000 3,837,500
- ------------------------------------------------------------------------------------------
Newmont Mining Corp. 120,500 2,846,812
--------------
6,684,312
- ------------------------------------------------------------------------------------------
METALS - 0.3%
Cia de Minas Buenaventura SA, Sponsored ADR 46,000 603,750
- ------------------------------------------------------------------------------------------
De Beers Consolidated Mines Ltd., ADR 150,400 2,632,000
--------------
3,235,750
- ------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 20.2%
- ------------------------------------------------------------------------------------------
AUTOS & HOUSING - 4.0%
Brazil Realty SA, GDR(1) 60,000 1,322,832
- ------------------------------------------------------------------------------------------
Brisa-Auto Estradas de Portugal SA 70,300 3,006,550
- ------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 1,714,678 5,041,758
- ------------------------------------------------------------------------------------------
Porsche AG, Preference 8,800 25,458,568
- ------------------------------------------------------------------------------------------
Solidere, GDR(1) 110,000 1,364,000
- ------------------------------------------------------------------------------------------
Volkswagen AG 10,000 9,597,301
--------------
45,791,009
- ------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 5.6%
Callaway Golf Co. 454,200 8,942,062
- ------------------------------------------------------------------------------------------
Corporacion Interamericana de Entretenimiento SA(2) 140,101 325,851
- ------------------------------------------------------------------------------------------
Corporacion Interamericana de Entretenimiento SA, Cl. B 1,050,764 2,970,098
- ------------------------------------------------------------------------------------------
Granada Group plc 830,000 15,251,959
- ------------------------------------------------------------------------------------------
Hasbro, Inc. 300,000 11,793,750
- ------------------------------------------------------------------------------------------
International Game Technology 494,000 11,979,500
- ------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 129,000 11,944,013
- ------------------------------------------------------------------------------------------
Resorts World Berhad 563,000 618,995
--------------
63,826,228
- ------------------------------------------------------------------------------------------
MEDIA - 8.9%
Canal Plus 232,000 43,264,296
- ------------------------------------------------------------------------------------------
Carlton Communications plc 2,500,000 22,281,974
- ------------------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored GDR(1)(2) 349,200 13,138,650
- ------------------------------------------------------------------------------------------
Publicis SA 28,000 4,838,023
- ------------------------------------------------------------------------------------------
Singapore Press Holdings Ltd. 400,000 2,681,697
- ------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 427,000 1,129,691
- ------------------------------------------------------------------------------------------
Television Francaise(1) 8,500 1,314,382
</TABLE>
64
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
TeleWest Communications plc(2) 5,430,000 $ 12,766,883
--------------
101,415,596
- ------------------------------------------------------------------------------------------
RETAIL: GENERAL - 1.0%
Credit Saison Co. Ltd. 290,000 5,746,298
- ------------------------------------------------------------------------------------------
Sonae Investimentos 109,600 5,986,109
--------------
11,732,407
- ------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.7%
Borders Group, Inc.(2) 200,000 7,400,000
- ------------------------------------------------------------------------------------------
Giordano International Ltd. 2,100,000 425,498
--------------
7,825,498
- ------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 17.1%
- ------------------------------------------------------------------------------------------
BEVERAGES - 2.2%
Cadbury Schweppes plc 1,200,000 18,559,280
- ------------------------------------------------------------------------------------------
Cia Cervejaria Brahma, Preference 4,700,000 2,907,513
- ------------------------------------------------------------------------------------------
South African Breweries Ltd. 178,900 3,705,556
--------------
25,172,349
- ------------------------------------------------------------------------------------------
FOOD - 4.0%
Carrefour Supermarche SA 12,000 7,574,882
- ------------------------------------------------------------------------------------------
Cresud SA, Sponsored ADR(2) 95,000 1,543,750
- ------------------------------------------------------------------------------------------
Dairy Farm International Holdings Ltd. 7,080,216 7,575,831
- ------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., Inc. (The) 593,300 19,615,981
- ------------------------------------------------------------------------------------------
Raision Tehtaat Oy 504,000 9,094,349
--------------
45,404,793
- ------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 5.8%
Amgen, Inc.(2) 150,000 9,806,250
- ------------------------------------------------------------------------------------------
BioChem Pharma, Inc.(2) 198,900 5,270,850
- ------------------------------------------------------------------------------------------
Fresenius AG, Preference 40,800 7,583,140
- ------------------------------------------------------------------------------------------
Genzyme Corp. (General Division)(2) 200,000 5,112,500
- ------------------------------------------------------------------------------------------
Gilead Sciences, Inc.(2) 72,700 2,330,944
- ------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 200,000 11,962,500
- ------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. 28,200 962,325
- ------------------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(2) 103,000 1,454,875
- ------------------------------------------------------------------------------------------
Novartis AG 5,000 8,320,087
- ------------------------------------------------------------------------------------------
Pfizer, Inc. 120,000 13,042,500
--------------
65,845,971
- ------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.6%
Gehe AG 80 4,293
- ------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 879,500 13,632,250
- ------------------------------------------------------------------------------------------
Pliva d.d., Sponsored GDR(1) 800,000 12,655,440
</TABLE>
65
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/SUPPLIES & SERVICES (CONTINUED)
United States Surgical Corp. 307,000 $ 14,006,875
--------------
40,298,858
- ------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 1.5%
Wella AG, Preference 15,000 16,926,651
- ------------------------------------------------------------------------------------------
ENERGY - 2.1%
- ------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.9%
Coflexip SA, Sponsored ADR 70,000 4,278,750
- ------------------------------------------------------------------------------------------
Global Marine, Inc.(2) 100,000 1,868,750
- ------------------------------------------------------------------------------------------
McDermott International, Inc. 200,000 6,887,500
- ------------------------------------------------------------------------------------------
Transocean Offshore, Inc. 120,818 5,376,401
- ------------------------------------------------------------------------------------------
Western Atlas, Inc.(2) 40,400 3,428,950
--------------
21,840,351
- ------------------------------------------------------------------------------------------
OIL-INTEGRATED - 0.2%
British Petroleum Co. plc, ADR 26,661 2,352,833
- ------------------------------------------------------------------------------------------
FINANCIAL - 17.8%
- ------------------------------------------------------------------------------------------
BANKS - 13.0%
Amalgamated Banks of South Africa Ltd. 150,000 942,272
- ------------------------------------------------------------------------------------------
Banco Bradesco SA, Preference 683,276,747 5,730,369
- ------------------------------------------------------------------------------------------
Banco Espirito Santo e Comercial de Lisboa SA 180,000 5,405,261
- ------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA, Sponsored ADR 144,450 3,313,322
- ------------------------------------------------------------------------------------------
Banco Latinoamericano de Exportaciones SA, Cl. E 64,400 1,980,300
- ------------------------------------------------------------------------------------------
Banco Pinto & Sotto Mayor SA 131,700 3,268,971
- ------------------------------------------------------------------------------------------
Banco Rio de la Plata SA, ADR 300,000 3,168,750
- ------------------------------------------------------------------------------------------
Bank Austria AG 60,000 4,880,223
- ------------------------------------------------------------------------------------------
Banque Libanaise Pour Le Commercial, GDR(2) 50,000 702,500
- ------------------------------------------------------------------------------------------
Barclays plc 97,000 2,794,997
- ------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 150,000 12,736,475
- ------------------------------------------------------------------------------------------
Cie Financiere de Paribas(2) 135,000 14,414,556
- ------------------------------------------------------------------------------------------
Credito Italiano SpA 2,291,900 11,997,484
- ------------------------------------------------------------------------------------------
Deutsche Bank AG 150,000 12,682,542
- ------------------------------------------------------------------------------------------
Grupo Financiero Banamex Accival SA de CV, Cl. B(2) 1,676,700 3,175,754
- ------------------------------------------------------------------------------------------
Industrial Finance Corp. of Thailand (The) 1,048,000 215,546
- ------------------------------------------------------------------------------------------
Istituto Bancario San Paolo di Torino 500,000 7,214,986
- ------------------------------------------------------------------------------------------
National Westminster Bank plc 618,070 11,058,681
- ------------------------------------------------------------------------------------------
Northern Trust Corp. 47,600 3,629,500
- ------------------------------------------------------------------------------------------
Skandinaviska Enskilda Banken Group 600,000 10,269,661
- ------------------------------------------------------------------------------------------
UBS AG 50,000 18,591,637
</TABLE>
66
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS (CONTINUED)
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(3) 336,300 $ 9,920,850
--------------
148,094,637
- ------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.8%
American Express Co. 49,000 5,586,000
- ------------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 160,000 12,300,000
- ------------------------------------------------------------------------------------------
Fannie Mae 150,000 9,112,500
- ------------------------------------------------------------------------------------------
First NIS Regional Fund(1) 193,700 1,815,937
- ------------------------------------------------------------------------------------------
Housing Development Finance Corp. Ltd.(2) 22,290 1,574,371
- ------------------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd., GDR(1) 212,500 2,172,812
- ------------------------------------------------------------------------------------------
Ladbroke Group plc(2) 2,000,000 11,030,515
--------------
43,592,135
- ------------------------------------------------------------------------------------------
INSURANCE - 1.0%
American International Group, Inc. 23,700 3,460,200
- ------------------------------------------------------------------------------------------
Chubb Corp. 100,000 8,037,500
--------------
11,497,700
- ------------------------------------------------------------------------------------------
INDUSTRIAL - 4.3%
- ------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 3.4%
Adecco SA 10,000 4,509,461
- ------------------------------------------------------------------------------------------
Grupo Elektra SA de CV 491,700 483,709
- ------------------------------------------------------------------------------------------
IHC Caland NV 22,200 1,249,569
- ------------------------------------------------------------------------------------------
Rentokil Initial plc 2,950,000 21,226,030
- ------------------------------------------------------------------------------------------
UNOVA, Inc. 49,300 1,059,950
- ------------------------------------------------------------------------------------------
WPP Group plc 1,500,000 9,867,434
--------------
38,396,153
- ------------------------------------------------------------------------------------------
MANUFACTURING - 0.7%
Powerscreen International plc 959,403 1,479,820
- ------------------------------------------------------------------------------------------
Societe BIC SA 85,932 6,097,988
--------------
7,577,808
- ------------------------------------------------------------------------------------------
TRANSPORTATION - 0.2%
Guangshen Railway Co. Ltd., Sponsored ADR 246,700 1,680,644
- ------------------------------------------------------------------------------------------
TECHNOLOGY - 19.5%
- ------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.9%
Rolls-Royce plc 2,366,138 9,765,202
- ------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.0%
International Business Machines Corp. 100,000 11,481,250
- ------------------------------------------------------------------------------------------
Sun Microsystems, Inc.(2) 250,000 10,859,375
--------------
22,340,625
- ------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.9%
Cap Gemini SA 150,000 23,516,792
</TABLE>
67
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
Computer Associates International, Inc. 91,700 $ 5,095,081
- ------------------------------------------------------------------------------------------
First Data Corp. 87,000 2,898,188
- ------------------------------------------------------------------------------------------
Microsoft Corp.(2) 66,000 7,152,750
- ------------------------------------------------------------------------------------------
Misys plc 100,000 5,684,509
--------------
44,347,320
- ------------------------------------------------------------------------------------------
ELECTRONICS - 3.6%
Advanced Micro Devices, Inc.(2) 500,000 8,531,250
- ------------------------------------------------------------------------------------------
National Semiconductor Corp.(2) 1,000,000 13,187,500
- ------------------------------------------------------------------------------------------
Royal Philips Electronics NV 100,000 8,406,162
- ------------------------------------------------------------------------------------------
Sony Corp. 100,000 8,610,440
- ------------------------------------------------------------------------------------------
STMicroelectronics NV(2) 34,000 2,375,750
--------------
41,111,102
- ------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 9.1%
Alcatel Alsthom SA 150,000 30,472,811
- ------------------------------------------------------------------------------------------
Cable & Wireless Communications plc(2) 380,000 3,843,088
- ------------------------------------------------------------------------------------------
Cisco Systems, Inc. 61,650 5,675,653
- ------------------------------------------------------------------------------------------
Energis plc(2) 265,600 4,041,354
- ------------------------------------------------------------------------------------------
General Instrument Corp.(2) 600,000 16,312,500
- ------------------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B 300,000 9,761,820
- ------------------------------------------------------------------------------------------
Pairgain Technologies, Inc.(2) 130,200 2,270,363
- ------------------------------------------------------------------------------------------
QUALCOMM, Inc.(2) 180,000 10,113,750
- ------------------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 434,200 11,017,825
- ------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd. 8,710 4,063,184
- ------------------------------------------------------------------------------------------
Telecom Italia Mobile SpA 1,000,000 6,115,158
--------------
103,687,506
- ------------------------------------------------------------------------------------------
UTILITIES - 4.5%
- ------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 4.5%
CPT Telefonica del Peru SA, Cl. B 2,720,031 5,450,193
- ------------------------------------------------------------------------------------------
Hellenic Tellecommunication Organization SA 388,888 9,968,863
- ------------------------------------------------------------------------------------------
Portugal Telecom SA 200,000 10,599,824
- ------------------------------------------------------------------------------------------
Telecomunicacoes de Sao Paulo SA, Preference 21,008,000 5,013,119
- ------------------------------------------------------------------------------------------
Telesp Celular SA, Cl. B(2) 21,008,000 1,761,857
- ------------------------------------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR(2) 250,000 2,675,000
- ------------------------------------------------------------------------------------------
WorldCom, Inc.(2) 326,200 15,800,313
--------------
51,269,169
--------------
Total Common Stocks (Cost $838,848,833) 986,800,107
</TABLE>
68
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.6%
- ------------------------------------------------------------------------------------------
Marschollek, Lautenschlaeger und Partner AG, Non-Vtg.
Preferred Stock (Cost $1,603,264) 13,257 $ 6,489,902
UNITS
- ------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.1%
- ------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 6,250 --
- ------------------------------------------------------------------------------------------
Bank Austria AG Rts., Exp. 7/98 60,000 --
- ------------------------------------------------------------------------------------------
Industrial Finance Corp. of Thailand (The) Rts., Exp. 12/99 528,500 --
- ------------------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B Rts., Exp. 7/98 300,000 1,410,668
- ------------------------------------------------------------------------------------------
PT Pan Indonesia Bank Wts., Exp. 6/00 415,500 1,292
- ------------------------------------------------------------------------------------------
Telecomunicacoes de Sao Paulo SA, Non-Vtg. Rts., Exp. 7/98 987,329 15,792
- ------------------------------------------------------------------------------------------
TeleWest Communications plc Rts., Exp. 7/98 994,225 --
--------------
Total Rights, Warrants and Certificates (Cost $0) 1,427,752
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 2.4%
- ------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 13.95%, 11/15/18 (Cost
$21,462,424)(4) $ 86,770,000 27,178,967
- ------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 11.1%
- ------------------------------------------------------------------------------------------
Repurchase agreement with Salomon Barney Holdings, Inc.,
5.90%, dated 6/30/98, to be repurchased at $125,920,634 on
7/1/98, collateralized by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19, with a value of $129,247,516
(Cost $125,900,000) 125,900,000 125,900,000
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $987,814,520) 101.1% 1,147,796,728
- ------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.1) (11,983,559)
------------ --------------
NET ASSETS 100.0% $1,135,813,169
------------ --------------
------------ --------------
</TABLE>
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 $32,469,671 or 2.86% of the Fund's net
assets as of June 30, 1998.
2. Non-income producing security.
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.
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
69
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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 $ 461,259,330 40.1%
- ---------------------------------------------------------------------
Great Britain 163,967,060 14.3
- ---------------------------------------------------------------------
France 138,148,231 12.0
- ---------------------------------------------------------------------
Germany 91,478,872 8.0
- ---------------------------------------------------------------------
Italy 38,959,879 3.4
- ---------------------------------------------------------------------
Switzerland 31,421,186 2.7
- ---------------------------------------------------------------------
Portugal 28,266,715 2.5
- ---------------------------------------------------------------------
Brazil 26,672,332 2.3
- ---------------------------------------------------------------------
Japan 26,300,750 2.3
- ---------------------------------------------------------------------
Sweden 21,442,149 1.9
- ---------------------------------------------------------------------
Mexico 20,094,062 1.8
- ---------------------------------------------------------------------
Argentina 13,067,580 1.1
- ---------------------------------------------------------------------
Singapore 10,257,528 0.9
- ---------------------------------------------------------------------
Greece 9,968,863 0.9
- ---------------------------------------------------------------------
The Netherlands 9,655,731 0.8
- ---------------------------------------------------------------------
Canada 9,108,350 0.8
- ---------------------------------------------------------------------
Finland 9,094,349 0.8
- ---------------------------------------------------------------------
South Africa 7,279,828 0.6
- ---------------------------------------------------------------------
India 6,422,183 0.6
- ---------------------------------------------------------------------
Peru 6,053,943 0.5
- ---------------------------------------------------------------------
Austria 4,880,223 0.4
- ---------------------------------------------------------------------
Korea, Republic of (South) 4,063,184 0.4
- ---------------------------------------------------------------------
Lebanon 2,066,500 0.2
- ---------------------------------------------------------------------
Panama 1,980,300 0.2
- ---------------------------------------------------------------------
Russia 1,815,938 0.2
- ---------------------------------------------------------------------
China 1,680,644 0.1
- ---------------------------------------------------------------------
Hong Kong 1,555,189 0.1
- ---------------------------------------------------------------------
Malaysia 618,995 0.1
- ---------------------------------------------------------------------
Thailand 215,546 0.0
- ---------------------------------------------------------------------
Indonesia 1,291 0.0
--------------- ---------
Total $ 1,147,796,728 100.0%
--------------- ---------
--------------- ---------
</TABLE>
See accompanying Notes to Financial Statements.
70
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 22.5%
- -------------------------------------------------------------------
GOVERNMENT AGENCY - 17.6%
- -------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 7.2%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 151, Cl. F,
9%, 5/15/21 $ 1,500,000 $ 1,600,533
Interest-Only Stripped Mtg.-Backed
Security, Series 177, Cl. B,
10.017%, 7/1/26(2) 10,891,671 2,465,943
- -------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 7/25/12(3) 4,500,000 4,525,335
7%, 7/1/12(3) 7,140,000 7,269,448
7.50%, 8/1/25 784,938 805,402
Interest-Only Stripped Mtg.-Backed
Security, Trust 276, Cl. 2,
13.517%, 10/1/24(2) 3,559,530 936,045
Principal-Only Stripped Mtg.-Backed
Security, Trust 277-C1, 3.279%,
4/1/27(4) 1,028,950 876,537
------------
18,479,243
- -------------------------------------------------------------------
GNMA/GUARANTEED - 10.4%
Government National Mortgage Assn.:
7%, 11/20/25-3/15/28 8,424,716 8,565,220
7%, 7/1/28(3) 10,090,000 10,250,835
7.50%, 2/15/27 3,980,506 4,092,877
8%, 11/15/25-5/15/26 3,656,086 3,789,132
------------
26,698,064
- -------------------------------------------------------------------
PRIVATE - 4.9%
- -------------------------------------------------------------------
COMMERCIAL - 3.5%
Amresco Commercial Mortgage Funding
I Corp., Multiclass Mtg.
