Semiannual Report June 30, 1999
O P P E N H E I M E R
High Income Fund/VA
A Series of Oppenheimer Variable Account Funds
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OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
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Oppenheimer Variable Account Funds--Oppenheimer High Income Fund/VA
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Objective
Oppenheimer High Income Fund/VA, a series of Oppenheimer Variable Account Funds,
seeks a high level of current income from investing in high-yield, high-risk
fixed-income securities, including unrated securities or securities in the lower
rating categories. These securities may be considered to be speculative.
Investing in foreign securities entails additional expenses and risks including
foreign currency fluctuations while investing in junk bonds carries a greater
risk of default.
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Narrative by David Negri and Tom Reedy, Co-Portfolio Managers
Oppenheimer High Income Fund/VA performed well during the first half of 1999,
despite a volatile environment for bond investing. For the six-month period that
ended June 30, 1999, the Fund provided a cumulative total return of 3.80%.(1) We
attribute the Fund's performance to our nearly fully invested position and our
emphasis on high-yield corporate bonds, which performed strongly during the
first half of the period.
The year began with the U.S. economy growing at a surprisingly robust
rate, fueled by high levels of consumer confidence and consumer spending. Most
bond sectors reacted negatively to the economy's unexpectedly high rate of
growth and the resulting increased potential for inflation, since inflation
undermines the value of a bond's yield. However, high-yield bond prices remained
strong as investors turned to the relatively attractive yields available on such
bonds, confident that recession was unlikely to strike the United States.
We positioned the Fund to take advantage of these conditions during the
last few months of 1998 by aggressively redeploying our cash reserves and most
of our U.S. Treasury bonds and other U.S. government-related securities into
higher yielding corporate bonds. As a result, the Fund participated in the
high-yield rally that occurred during the first quarter of 1999. We focused
primarily on fast-growing industries that we believed were likely to benefit
from global economic and technological trends. Our largest group of holdings was
in the media/entertainment/telecommunications sector, among high-yielding debt
obligations of companies such as NTL, Inc., a British cable and broadcasting
company. These investments generally performed well during the high yield
market's rally.(2)
In early April 1999, reassured by evidence that the U.S. economy was
continuing to grow at a sustainable rate and that global economies were
stabilizing, investors began looking for undervalued opportunities among bonds
and equities of companies in economically sensitive, cyclical industries that
stood to benefit from a global recovery. This trend toward value-oriented
securities undermined the strength of the high-yield growth sector that the Fund
emphasized. However, the trend favored certain of the Fund's investments that
had disappointed earlier in the year. Most notable of these were our holdings in
the energy sector, which had declined in early 1999 as a result of weak Asian
demand and the inability of oil-producing nations to coordinate production
targets. From March 1999 through the end of June, we saw recovery in the energy
sector in response to growing global demand. We also sought to take advantage of
the shift in market sentiment by increasing our exposure to specific industries,
such as paper and specialty chemicals, that we believed were best positioned to
benefit from an environment of global growth.
Looking toward the second half of 1999, we anticipate a favorable
environment for investments in corporate high-yield bonds if, as we expect, the
U.S. economy continues to grow without overheating. Only time will tell if the
market's recent shift in favor of economically sensitive, cyclical companies
will continue. However, we believe that the value-oriented industries we've
identified hold potential for further increases and have positioned the Fund to
participate in those gains.
The Fund's performance may from time to time be subject to substantial
short-term changes, particularly during periods of market or interest rate
volatility. For updates on the Fund's performance, please contact your financial
advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com.
1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this Fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
2 Oppenheimer High Income Fund/VA
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Oppenheimer Variable Account Funds--Oppenheimer High Income Fund/VA
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At the same time, a number of developments bear careful observation. Emerging
markets, which have demonstrated remarkable resilience in recent months, still
face fundamental economic challenges. We continue to look for signs of strength
that might lead us to allocate more of the Fund's resources to those markets. We
also remain cautious regarding the possibility of Y2K-related business
disruptions that might affect corporate performance. Our disciplined investment
strategy will guide us in evaluating investment challenges and opportunities as
they arise, which is why Oppenheimer High Income Fund/VA remains part of The
Right Way to Invest.