Pass-Through Certificates, Series
1997-C1, Cl. G, 7%, 6/17/29(5) 100,000 93,250
- -------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-D4, Cl. B1, 7.525%,
4/14/29(6) 375,000 362,988
Series 1997-D5, Cl. B1, 6.93%,
2/14/41 300,000 274,125
Series 1997-D5, Cl. B2, 6.93%,
2/14/41 1,250,000 1,114,453
- -------------------------------------------------------------------
CRIIMI MAE Trust I, Collateralized
Mtg. Obligations, Series 1996-C1,
Cl. A2,
7.56%, 8/30/05(7) 100,000 101,031
- -------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates,
Series 1997-C2, Cl. F, 7.46%,
5/17/14 150,000 144,000
- -------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates,
Series 1994-C1, Cl. 2-G, 8.70%,
9/25/25(5) 153,594 157,818
- -------------------------------------------------------------------
General Motors Acceptance Corp.:
Collateralized Mtg. Obligations,
Series 1997-C1, Cl. G, 7.414%,
11/15/11 440,000 418,275
Collateralized Mtg. Obligations,
Series 1997-C2, Cl. F, 6.75%,
4/16/29 250,000 216,094
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-C1, Cl. X,
8.452%, 7/15/27(2) 4,228,953 408,358
- -------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates,
Series 1995-C2, Cl. D, 8.26%,
6/15/21(6) 336,523 346,699
</TABLE>
71
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (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. F, 7.438%,
2/15/28(5)(6) $ 162,744 $ 137,722
Series 1997-HF1, Cl. F, 6.86%,
2/15/10(5) 150,000 140,109
Series 1997-RR, Cl. D, 7.671%,
4/30/39(5) 450,000 439,453
Series 1997-RR, Cl. E, 7.74%,
4/30/39(5)(6) 300,000 285,562
Series 1997-RR, Cl. F, 7.739%,
4/30/39(5) 600,000 501,562
Series 1997-XL1, Cl. G, 7.695%,
10/3/30(5)(6) 390,000 387,380
- -------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates,
Series-DMC, Cl. C, 8.921%,
8/12/11(5) 200,000 216,313
- -------------------------------------------------------------------
Nykredit AS:
8% Cv. Bonds, 10/1/26(DKK) 6,900,000 1,027,222
Mtg.-Backed Security, Series ANN,
6%, 10/1/26(DKK) 3,214,000 465,952
- -------------------------------------------------------------------
Realkredit Danmark, Mtg.-Backed
Security, 6%, 10/1/26(DKK) 3,217,000 467,322
- -------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. D, 8.25%,
12/25/20 106,964 106,868
Series 1993-C1, Cl. D, 9.45%,
5/25/24 91,000 91,067
Series 1994-C2, Cl. E, 8%, 4/25/25 1,011,945 1,020,895
- -------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
F, 7.30%, 4/12/12(5) 200,000 194,625
Multiclass Pass-Through
Certificates, Series 1995-C4, Cl.
E, 8.74%, 6/25/26(5)(6) 46,290 47,679
------------
9,166,822
- -------------------------------------------------------------------
MULTI-FAMILY - 0.7%
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(5) 63,720 61,808
Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl.
G, 7.15%, 6/15/06(7) 800,000 761,500
- -------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-CL, Cl.
F, 9.209%, 1/20/28(6) 1,000,000 880,625
------------
1,703,933
- -------------------------------------------------------------------
RESIDENTIAL - 0.7%
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates:
Series 1997-C1, Cl. F, 7.50%,
6/20/13(5) 100,000 98,850
Series 1997-C1, Cl. G, 7.50%,
6/20/14(5) 100,000 94,500
Series 1997-C1, Cl. H, 7.50%,
8/20/14(5) 60,000 48,900
Series 1997-C2, Cl. H, 7.46%,
1/17/35 100,000 82,250
- -------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates
Series 1997-CHL1:
6.929%, 2/25/11(5)(6) 600,000 528,600
8.129%, 5/25/08(5)(6) 350,000 360,045
- -------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.132%, 4/25/26 390,233 290,846
- -------------------------------------------------------------------
Salomon, Inc., Commercial Mtg.
Pass-Through Certificates, Series
1998-A1,
5%, 12/25/20(5) 447,887 429,972
------------
1,933,963
------------
Total Mortgage-Backed Obligations
(Cost $57,992,165) 57,982,025
</TABLE>
72
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 27.0%
- -------------------------------------------------------------------
TREASURY - 27.0%
U.S. Treasury Bonds:
10.75%, 8/15/05 $ 2,750,000 $ 3,578,440
11.875%, 11/15/03 7,200,000 9,281,253
5.50%, 1/31/03 1,000,000 999,376
6%, 2/15/26(8) 1,730,000 1,800,283
6.125%, 11/15/27(9) 2,390,000 2,561,784
6.50%, 11/15/26 6,340,000 7,043,347
8%, 11/15/21 800,000 1,031,501
8.125%, 8/15/19 500,000 645,469
9.375%, 2/15/06 3,205,000 3,960,181
- -------------------------------------------------------------------
U.S. Treasury Nts.:
10.75%, 5/15/03 2,700,000 3,290,628
6.25%, 10/31/01 4,315,000 4,405,347
6.25%, 2/15/03(10) 2,100,000 2,161,690
6.50%, 10/15/06 19,810,000 21,048,145
6.50%, 5/15/05 4,810,000 5,079,062
6.50%, 8/15/05 2,450,000 2,587,048
------------
Total U.S. Government Obligations
(Cost $68,347,853) 69,473,554
- -------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
14.8%
- -------------------------------------------------------------------
ARGENTINA - 2.4%
Argentina (Republic of) Bonds:
5%, 12/20/02(JPY) 60,000,000 435,047
Bonos de Consolidacion de Deudas,
Series I, 3.108%, 4/1/07(6)(ARP) 1,240,405 871,354
Bonos de Consolidacion de Deudas,
Series I, 5.667%, 4/1/01(6) 122,385 116,483
Series L, 6.625%, 3/31/05(6) 646,000 572,679
- -------------------------------------------------------------------
Argentina (Republic of) Global
Bonds, Unsec Nts., Series BGL5,
11.375%, 1/30/17 990,000 1,056,330
- -------------------------------------------------------------------
Argentina (Republic of) Nts.,
Series REGS, 11.75%, 2/12/07(ARP) 390,000 363,719
- -------------------------------------------------------------------
Argentina (Republic of) Par Bonds,
5.75%, 3/31/23(11) 770,000 573,169
- -------------------------------------------------------------------
Argentina (Republic of) Sr. Unsec.
Unsub. Bonds, 11%, 10/9/06 50,000 52,750
- -------------------------------------------------------------------
Argentina (Republic of) Unsec.
Unsub. Medium-Term Nts.:
5.50%, 3/27/01(JPY) 170,000,000 1,275,321
8.75%, 7/10/02(ARP) 660,000 569,318
- -------------------------------------------------------------------
Banco Hipotecario Nacional
(Argentina) Medium-Term Nts.,
10.625%, 8/7/06(9) 400,000 405,000
------------
6,291,170
- -------------------------------------------------------------------
BRAZIL - 1.2%
Brazil (Federal Republic of) Bonds,
Series RG, 6.688%, 4/15/12(6) 1,000,000 699,370
- -------------------------------------------------------------------
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 2,419,037 1,787,064
- -------------------------------------------------------------------
Brazil (Federal Republic of)
Eligible Interest Bonds, 6.625%,
4/15/06(6) 679,000 560,175
------------
3,046,609
</TABLE>
73
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- -------------------------------------------------------------------
BULGARIA - 0.2%
Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds,
Tranche A, 2.263%, 7/28/12(11) $ 510,000 $ 314,288
- -------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.563%, 7/28/11(6) 160,000 114,500
------------
428,788
- -------------------------------------------------------------------
CANADA - 0.6%
Canada (Government of) Bonds:
9.75%, 6/1/01(CAD) 1,155,000 879,731
Series A-33, 11.50%, 9/1/00(CAD) 760,000 582,411
------------
1,462,142
- -------------------------------------------------------------------
ECUADOR - 0.1%
Ecuador (Republic of) Disc. Bonds,
6.625%, 2/28/25(6) 50,000 34,875
- -------------------------------------------------------------------
Ecuador (Republic of) Past Due
Interest Bonds, 6.625%, 2/27/15(6) 344,927 193,159
------------
228,034
- -------------------------------------------------------------------
GERMANY - 2.1%
Germany (Republic of) Bonds:
Series 97, 6%, 7/4/07(DEM) 2,535,000 1,526,076
Series 98, 5.25%, 1/4/08(DEM) 2,490,000 1,425,710
- -------------------------------------------------------------------
Germany (Republic of) Nts., Series
98, 4%, 3/17/00(DEM) 4,390,000 2,429,337
------------
5,381,123
- -------------------------------------------------------------------
GREAT BRITAIN - 1.2%
United Kingdom Treasury Bonds:
8.50%, 12/7/05(GBP) 1,550,000 2,956,166
9%, 8/6/12(GBP) 40,000 86,898
------------
3,043,064
- -------------------------------------------------------------------
GREECE - 0.1%
Hellenic Republic Government Bonds,
8.90%, 4/1/03(GRD) 75,600,000 247,896
- -------------------------------------------------------------------
HUNGARY - 0.1%
Hungary (Government of) Bonds,
Series 99-G, 16.50%, 7/24/99(HUF) 44,000,000 200,914
- -------------------------------------------------------------------
INDONESIA - 0.1%
PT Bank Negara Indonesia Sr. Nts.,
7.625%, 2/15/07 497,000 294,473
- -------------------------------------------------------------------
ITALY - 1.0%
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali:
10.50%, 4/1/05(ITL) 175,000,000 129,767
8.50%, 1/1/04(ITL) 2,180,000,000 1,444,462
9%, 10/1/03(ITL) 1,360,000,000 914,063
------------
2,488,292
- -------------------------------------------------------------------
IVORY COAST - 0.1%
Ivory Coast (Government of) Past
Due Interest Bonds, 2%,
3/29/18(7)(11) 587,000 218,658
- -------------------------------------------------------------------
JORDAN - 0.0%
Hashemite (Kingdom of Jordan)
Bonds, Series DEF, 5%, 12/23/23(11) 210,000 148,313
- -------------------------------------------------------------------
KOREA, REPUBLIC OF (SOUTH) - 0.2%
Korea (Republic of) Nts., 8.281%,
4/8/00(5)(6) 580,000 547,520
</TABLE>
74
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MEXICO - 1.2%
United Mexican States Bonds:
10.375%, 1/29/03(DEM) 725,000 $ 448,663
16.50%, 9/1/08(5)(GBP) 20,000 50,692
8.125%, 9/10/04(11)(DEM) 750,000 446,243
- -------------------------------------------------------------------
United Mexican States
Collateralized Fixed Rate Par
Bonds:
Series B, 6.25%, 12/31/19 600,000 498,375
Series W-A, 6.25%, 12/31/19 250,000 207,656
Series W-B, 6.25%, 12/31/19 1,600,000 1,329,000
- -------------------------------------------------------------------
United Mexican States Petroleos
Mexicanos Gtd. Unsec. Unsub. Nts.,
7.875%, 3/2/99(CAD) 200,000 136,854
------------
3,117,483
- -------------------------------------------------------------------
NEW ZEALAND - 0.3%
New Zealand (Government of) Bonds:
8%, 2/15/01(NZD) 500,000 264,731
8%, 4/15/04(NZD) 1,115,000 613,782
------------
878,513
- -------------------------------------------------------------------
NORWAY - 0.4%
Norway (Government of) Bonds,
9.50%, 10/31/02(NOK) 7,810,000 1,170,145
- -------------------------------------------------------------------
PANAMA - 0.1%
Panama (Government of) Past Due
Interest Debs., 6.563%, 7/17/16(6) 229,123 175,852
- -------------------------------------------------------------------
PERU - 0.5%
Peru (Republic of) Sr. Nts., Zero
Coupon, 4.534%, 2/28/16(12) 3,378,514 1,418,976
- -------------------------------------------------------------------
POLAND - 0.8%
Poland (Republic of) Bonds:
14%, 2/12/00(PLZ) 2,160,000 571,959
16%, 2/12/99(PLZ) 450,000 124,675
Series 0600, 14%, 6/12/00(PLZ) 1,000,000 263,835
Series 5 yr., 12%, 2/12/02(PLZ) 1,300,000 319,965
- -------------------------------------------------------------------
Poland (Republic of) Past Due
Interest Bonds, 4%, 10/27/14(11) 765,000 690,891
------------
1,971,325
- -------------------------------------------------------------------
RUSSIA - 0.6%
City of St. Petersburg Sr. Unsub.
Nts., 9.50%, 6/18/02(7) 180,000 139,950
- -------------------------------------------------------------------
Ministry of Finance (Russian
Government) Unsec. Unsub. Bonds,
10%, 6/26/07(7) 320,000 241,600
- -------------------------------------------------------------------
Russia (Government of) Bonds:
18.29%, 4/28/99(RUR) 860,000 124,233
29.80%, 7/14/99(RUR) 1,500,000 198,313
Series 2, 29.80%, 7/14/99(RUR) 745,000 98,495
Series 3, 18.29%, 4/28/99(RUR) 790,000 114,121
- -------------------------------------------------------------------
Russia (Government of) Debs.,
Series 19 yr., 6.625%, 12/15/15(6) 282,788 157,213
- -------------------------------------------------------------------
Russia (Government of) Federal Loan
Bonds, Series 5022, 15%,
2/23/00(RUR) 5,417,000 466,435
------------
1,540,360
- -------------------------------------------------------------------
SOUTH AFRICA - 0.3%
South Africa (Republic of) Bonds,
Series 153, 13%, 8/31/10(ZAR) 4,600,000 689,364
- -------------------------------------------------------------------
SWEDEN - 0.1%
Sweden (Kingdom of) Bonds, Series
1037, 8%, 8/15/07(SEK) 1,600,000 245,039
</TABLE>
75
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
TURKEY - 0.5%
Turkey (Republic of) Treasury
Bills, Zero Coupon:
85.002%, 1/27/99(12)(TRL) 220,300,000,000 $ 574,868
88.982%, 9/30/98(12)(TRL) 250,000,000,000 806,287
------------
1,381,155
- -------------------------------------------------------------------
VENEZUELA - 0.6%
Venezuela (Republic of) Bonds,
9.25%, 9/15/27 990,000 772,200
- -------------------------------------------------------------------
Venezuela (Republic of) Disc.
Bonds, Series DL, 6.625%,
12/18/07(6) 678,570 556,428
- -------------------------------------------------------------------
Venezuela (Republic of) New Money
Bonds, Series A, 6.75%, 12/18/05(6) 220,589 181,435
------------
1,510,063
- -------------------------------------------------------------------
VIETNAM - 0.0%
Vietnam (Government of) Bonds, 3%,
3/12/28(6) 54,000 19,238
------------
Total Foreign Government
Obligations (Cost $39,942,771) 38,144,509
- -------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.2%
- -------------------------------------------------------------------
Jamaica (Government of) 1990
Refinancing Agreement Nts., Tranche
A, 6.50%, 10/16/00(5)(6) 31,250 30,000
- -------------------------------------------------------------------
Morocco (Kingdom of) Loan
Participation Agreement, Tranche A,
6.563%, 1/1/09(5)(6) 740,000 632,700
------------
Total Loan Participations (Cost
$682,009) 662,700
- -------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 33.0%
- -------------------------------------------------------------------
AEROSPACE - 1.1%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 450,000 481,500
- -------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts.,
8/1/04 150,000 158,625
- -------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 125,000 133,125
12.25% Pass-Through Certificates,
12/1/02 350,000 386,750
9.25% Sr. Nts., 4/15/08(7) 300,000 300,000
- -------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts.,
Series 1997-1, 1/1/01(5) 175,000 177,625
- -------------------------------------------------------------------
Greater Toronto Airport, 5.40%
Debs., 12/3/02(CAD) 240,000 162,345
- -------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Cl. B, 6/15/04(5) 93,438 96,475
- -------------------------------------------------------------------
SC International Services, Inc.,
9.25% Sr. Sub. Nts., Series B,
9/1/07 325,000 338,000
- -------------------------------------------------------------------
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04 580,000 611,900
------------
2,846,345
- -------------------------------------------------------------------
CHEMICALS - 0.8%
ClimaChem, Inc., 10.75% Gtd. Sr.
Unsec. Nts., Series B, 12/1/07 150,000 157,125
- -------------------------------------------------------------------
Harris Chemical North America,
Inc., 10.75% Gtd. Sr. Sub. Nts.,
10/15/03 100,000 105,625
- -------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 50,000 51,250
- -------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., Series B, 9/15/07 150,000 147,000
- -------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 140,000 154,875
- -------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Gtd. Nts., 10/15/07 175,000 171,937
- -------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 200,000 199,000
</TABLE>
76
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
CHEMICALS (CONTINUED)
Polytama International Finance BV,
11.25% Gtd. Sec. Nts., 6/15/07 $ 150,000 $ 63,562
- -------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 425,000 435,625
- -------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 50,000 49,750
11.75% Sr. Unsec. Sub. Nts.,
8/15/06 475,000 477,375
------------
2,013,124
- -------------------------------------------------------------------
CONSUMER DURABLES - 0.3%
Holmes Products Corp., 9.875% Gtd.
Sr. Unsec. Sub. Nts., Series B,
11/15/07 200,000 207,000
- -------------------------------------------------------------------
Icon Health & Fitness, Inc., 13%
Sr. Sub. Nts., Series B, 7/15/02 300,000 312,000
- -------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub.
Disc. Nts., Series B, 11/15/04(13) 135,000 101,925
- -------------------------------------------------------------------
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(5) 100,000 117,346
------------
738,271
- -------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.7%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs.,
7/1/09(7)(13) 150,000 79,500
10.50% Sr. Nts., 7/1/08(7) 100,000 101,000
- -------------------------------------------------------------------
American Pad & Paper Co., 13% Sr.
Sub. Nts., Series B, 11/15/05 200,000 203,000
- -------------------------------------------------------------------
Chattem, Inc., 8.875% Sr. Sub.
Nts., 4/1/08(7) 100,000 100,000
- -------------------------------------------------------------------
Galey & Lord, Inc., 9.125% Sr.
Unsec. Sub. Nts., 3/1/08 400,000 388,000
- -------------------------------------------------------------------
Indorayon International Finance Co.
BV, 10% Gtd. Unsec. Unsub. Nts.,
3/29/01(5) 100,000 60,000
- -------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50%
Sr. Sub. Nts., 5/1/08(7) 200,000 200,750
- -------------------------------------------------------------------
Revlon Consumer Products Corp.,
8.625% Sr. Unsec. Sub. Nts., 2/1/08 100,000 100,625
- -------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts., 10.085%,
3/15/01(12) 375,000 292,500
- -------------------------------------------------------------------
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08(7) 100,000 102,000
- -------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 135,000 144,450
- -------------------------------------------------------------------
Williams (J. B.) Holdings, Inc.,
12% Sr. Nts., 3/1/04(5) 100,000 102,500
------------
1,874,325
- -------------------------------------------------------------------
ENERGY - 2.5%
Belden & Blake Corp., 9.875% Sr.
Sub. Nts., 6/15/07 100,000 98,250
- -------------------------------------------------------------------
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 100,000 98,750
9.625% Sr. Nts., 5/1/05(7) 250,000 251,875
- -------------------------------------------------------------------
Clark Refinancing & Marketing,
Inc., 8.875% Sr. Sub. Nts.,
11/15/07 245,000 245,612
- -------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 125,000 136,562
- -------------------------------------------------------------------
Dailey International, Inc., 9.50%
Sr. Unsec. Nts., Series B, 2/15/08 400,000 392,000
- -------------------------------------------------------------------
Denbury Management, Inc., 9% Sr.
Sub. Nts., 3/1/08 400,000 384,000
- -------------------------------------------------------------------
DI Industries, Inc., 8.875% Sr.
Nts., 7/1/07 75,000 72,750
- -------------------------------------------------------------------
Empresa Electric Del Norte, 10.50%
Sr. Debs., 6/15/05(5) 100,000 102,500
- -------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B,
2/15/07 90,000 85,950
9.50% Sr. Sub. Nts., 11/1/06 400,000 403,000
</TABLE>
77
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
ENERGY (CONTINUED)
Gothic Energy Corp., Units (each
unit consists of $1,000 principal
amount of 0%/14.125% sr. disc.
nts., 5/1/06 and 7.933 warrants to
purchase 7.933 shares of common
stock)(7)(13)(14) $ 275,000 $ 160,875
- -------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., 5/1/05(7) 200,000 192,500
- -------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr.
Nts., 2/15/08 600,000 598,500
- -------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr.
Sub. Bonds, 7/15/06 215,000 232,200
- -------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Gtd.
Sr. Sec. Nts., 6/1/08(7) 250,000 238,750
- -------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., 5/15/08(7) 300,000 309,750
- -------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sub. Debs., 2/1/06 425,000 384,625
- -------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 370,000 377,400
- -------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec.
Nts., 2/15/08 600,000 606,000
- -------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts.,
Series B, 11/15/03 175,000 184,625
- -------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 355,000 359,437
- -------------------------------------------------------------------
Universal Compression Holdings,
Inc.:
0%/11.375% Sr. Disc. Nts.,
2/15/09(7)(13) 400,000 238,000
0%/9.875% Sr. Disc. Nts.,
2/15/08(7)(13) 500,000 317,500
------------
6,471,411
- -------------------------------------------------------------------
FINANCIAL - 3.8%
AMRESCO, Inc.:
10% Sr. Sub. Nts., Series 97-A,
3/15/04 100,000 103,250
9.875% Sr. Sub. Nts., Series 98-A,
3/15/05 300,000 307,125
- -------------------------------------------------------------------
Bakrie Investindo, Zero Coupon
Promissory Nts.,
7/10/98(5)(15)(IDR) 1,000,000,000 16,892
- -------------------------------------------------------------------
Banco del Atlantico SA, 7.875%
Eurobonds, 11/5/98(5) 370,000 370,925
- -------------------------------------------------------------------
Banco Nacional de Mexico SA, 11%
Sub. Exchangeable
Capital Debs., 7/15/03(5) 130,000 134,225
- -------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 7,000 8,015
- -------------------------------------------------------------------
Bayerische Vereinsbank AG, 5% Sec.
Nts., Series 661, 7/28/04(DEM) 4,055,000 2,279,620
- -------------------------------------------------------------------
CB Richard Ellis Services, Inc.,
8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 249,375
- -------------------------------------------------------------------
Deutsche Pfandbrief & Hypobank,
4.75% Sec. Nts., Series 452,
3/20/03(DEM) 2,800,000 1,563,093
- -------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr.
Nts., Series B, 9/15/04 80,000 58,800
- -------------------------------------------------------------------
First Nationwide Holdings, Inc.,
10.625% Sr. Sub. Nts., 10/1/03 120,000 133,200
- -------------------------------------------------------------------
Ford Motor Credit Co., 5.25% Bonds,
6/16/08(DEM) 1,350,000 745,364
- -------------------------------------------------------------------
Hypothekenbank in Essen AG:
4.50% Sec. Nts., Series 478,
5/2/03(DEM) 575,000 317,589
5.25% Sec. Nts., Series 502,
1/22/08(DEM) 890,000 501,763
5.50% Sec. Nts., Series 459,
2/20/07(DEM) 830,000 477,119
- -------------------------------------------------------------------
Industrial Bank of Japan Preferred
Capital Co. (The) LLC,
8.79% Bonds, 12/29/49(6)(7) 400,000 366,198
- -------------------------------------------------------------------
Kreditanstalt fuer Wiederaufbau, 5%
Bonds, 1/4/09(DEM) 650,000 361,576
- -------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(7) 150,000 164,250
- -------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd.
Bonds, 8/1/27 150,000 164,250
</TABLE>
78
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (CONTINUED)
Ocwen Financial Corp., 11.875%
Nts., 10/1/03 $ 150,000 $ 170,250
- -------------------------------------------------------------------
Ongko International Finance Co. BV,
10.50% Gtd. Nts., 3/29/04(7)(16) 90,000 13,387
- -------------------------------------------------------------------
PT Polysindo Eka Perkasa:
Zero Coupon Nts., Series 2,
7/15/98(5)(15)(IDR) 164,300,000 2,220
Zero Coupon Promissory Nts.,
7/14/98(5)(15) 100,000 35,000
- -------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts., Series
B, 4/1/08 350,000 347,375
- -------------------------------------------------------------------
SBS Agro Finance BV Bonds, 10.25%,
7/21/00 339,000 259,335
- -------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04 250,000 248,750
- -------------------------------------------------------------------
Veritas Capital Trust, 10% Gtd.
Debs., 1/1/28(5) 100,000 105,250
- -------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr.
Nts., 12/15/03 129,000 135,772
- -------------------------------------------------------------------
Wilshire Financial Services Group,
Inc., 13% Nts., 1/1/04 60,000 65,250
------------
9,705,218
- -------------------------------------------------------------------
FOOD & DRUG - 0.8%
Ameriking, Inc., 10.75% Sr. Nts.,
12/1/06 125,000 134,375
- -------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts.,
8/15/03 100,000 104,750
- -------------------------------------------------------------------
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B,
12/1/04 50,000 52,250
10.625% Sr. Sub. Nts., Series B,
7/31/07 850,000 890,375
- -------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75%
Jr. Sub. Deferred Coupon Nts.,
11/1/03(13) 200,000 169,000
- -------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., Series B,
7/1/07 350,000 371,000
- -------------------------------------------------------------------
Shoppers Food Warehouse Corp.,
9.75% Sr. Nts., 6/15/04 155,000 172,050
- -------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9%
Sr. Unsec. Sub. Nts., 7/1/04 125,000 128,125
------------
2,021,925
- -------------------------------------------------------------------
FOOD/TOBACCO - 0.6%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., 7/1/08(7) 150,000 151,687
- -------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., 12/15/07(7)(13) 100,000 65,500
- -------------------------------------------------------------------
Eagle Family Foods, Inc., 8.75% Sr.
Sub. Nts., 1/15/08(7) 50,000 49,000
- -------------------------------------------------------------------
Favorite Brands International,
Inc., 10.75% Sr. Nts., 5/15/06(7) 150,000 152,250
- -------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr.
Unsec. Nts., 2/1/05(7) 100,000 102,000
- -------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Sub.
Nts., 3/15/10(7) 250,000 258,125
- -------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr.
Sub. Nts., 2/15/08(7) 400,000 406,000
- -------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sec. Sub. Nts., 11/15/07 200,000 210,000
- -------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75%
Sr. Sub. Nts., 5/15/07 150,000 157,500
------------
1,552,062
- -------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.9%
Consumers International, Inc.,
10.25% Sr. Sec. Nts., 4/1/05(5) 250,000 268,750
- -------------------------------------------------------------------
Fletcher Challenge Finance U.S.A.,
Inc., 8.05% Debs., 6/15/03(NZD) 80,000 40,559
- -------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts.,
4/30/05(NZD) 60,000 33,549
14.50% Cv. Sub. Nts., 9/30/00(NZD) 60,000 34,592
- -------------------------------------------------------------------
Florida Coast Paper Co. LLC, 12.75%
First Mtg. Nts., 6/1/03 230,000 257,025
</TABLE>
79
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
FOREST PRODUCTS/CONTAINERS
(CONTINUED)
Four M Corp., 12% Sr. Nts., Series
B, 6/1/06(5) $ 125,000 $ 134,375
- -------------------------------------------------------------------
Indah Kiat International Finance
Co. BV, 11.375% Gtd. Sec. Nts.,
6/15/99(5) 205,000 174,250
- -------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr.
Nts., 3/1/03 365,000 376,862
- -------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 450,000 470,250
10.875% Sr. Sub. Nts., 4/1/08 200,000 203,000
- -------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts.,
Series B, 12/15/04 200,000 222,250
- -------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr.
Nts., 11/15/07 150,000 156,000
------------
2,371,462
- -------------------------------------------------------------------
GAMING/LEISURE - 2.1%
AP Holdings, Inc., 0%/11.25% Sr.
Disc. Nts., 3/15/08(7)(13) 50,000 30,500
- -------------------------------------------------------------------
Apoca, Inc., 9.25% Sr. Sub. Nts.,
3/15/08(7) 100,000 99,750
- -------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 275,000 286,687
- -------------------------------------------------------------------
Casino America, Inc., 12.50% Sr.
Nts., 8/1/03 50,000 56,750
- -------------------------------------------------------------------
Casino Magic of Louisiana Corp.,
13% First Mtg. Nts., Series B,
8/15/03 120,000 138,600
- -------------------------------------------------------------------
Empress Entertainment, Inc., 8.125%
Sr. Sub. Nts., 7/1/06(7) 400,000 403,000
- -------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd.
First Mtg. Nts., 12/1/03 350,000 385,000
- -------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375%
Bonds, 2/13/02 50,000 50,750
- -------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr.
Sub. Nts., 4/1/05(7) 300,000 309,000
- -------------------------------------------------------------------
HMC Acquisition Properties, Inc.,
9% Sr. Nts., Series B, 12/15/07 150,000 163,500
- -------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr.
Nts., 7/15/07 300,000 336,000
- -------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 425,000 452,094
- -------------------------------------------------------------------
Majestic Star Casino LLC (The),
12.75% Sr. Sec. Nts., 5/15/03 400,000 439,000
- -------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts.,
Series B, 11/15/02 200,000 253,000
- -------------------------------------------------------------------
Outboard Marine Corp., 10.75% Sr.
Nts., 6/1/08(7) 200,000 203,000
- -------------------------------------------------------------------
Premier Cruises Ltd., 11% Sr. Nts.,
3/15/08(7) 250,000 167,500
- -------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(13) 200,000 133,750
9.25% Sr. Nts., 4/1/06 100,000 103,750
- -------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50%
Gtd. Sr. Sub. Nts., 4/15/07 350,000 368,375
- -------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp.,
13.50% First Mtg. Nts., Series B,
3/15/03 350,000 407,750
- -------------------------------------------------------------------
Six Flags Entertainment Corp.,
8.75% Sr. Unsec. Nts., 4/1/06 200,000 204,750
- -------------------------------------------------------------------
Venetian Casino Resort LLC/Las
Vegas Sands, Inc.:
10% Sr. Unsec. Sub. Nts.,
11/15/05(11) 150,000 139,500
12.25% Mtg. Nts., 11/15/04 150,000 155,625
------------
5,287,631
- -------------------------------------------------------------------
HEALTHCARE - 0.6%
Fresenius Medical Care Capital
Trust II, 7.875% Gtd. Nts.,
2/1/08(5) 500,000 492,500
- -------------------------------------------------------------------
Fresenius Medical Care Capital
Trust III, 7.375% Gtd. Nts.,
2/1/08(7)(DEM) 400,000 224,582
</TABLE>
80
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Integrated Health Services, Inc.:
10.25% Sr. Sub. Nts., 4/30/06 $ 15,000 $ 16,125
9.50% Sr. Sub. Nts., 9/15/07 150,000 157,500
- -------------------------------------------------------------------
Magellan Health Services, Inc., 9%
Sr. Sub. Nts., 2/15/08(7) 250,000 249,375
- -------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr.
Nts., 5/15/05(7) 150,000 154,500
- -------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07(7) 265,000 270,300
------------
1,564,882
- -------------------------------------------------------------------
HOUSING - 0.6%
Building Materials Corp. of
America, 8.625% Sr. Nts., Series B,
12/15/06 50,000 52,000
- -------------------------------------------------------------------
Falcon Building Products, Inc.,
9.50% Sr. Sub. Nts., 6/15/07 175,000 173,250
- -------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Gtd.
Sr. Nts., 3/1/04(5) 50,000 54,250
- -------------------------------------------------------------------
Hovnanian K. Enterprises, Inc.,
11.25% Gtd. Sub. Nts., 4/15/02 75,000 78,000
- -------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75%
Sr. Nts., 10/15/04 300,000 300,375
- -------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 650,000 667,875
9.25% Sr. Nts., Series B, 3/15/07 150,000 154,875
------------
1,480,625
- -------------------------------------------------------------------
INFORMATION TECHNOLOGY - 1.4%
Amazon.Com, Inc., 0%/10% Sr. Disc.
Nts., 5/1/08(7)(13) 200,000 122,500
- -------------------------------------------------------------------
Bell Technology Group Ltd., Units
(each unit consists of $1,000
principal amount of 13% sr. nts.,
5/1/05 and one warrant to purchase
one share of common stock)(7)(14) 325,000 329,875
- -------------------------------------------------------------------
Concentric Network Corp., 12.75%
Sr. Unsec. Nts., 12/15/07 80,000 85,000
- -------------------------------------------------------------------
Covad Communications Group, Inc.,
Units (each unit consists of
$1,000 principal amount of
0%/13.50% sr. disc. nts., 3/15/08
and one
warrant to purchase 6.4792 common
shares)(7)(13)(14) 600,000 315,000
- -------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
Series B, 11/15/05 250,000 250,000
- -------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub.
Nts., 9/15/07 20,000 19,700
- -------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 350,000 362,250
- -------------------------------------------------------------------
Exodus Communications, Inc., 11.25%
Sr. Nts., 7/1/08(7) 200,000 200,875
- -------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr.
Disc. Nts., 2/15/08(7)(13) 190,000 113,525
- -------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub.
Nts., 9/30/09 150,000 154,500
- -------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 750,000 768,750
- -------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 150,000 173,812
- -------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Nts., 4/1/05(7) 225,000 232,312
13.50% Sr. Nts., 6/15/04(7) 65,000 74,750
- -------------------------------------------------------------------
WAM!Net, Inc., Units (each unit
consists of $1,000 principal amount
of 0%/13.25% sr. disc. nts., 3/1/05
and three warrants to purchase 6.03
shares of common stock)(7)(13)(14) 500,000 317,500
- -------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 175,000 182,875
------------
3,703,224
</TABLE>
81
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 1.0%
Burke Industries, Inc., 10% Sr.
Sub. Nts., 8/15/07 $ 150,000 $ 151,500
- -------------------------------------------------------------------
Cia Latino Americana de
Infraestructura & Servicios SA -
CLISA,
11.625% Gtd. Sr. Nts., 6/1/04(5) 30,000 30,300
- -------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 100,000 112,000
12.50% Debs., Series B,
7/15/07(5)(17) 115,994 123,534
- -------------------------------------------------------------------
Communications & Power Industries,
Inc., 12% Sr. Sub. Nts., Series B,
8/1/05 250,000 281,250
- -------------------------------------------------------------------
Eagle-Picher Industries, Inc.,
9.375% Sr. Sub. Nts., 3/1/08(7) 400,000 406,000
- -------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub.
Nts., 5/1/08(7) 100,000 100,000
- -------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 154,500
- -------------------------------------------------------------------
Insilco Corp., 10.25% Sr. Unsec.
Sub. Nts., 8/15/07 300,000 315,000
- -------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 125,000 137,656
- -------------------------------------------------------------------
Maxxam Group, Inc., 0%/12.25% Sr.
Sec. Disc. Nts., 8/1/03(13) 25,000 26,312
- -------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75%
Gtd. Sr. Sec. Sub. Nts., Series B,
12/30/99 85,000 85,212
- -------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(7) 200,000 205,000
- -------------------------------------------------------------------
Paragon Corp. Holdings, Inc.,
9.625% Sr. Nts., 4/1/08(7) 125,000 116,250
- -------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub.
Nts., 7/1/07 100,000 101,625
- -------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Gtd. Sr. Sub. Nts.,
Series B, 6/15/07 140,000 143,850
- -------------------------------------------------------------------
Terex Corp., 8.875% Sr. Sub. Nts.,
4/1/08(7) 150,000 148,125
- -------------------------------------------------------------------
Unifrax Investment Corp., 10.50%
Sr. Nts., 11/1/03(5) 50,000 52,750
------------
2,690,864
- -------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
1.1%
Azteca Holdings SA, 11% Sr. Sec.
Nts., 6/15/02 155,000 156,162
- -------------------------------------------------------------------
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 275,000 290,125
- -------------------------------------------------------------------
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B,
12/15/07 200,000 203,500
8.75% Gtd. Sr. Unsec. Sub. Nts.,
Series B, 6/15/07 100,000 104,500
- -------------------------------------------------------------------
Jacor Communications Co.:
8% Sr. Sub. Nts., 2/15/10 500,000 507,500
8.75% Gtd. Sr. Sub. Nts., Series B,
6/15/07 100,000 104,500
- -------------------------------------------------------------------
Paxson Communications Corp.,
11.625% Sr. Sub. Nts., 10/1/02 95,000 102,362
- -------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(11) 100,000 102,500
- -------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 9/30/05 100,000 107,750
8.75% Sr. Sub. Nts., 12/15/07 150,000 155,250
9% Gtd. Sr. Sub. Nts., 7/15/07 250,000 261,250
- -------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
11% Sr. Nts., 3/15/04 100,000 108,500
- -------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Gtd. Sr. Nts., Series A,
2/15/04 100,000 99,750
10.50% Gtd. Sr. Nts., Series B,
2/15/07 150,000 150,000
- -------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 286,687
</TABLE>
82
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-BROADCASTING
(CONTINUED)
Young Broadcasting, Inc.:
(Continued)
9% Sr. Sub. Nts., Series B, 1/15/06 $ 100,000 $ 104,500
------------
2,844,836
- -------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 1.5%
Adelphia Communications Corp.:
10.50% Sr. Unsec. Nts., Series B,
7/15/04 70,000 76,825
8.375% Sr. Nts., Series B, 2/1/08 100,000 100,000
9.25% Sr. Nts., 10/1/02 100,000 104,250
- -------------------------------------------------------------------
American Telecasting, Inc.,
0%/14.50% Sr. Disc. Nts.,
6/15/04(13) 49,000 12,495
- -------------------------------------------------------------------
Cablevision Systems Corp. Holdings,
Inc.:
9.875% Sr. Sub. Debs., 4/1/23 150,000 166,125
9.875% Sr. Sub. Nts., 5/15/06 250,000 274,375
- -------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(13) 40,000 39,200
- -------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Sr.
Nts., 7/1/02 250,000 279,375
- -------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(5) 135,185 134,509
- -------------------------------------------------------------------
EchoStar II, 8.25% Bonds,
11/9/01(5) 131,308 130,652
- -------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(13) 400,000 369,000
- -------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285%
Sr. Disc. Debs., 4/15/10(7)(13) 350,000 228,375
- -------------------------------------------------------------------
Fundy Cable Ltd./Ltee, 11% Sr. Sec.
Second Priority Nts., 11/15/05(5) 100,000 110,750
- -------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(6) 175,000 188,125
- -------------------------------------------------------------------
Marcus Cable Operating Co.
LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts.,
Series II, 8/1/04(13) 200,000 195,000
- -------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 310,000 342,550
- -------------------------------------------------------------------
Rogers Cablesystems Ltd., 10%
Second Priority Sr. Sec. Debs.,
12/1/07 200,000 223,000
- -------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07(CAD) 400,000 275,909
- -------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/12.25% Sr. Sub. Disc. Nts.,
2/15/07(13) 300,000 204,000
10.875% Sr. Sub. Nts., 2/15/07 100,000 100,000
- -------------------------------------------------------------------
United International Holdings,
Inc.:
0%/10.75% Sr. Disc. Nts., Series B,
2/15/08(13) 70,000 43,400
0%/14% Sr. Disc. Nts., Series B,
5/15/06(13) 400,000 246,500
------------
3,844,415
- -------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 0.8%
Ackerley Communications, Inc.,
10.75% Sr. Sec. Nts., Series A,
10/1/03 200,000 211,000
- -------------------------------------------------------------------
Chancellor Media Corp., 10.50% Sr.
Sub. Nts., Series B, 1/15/07 90,000 100,575
- -------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07 100,000 104,000
- -------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01 200,000 209,250
- -------------------------------------------------------------------
IPC Magazines Group plc, 9.675%
Bonds, 3/15/08(7)(GBP) 300,000 473,987
- -------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 150,000 154,313
9.625% Sr. Sub. Nts., 12/1/06 50,000 53,750
- -------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr.