Oppenheimer High Income Fund/VA 3
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Statement of Investments June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
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<S> <C> <C>
Mortgage-Backed Obligations--2.0%
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AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 130,313
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Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(3) 167,000 128,877
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(3) 167,000 126,816
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(3) 166,000 113,347
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CBA Mortgage Corp., Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. E, 6.72%, 12/25/03(2)(3) 250,000 217,500
Series 1993-C1, Cl. F, 6.72%, 12/25/03(2)(3) 700,000 598,828
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First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates:
Series 1997-CHL1, 8.054%, 5/25/08(2)(3) 300,000 246,000
Series 1997-CHL1, 8.055%, 2/25/11(2)(3) 1,500,000 1,072,500
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Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. E, 7.426%, 3/15/06(2)(3) 835,342 689,679
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Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2) 254,890 203,912
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Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 630,356 611,151
Series 1994-C2, Cl. G, 8%, 4/25/25 688,707 662,934
Series 1995-C1, Cl. F, 6.90%, 2/25/27 518,797 472,754
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Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 6.581%, 4/25/26(2) 1,435,997 1,014,173
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Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1996-C3, Cl. E, 8.256%, 6/25/30(4) 650,000 600,844
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Total Mortgage-Backed Obligations (Cost $7,054,242) 6,889,628
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Foreign Government Obligations--1.0%
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Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 2.815%, 4/1/07(3)ARP 2,597,935 1,617,662
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Bulgaria (Republic of) Interest Arrears Bonds, 5.875%, 7/28/11(3) 1,450,000 986,000
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Panama (Republic of) Interest Reduction Bonds, 4%,7/17/14(5) 275,000 202,125
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Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4%, 3/7/17(5) 400,000 243,000
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Philippines (Republic of) Debs., 6%, 12/1/09(3) 142,800 131,733
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PT Hutama Karya Promissory Nts., Zero Coupon, B344 2/10/98 (2)(6)(IDR) 1,000,000,000 39,943
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Total Foreign Government Obligations (Cost $3,442,648) 3,220,463
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Loan Participations--0.3%
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Central Bank of Indonesia Gtd. Nts., Series 2 yr., 8.375%, 8/25/00(2)(3) (Cost $762,062) 1,000,000 932,500
4 Oppenheimer High Income Fund/VA
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Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
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Corporate Bonds and Notes--82.9%
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Aerospace/Defense--3.4%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 $ 1,000,000 $ 1,025,000
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Amtran, Inc.:
9.625% Nts., 12/15/05 800,000 785,000
10.50% Sr. Nts., 8/1/04 700,000 703,500
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Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08(2) 1,325,000 1,265,375
9.375% Sr. Unsec. Nts., 11/15/06 1,000,000 955,000
10.75% Sr. Nts., 8/1/05 700,000 717,500
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BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 1,840,000 1,890,600
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Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(2) 800,000 766,000
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Decrane Aircraft Holdings, Inc., 12% Sr. Sub. Nts., 9/30/08(4) 1,750,000 1,776,250
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Fairchild Corp., 10.75% Sr. Sub. Gtd. Nts., 4/15/09(4) 600,000 591,000
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Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Series 1997-A, Cl. B, 6/15/04(2) 303,086 315,331
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Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 837,750 820,996
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11,611,552
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Chemicals--2.1%
Brunner Mond Group plc, 12.50% Sr. Unsec. Sub. Nts., 7/15/08(GBP) 1,090,000 1,039,491
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ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 500,000 480,625
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Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09(4) 800,000 812,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09(EUR) 500,000 523,371
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Lyondell Chemical Co.:
9.875% Nts., Series B, 5/1/07(4) 500,000 513,750
10.875% Sr. Sub. Nts. 5/1/09(4) 250,000 261,250
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PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 500,000 407,500
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Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 400,000 330,000
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Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 250,000 243,750
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Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 795,000 800,962
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Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 250,000 186,250
11.75% Sr. Unsec. Sub. Nts., 8/15/06 750,000 573,750
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ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(4) 800,000 811,000
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6,983,699
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Consumer Durables--0.2%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 413,312
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TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 350,000 393,746
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807,058
Oppenheimer High Income Fund/VA 5
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Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
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Consumer Non-Durables--3.3%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs., 7/1/09(7) $ 1,080,000 $ 415,800
10.50% Sr. Unsec. Nts., 7/1/08 1,000,000 975,000
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American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05 400,000 255,000