Sub. Nts., 2/1/08(7) 500,000 492,500
</TABLE>
83
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA (CONTINUED)
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 $ 300,000 $ 352,225
------------
2,151,600
- -------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -4.5%
Call-Net Enterprises, Inc.:
0%/13.25% Sr. Disc. Nts.,
12/1/04(13) 200,000 192,000
0%/9.27% Sr. Disc. Nts.,
8/15/07(13) 75,000 52,875
- -------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts.,
12/15/06(13) 200,000 160,000
10.125% Sr. Nts., 11/30/07(GBP) 170,000 306,153
8.875% Sr. Nts., 11/30/07(DEM) 100,000 60,951
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)(14) 200,000 199,000
- -------------------------------------------------------------------
Comcast UK Cable Partners Ltd.,
0%/11.20% Sr. Disc. Debs.,
11/15/07(13) 250,000 209,375
- -------------------------------------------------------------------
Convergent Communications, Inc.,
Units (each unit consists of $1,000
principal amount of 13% sr. nts.,
4/1/08 and four warrants to
purchase 10.8 shares of common
stock)(7)(14) 250,000 241,250
- -------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(13) 825,000 684,750
- -------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr.
Nts., 2/1/08(7) 50,000 52,125
- -------------------------------------------------------------------
e.spire Communications, Inc.,
13.75% Sr. Nts., 7/15/07(17) 110,000 125,950
- -------------------------------------------------------------------
FaciliCom International, Inc.,
10.50% Sr. Nts., 1/15/08(7) 750,000 742,500
- -------------------------------------------------------------------
Firstworld Communications, Inc.,
Units (each unit consists of $1,000
principal amount of 0%/13% sr.
disc. nts., 4/15/08 and one warrant
to purchase 7.9002 shares of series
b common stock)(7)(13)(14) 250,000 111,250
- -------------------------------------------------------------------
Focal Communications Corp.,
0%/12.125% Sr. Disc. Nts.,
2/15/08(7)(13) 1,150,000 691,438
- -------------------------------------------------------------------
Global Crossing Holdings Ltd.,
9.625% Sr. Nts., 5/15/08(7) 210,000 219,713
- -------------------------------------------------------------------
GST Telecommunications, Inc.,
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(7)(13) 25,000 20,281
- -------------------------------------------------------------------
GST Telecommunications, Inc./GST
Network Funding Corp., Inc.,
0%/10.50% Sr. Disc. Nts.,
5/1/08(7)(13) 150,000 90,750
- -------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05(13) 425,000 346,375
- -------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts.,
5/1/06(13) 195,000 153,075
0%/13.50% Sr. Disc. Nts.,
9/15/05(13) 125,000 106,250
- -------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/11.25% Sr. Disc. Nts., Series B,
7/15/07(13) 300,000 220,875
8.50% Sr. Nts., Series B, 1/15/08 250,000 251,250
8.60% Sr. Nts., 6/1/08(7) 250,000 254,375
8.875% Sr. Nts., 11/1/07 200,000 205,500
- -------------------------------------------------------------------
KMC Telecom Holdings, Inc., Units
(each unit consists of $1,000
principal amount of 0%/12.50% sr.
disc. nts., 2/15/08 and one warrant
to purchase .21785 ordinary
shares)(7)(13)(14) 725,000 424,125
- -------------------------------------------------------------------
Level 3 Communications, Inc.,
9.125% Sr. Nts., 5/1/08(7) 450,000 440,438
- -------------------------------------------------------------------
Long Distance International, Inc.,
Units (each unit consists of $1,000
principal amount of 12.25% sr.
nts., 4/15/08 and one warrant to
purchase 15.0874 shares of common
stock)(7)(14) 200,000 199,000
</TABLE>
84
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts.,
3/1/07(13) $ 140,000 $ 105,000
8.375% Sr. Nts., 3/15/08(7) 300,000 302,250
9.25% Sr. Nts., 7/15/07 75,000 78,188
- -------------------------------------------------------------------
Metronet Communications Corp.:
0%/10.75% Sr. Disc. Nts.,
11/1/07(13) 175,000 115,719
0%/9.95% Sr. Disc.Nts.,
6/15/08(7)(13) 100,000 62,375
- -------------------------------------------------------------------
Netia Holdings BV:
0%/11% Gtd. Sr. Disc. Nts.,
11/1/07(13)(DEM) 400,000 148,800
0%/11% Gtd. Sr. Disc. Nts., Series
B, 11/1/07(13)(DEM) 200,000 74,400
0%/11.25% Sr. Disc. Nts., Series B,
11/1/07(13) 100,000 66,250
10.25% Sr. Nts., Series B, 11/1/07 50,000 48,188
- -------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Nts.,
4/15/08(7)(13) 400,000 246,500
9% Sr. Nts., 3/15/08(7) 200,000 201,000
9.625% Sr. Nts., 10/1/07 350,000 360,500
- -------------------------------------------------------------------
NTL, Inc.:
0%/10.75% Sr. Unsec. Unsub. Nts.,
Series REGS, 4/1/08(13)(GBP) 200,000 200,100
0%/9.75% Sr. Nts., 4/1/08(7)(13) 300,000 196,500
10% Sr. Nts., 2/15/07 100,000 107,500
- -------------------------------------------------------------------
Onepoint Communications Corp.,
Units (each unit consists of $1,000
principal amount of 14.50% sr.
nts., 6/1/08 and one warrant to
purchase
one share of common stock @ $.01
per share)(7)(14) 100,000 94,500
- -------------------------------------------------------------------
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)(7)(13)(14) 300,000 279,000
- -------------------------------------------------------------------
PTC International Finance BV,
0%/10.75% Gtd. Sr. Unsec. Sub.
Bonds, 7/1/07(13) 134,000 91,623
- -------------------------------------------------------------------
Qwest Communications International,
Inc.:
0%/8.29% Sr. Disc. Nts.,
2/1/08(7)(13) 365,000 264,625
0%/9.47% Sr. Disc. Nts.,
10/15/07(13) 635,000 477,838
- -------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(13)(DEM) 200,000 64,650
0%/10% Bonds, Series REGS,
3/15/08(7)(13)(DEM) 150,000 48,488
0%/10.125% Sr. Disc. Nts.,
3/1/08(7)(13) 300,000 180,000
- -------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27(CAD) 340,000 232,241
- -------------------------------------------------------------------
Teleport Communications Group,
Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(13) 425,000 369,750
- -------------------------------------------------------------------
TeleWest Communications plc, 0%/11%
Sr. Disc. Debs., 10/1/07(13) 200,000 167,000
- -------------------------------------------------------------------
Viatel, Inc., Units (each unit
consists of $1,000 principal amount
of
11.25% sr. nts., and 0.483 shares
of series a preferred stock)(7)(14) 300,000 315,000
------------
11,659,609
- -------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 3.3%
American Mobile Satellite
Corp./AMSC Acquisition Co., Inc.,
Units (each unit consists of $1,000
principal amount of 12.25% sr.
nts., 4/1/08 and one warrant to
purchase 3.75749 shares of common
stock)(7)(14) 150,000 141,750
- -------------------------------------------------------------------
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(7) 200,000 202,250
</TABLE>
85
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS (CONTINUED)
Celcaribe SA, 13.50% Sr. Sec. Nts.,
3/15/04(5) $ 150,000 $ 153,000
- -------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14%
Sr. Disc. Nts., 10/1/07(13) 500,000 280,000
- -------------------------------------------------------------------
Cellular Communications
International, Inc., 0%/9.50%
Bonds, 4/1/05(7)(13)(XEU) 650,000 515,608
- -------------------------------------------------------------------
Clearnet Communications, Inc.,
0%/14.75% Sr. Disc. Nts.,
12/15/05(13) 150,000 126,375
- -------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125%
Sr. Deferred Coupon Bonds,
11/15/03(13) 350,000 271,250
- -------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Unsec. Disc. Nts.,
11/15/07(13) 350,000 240,625
- -------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., Series
B, 7/15/05(13) 90,000 7,650
12% Cv. Sr. Sub. Nts.,
2/15/01(5)(16) 210,000 5,250
- -------------------------------------------------------------------
Iridium LLC/Iridium Capital Corp.:
11.25% Sr. Nts., Series C/EN,
7/15/05 155,000 156,163
13% Sr. Nts., Series A, 7/15/05 125,000 134,688
- -------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., Series
B, 10/15/07(13)(CAD) 300,000 129,544
0%/14% Sr. Disc. Nts., Series B,
6/1/06(13) 200,000 149,500
- -------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts.,
6/1/06(13) 210,000 163,275
- -------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts.,
9/15/07(13) 950,000 643,625
0%/9.75% Sr. Disc. Nts.,
10/31/07(13) 500,000 327,500
0%/9.95% Sr. Disc. Nts.,
2/15/08(7)(13) 325,000 209,219
- -------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 365,000 385,988
11.625% Sr. Nts., Series A, 8/15/06 80,000 84,600
- -------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 300,000 341,250
- -------------------------------------------------------------------
Orbital Imaging Corp., 11.625% Sr.
Nts., 3/1/05(7) 325,000 335,563
- -------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(13) 550,000 420,750
- -------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr.
Disc. Nts., 3/15/08(7)(13) 325,000 214,500
- -------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 0%/13.50% Sr. Disc.
Nts., Series B, 8/1/07(13) 900,000 632,250
- -------------------------------------------------------------------
Price Communications Wireless,
Inc.:
11.75% Sr. Sub. Nts., 7/15/07 275,000 303,875
9.125% Sr. Sec. Nts., 12/15/06(7) 250,000 250,938
- -------------------------------------------------------------------
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)(7)(13)(14) 300,000 160,500
- -------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr.
Sub. Nts., 5/15/08(7) 300,000 301,500
- -------------------------------------------------------------------
Satelites Mexicanos SA, 10.125% Sr.
Nts., 11/1/04(7) 100,000 97,625
- -------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Disc. Nts., 3/1/08(7)(13) 700,000 441,000
- -------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(7)(13) 500,000 280,000
- -------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum
Finance Corp., 0%/12.50% Sr. Disc.
Nts., 8/15/06(13) 65,000 55,738
</TABLE>
86
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS (CONTINUED)
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 $ 200,000 $ 221,000
9.50% Sr. Nts., 2/1/04 100,000 91,250
------------
8,475,599
- -------------------------------------------------------------------
METALS/MINERALS - 0.9%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 350,000 367,500
- -------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 300,000 337,500
- -------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 45,000 48,488
- -------------------------------------------------------------------
Centaur Mining & Exploration Ltd.,
11% Gtd. Sr. Nts., 12/1/07(7) 100,000 102,500
- -------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., 5/15/08(7) 500,000 512,500
- -------------------------------------------------------------------
International Utility Structures,
Inc., 10.75% Sr. Sub. Nts.,
2/1/08(7) 50,000 51,250
- -------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Sec. Nts., 8/1/07 200,000 205,500
- -------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07 745,000 782,250
------------
2,407,488
- -------------------------------------------------------------------
RETAIL - 0.6%
Boyds Collection Ltd., 9% Sr. Sub.
Nts., 5/15/08(7) 400,000 402,000
- -------------------------------------------------------------------
Central Termica Guemes, 12% Bonds,
11/26/01(7) 100,000 98,875
- -------------------------------------------------------------------
Eye Care Centers of America, Inc.:
12% Sr. Nts., 10/1/03 70,000 75,600
9.125% Sr. Sub. Nts., 5/1/08(7) 300,000 300,000
- -------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs.,
5/1/08 100,000 100,750
- -------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 100,000 100,875
- -------------------------------------------------------------------
Home Interiors & Gifts, Inc.,
10.125% Sr. Sub. Nts., 6/1/08(7) 225,000 230,906
- -------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07 200,000 205,000
------------
1,514,006
- -------------------------------------------------------------------
SERVICE - 0.9%
Allied Waste Industries, Inc.,
0%/11.30% Sr. Disc. Nts.,
6/1/07(13) 300,000 220,500
- -------------------------------------------------------------------
Allied Waste North America, Inc.,
10.25% Sr. Sub. Nts., 12/1/06 250,000 275,000
- -------------------------------------------------------------------
Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03(5) 100,000 104,562
9.625% Sr. Sub. Nts., 3/15/07 100,000 112,500
- -------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(13) 100,000 81,500
- -------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr.
Nts., 4/15/08(7)(13) 175,000 98,000
- -------------------------------------------------------------------
Fisher Scientific International,
Inc., 9% Sr. Unsec. Sub. Nts.,
2/1/08 600,000 598,500
- -------------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 50,000 50,625
- -------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Gtd.
Unsec. Nts., Series B, 11/1/07 500,000 507,500
- -------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc., 6.75% Cv. Gtd. Sr. Sub. Nts.,
9/15/03 125,000 145,938
- -------------------------------------------------------------------
SF Holdings Group, Inc., Units
(each unit consists of $1,000
principal amount of 0%/12.75% sr.
disc. nts., 3/15/08 and one warrant
to purchase two shares of cl. c
common stock)(7)(13)(14) 100,000 54,000
------------
2,248,625
</TABLE>
87
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 1.7%
American Communication Lines LLC,
10.25% Bonds, 6/30/08(7) $ 200,000 $ 203,500
- -------------------------------------------------------------------
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., Series B, 7/15/07 75,000 76,125
- -------------------------------------------------------------------
Coach USA, Inc., 9.375% Gtd. Sr.
Sub. Nts., Series B, 7/1/07 200,000 209,000
- -------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Gtd. Sr. Sub. Nts., 4/15/06 300,000 333,750
- -------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts.,
7/1/10 300,000 302,763
- -------------------------------------------------------------------
Hayes Wheels International, Inc.:
11% Sr. Sub. Nts., 7/15/06 225,000 253,125
9.125% Sr. Sub. Nts., 7/15/07 100,000 105,500
- -------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 300,000 313,500
- -------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts.,
7/15/06 200,000 219,500
- -------------------------------------------------------------------
Navigator Gas Transport plc, 10.50%
First Priority Ship Mtg. Nts.,
6/30/07(7) 275,000 288,063
- -------------------------------------------------------------------
Navigator Gas Transport plc, Units
(each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(7)(14) 150,000 170,250
- -------------------------------------------------------------------
Oxford Automotive, Inc., 10.125%
Sr. Unsec. Sub. Nts., 6/15/07 900,000 931,500
- -------------------------------------------------------------------
Pycsa Panama SA, 10.28% Sr. Sec.
Bonds, 12/15/12(7) 200,000 189,750
- -------------------------------------------------------------------
TFM SA de CV, 10.25% Gtd. Sr. Nts.,
6/15/07 200,000 194,500
- -------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(13) 300,000 280,500
- -------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50%
Nts., Series 1993-A, 12/1/11(5) 238,609 186,712
- -------------------------------------------------------------------
Trico Marine Services, Inc., 8.50%
Gtd. Sr. Nts., Series D, 8/1/05 40,000 39,100
------------
4,297,138
- -------------------------------------------------------------------
UTILITY - 0.5%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds,
6/1/17(5) 199,000 224,870
- -------------------------------------------------------------------
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 150,000 161,625
- -------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 100,000 109,500
8.75% Sr. Nts., 7/15/07 230,000 237,475
- -------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Bonds, Series E, 5/1/11 250,000 286,250
- -------------------------------------------------------------------
First PV Funding Corp.:
10.30% Lease Obligation Bonds,
Series 1986A:
1/15/14(5) 136,000 144,650
1/15/14 4,000 4,000
------------
1,168,370
------------
Total Corporate Bonds and Notes
(Cost $84,411,805) 84,933,055
SHARES
- -------------------------------------------------------------------
PREFERRED STOCKS - 3.4%
- -------------------------------------------------------------------
American Radio Systems Corp.,
11.375% Cum. Exchangeable
Preferred, Series B(5) 751 89,369
- -------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable Preferred Stock,
Non-Vtg.(5) 2,475 64,969
- -------------------------------------------------------------------
BankUnited Capital Trust, 10.25%
Gtd. Bonds, 12/31/26(5) 100,000 108,000
- -------------------------------------------------------------------
California Federal Bank, 11.50%
Non-Cum., Non-Vtg. 1,500 169,125
- -------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(5)(18) 16,000 400,000
</TABLE>
88
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- -------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
- -------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cv.
Cum. Preferred Stock(7) 4,000 $ 169,500
- -------------------------------------------------------------------
Clark USA, Inc., 11.50% Sr. Cum.
Exchangeable Preferred Stock(5)(17) 52 54,990
- -------------------------------------------------------------------
Concentric Network Corp., 13.50%
Exchangeable Preferred Stock(7)(17) 200 198,500
- -------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv.
Preferred Stock, Series B, Non-Vtg. 46,000 1,549,625
- -------------------------------------------------------------------
Crown American Realty Trust, 11%
Cum. Non-Vtg. Preferred, Series A 2,000 107,250
- -------------------------------------------------------------------
Doane Products Co., 14.25% Sr.
Exchangeable Preferred Stock,
Non-Vtg.(5)(18) 5,000 201,250
- -------------------------------------------------------------------
Dobson Communications Corp., 12.25%
Preferred Stock(7)(17) 205 213,712
- -------------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable Preferred
Stock 154 172,865
- -------------------------------------------------------------------
Eagle-Picher Holdings, Inc.,
Preferred Stock(5)(18) 5,000 291,250
- -------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr.
Preferred Stock, Series C(5)(17) 10,000 17,500
- -------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable Exchangeable
Preferred Stock, Series B(5)(17) 136 151,980
- -------------------------------------------------------------------
El Paso Electric Co., 11.40%
Preferred Stock, Series A(17) 1,921 210,830
- -------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, l2% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A(5) 20 545
- -------------------------------------------------------------------
Fresenius Medical Care Capital
Trust III, 9% Gtd. Nts., 12/1/06(5) 275,000 286,687
- -------------------------------------------------------------------
Golden State Bancorp, 8.75% Cv.
Preferred Stock, Series A 1,000 86,687
- -------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable Preferred Stock(5)(17) 108 131,490
- -------------------------------------------------------------------
Intermedia Communications, Inc.,
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E,
Non-Vtg.(7) 2,100 77,963
- -------------------------------------------------------------------
International Utility Structures,
Inc., Units (each unit consists of
$1,000 principal amount of 13% sr.
exchangeable preferred stock and
one warrant to purchase 30 shares
of common stock)(5)(14)(17) 50 54,750
- -------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv. 1,800 42,300
- -------------------------------------------------------------------
Nebco Evans Holdings Co., 11.25%
Nts., 3/1/08(5)(17) 5,132 524,747
- -------------------------------------------------------------------
Nextel Communications, Inc.,
11.125% Preferred Stock(7) 105 108,413
- -------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Sr. Exchangeable Preferred(17) 15,481 909,509
- -------------------------------------------------------------------
Paxson Communications Corp., 13.25%
Cum. Jr. Exchangeable Preferred
Stock(7)(17) 20 196,500
- -------------------------------------------------------------------
Prime Retail, Inc., 8.50% Cv.
Preferred Stock, Series B 6,000 123,000
- -------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Preferred Stock 8,000 780,000
9.20% Preferred Stock, Series F 1,000 101,750
- -------------------------------------------------------------------
Rural Cellular Corp., 11.375% Sr.
Exchangeable Preferred Stock(5)(17) 200 201,000
- -------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable Preferred Stock,
Series B, Non-Vtg. 9,000 452,250
- -------------------------------------------------------------------
SF Holdings Group, Inc., Units
(each unit consists of one share of
preferred stock and 37 cl. c shares
of common stock)(5)(14)(17) 10 89,250
- -------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Sr. Exchangeable
Preferred Stock, Non-Vtg.(5)(17) 113 119,215
- -------------------------------------------------------------------
Time Warner, Inc., 10.25%
Exchangeable Preferred, Series
M(17) 1 1,170
</TABLE>
89
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS (CONTINUED)
- -------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv. Preferred Stock, Series B 10,000 $ 285,000
9.20% Sr. Preferred Stock 1,000 25,438
------------
Total Preferred Stocks (Cost
$8,745,834) 8,768,379
- -------------------------------------------------------------------
COMMON STOCKS - 0.3%
- -------------------------------------------------------------------
Celcaribe SA(5)(18) 24,390 109,755
- -------------------------------------------------------------------
Coinstar, Inc. 700 6,475
- -------------------------------------------------------------------
Horizon Group Properties, Inc.(18) 358 2,361
- -------------------------------------------------------------------
Intermedia Communications, Inc.(18) 50 2,097
- -------------------------------------------------------------------
Optel, Inc.(5)(18) 210 2
- -------------------------------------------------------------------
Vail Resorts, Inc.(18) 15,500 412,687
- -------------------------------------------------------------------
WorldCom, Inc.(18) 6,885 333,492
------------
Total Common Stocks (Cost $354,276) 866,869
UNITS
- -------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.1%
- -------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(5) 1,500 15
- -------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(5) 16,000 8,000
- -------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05(5) 165 735
- -------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp.
11/03(5) 200 14,025
- -------------------------------------------------------------------
Concentric Network Corp. Wts., Exp.
12/07 100 13,500
- -------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(5) 7,500 75
- -------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(5) 2,621 26
Exp. 9/04(5) 2,800 3,150
- -------------------------------------------------------------------
Hyperion Telecommunications, Inc.
Wts., Exp. 4/01(5) 60 5,820
- -------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(5) 825 24,348
- -------------------------------------------------------------------
IHF Capital, Inc., Series I Wts.,
Exp. 11/99(5) 200 2,025
- -------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 200 --
- -------------------------------------------------------------------
Mexican Value Rts., Exp. 6/03 1,100 --
- -------------------------------------------------------------------
Microcell Telecommunications, Inc.
Wts., Exp. 6/06(5) 600 16,664
- -------------------------------------------------------------------
Occidente y Caribe Celular SA Wts.,
Exp. 3/04(5) 800 16,100
- -------------------------------------------------------------------
Orbital Imaging Corp. Wts., Exp.
3/05(5) 325 14,625
- -------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(5) 150 2,269
- -------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(5) 3,096 46,827
- -------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(5) 200 4,037
------------
Total Rights, Warrants and
Certificates (Cost $43,252) 172,241
</TABLE>
90
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- -------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 5.8%
- -------------------------------------------------------------------
Bankers Trust, Lehman High Yield
Index Nts., 8.438%, 8/5/98 $ 1,000,000 $ 993,950
- -------------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch), Lehman High
Yield Index Nts.:
8.50%, 3/8/99 1,000,000 1,000,000
7.95%, 8/5/98 500,000 496,900
9%, 7/8/98 500,000 516,875
- -------------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts., 9%:
10/13/98 500,000 507,750
2/16/99(5) 600,000 601,920
2/5/99 1,000,000 1,000,400
8/25/98 1,500,000 1,528,800
9/4/98 750,000 761,250
- -------------------------------------------------------------------
Chase Manhattan Bank USA, National
Assn., Chase Physical Commodity
Excess Return Index Linked Nts.,
5.655%, 9/30/99 250,000 183,950
- -------------------------------------------------------------------
Deutsche Morgan Grenfell, Russian
Federal Loan Floating Rate Linked
Bonds:
12%, 10/25/00 240,000 155,283
15%, 2/23/00 240,000 155,573
- -------------------------------------------------------------------
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)(5) 104,347 104,817
- -------------------------------------------------------------------
Korea Development Bank Industrial
Bank Finance U.S. Dollar/South
Korean Won Linked Nts., Zero
Coupon, 3/5/99(5) 470,000 485,416
- -------------------------------------------------------------------
Lehman Brothers Holdings, Inc.:
Chilean Peso/Japanese Yen Linked
Nts., 17.50%, 7/28/98 250,000 256,645
Chilean Peso/Japanese Yen Linked
Nts., 18%, 7/28/98 240,000 249,163
Greek Drachma/European Currency
Unit Linked Nts., Zero Coupon,
3/26/99 280,000 296,156
Greek Drachma/Swiss Franc Linked
Nts., Zero Coupon, 3/31/99 175,000 191,030
- -------------------------------------------------------------------
Rabobank, Lehman High Yield Index
Nts., 7.988%, 7/6/98 400,000 397,480
- -------------------------------------------------------------------
Salomon Smith Barney Holdings,
Inc., Brazil Credit Linked Unsec.
Nts., 6%, 4/2/03 620,000 509,702
- -------------------------------------------------------------------
Salomon, Inc., Russian S-Account
Credit Linked Nts., Zero Coupon:
9.785%, 7/31/98(12) 400,000 392,420
9.78%, 8/7/98(12) 585,000 568,591
- -------------------------------------------------------------------
Salomon, Inc.:
United Mexican States 2016 Linked
Nts., 12.02%, 9/16/98 808,330 795,640
United Mexican States 2026 Linked
Nts., 12.328%, 9/16/98 1,410,553 1,404,488
- -------------------------------------------------------------------
Shoshone Partners Loan Trust Sr.
Nts., 9.719%, 4/28/02 (representing
a basket of reference loans and a
total return swap between Chase
Manhattan Bank and the Trust)(5)(6) 750,000 830,517
- -------------------------------------------------------------------
Standard Chartered Bank:
Philippines Peso/Japanese Yen
Linked Nts., 20.25%, 11/9/98 240,000 234,888
Thailand Baht/Japanese Yen Linked
Nts., 48%, 8/11/98 210,000 208,509
------------
Total Structured Instruments (Cost
$14,928,102) 14,828,113
</TABLE>
91
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
DATE STRIKE CONTRACTS NOTE 1
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
CALL OPTIONS PURCHASED - 0.0%
- -------------------------------------------------------------------------------------
German Mark/Swiss Franc Call Opt. 10/98 .84DEM/CHF 960,000 $4,678
- -------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/27 Call Opt. 11/98 107.125% 2,500 60,156
----------
Total Call Options Purchased (Cost
$31,387) 64,834
- -------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED - 0.1%
- -------------------------------------------------------------------------------------
Japanese Yen Put Opt. 9/98 136 JPY) 439,040,000 205,910
- -------------------------------------------------------------------------------------
Japanese Yen Put Opt. 9/98 145.40 JPY) 191,740,000 21,475
- -------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/15 Put Opt. 7/98 105.344% 2,500 6,075
----------
Total Put Options Purchased (Cost
$98,750) 233,460
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(1)
- -------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 0.3%
- -------------------------------------------------------------------
Repurchase agreement with Salomon
Smith Barney Holdings, Inc., 5.90%,
dated 6/30/98, to be repurchased at
$700,115 on 7/1/98, collateralized
by U.S. Treasury Bonds,
8.75%-10.625%, 2/15/15-2/15/19,
with a value of $718,612 (Cost
$700,000) $ 700,000 700,000
- -------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$276,278,205) 107.5% 276,829,739
- -------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (7.5) (19,392,015)
---------------- ------------
NET ASSETS 100.0% $257,437,724
---------------- ------------
---------------- ------------
</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 JPY - Japanese Yen
CAD - Canadian Dollar NOK - Norwegian Krone
CHF - Swiss Franc NZD - New Zealand Dollar
DEM - German Mark PLZ - Polish Zloty
DKK - Danish Krone RUR - Russian Ruble
GBP - British Pound Sterling SEK - Swedish Krona
GRD - Greek Drachma TRL - Turkish Lira
HUF - Hungarian Forint XEU - European Currency Units
IDR - Indonesian Rupiah ZAR - South African Rand
ITL - Italian Lira
</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 June 30, 1998.
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.
92
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
5. Identifies issues considered to be illiquid or restricted - See Note 8 of
Notes to Financial Statements.
6. Represents the current interest rate for a variable rate security.
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 $24,265,835 or 9.43% of the Fund's net
assets as of June 30, 1998.
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. A sufficient amount of securities has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
PRINCIPAL/CONTRACTS 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 8/7/00 100.00 $ 3,680 $ 6,000
German Mark/Swiss Franc Call
Option 960,000 10/22/98 0.60 (DEM\CHF) 3,262 531
U.S. Treasury Bonds, 6.125%
11/15/15 Put Option 2,500,000 7/13/98 96.00% 28,125 7,812
----------- -------------
$ 35,067 $ 14,343
----------- -------------
----------- -------------
</TABLE>
10. Securities with an aggregate market value of $617,626 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
11. Represents the current interest rate for an increasing rate security.
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. 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.
15. Issuer is in default.
16. Non-income producing--issuer is in default of interest payment.
17. Interest or dividend is paid in kind.
18. Non-income producing security.
See accompanying Notes to Financial Statements.
93
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 85.5%
- -------------------------------------------------------------
BASIC MATERIALS - 1.5%
- -------------------------------------------------------------
CHEMICALS - 1.5%
Ferro Corp. 27,500 $ 696,094
- -------------------------------------------------------------
IMC Global, Inc. 55,000 1,656,875
- -------------------------------------------------------------
Olin Corp. 35,000 1,459,062
------------
3,812,031
- -------------------------------------------------------------
CONSUMER CYCLICALS - 23.8%
- -------------------------------------------------------------
AUTOS & HOUSING - 9.0%
Budget Group, Inc., Cl. A(1) 77,500 2,475,156
- -------------------------------------------------------------
Champion Enterprises, Inc.(1) 20,000 585,000
- -------------------------------------------------------------
CSK Auto Corp.(1) 275,000 6,943,750
- -------------------------------------------------------------
General Motors Corp. 17,500 1,169,219
- -------------------------------------------------------------
Lear Corp.(1) 17,500 897,969
- -------------------------------------------------------------
Republic Industries, Inc.(1) 350,000 8,750,000
- -------------------------------------------------------------
Tower Realty Trust, Inc. 42,500 950,937
- -------------------------------------------------------------
United Road Services, Inc.(1) 95,000 1,816,875
------------
23,588,906
- -------------------------------------------------------------
LEISURE & ENTERTAINMENT - 7.9%
AMR Corp.(1)(2) 10,000 832,500
- -------------------------------------------------------------
Brinker International, Inc.(1) 60,000 1,155,000
- -------------------------------------------------------------
Brunswick Corp. 17,500 433,125
- -------------------------------------------------------------
Callaway Golf Co. 75,000 1,476,562
- -------------------------------------------------------------
Delta Air Lines, Inc. 15,000 1,938,750
- -------------------------------------------------------------
Harrah's Entertainment, Inc.(1) 107,500 2,499,375
- -------------------------------------------------------------
Hilton Hotels Corp. 30,000 855,000
- -------------------------------------------------------------
Host Marriott Corp.(1) 70,000 1,246,875
- -------------------------------------------------------------
Luby's Cafeterias, Inc. 55,000 965,937
- -------------------------------------------------------------
Mirage Resorts, Inc.(1)(2) 65,000 1,385,312
- -------------------------------------------------------------
News Corp. Ltd., Sponsored ADR,
Preference 77,500 2,189,375
- -------------------------------------------------------------
Time Warner, Inc. 35,000 2,990,312
- -------------------------------------------------------------
Viacom, Inc., Cl. B(1) 50,000 2,912,500
------------
20,880,623
- -------------------------------------------------------------
MEDIA - 3.2%
Capstar Broadcasting Corp.(1) 100,000 2,512,500
- -------------------------------------------------------------
CBS Corp.(2) 70,000 2,222,500
- -------------------------------------------------------------
Emmis Broadcasting Corp., Cl. A(1) 40,000 1,912,500
- -------------------------------------------------------------
Jacor Communications, Inc.(1) 30,000 1,770,000
------------
8,417,500
- -------------------------------------------------------------
RETAIL: GENERAL - 1.7%
Federated Department Stores,
Inc.(1) 85,000 4,574,062
</TABLE>
94
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -------------------------------------------------------------
<S> <C> <C>
RETAIL: SPECIALTY - 2.0%
AutoZone, Inc.(1) 70,000 $ 2,235,625
- -------------------------------------------------------------
Nine West Group, Inc.(1) 85,000 2,279,062
- -------------------------------------------------------------
Petco Animal Supplies, Inc.(1) 40,000 797,500
------------
5,312,187
- -------------------------------------------------------------
CONSUMER NON-CYCLICALS - 5.8%
- -------------------------------------------------------------
BEVERAGES - 0.7%
Anheuser-Busch Cos., Inc. 41,000 1,934,687
- -------------------------------------------------------------
FOOD - 0.5%
Unilever NV, NY Shares 15,000 1,184,062
- -------------------------------------------------------------
HEALTHCARE/DRUGS - 0.9%
American Home Products Corp. 17,500 905,625
- -------------------------------------------------------------
BioChem Pharma, Inc.(1) 50,000 1,325,000
- -------------------------------------------------------------
CliniChem Development, Inc. 1,250 7,187
------------
2,237,812
- -------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
0.2%
Acuson Corp.(1) 25,000 454,687
- -------------------------------------------------------------
HOUSEHOLD GOODS - 0.7%
Fort James Corp. 25,000 1,112,500
- -------------------------------------------------------------
Kimberly-Clark Corp. 15,000 688,125
------------
1,800,625
- -------------------------------------------------------------
TOBACCO - 2.8%
Philip Morris Cos., Inc. 115,000 4,528,125
- -------------------------------------------------------------
RJR Nabisco Holdings Corp. 115,000 2,731,250
------------
7,259,375
- -------------------------------------------------------------
ENERGY - 5.1%
- -------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 4.9%
BJ Services Co.(1) 27,500 799,219
- -------------------------------------------------------------
Coflexip SA, Sponsored ADR 40,000 2,445,000
- -------------------------------------------------------------
Cooper Cameron Corp.(1) 32,500 1,657,500
- -------------------------------------------------------------
EVI Weatherford, Inc.(1) 21,375 793,547
- -------------------------------------------------------------
Marine Drilling Cos., Inc.(1) 35,000 560,000
- -------------------------------------------------------------
Santa Fe International Corp. 55,000 1,663,750
- -------------------------------------------------------------
Stolt Comex Seaway SA(1) 135,000 2,615,625
- -------------------------------------------------------------
Stolt Comex Seaway SA, ADR(1) 67,500 1,181,250
- -------------------------------------------------------------
Transocean Offshore, Inc. 25,000 1,112,500
------------
12,828,391
- -------------------------------------------------------------
OIL-INTEGRATED - 0.2%
Petroleo Brasileiro SA, Preference 2,630,000 488,887
- -------------------------------------------------------------
FINANCIAL - 19.1%
- -------------------------------------------------------------
BANKS - 11.3%
Banco Rio de la Plata SA, ADR 50,000 528,125
- -------------------------------------------------------------
BankAmerica Corp. 29,000 2,506,687
</TABLE>
95
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -------------------------------------------------------------
<S> <C> <C>
BANKS (CONTINUED)
Chase Manhattan Corp. (New) 85,000 $ 6,417,500
- -------------------------------------------------------------
Citicorp 12,880 1,922,340
- -------------------------------------------------------------
Commercial Federal Corp. 32,500 1,027,812
- -------------------------------------------------------------
Compass Bancshares, Inc. 10,000 451,250
- -------------------------------------------------------------
Credito Italiano SpA 190,000 994,599
- -------------------------------------------------------------
First Chicago NBD Corp. 11,400 1,010,325
- -------------------------------------------------------------
First Union Corp. 68,850 4,010,513
- -------------------------------------------------------------
Fleet Financial Group, Inc. 25,000 2,087,500
- -------------------------------------------------------------
Hubco, Inc. 47,500 1,701,094
- -------------------------------------------------------------
KeyCorp 20,000 712,500
- -------------------------------------------------------------
Societe Generale 7,500 1,555,821
- -------------------------------------------------------------
Sovereign Bancorp, Inc. 92,500 1,511,797
- -------------------------------------------------------------
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(3) 25,000 737,500
- -------------------------------------------------------------
Union Planters Corp. 45,000 2,646,563
------------
29,821,926
- -------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.0%
American Express Co.(2) 15,000 1,710,000
- -------------------------------------------------------------
Arm Financial Group, Inc., Cl. A 55,000 1,216,875
- -------------------------------------------------------------
CRIIMI MAE, Inc. 25,000 346,875
- -------------------------------------------------------------
Merrill Lynch & Co., Inc.(2) 2,500 230,625
- -------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 18,500 1,690,438
- -------------------------------------------------------------
Travelers Group, Inc. 10,000 606,250
- -------------------------------------------------------------
UniCapital Corp.(1) 115,000 2,199,375
------------
8,000,438
- -------------------------------------------------------------
INSURANCE - 4.8%
Allstate Corp. 35,000 3,204,688
- -------------------------------------------------------------
Cigna Corp. 9,000 621,000
- -------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 200,000 7,687,500
- -------------------------------------------------------------
Life Re Corp. 15,000 1,230,000
------------
12,743,188
- -------------------------------------------------------------
INDUSTRIAL - 12.2%
- -------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
Raychem Corp. 55,000 1,625,938
- -------------------------------------------------------------
INDUSTRIAL MATERIALS - 1.9%
Kennametal, Inc. 67,500 2,818,125
- -------------------------------------------------------------
Owens Corning 25,000 1,020,313
- -------------------------------------------------------------
Owens-Illinois, Inc.(1) 25,000 1,118,750
------------
4,957,188
- -------------------------------------------------------------
INDUSTRIAL SERVICES - 4.7%
Allied Waste Industries, Inc.(1) 27,500 660,000
</TABLE>
96
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (CONTINUED)
Ikon Office Solutions, Inc. 225,000 $ 3,276,563
- -------------------------------------------------------------
Loewen Group, Inc. 20,000 540,000
- -------------------------------------------------------------
Waste Management, Inc. 225,000 7,875,000
------------
12,351,563
- -------------------------------------------------------------
MANUFACTURING - 5.0%
American Standard Cos., Inc.(1) 75,000 3,351,563
- -------------------------------------------------------------
Halter Marine Group, Inc.(1) 305,000 4,594,063
- -------------------------------------------------------------
MascoTech, Inc. 40,000 960,000
- -------------------------------------------------------------
Mettler-Toledo International,
Inc.(1) 202,500 4,062,656
- -------------------------------------------------------------
Tenneco, Inc. (New) 7,500 285,469
------------
13,253,751
- -------------------------------------------------------------
TECHNOLOGY - 14.5%
- -------------------------------------------------------------
AEROSPACE/DEFENSE - 0.1%
Boeing Co. 6,500 289,656
- -------------------------------------------------------------
COMPUTER HARDWARE - 4.2%
International Business Machines
Corp. 17,500 2,009,219
- -------------------------------------------------------------
Seagate Technology, Inc.(1)(2) 20,000 476,250
- -------------------------------------------------------------
Sun Microsystems, Inc.(1) 30,000 1,303,125
- -------------------------------------------------------------
Waters Corp.(1) 122,500 7,219,844
------------
11,008,438
- -------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 8.0%
First Data Corp.(2) 125,000 4,164,063
- -------------------------------------------------------------
PLATINUM Technology, Inc.(1) 250,000 7,140,625
- -------------------------------------------------------------
Structural Dynamics Research
Corp.(1) 357,500 8,267,188
- -------------------------------------------------------------
Unigraphics Solutions, Inc.(1) 99,400 1,391,600
------------
20,963,476
- -------------------------------------------------------------
ELECTRONICS - 0.3%
Intel Corp.(2) 4,000 296,500
- -------------------------------------------------------------
LSI Logic Corp.(1)(2) 7,500 172,969
- -------------------------------------------------------------
Xilinx, Inc.(1)(2) 6,000 204,000
------------
673,469
- -------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY -
1.9%
CIENA Corp.(1)(2) 20,000 1,392,500
- -------------------------------------------------------------
Cisco Systems, Inc.(2) 22,500 2,071,406
- -------------------------------------------------------------
RCN Corp.(1) 73,800 1,429,875
------------
4,893,781
- -------------------------------------------------------------
UTILITIES - 3.5%
- -------------------------------------------------------------
TELEPHONE UTILITIES - 3.5%
MCI Communications Corp. 72,500 4,214,063
- -------------------------------------------------------------
Qwest Communications International,
Inc.(1) 99,118 3,456,740
</TABLE>
97
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -------------------------------------------------------------
<S> <C> <C>
TELEPHONE UTILITIES (CONTINUED)
Telecomunicacoes Brasileiras SA,
Sponsored ADR 14,250 $ 1,555,922
------------
9,226,725
------------
Total Common Stocks (Cost
$199,647,145) 224,583,372
- -------------------------------------------------------------
PREFERRED STOCKS - 7.2%
- -------------------------------------------------------------
Automatic Commission Exchange
Security Trust II, 6.50% Cv.