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Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 1,100,000 1,100,000
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Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(4) 1,300,000 1,124,500
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Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 900,000 679,500
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Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 720,000 723,600
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Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 2,200,000 2,068,000
9% Sr. Nts., 11/1/06 1,185,000 1,173,150
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Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., Series B, 11.49%, 3/15/01(8) 680,000 445,400
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Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 1,200,000 1,248,000
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Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 600,000 585,000
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William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 235,000 240,287
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11,033,237
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Energy--5.1%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(4) 750,000 736,875
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Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 1,000,000 885,000
9.625% Sr. Unsec. Nts., Series B, 5/1/05 1,000,000 940,000
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Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 1,040,000 919,100
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Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 275,000 240,969
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Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B, 2/15/08 800,000 508,000
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Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 800,000 718,000
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Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(4) 1,000,000 655,000
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Forcenergy, Inc., 8.50% Sr. Sub. Nts., Series B, 2/15/07(6) 700,000 493,500
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Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 1,750,000 1,548,750
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Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 1,025,000 548,375
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Leviathan Gas Pipeline Partners LP/Leviathan Financial Corp., 10.375% Sr. Sub. Nts., 6/1/09(4) 500,000 512,500
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National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(6) 810,000 319,950
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Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,420,000 1,029,500
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P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,000,000 997,500
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Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 800,000 762,000
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R&B Falcon Corp., 12.25% Sr. Nts., 3/15/06(4) 1,000,000 1,035,000
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RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 1,060,000 560,475
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RBF Finance Co.:
11% Sec. Nts., 3/15/06(4) 1,000,000 1,035,000
11.375% Sec. Nts., 3/15/09(4) 500,000 520,000
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Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 225,000 239,062
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Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 735,000 735,000
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Universal Compression Holdings, Inc.:
0%/9.875% Sr. Disc. Nts., 2/15/08(7) 1,325,000 834,750
0%/11.375% Sr. Disc. Nts., 2/15/09(7) 720,000 435,600
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17,209,906
6 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
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Financial--1.3%
Bakrie Investindo, Zero Coupon Promissory Nts., 3/26/98(2)(6)(IDR) 1,000,000,000 $ 21,787
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Bank Plus Corp., 12% Sr. Nts., 7/18/07(2) 517,000 450,436
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ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(2) 8,473 8,495
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Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 800,000 832,000
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Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 450,000 353,250
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PT Polysindo Eka Perkasa, 24% Nts., 6/19/03(6)(IDR) 657,200,000 12,409
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Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 2,165,000 2,024,275
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Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(2)(6) 240,000 109,200
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Veritas Capital Trust, 10% Nts., 1/1/28 550,000 441,375
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4,253,227
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Food & Drug--1.9%
Family Restaurants, Inc.:
9.75% Sr. Nts., 2/1/02 1,300,000 664,625
10.875% Sr. Sub. Disc. Nts., 2/1/04(2) 100,000 52,750
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Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,135,000 1,058,387
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Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(7) 2,710,000 2,696,450
12.625% Sub. Nts., 6/15/02 900,000 918,000
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Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 1,060,000 1,118,300
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6,508,512
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Food/Tobacco--1.9%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 520,000 512,200
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Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(7) 501,000 370,740
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New World Pasta Co., 9.25% Sr. Sub. Nts., 2/15/09(4) 1,200,000 1,173,000
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Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 1,600,000 1,576,000
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Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10 400,000 302,000
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SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 841,750
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Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 1,175,000 945,875
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Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09(4) 750,000 738,750