Preferred (exchangeable to common
stock of Republic Industries, Inc.
"TRACES" effective 5/15/00) 100,000 2,400,000
- -------------------------------------------------------------
Budget Group, Inc., 6.25% Cv.(4) 25,000 1,453,125
- -------------------------------------------------------------
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated
Preferred Securities 10,000 1,273,750
- -------------------------------------------------------------
Evergreen Media Corp., 6% Cv.
Preferred(4) 20,000 2,055,000
- -------------------------------------------------------------
Host Marriott Corp. 6.75% Preferred
Stock 2,500 132,188
- -------------------------------------------------------------
Host Marriott Financial Trust,
6.75% Cv. Preferred Stock(4) 25,000 1,321,875
- -------------------------------------------------------------
ICG Communications, Inc., 6.75% Cv.
Preferred Stock(4) 50,000 4,181,250
- -------------------------------------------------------------
Intermedia Communications, Inc., 7%
Cv. Preferred Stock(4) 72,770 4,047,831
- -------------------------------------------------------------
QUALCOMM Financial Trust I, 5.75%
Cum. Cv. Preferred Securities,
Non-Vtg. 25,000 1,206,250
- -------------------------------------------------------------
Union Pacific Capital Trust, 6.25%
Cv. Preferred Stock(4) 20,000 922,500
------------
Total Preferred Stocks (Cost
$14,399,660) 18,993,769
- -------------------------------------------------------------
OTHER SECURITIES - 0.9%
- -------------------------------------------------------------
Houston Industries, Inc., 7%
Automatic Common Exchange
Securities, 7/1/00 (Time Warner,
Inc.) 25,000 1,862,500
- -------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25%
Structured Yield Product
Exchangeable for Stock of IMC
Global, Inc. 17,500 551,250
------------
Total Other Securities (Cost
$1,813,623) 2,413,750
PRINCIPAL
AMOUNT
- -------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 2.4%
- -------------------------------------------------------------
U.S. Treasury Bonds, 6.375%,
8/15/27 $1,500,000 1,648,126
- -------------------------------------------------------------
U.S. Treasury Bonds, 6.50%,
11/15/26 3,500,000 3,888,283
- -------------------------------------------------------------
U.S. Treasury Bonds, STRIPS,
6.146%, 2/15/27(5) 3,000,000 608,802
------------
Total U.S. Government Obligations
(Cost $5,389,128) 6,145,211
- -------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND
NOTES - 4.7%
- -------------------------------------------------------------
Adaptec, Inc., 4.75% Cv. Sub. Nts.,
2/1/04(4) 1,000,000 760,000
- -------------------------------------------------------------
Adaptec, Inc., 4.75% Cv. Sub. Nts.,
2/1/04 500,000 380,000
- -------------------------------------------------------------
AMF Bowling, Inc., Zero Coupon Cv.
Debs., 7%, 5/12/18(4)(5) 5,000,000 1,300,000
- -------------------------------------------------------------
Continental Airlines, Inc., 6.75%
Cv. Sub. Nts., 4/15/06 500,000 1,033,125
- -------------------------------------------------------------
Corporate Express, Inc., 4.50% Cv.
Sub. Nts., 7/1/00 1,250,000 1,156,250
- -------------------------------------------------------------
Magna International, Inc., 4.875%
Cv. Sub. Debs., 2/15/05(4) 500,000 552,500
- -------------------------------------------------------------
PLATINUM Technology, Inc., 6.25%
Cv. Sub. Nts., 12/15/02(4) 2,000,000 2,072,500
- -------------------------------------------------------------
PLATINUM Technology, Inc., 6.75%
Cv. Sub. Nts., 11/15/01 500,000 1,056,875
- -------------------------------------------------------------
Quantum Corp., 7% Cv. Sub. Nts.,
8/1/04 1,250,000 1,200,000
- -------------------------------------------------------------
Saks Holdings, Inc., 5.50% Cv. Sub.
Nts., 9/15/06 1,750,000 1,614,375
</TABLE>
98
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT NOTE 1
<S> <C> <C>
- -------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND
NOTES (CONTINUED)
- -------------------------------------------------------------
Tower Automotive, Inc., 5% Cv. Sub.
Nts., 8/1/04(4) $ 500,000 $ 520,625
- -------------------------------------------------------------
Western Digital Corp., Zero Coupon
Cv. Sub. Debs., 5.249%,
2/18/18(4)(5) 3,000,000 787,500
------------
Total Convertible Corporate Bonds
and Notes (Cost $11,743,013) 12,433,750
- -------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.2%
- -------------------------------------------------------------
Repurchase agreement with Salomon
Smith Barney Holdings, Inc., 5.90%,
dated 6/30/98, to be repurchased at
$500,082 7/1/98, collateralized by
U.S. Treasury Bonds, 8.75%-10.625%,
2/15/15-2/15/19, with a value of
$513,294 500,000 500,000
- -------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$233,492,569) 100.9% 265,069,852
- -------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (0.9) (2,289,590)
---------- ------------
NET ASSETS 100.0% $262,780,262
---------- ------------
---------- ------------
</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>
MARKET
SHARES SUBJECT EXPIRATION EXERCISE PREMIUM VALUE
TO CALL DATE PRICE RECEIVED NOTE 1
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
AMR Corp. 5,000 7/98 $ 78 $ 22,974 $ 31,875
American Express Co. 7,500 10/98 115 50,711 51,563
CBS Corp. 50,000 7/98 38 67,248 3,125
CIENA Corp. 20,000 7/98 60 71,898 200,000
Cisco Systems, Inc. 15,000 7/98 67 171,108 380,625
First Data Corp. 75,000 8/98 40 54,373 4,688
First Data Corp. 30,000 7/98 35 30,974 9,375
Intel Corp. 4,000 7/98 75 5,630 9,000
LSI Logic Corp. 7,500 7/98 25 7,275 2,812
Merrill Lynch & Co., Inc. 2,500 7/98 95 4,924 5,937
Mirage Resorts, Inc. 30,000 8/98 30 38,474 1,875
Seagate Technology, Inc. 7,500 7/98 25 5,162 6,094
Xilinx, Inc. 6,000 7/98 40 2,880 1,500
----------- -----------
$ 533,631 $ 708,469
----------- -----------
----------- -----------
</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.
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 $19,974,706 or 7.60% of the Trust's net
assets as of June 30, 1998.
5. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
See accompanying Notes to Financial Statements.
99
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 98.5%
- -----------------------------------------------------------------------------
CONSUMER CYCLICALS - 14.4%
- -----------------------------------------------------------------------------
AUTOS & HOUSING - 1.4%
Fairfield Communities, Inc.(1) 200 $ 3,837
- -----------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.1%
Cinar Films, Inc., Cl. B(1) 400 7,800
- -----------------------------------------------------------------------------
Star Buffet, Inc.(1) 400 3,300
-------
11,100
- -----------------------------------------------------------------------------
MEDIA - 1.7%
Applied Graphics Technologies, Inc.(1) 100 4,575
- -----------------------------------------------------------------------------
RETAIL: SPECIALTY - 7.2%
Central Garden & Pet Co.(1) 100 3,112
- -----------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 200 6,112
- -----------------------------------------------------------------------------
Pier 1 Imports, Inc. 200 4,775
- -----------------------------------------------------------------------------
Renters Choice, Inc.(1) 200 5,675
-------
19,674
- -----------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 21.9%
- -----------------------------------------------------------------------------
EDUCATION - 5.1%
Education Management Corp.(1) 200 6,575
- -----------------------------------------------------------------------------
Strayer Education, Inc. 200 7,250
-------
13,825
- -----------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 16.8%
Cornell Corrections, Inc.(1) 400 8,400
- -----------------------------------------------------------------------------
Covance, Inc.(1) 200 4,500
- -----------------------------------------------------------------------------
Medical Manager Corp.(1) 200 5,525
- -----------------------------------------------------------------------------
Renal Care Group, Inc.(1) 200 8,812
- -----------------------------------------------------------------------------
Serologicals Corp.(1) 400 12,900
- -----------------------------------------------------------------------------
Ventana Medical Systems, Inc.(1) 200 5,600
-------
45,737
- -----------------------------------------------------------------------------
ENERGY - 5.0%
- -----------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 5.0%
Cal Dive International, Inc.(1) 200 5,512
- -----------------------------------------------------------------------------
Core Laboratories NV(1) 200 4,325
- -----------------------------------------------------------------------------
Cross Timbers Oil Co. 200 3,813
-------
13,650
</TABLE>
100
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL - 7.7%
- -----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 7.7%
First Alliance Corp.(1) 200 $ 1,400
- -----------------------------------------------------------------------------
Investors Financial Services Corp. 200 10,600
- -----------------------------------------------------------------------------
Resource America, Inc., Cl. A 300 8,888
-------
20,888
- -----------------------------------------------------------------------------
INDUSTRIAL - 18.2%
- -----------------------------------------------------------------------------
INDUSTRIAL SERVICES - 16.9%
American Disposal Services, Inc.(1) 200 9,375
- -----------------------------------------------------------------------------
CORT Business Services Corp.(1) 100 3,150
- -----------------------------------------------------------------------------
Eastern Environmental Services, Inc.(1) 200 6,800
- -----------------------------------------------------------------------------
Group Maintenance America Corp.(1) 200 3,600
- -----------------------------------------------------------------------------
Metzler Group, Inc.(1) 200 7,325
- -----------------------------------------------------------------------------
NCO Group, Inc.(1) 200 4,400
- -----------------------------------------------------------------------------
Service Experts, Inc.(1) 100 3,450
- -----------------------------------------------------------------------------
U.S. Rentals, Inc.(1) 200 7,888
-------
45,988
- -----------------------------------------------------------------------------
MANUFACTURING - 1.3%
Applied Power, Inc., Cl. A 100 3,438
- -----------------------------------------------------------------------------
TECHNOLOGY - 21.7%
- -----------------------------------------------------------------------------
COMPUTER HARDWARE - 4.6%
Network Appliance, Inc.(1) 100 3,894
- -----------------------------------------------------------------------------
Zebra Technologies Corp., Cl. A(1) 200 8,550
-------
12,444
- -----------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 11.4%
Aspen Technologies, Inc.(1) 100 5,050
- -----------------------------------------------------------------------------
Documentum, Inc.(1) 100 4,800
- -----------------------------------------------------------------------------
Engineering Animation, Inc.(1) 100 6,100
- -----------------------------------------------------------------------------
JDA Software Group, Inc.(1) 100 4,375
- -----------------------------------------------------------------------------
New Era of Networks, Inc.(1) 200 6,100
- -----------------------------------------------------------------------------
Visio Corp.(1) 100 4,775
-------
31,200
- -----------------------------------------------------------------------------
ELECTRONICS - 2.7%
Pittway Corp., Cl. A 100 7,388
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 3.0%
General Cable Corp. 150 4,331
- -----------------------------------------------------------------------------
Pacific Gateway Exchange, Inc.(1) 100 4,006
-------
8,337
</TABLE>
101
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------------
<S> <C> <C>
UTILITIES - 9.6%
- -----------------------------------------------------------------------------
TELEPHONE UTILITIES - 9.6%
Electric Lightwave, Inc.(1) 200 $ 2,213
- -----------------------------------------------------------------------------
ICG Communications, Inc.(1) 100 3,656
- -----------------------------------------------------------------------------
RSL Communications Ltd., Cl. A(1) 200 6,000
- -----------------------------------------------------------------------------
Star Telecommunications, Inc. 200 4,475
- -----------------------------------------------------------------------------
Telegroup, Inc.(1) 400 3,700
- -----------------------------------------------------------------------------
US LEC Corp., Cl. A(1) 300 6,263
-------
26,307
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $274,288) 98.5% 268,388
- -----------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.5 3,965
------ -------
NET ASSETS 100.0% $272,353
------ -------
------ -------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
102
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER AGGRESSIVE OPPENHEIMER
MONEY HIGH INCOME BOND GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost *)
(including repurchase agreements **) -
see accompanying statements $ 134,634,424 $ 341,540,046 $ 658,280,308 $ 1,101,887,376 $ 661,873,611
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts -
see applicable note -- 2,899 37,810 -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash 41,074 47,303 4,122,700 85,962 252,868
- -------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 242,566 5,457,756 8,176,645 262,168 324,484
Closed forward foreign currency exchange
contracts -- 122,437 -- -- --
Daily variation on futures contracts -
see applicable note -- -- 159,189 -- --
Shares of beneficial interest sold 1,416,947 629,311 769,532 114,694 528,369
Investments sold -- 1,923,434 86,916,137 15,798,193 2,341,593
- -------------------------------------------------------------------------------------------------------------------------
Other 2,664 3,594 3,828 3,517 3,873
------------- ------------- ------------- --------------- -------------
Total assets 136,337,675 349,726,780 758,466,149 1,118,151,910 665,324,798
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Bank overdraft -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums
received ***) - see accompanying
statements and notes -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Closed forward foreign currency exchange
contracts -- -- 16,014 -- --
Daily variation on futures contracts -
see applicable note -- -- 66,516 -- --
Dividends 230,095 -- -- -- --
Custodian fees 1,714 13,308 15,782 7,854 8,288
Shareholder reports 21,565 53,455 79,628 74,914 73,932
Legal, auditing and other professional
fees 4,544 7,334 6,579 8,600 6,333
Investments purchased (including those
purchased on a when-issued basis ****) -
see applicable note -- 8,753,878 184,893,140 15,255,568 6,620,975
Shares of beneficial interest redeemed 1,014,734 713,324 781,554 14,842,137 1,111,628
Other 8,693 67,578 10,847 19,210 23,725
------------- ------------- ------------- --------------- -------------
Total liabilities 1,281,345 9,608,877 185,870,060 30,208,283 7,844,881
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 135,056,330 $ 340,117,903 $ 572,596,089 $ 1,087,943,627 $ 657,479,917
------------- ------------- ------------- --------------- -------------
------------- ------------- ------------- --------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 135,072,452 $ 321,311,816 $ 550,102,017 $ 767,040,666 $ 477,057,694
- -------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income -- 7,936,671 10,105,624 (523,288) 2,014,855
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss)
from investments and foreign currency
transactions (16,122) 3,581,502 (147,266) 11,967,970 18,881,716
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies -- 7,287,914 12,535,714 309,458,279 159,525,652
------------- ------------- ------------- --------------- -------------
Net Assets $ 135,056,330 $ 340,117,903 $ 572,596,089 $ 1,087,943,627 $ 657,479,917
------------- ------------- ------------- --------------- -------------
------------- ------------- ------------- --------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 135,072,473 29,561,356 47,768,614 23,226,754 18,996,908
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 1.00 $ 11.51 $ 11.99 $ 46.84 $ 34.61
* Cost $ 134,634,424 $ 334,254,757 $ 646,313,907 $ 792,429,098 $ 502,348,197
** Repurchase agreements $ -- $ 45,500,000 $ 15,200,000 $ 28,000,000 $ 87,100,000
*** Premiums received $ -- $ -- $ -- $ -- $ --
**** When-issued $ -- $ 1,472,599 $ 167,878,635 $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
103
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL STRATEGIC GROWTH & SMALL
STRATEGIES SECURITIES BOND INCOME CAP GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost *)
(including repurchase agreements **) -
see accompanying statements $ 679,676,602 $ 1,147,796,728 $ 276,829,739 $ 265,069,852 $ 268,388
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts -
see applicable note -- -- 119,388 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Cash 600,465 -- 258,088 1,190,321 7,986
- -------------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 4,569,235 1,844,610 4,303,016 458,387 --
Closed forward foreign currency exchange
contracts -- 2,258,320 108,498 -- --
Daily variation on futures contracts -
see applicable note -- -- 66,699 -- --
Shares of beneficial interest sold 179,763 374,264 80,513 480,216 1,251
Investments sold 246,911 2,951,544 3,803,435 2,547,726 --
- -------------------------------------------------------------------------------------------------------------------------------
Other 5,443 5,608 2,629 3,424 356
------------- --------------- --------------- ---------------- --------------
Total assets 685,278,419 1,155,231,074 285,572,005 269,749,926 277,981
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Bank overdraft -- 41,276 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums
received ***) - see accompanying
statements and notes 4,159,200 -- 14,343 708,469 --
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- -- 11,255 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Closed forward foreign currency exchange
contracts -- -- -- -- --
Daily variation on futures contracts -
see applicable note -- -- -- -- --
Dividends -- -- -- -- --
Custodian fees 11,690 48,100 4,220 2,730 --
Shareholder reports 56,021 134,255 38,627 27,239 --
Legal, auditing and other professional
fees 8,218 9,954 5,528 4,822 --
Investments purchased (including those
purchased on a when-issued basis ****) -
see applicable note 6,497,696 18,071,265 27,327,681 5,766,845 5,563
Shares of beneficial interest redeemed 513,012 1,094,872 718,539 431,912 --
Other 71 18,183 14,088 27,647 65
------------- --------------- --------------- ---------------- --------------
Total liabilities 11,245,908 19,417,905 28,134,281 6,969,664 5,628
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 674,032,511 $ 1,135,813,169 $ 257,437,724 $ 262,780,262 $ 272,353
------------- --------------- --------------- ---------------- --------------
------------- --------------- --------------- ---------------- --------------
- -------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 537,353,354 $ 902,385,261 $ 251,985,026 $ 222,385,707 $ 284,350
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income 7,955,462 6,429,535 6,225,829 668,366 (218)
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss)
from investments and foreign currency
transactions 18,875,263 66,987,773 (1,547,090) 8,323,744 (5,879)
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies 109,848,432 160,010,600 773,959 31,402,445 (5,900)
------------- --------------- --------------- ---------------- --------------
Net Assets $ 674,032,511 $ 1,135,813,169 $ 257,437,724 $ 262,780,262 $ 272,353
------------- --------------- --------------- ---------------- --------------
------------- --------------- --------------- ---------------- --------------
- -------------------------------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 39,377,086 52,333,382 50,044,023 11,882,321 28,498
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 17.12 $ 21.70 $ 5.14 $ 22.12 $ 9.56
* Cost $ 568,233,097 $ 987,814,520 $ 276,278,205 $ 233,492,569 $ 274,288
** Repurchase agreements $ 72,900,000 $ 125,900,000 $ 700,000 $ 500,000 $ --
*** Premiums received $ 2,591,585 $ -- $ 35,067 $ 533,631 $ --
**** When-issued $ 6,108,646 $ -- $ -- $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
104
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER AGGRESSIVE OPPENHEIMER
MONEY HIGH INCOME BOND GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of withholding taxes of *) $ 3,583,705 $ 13,295,561 $ 19,195,999 $ 2,193,522 $ 2,524,652
- ------------------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of **) -- 807,461 119,249 742,064 1,718,135
------------ ------------ ------------ ------------- ------------
Total income 3,583,705 14,103,022 19,315,248 2,935,586 4,242,787
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees - see applicable note 282,326 1,164,161 1,968,262 3,302,300 2,059,876
- ------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 5,666 348 5,403 22,032 14,739
- ------------------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 5,352 8,536 8,465 11,761 8,196
- ------------------------------------------------------------------------------------------------------------------------
Insurance expenses 1,705 2,486 2,497 3,477 2,501
- ------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,275 1,956 2,016 2,298 1,104
- ------------------------------------------------------------------------------------------------------------------------
Shareholder reports 19,808 53,724 56,937 62,057 72,712
- ------------------------------------------------------------------------------------------------------------------------
Other 5,294 17,907 13,111 23,520 26,382
------------ ------------ ------------ ------------- ------------
Total expenses 321,426 1,249,118 2,056,691 3,427,445 2,185,510
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 3,262,279 12,853,904 17,258,557 (491,859) 2,057,277
- ------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 13 5,476,478 2,797,815 15,136,947 19,246,751
Closing of futures contracts -- (718,512) (529,917) -- --
Closing and expiration of options written -- (34,656) -- -- --
Foreign currency transactions -- 241,282 175,431 (96) (114,060)
- ------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments -- (3,297,928) 1,259,325 142,645,519 68,484,345
Translation of assets and liabilities
denominated in foreign currencies -- (73,031) (265,254) 72,475 (208,526)
------------ ------------ ------------ ------------- ------------
Net realized and unrealized gain (loss) 13 1,593,633 3,437,400 157,854,845 87,408,510
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,262,292 $ 14,447,537 $ 20,695,957 $ 157,362,986 $ 89,465,787
------------ ------------ ------------ ------------- ------------
------------ ------------ ------------ ------------- ------------
* Withholding taxes - interest $ -- $ -- $ 8,942 $ -- $ --
** Withholding taxes - dividends $ -- $ -- $ -- $ -- $ --
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
See accompanying Notes to Financial Statements.
105
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL STRATEGIC GROWTH & SMALL CAP
STRATEGIES SECURITIES BOND INCOME GROWTH
FUND FUND FUND FUND FUND(1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of withholding taxes of *) $ 12,788,689 $ 7,041,632 $ 10,069,984 $ 762,632 $ 73
- ------------------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of **) 2,355,406 6,500,217 193,545 1,061,842 36
------------ ------------- ------------ ------------ ------------
Total income 15,144,095 13,541,849 10,263,529 1,824,474 109
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees - see applicable note 2,351,674 3,591,385 860,659 772,758 327
- ------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 61,255 185,287 21,850 4,109 --
- ------------------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 11,745 14,284 6,793 8,317 --
- ------------------------------------------------------------------------------------------------------------------------
Insurance expenses 3,150 3,547 1,847 1,920 --
- ------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 4,147 2,370 678 1,310 --
- ------------------------------------------------------------------------------------------------------------------------
Shareholder reports 55,254 133,710 28,355 18,336 --
- ------------------------------------------------------------------------------------------------------------------------
Other 2,241 23,155 28,300 30,242 --
------------ ------------- ------------ ------------ ------------
Total expenses 2,489,466 3,953,738 948,482 836,992 327
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 12,654,629 9,588,111 9,315,047 987,482 (218)
- ------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 20,134,610 81,848,753 958,461 8,321,705 (5,879)
Closing of futures contracts -- (2,745,618) 540,883 -- --
Closing and expiration of options written 606,742 -- 27,036 121,772 --
Foreign currency transactions (1,106,375) (12,124,466) (1,600,504) (49,118) --
- ------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments 17,606,092 62,901,448 (2,599,726) 13,183,162 (5,900)
Translation of assets and liabilities
denominated in foreign currencies (5,164,837) (19,501,835) 809,683 (33,017) --
------------ ------------- ------------ ------------ ------------
Net realized and unrealized gain (loss) 32,076,232 110,378,282 (1,864,167) 21,544,504 (11,779)
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 44,730,861 $ 119,966,393 $ 7,450,880 $ 22,531,986 $ (11,997)
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
* Withholding taxes - interest $ -- $ -- $ 49,348 $ -- $ --
** Withholding taxes - dividends $ 61,592 $ 322,537 $ -- $ -- $ --
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
See accompanying Notes to Financial Statements.
106
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND THE YEAR ENDED DECEMBER
31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
MONEY HIGH INCOME
FUND FUND
1998 1997 1998 1997
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,262,279 $ 6,934,054 $ 12,853,904 $ 19,861,042
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) 13 2,232 4,964,592 6,265,470
- ---------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation -- -- (3,370,959) 93,210
------------- ------------- ------------- -------------
Net increase (decrease) in net
assets resulting from
operations 3,262,292 6,936,286 14,447,537 26,219,722
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,262,279) (6,937,040) (6,694,100) (18,546,183)
- ---------------------------------------------------------------------------------------------
Distributions from net
realized gain -- -- (8,113,249) (138,778)
- ---------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 8,273,935 (2,935,384) 49,154,924 92,494,657
- ---------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 8,273,948 (2,936,138) 48,795,112 100,029,418
- ---------------------------------------------------------------------------------------------
Beginning of period 126,782,382 129,718,520 291,322,791 191,293,373
------------- ------------- ------------- -------------
End of period $ 135,056,330 $ 126,782,382 $ 340,117,903 $ 291,322,791
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Undistributed
(overdistributed) net
investment income $ -- $ -- $ 7,936,671 $ 1,776,867
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
BOND AGGRESSIVE GROWTH
FUND FUND
1998 1997 1998 1997
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 17,258,557 $ 30,219,733 $ (491,859) $ 2,349,366
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) 2,443,329 4,038,585 15,136,851 21,293,313
- -----------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 994,071 6,440,140 142,717,994 61,517,825
------------- ------------- --------------- -------------
Net increase (decrease) in net
assets resulting from
operations 20,695,957 40,698,458 157,362,986 85,160,504
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (9,009,960) (27,908,616) (2,267,792) (1,547,409)
- -----------------------------------------------------------------------------------------------
Distributions from net
realized gain (8,154,014) (1,447,022) (23,288,487) (30,466,762)
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 48,986,078 82,296,263 78,329,447 207,268,868
- -----------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 52,518,061 93,639,083 210,136,154 260,415,201
- -----------------------------------------------------------------------------------------------
Beginning of period 520,078,028 426,438,945 877,807,473 617,392,272
------------- ------------- --------------- -------------
End of period $ 572,596,089 $ 520,078,028 $ 1,087,943,627 $ 877,807,473
------------- ------------- --------------- -------------
------------- ------------- --------------- -------------
Undistributed
(overdistributed) net
investment income $ 10,105,624 $ 1,857,027 $ (523,288) $ 2,236,363
</TABLE>
See accompanying Notes to Financial Statements.
107
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND THE YEAR ENDED DECEMBER
31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
GROWTH MULTIPLE STRATEGIES GLOBAL SECURITIES
FUND FUND FUND
1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,057,277 $ 3,966,775 $ 12,654,629 $ 21,778,851 $ 9,588,111 $ 12,143,675
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 19,132,691 47,435,793 19,634,977 34,197,105 66,978,669 103,718,556
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 68,275,819 34,194,334 12,441,255 32,455,612 43,399,613 33,657,002
------------- ------------- ------------- ------------- --------------- -------------
Net increase (decrease) in net
assets resulting from
operations 89,465,787 85,596,902 44,730,861 88,431,568 119,966,393 149,519,233
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,939,381) (1,639,463) (5,964,037) (21,242,764) (21,307,082) (8,181,958)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain (47,530,889) (17,220,011) (34,591,414) (18,354,349) (80,203,951) --
- -------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 125,578,426 141,248,396 32,312,271 104,424,895 158,247,589 235,692,756
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 163,573,943 207,985,824 36,487,681 153,259,350 176,702,949 377,030,031
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of period 493,905,974 285,920,150 637,544,830 484,285,480 959,110,220 582,080,189
------------- ------------- ------------- ------------- --------------- -------------
End of period $ 657,479,917 $ 493,905,974 $ 674,032,511 $ 637,544,830 $ 1,135,813,169 $ 959,110,220
------------- ------------- ------------- ------------- --------------- -------------
------------- ------------- ------------- ------------- --------------- -------------
Undistributed
(overdistributed) net
investment income $ 2,014,855 $ 3,896,959 $ 8,187,872 $ 1,264,870 $ 6,429,535 $ 18,148,506
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
STRATEGIC BOND GROWTH & INCOME SMALL CAP
FUND FUND GROWTH FUND(1)
1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 9,315,047 $ 13,156,048 $ 987,482 $ 1,094,913 $ (218) $ --
- -------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (74,124) 894,858 8,394,359 9,837,467 (5,879) --
- -------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation (1,790,043) (441,401) 13,150,145 15,049,196 (5,900) --
------------- ------------- ------------- ------------- --------- -------------
Net increase (decrease) in net
assets resulting from
operations 7,450,880 13,609,505 22,531,986 25,981,576 (11,997) --
- -------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,974,494) (12,654,390) (449,201) (976,438) -- --
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain (2,561,341) (207,080) (9,891,404) (2,670,354) -- --
- -------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 48,683,275 88,374,959 95,221,131 86,023,722 284,350 --
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 49,598,320 89,122,994 107,412,512 108,358,506 272,353 --
- -------------------------------------------------------------------------------------------------------------------------
Beginning of period 207,839,404 118,716,410 155,367,750 47,009,244 -- --
------------- ------------- ------------- ------------- --------- -------------
End of period $ 257,437,724 $ 207,839,404 $ 262,780,262 $ 155,367,750 $ 272,353 $ --
------------- ------------- ------------- ------------- --------- -------------
------------- ------------- ------------- ------------- --------- -------------
Undistributed
(overdistributed) net
investment income $ 6,225,829 $ 885,276 $ 668,366 $ 130,085 $ (218) $ --
</TABLE>
1. For period from May 1, 1998 (commencement of operations) to June 30, 1998.
See accompanying Notes to Financial Statements.
108
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <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 $1.00
- --------------------------------------------------------------------------------------------------------------
Income from investment
operations - net investment
income and net realized gain .03 .05 .05 .06 .04 .03
Dividends and distributions to
shareholders (.03) (.05) (.05) (.06) (.04) (.03)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1) 2.61% 5.31% 5.13% 5.62% 4.25% 3.09%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 135,056 $126,782 $129,719 $ 65,386 $ 89,671 $ 61,221
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 126,567 $133,707 $ 99,263 $ 75,136 $ 90,264 $ 57,654
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.20%(2) 5.19% 5.01% 5.52% 4.18% 3.12%
Expenses 0.51%(2) 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.
2. Annualized.
See accompanying Notes to Financial Statements.
109
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $11.52 $11.13 $10.63 $ 9.79 $11.02 $ 9.74
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .43 .94 .97 .98 .94 .82
Net realized and unrealized
gain (loss) .11 .37 .58 .94 (1.27) 1.65
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .54 1.31 1.55 1.92 (.33) 2.47
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.25) (.91) (1.05) (1.08) (.66) (1.19)
Distributions from net
realized gain (.30) (.01) -- -- (.24) --
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (.55) (.92) (1.05) (1.08) (.90) (1.19)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.51 $11.52 $11.13 $10.63 $ 9.79 $11.02
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 4.76% 12.21% 15.26% 20.37% (3.18)% 26.34%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 340,118 $291,323 $191,293 $133,451 $ 95,698 $ 93,011
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 317,995 $223,617 $157,203 $115,600 $101,096 $ 67,000
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.15%(2) 8.88% 9.18% 9.81% 9.15% 10.50%
Expenses 0.79%(2) 0.82% 0.81% 0.81% 0.67% 0.68%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 144.3% 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. Annualized.
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 June 30, 1998 were $443,903,801 and $376,184,299, respectively.
See accompanying Notes to Financial Statements.
110
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $11.91 $11.63 $11.84 $10.78 $11.65 $10.99
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .37 .76 .69 .72 .76 .65
Net realized and unrealized
gain (loss) .09 .28 (.15) 1.07 (.98) .76
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .46 1.04 .54 1.79 (.22) 1.41
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.20) (.72) (.74) (.73) (.62) (.75)
Distributions from net
realized gain (.18) (.04) (.01) -- (.03) --
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (.38) (.76) (.75) (.73) (.65) (.75)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.99 $11.91 $11.63 $11.84 $10.78 $11.65
------ -------- -------- -------- -------- --------
------ -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 3.94% 9.25% 4.80% 17.00% (1.94)% 13.04%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 572,596 $520,078 $426,439 $211,232 $135,067 $111,846
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 549,442 $449,760 $296,253 $170,929 $121,884 $ 87,215
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.33%(2) 6.72% 6.72% 6.91% 7.30% 7.20%
Expenses 0.75%(2) 0.78% 0.78% 0.80% 0.57% 0.46%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 12.4% 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. Annualized.
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 June 30, 1998 were $136,308,857 and $63,248,543, respectively.
See accompanying Notes to Financial Statements.
111
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $40.96 $38.71 $34.21 $25.95 $31.64 $26.04
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (.02) .10 .09 .11 .10 .05
Net realized and unrealized
gain (loss) 7.07 4.01 6.59 8.29 (2.22) 6.71
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 7.05 4.11 6.68 8.40 (2.12) 6.76
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.10) (.09) (.11) (.09) (.04) (.06)
Distributions from net
realized gain (1.07) (1.77) (2.07) (.05) (3.53) (1.10)
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (1.17) (1.86) (2.18) (.14) (3.57) (1.16)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $46.84 $40.96 $38.71 $34.21 $25.95 $31.64
------ -------- -------- -------- -------- --------
------ -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 17.40% 11.67% 20.22% 32.52% (7.59)% 27.32%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $1,087,944 $877,807 $617,392 $325,404 $185,774 $136,885
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 971,134 $753,852 $467,080 $240,730 $153,832 $ 98,228
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (0.10)%(2) 0.31% 0.32% 0.47% 0.50% 0.23%
Expenses 0.71%(2) 0.73% 0.75% 0.78% 0.57% 0.47%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 36.7% 87.6% 100.1% 125.5% 96.5% 122.8%
</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. Annualized.
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 June 30, 1998 were $475,558,904 and $334,257,411, respectively.
See accompanying Notes to Financial Statements.
112
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $32.44 $27.24 $23.55 $17.68 $17.70 $16.96
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 0.09 .25 .15 .25 .22 .46
Net realized and unrealized
gain (loss) 5.26 6.62 5.46 6.10 (.05) .74
- --------------------------------------------------------------------------------------------------------------
Total income from investment
operations 5.35 6.87 5.61 6.35 .17 1.20
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.24) (.15) (.25) (.22) (.15) (.14)
Distributions from net
realized gain (2.94) (1.52) (1.67) (.26) (.04) (.32)
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (3.18) (1.67) (1.92) (.48) (.19) (.46)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $34.61 $32.44 $27.24 $23.55 $17.68 $17.70
------ -------- -------- -------- -------- --------
------ -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 17.03% 26.68% 25.20% 36.65% 0.97% 7.25%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 657,480 $493,906 $285,920 $117,710 $ 63,283 $ 56,701
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 577,221 $390,447 $152,466 $ 88,803 $ 59,953 $ 46,389
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.72%(2) 1.02% 1.08% 1.46% 1.38% 1.13%
Expenses 0.76%(2) 0.75% 0.81%(3) 0.79% 0.58% 0.50%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 32.1% 66.0% 65.4% 58.2% 53.8% 12.6%
</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. Annualized.
3. The expense ratio was 0.79% net of the voluntary reimbursement by the
Manager.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended June 30, 1998 were $254,181,356 and $156,337,547, respectively.
See accompanying Notes to Financial Statements.
113
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $17.01 $15.63 $14.55 $12.91 $13.88 $12.47
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .32 .62 .72 .66 .63 .55
Net realized and unrealized
gain (loss) .88 1.95 1.45 2.00 (.90) 1.41
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 1.20 2.57 2.17 2.66 (.27) 1.96
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.16) (.61) (.74) (.65) (.60) (.55)
Distributions from net
realized gain (.93) (.58) (.35) (.37) (.10) --
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (1.09) (1.19) (1.09) (1.02) (.70) (.55)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.12 $17.01 $15.63 $14.55 $12.91 $13.88
------ -------- -------- -------- -------- --------
------ -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 7.09% 17.22% 15.50% 21.36% (1.95)% 15.95%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 674,033 $637,545 $484,285 $381,263 $292,067 $250,290
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 664,192 $564,369 $428,277 $344,745 $279,949 $199,954
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.84%(2) 3.86% 4.89% 4.81% 4.90% 4.44%
Expenses 0.76%(2) 0.75% 0.77% 0.77% 0.56% 0.48%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 29.4% 41.9% 40.3% 39.0% 31.4% 32.4%
</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. Annualized.
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 June 30, 1998 were $169,849,310 and $164,777,119, respectively.
See accompanying Notes to Financial Statements.
114
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $21.37 $17.67 $15.00 $15.09 $16.30 $ 9.57
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .18 .25 .15 .12 .04 (.02)
Net realized and unrealized
gain (loss) 2.33 3.68 2.52 .19 (.96) 6.75
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.51 3.93 2.67 .31 (.92) 6.73
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.46) (.23) -- -- (.04) --
Distributions from net
realized gain (1.72) -- -- (.40) (.25) --
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (2.18) (.23) -- (.40) (.29) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.70 $21.37 $17.67 $15.00 $15.09 $16.30
------ -------- -------- -------- -------- --------
------ -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 12.19% 22.42% 17.80% 2.24% (5.72)% 70.32%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $1,135,813 $959,110 $582,080 $360,979 $297,842 $ 96,425
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $1,068,024 $802,389 $466,750 $332,336 $214,545 $ 31,696
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.81%(2) 1.51% 1.09% 0.86% 0.54% 0.72%
Expenses 0.75%(2) 0.76% 0.81% 0.89% 0.91% 0.92%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 44.3% 67.1% 89.9% 131.3% 70.4% 65.1%
</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. Annualized.
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 June 30, 1998 were $414,965,998 and $411,048,811, respectively.
See accompanying Notes to Financial Statements.
115
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993(1)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $5.12 $5.09 $4.91 $4.60 $5.12 $5.00
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .19 .39 .38 .38 .35 .10
Net realized and unrealized
gain (loss) (.02) .04 .19 .30 (.54) .11
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .17 .43 .57 .68 (.19) .21
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.09) (.39) (.39) (.37) (.32) (.09)
Distributions in excess of net
realized gain (.06) (.01) -- -- (.01) --
- --------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (.15) (.40) (.39) (.37) (.33) (.09)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.14 $5.12 $5.09 $4.91 $4.60 $5.12
------------- -------- -------- -------- -------- --------
------------- -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(2) 3.30% 8.71% 12.07% 15.33% (3.78)% 4.25%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 257,438 $207,839 $118,716 $ 60,098 $ 20,320 $9,887
- --------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 232,999 $159,934 $ 82,604 $ 37,698 $ 15,389 $4,259
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.06%(3) 8.23% 8.48% 9.32% 8.36% 5.67%(3)
Expenses 0.82%(3) 0.83% 0.85% 0.85% 0.87% 0.96%(3)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 100.5% 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 June 30, 1998 were $251,069,880 and $212,695,324, respectively.
See accompanying Notes to Financial Statements.
116
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ----------------------------------
(UNAUDITED) 1997 1996 1995(1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $20.58 $16.37 $12.51 $10.00
- ------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .09 .19 .14 .01
Net realized and unrealized
gain 2.60 4.91 3.91 2.52
- ------------------------------------------------------------------------------------
Total income from investment
operations 2.69 5.10 4.05 2.53
- ------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.05) (.17) (.14) (.02)
Distributions from net
realized gain (1.10) (.72) (.05) --
- ------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (1.15) (.89) (.19) (.02)
- ------------------------------------------------------------------------------------
Net asset value, end of period $22.12 $20.58 $16.37 $12.51
------ -------- -------- --------
------ -------- -------- --------
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(2) 13.09% 32.48% 32.51% 25.25%
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 262,780 $155,368 $ 47,009 $4,288
- ------------------------------------------------------------------------------------
Average net assets (in
thousands) $ 209,180 $ 94,906 $ 21,562 $1,809
- ------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.95%(3) 1.15% 1.41% 0.50%(3)
Expenses 0.81%(3) 0.83% 1.00% 2.07%(3)
- ------------------------------------------------------------------------------------
Portfolio turnover rate(4) 62.2% 78.5% 112.6% 23.7%
</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 June 30, 1998 were $153,925,679 and $128,725,131, respectively.
See accompanying Notes to Financial Statements.
117
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIOD
ENDED
JUNE 30, 1998(1)
(UNAUDITED)
<S> <C>
- -------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 10.00
- -------------------------------------------------------------------------------
Income from investment operations:
Net investment income (.01)
Net realized and unrealized gain (.43)
- -------------------------------------------------------------------------------
Total income from investment operations (.44)
- -------------------------------------------------------------------------------
Net asset value, end of period $ 9.56
------
------
- -------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) (4.40)%
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $272
- -------------------------------------------------------------------------------
Average net assets (in thousands) $262
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (0.50)%(3)
Expenses 0.75%(3)
- -------------------------------------------------------------------------------
Portfolio turnover rate(4) 23.2%
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
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 June 30, 1998 were $334,718 and $59,070, respectively.
See accompanying Notes to Financial Statements.
118
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Money Fund (OMF), Oppenheimer High Income Fund (OHIF), Oppenheimer
Bond Fund (OBF), Oppenheimer Aggressive Growth Fund (OAGF) operated under the
name Oppenheimer Capital Appreciation Fund through April 30, 1998, Oppenheimer
Growth Fund (OGF), Oppenheimer Multiple Strategies Fund (OMSF), Oppenheimer
Global Securities Fund (OGSF), Oppenheimer Strategic Bond Fund (OSBF),
Oppenheimer Growth & Income Fund (OGIF) and Oppenheimer Small Cap Growth Fund
(OSCGF), (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. The Fund's investments include
unrated securities or high risk securities in the lower rating categories,
commonly known as "junk bonds", which are subject to a greater risk of loss of
principal and nonpayment of interest than higher-rated securities.
OPPENHEIMER BOND FUND primarily seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. The Fund will, under normal market conditions, invest at least 65% of
its total assets in investment grade debt securities.
OPPENHEIMER AGGRESSIVE GROWTH 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 and 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 situations which are
considered to have appreciation possibilities, but which may be considered to be
speculative.
OPPENHEIMER STRATEGIC BOND FUND seeks a high level of current income principally
derived from interest on debt securities and seeks to enhance such income by
writing covered call options on debt securities. The Fund intends to invest
principally in: (i) foreign government and corporate debt securities, (ii)
securities of the U.S. Government and its agencies and instrumentalities ("U.S.
Government securities"), and (iii) lower-rated high yield domestic debt
securities, commonly know as "junk bonds", which are subject to a greater risk
of loss of principal and nonpayment of interest than higher-rated securities.
Capital appreciation is not the objective.
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. From time to time this Fund may focus on small to medium
capitalization common stocks, bonds and convertible securities.
OPPENHEIMER SMALL CAP GROWTH FUND seeks capital appreciation. Current income is
not an objective, In seeking its objective, the Fund emphasizes investments in
securities of "growth-type" companies with market capitalization less than $1
billion, including common stocks, preferred stocks, convertible securities,
rights, warrants and options, in proportions which may vary from time to time.
119
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION. Portfolio securities of OMF are valued on the basis of
amortized cost, which approximates market value. Portfolio securities of OHIF,
OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF 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 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. The Funds may invest in commodity and foreign currency-linked
structured notes whereby the market value and redemption price are linked to
commodity indices and foreign currency exchange rates. The structured notes may
be leveraged, which increase the notes' volatility relative to the face value of
the security. Fluctuations in values of the securities are recorded as
unrealized gains and losses in the accompanying financial statements. During the
six months ended June 30, 1998, the market value of these securities comprised
an average of 7% and 5%, respectively, of the net assets of OHIF and OSBF, and
resulted in realized and unrealized gains of $294,901 and $628,052,
respectively.
- --------------------------------------------------------------------------------
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 this period, such securities do not earn interest, are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The 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 June 30,
1998, 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 $ 1,472,599
Oppenheimer Bond Fund 167,878,635
Oppenheimer Multiple Strategies Fund 6,108,646
Oppenheimer Strategic Bond Fund 22,106,088
</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.
120
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. The aggregate market value of
securities in default at June 30, 1998 for OHIF, OMSF and OSBF are shown below:
<TABLE>
<CAPTION>
PERCENTAGE OF NET
AMOUNT ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund $ 42,665 0.01%
Oppenheimer Multiple Strategies Fund 2,162,500 0.32
Oppenheimer Strategic Bond Fund 72,749 0.01
</TABLE>
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are maintained
in U.S. dollars. Prices of securities purchased by OHIF, OBF, OAGF, 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, OAGF, 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders of
OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF 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 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.
121
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 on the ex-date.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The 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>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
OPPENHEIMER MONEY FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Sold 148,757,96 $148,757,967 390,437,217 $390,437,217
Dividends and distributions reinvested 3,275,949 3,275,949 6,901,000 6,901,000
Redeemed (143,759,981) (143,759,981) (400,273,601) (400,273,601)
------------ ------------ ------------ ------------
Net increase (decrease) 8,273,935 $ 8,273,935 (2,935,384) $ (2,935,384)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER HIGH INCOME FUND
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Sold 6,872,284 $79,631,842 14,372,458 $163,481,515
Dividends and distributions reinvested 1,300,031 14,807,349 1,658,451 18,684,961
Redeemed (3,908,532) (45,284,267) (7,919,351) (89,671,819)
------------ ------------ ------------ ------------
Net increase 4,263,783 $49,154,924 8,111,558 $ 92,494,657
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Sold 9,163,206 $109,657,567 12,079,029 $142,326,116
Dividends and distributions reinvested 1,463,254 17,163,974 2,509,897 29,264,275
Redeemed (6,509,116) (77,835,463) (7,613,095) (89,294,128)
------------ ------------ ------------ -------------
Net increase 4,117,344 $ 48,986,078 6,975,831 $ 82,296,263
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER AGGRESSIVE GROWTH FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Sold 5,823,298 $255,958,927 9,511,150 $368,762,665
Dividends and distributions reinvested 580,165 25,556,279 952,236 32,014,171
Redeemed (4,608,376) (203,185,759) (4,981,695) (193,507,968)
------------ ------------ ------------ -------------
Net increase 1,795,087 $ 78,329,447 5,481,691 $207,268,868
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
</TABLE>
122
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
OPPENHEIMER GROWTH FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Sold 4,330,157 $145,734,005 10,437,357 $318,824,006
Dividends and distributions reinvested 1,565,398 51,470,270 720,274 18,842,365
Redeemed (2,122,009) (71,625,849) (6,429,313) (191,417,975)
------------ ------------- ------------ ------------
Net increase 3,773,546 $125,578,426 4,728,318 $141,248,396
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Sold 2,156,497 $37,223,913 6,728,904 $110,124,465
Dividends and distributions reinvested 2,387,019 40,555,452 2,517,354 39,597,113
Redeemed (2,639,502) (45,467,094) (2,765,980) (45,296,683)
------------ ------------ ------------ -------------
Net increase 1,904,014 $32,312,271 6,480,278 $104,424,895
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Sold 6,606,784 $143,954,552 17,881,768 $354,780,849
Dividends and distributions reinvested 4,877,993 101,511,033 446,370 8,181,958
Redeemed (4,035,341) (87,217,996) (6,390,329) (127,270,051)
------------ ------------ ------------ ------------
Net increase 7,449,436 $158,247,589 11,937,809 $235,692,756
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Sold 11,535,682 $59,546,651 18,907,314 $96,727,423
Dividends and distributions reinvested 1,279,028 6,535,834 2,528,920 12,861,470
Redeemed (3,375,252) (17,399,210) (4,147,991) (21,213,934)
------------ ------------ ------------ ------------
Net increase 9,439,458 $48,683,275 17,288,243 $88,374,959
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Sold 4,688,369 $102,660,619 5,209,743 $95,997,604
Dividends and distributions reinvested 468,325 10,340,605 216,162 3,646,792
Redeemed (825,554) (17,780,093) (745,544) (13,620,674)
------------ ------------ ------------ ------------
Net increase 4,331,140 $ 95,221,131 4,680,361 $86,023,722
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
OPPENHEIMER SMALL CAP GROWTH FUND JUNE 30, 1998(1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Sold 28,503 $ 284,402 -- $ --
Redeemed (5) (52) -- --
------------ ------------ ------------ ------------
Net increase 28,498 $ 284,350 -- $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
123
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At June 30, 1998, net unrealized appreciation or depreciation on investments and
options written consisted of the following:
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
HIGH INCOME OPPENHEIMER AGGRESSIVE OPPENHEIMER
FUND BOND FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Gross appreciation $10,884,978 $19,763,740 $316,497,388 $173,714,123
Gross depreciation 3,599,689 7,797,339 7,039,109 14,188,709
----------- ----------- ------------ ------------
Net unrealized appreciation $ 7,285,289 $11,966,401 $309,458,279 $159,525,414
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL OPPENHEIMER OPPENHEIMER
STRATEGIES SECURITIES STRATEGIC GROWTH &
FUND FUND BOND FUND INCOME FUND
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Gross appreciation $128,783,861 $218,615,689 $6,231,507 $42,514,387
Gross depreciation 18,907,971 58,633,482 5,659,249 11,111,942
------------ ------------ ----------- -----------
Net unrealized appreciation $109,875,890 $159,982,207 $ 572,258 $31,402,445
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
SMALL CAP
GROWTH FUND
<S> <C>
- --------------------------------------------------------------
Gross appreciation $ 14,104
Gross depreciation 20,004
-----------
Net unrealized depreciation $ 5,900
-----------
-----------
</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, OAGF, OGF, OMSF, OGSF, OSBF,
OGIF and OSCGF, 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 annual 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.
124
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS (CONTINUED)
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.
At June 30, 1998, outstanding forward contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS
EXPIRATION CONTRACT OF JUNE 30, UNREALIZED UNREALIZED
OPPENHEIMER HIGH INCOME FUND DATES AMOUNT (000'S) 1998 APPRECIATION DEPRECIATION
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- -----------------------------
Canadian Dollar (CAD) 7/15/98 525 CAD $ 360,280 $ 2,899 $ --
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- -----------------------------
Canadian Dollar (CAD) 7/15/98 4,000 CAD $ 2,722,905 $ 37,810 $ --
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND
FUND
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -----------------------------
Danish Krone (DKK) 7/1/98 832 DKK $ 120,983 $ 1,822 $ --
Greek Drachma (GRD) 7/17/98-7/20/98 218,300 GRD 714,651 -- 11,211
Japanese Yen (JPY) 7/31/98 7,560 JPY 55,066 -- 44
New Zealand Dollar (NZD) 7/22/98 1,875 NZD 969,175 7,791 --
South African Rand (ZAR) 7/3/98 5,080 ZAR 860,269 109,027 --
----------- -------------
118,640 11,255
----------- -------------
CONTRACTS TO SELL
- -----------------------------
Australian Dollar (AUD) 7/22/98 537 AUD 333,325 748 --
----------- -------------
Total Unrealized Appreciation and Depreciation $ 119,388 $ 11,255
----------- -------------
----------- -------------
</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 in an amount (initial margin) 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.
125
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS (CONTINUED)
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.
At June 30, 1998, outstanding futures contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS UNREALIZED
EXPIRATION NUMBER OF OF APPRECIATION
OPPENHEIMER BOND FUND DATE CONTRACTS JUNE 30, 1998 (DEPRECIATION)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -----------------------------------------------
U.S. Treasury Bonds, 30 yr. 9/98 566 $69,954,063 $ 796,563
-------------
CONTRACTS TO SELL
- -----------------------------------------------
U.S. Treasury Nts., 5 yr. 9/98 265 29,067,188 (155,273)
U.S. Treasury Nts., 10 yr. 9/98 156 17,759,625 (107,039)
-------------
(262,312)
-------------
$ 534,251
-------------
-------------
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
- -----------------------------------------------
U.S. Treasury Bonds, 30 yr. 9/98 129 $15,943,594 $ 237,969
-------------
CONTRACTS TO SELL
- -----------------------------------------------
German Government Bonds 9/98 5 749,253 (4,481)
Standard & Poors 500 Index 9/98 14 4,000,500 (126,875)
-------------
(131,356)
-------------
$ 106,613
-------------
-------------
</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.
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.
126
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY (CONTINUED)
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 six months June 30, 1998 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, 1997 -- $ -- -- $ --
Options written 200 45,875 6 50,220
Options closed or expired (200) (45,875) (6) (50,220)
--------- ---------- ----------- -----------
Options outstanding at June 30, 1998 -- $ -- -- $ --
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1997 6,056 $1,797,849 -- $ --
Options written 7,411 2,531,943 -- --
Options closed or expired (3,491) (1,043,730) -- --
Options exercised (2,497) (694,477) -- --
--------- ---------- ----------- -----------
Options outstanding at June 30, 1998 7,479 $2,591,585 -- $ --
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1997 400 $ 3,679 224,820,000 $ 31,046
Options written 3,210,000 25,133 561,454,500 101,529
Options closed or expired (3,210,000) (25,133) (416,242,000) (44,571)
Options exercised -- -- (369,070,000) (56,616)
--------- ---------- ----------- -----------
Options outstanding at June 30, 1998 400 $ 3,679 962,500 $ 31,388
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding at December 31, 1997 880 $ 61,758 -- $ --
Options written 8,145 1,623,621 -- --
Options closed or expired (4,815) (641,383) -- --
Options exercised (1,610) (510,365) -- --
--------- ---------- ----------- -----------
Options outstanding at June 30, 1998 2,600 $ 533,631 -- $ --
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES
At June 30, 1998, 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 its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid and restricted securities
subject to this 10% limitation at June 30, 1998 are shown below:
127
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES (CONTINUED)
Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF NET
AMOUNT ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Oppenheimer Money Fund $13,000,000 9.62%
Oppenheimer High Income Fund 27,656,030 8.13
Oppenheimer Bond Fund 37,742,036 6.60
Oppenheimer Aggressive Growth Fund 5,093,750 0.47
Oppenheimer Multiple Strategies Fund 3,556,141 0.53
Oppenheimer Strategic Bond Fund 14,409,842 5.60
</TABLE>
OPPENHEIMER MONEY FUND
The aggregate value of restricted securities is $3,000,000.
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS
OF
ACQUISITION COST PER JUNE 30,
SECURITY DATE UNIT 1998
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
SHORT-TERM NOTES
- -----------------------------------------------------------
American Honda Finance Corp., 5.687%, 1/19/99 1/22/98 100.00% 100.00%
</TABLE>
OPPENHEIMER HIGH INCOME FUND
The aggregate value of restricted securities is $3,911,835.
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS
ACQUISITION COST PER OF
SECURITY DATE UNIT JUNE 30, 1998
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
BONDS
- -----------------------------------------------------------
ECM Fund, L.P. I., 14% Sub. Nts., 6/10/02 4/14/92 100.00% 100.25%
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08 3/19/98 101.00 107.00
STOCKS AND WARRANTS
- -----------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A 6/17/97 $ 25.00 $ 25.00
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 .00 .50
ECM Fund, L.P. I. 4/14/92 1,000.00 885.00
Omnipoint Corp. 1/16/96 16.00 21.79
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 .00 21.79
</TABLE>
OPPENHEIMER BOND FUND
The aggregate value of restricted securities is $1,166,500.
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS
OF
ACQUISITION COST PER JUNE 30,
SECURITY DATE UNIT 1998
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
BONDS
- -----------------------------------------------------------
Merrill Lynch & Co., Inc., Units, 9.75%, 6/15/99 5/15/95 110.05% 116.65%
</TABLE>
OPPENHEIMER STRATEGIC BOND FUND
The aggregate value of restricted securities is $408,000.
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS
OF
ACQUISITION COST PER JUNE 30,
SECURITY DATE UNIT 1998
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
STOCKS AND WARRANTS
- -----------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A 6/17/97 $ 25.00 $25.00
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 .00 .50
</TABLE>
128
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SHAREHOLDER MEETING (UNAUDITED)
- --------------------------------------------------------------------------------
On April 3, 1998, a shareholder meeting was held at which the following items
and proposals were approved, as described in the Trust's proxy statement for
that meeting. The following is a report of the votes cast:
<TABLE>
<CAPTION>
WITHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1. Robert G. Avis 343,078,839.117 9,606,314.100 1,599,420.050 354,284,573.267
William A. Baker 341,475,509.412 11,209,603.805 1,599,420.050 354,284,533.267
Charles Conrad, Jr. 343,080,485.338 9,604,667.875 1,599,420.050 354,284,573.263
Jon S. Fossel 343,120,429.591 9,564,693.626 1,599,420.050 354,284,543.267
Sam Freedman 343,067,197.485 9,617,955.932 1,599,420.050 354,284,573.467
Raymond Kalinowski 343,091,550.638 9,593,562.482 1,599,420.050 354,284,533.170
C. Howard Kast 342,398,240.944 10,286,872.273 1,599,420.050 354,284,533.267
Robert M. Kirschner 342,299,180.973 10,385,932.244 1,599,420.050 354,284,533.267
Ned M. Steel 341,433,552.912 11,251,560.305 1,599,420.050 354,284,533.267
James C. Swain 343,086,111.667 9,595,015.871 1,603,405.729 354,284,533.267
2. Ratification of the selection of Deloitte & Touche LLP as independent auditors of the Trust for
the fiscal year beginning January 1, 1998 (Proposal No. 1):
335,797,488.589 2,214,452.724 15,273,182.843 353,285,124.156
3(i). Approval of changes to the fundamental investment policies of Oppenheimer Money Fund on
warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
96,286,996.003 11,207,036.137 9,478,262.875 116,972,295.015
3(ii). Approval of changes to the fundamental investment policies of Oppenheimer High Income Fund on
warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
21,954,279.29 1,416,150.736 2,507,353.000 25,877,783.026
3(iii). Approval of changes to the fundamental investment policies of Oppenheimer Bond Fund on warrants,
borrowing, investing in oil and gas exploration, investing in other investment companies and
hedging. (Proposal No. 2):
34,400,730.76 2,437,071.467 2,884,944.412 39,722,748.643
3(iv). Approval of changes to the fundamental investment policies of Oppenheimer Strategic Bond Fund on
warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
36,871,222.256 1,735,365.400 2,761,054.592 41,367,642.248
3(v). Approval of changes to the fundamental investment policies of Oppenheimer Aggressive Growth Fund
on warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
17,965,586.548 1,398,668.778 1,384,173.270 20,748,428.596
</TABLE>
129
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
SHAREHOLDER MEETING (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WITHELD/
NOMINEE/PROPOSAL FOR AGAINST ABSTAIN TOTAL
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3(vi). Approval of changes to the fundamental investment policies of Oppenheimer Growth Fund on
warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
10,043,951.548 796,895.779 743,803.638 11,584,650.965
3(vii). Approval of changes to the fundamental investment policies of Oppenheimer Multiple Strategies
Fund on warrants, borrowing, investing in oil and gas exploration, investing in other
investment companies and hedging. (Proposal No. 2):
31,193,142.790 2,281,462.346 3,087,828.124 36,562,433.260
3(viii). Approval of changes to the fundamental investment policies of Oppenheimer Growth & Income Fund
on warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
7,029,838.247 410,269.718 504,078.630 7,944,186.595
3(ix). Approval of changes to the fundamental investment policies of Oppenheimer Global Securities Fund
on warrants, borrowing, investing in oil and gas exploration, investing in other investment
companies and hedging. (Proposal No. 2):
37,466,080.901 2,849,132.245 3,176,056.564 43,491,269.710
4. Approval of changes to certain in Oppenheimer Bond Fund's investment objective and fundamental
investment policies. (Proposal No. 3):
34,444,138.694 2,098,267.244 3,180,342.705 29,722,748.643
5. Approval of amendments to the Trust's Declaration of Trust to permit each Fund to issue
additional classes of shares. (Proposal No. 4):
309,886,066.129 18,994,944.838 24,404,133.189 353,285,144.156
</TABLE>
130
<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
Bruce L. Bartlett, Vice President
Alan Gilston, Vice President
John Kowalik, Vice President
Michael S. Levine, Vice President
David P. Negri, Vice President
Jane Putnam, Vice President
Thomas P. Reedy, Vice President
Richard H. Rubinstein, Vice President
Arthur P. Steinmetz, Vice President
Jay W. Tracey, Vice President
William L. Wilby, Vice President
Arthur J. Zimmer, 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.
The financial statements included herein have been taken from the records
of the Funds without examination of the independent auditors.
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>
131