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6,460,315
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Forest Products/Containers--1.7%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 700,000 686,875
8.25% Sr. Unsec. Sub. Nts., 8/1/08 800,000 792,000
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Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 500,000 477,500
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Packaging Corp. of America, 9.625% Sr. Sub. Nts., 4/1/09(4) 250,000 255,000
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Repap Enterprises (New Brunswick), 9% First Priority Sr. Sec. Nts., 6/1/04 250,000 234,375
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Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 1,130,000 1,163,900
10.875% Sr. Sub. Nts., 4/1/08 750,000 733,125
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SD Warren Co., 14% Unsec. Nts., 12/15/06(9) 1,158,749 1,329,664
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5,672,439
Oppenheimer High Income Fund/VA 7
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
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Gaming/Leisure--5.5%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(7) $ 450,000 $ 247,500
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Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 940,000 851,875
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Aztar Corp., 8.875% Sr. Sub. Nts., 5/15/07(4) 550,000 529,375
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Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(6) 9,500 --
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Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 840,000 789,600
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Coast Hotel & Casinos, Inc., 9.50% Sr. Sub. Nts., 4/1/09(4) 500,000 483,750
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Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 500,000 501,875
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Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 800,000 752,000
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Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 1,600,000 1,516,000
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Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 120,000 125,400
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Hollywood Casino Corp., 11.25% Sec. Nts., 5/1/07(4) 500,000 506,250
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Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 1,000,000 997,500
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Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,300,000 1,327,625
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Intrawest Corp., 9.75% Sr. Nts., 8/15/08 1,500,000 1,518,750
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Isle of Capri Casinos, Inc., 8.75% Sr. Sub. Nts., 4/15/09(4) 1,200,000 1,131,000
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Jupiters Ltd., 8.50% Sr. Nts., 3/1/06(4) 1,000,000 985,000
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Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 1,500,000 1,492,500
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Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(7) 1,200,000 802,500
9.25% Sr. Nts., 4/1/06 600,000 594,000
9.75%, Sr. Nts., 6/15/07 750,000 761,250
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Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,000,000 1,005,000
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Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07 800,000 816,000
10.125% Sr. Sub. Nts., 3/15/06 800,000 830,000
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18,564,750
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Healthcare--2.1%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 1,300,000 1,212,250
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Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08(DEM) 1,225,000 668,527
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ICN Pharmaceuticals, Inc., 8.75% Sr. Nts., 11/15/08(4) 1,065,000 1,051,687
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Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07 600,000 441,000
10.25% Sr. Sub. Nts., 4/30/06 35,000 25,856
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King Pharmaceutical, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09 1,250,000 1,296,875
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Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 1,000,000 860,000
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Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(4) 1,200,000 1,242,000
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Tenet Healthcare Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 250,000 237,500
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7,035,695
8 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Housing--1.6%
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06(2) $ 900,000 $ 873,000
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D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 500,000 472,500
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Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 600,000 597,000
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Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08 1,300,000 1,215,500
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Nortek, Inc.:
8.875% Sr. Nts., 8/1/08(4) 250,000 246,250
9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,393,000
9.25% Sr. Nts., Series B, 3/15/07 625,000 628,125
------------
5,425,375
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Information Technology--1.1%
Amkor Technologies, Inc.:
9.25% Sr. Nts., 5/1/06(4) 500,000 490,000
10.50% Sr. Sub. Nts., 5/1/09(4) 500,000 483,750
- --------------------------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 500,000 466,250
- --------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 609,375
- --------------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor Corp., 10.375% Sr. Sub. Nts., 10/1/07(4) 850,000 839,375
- --------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 275,000 306,625
- --------------------------------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 500,000 445,000
------------
3,640,375
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Manufacturing--2.8%
American Standard Cos., Inc., 7.625% Sr. Nts., 2/15/10(10) 1,500,000 1,402,500
- --------------------------------------------------------------------------------------------------------------------------------
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 350,000 341,250
- --------------------------------------------------------------------------------------------------------------------------------
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 420,000 416,325
- --------------------------------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 400,000 308,000
- --------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 811,750
- --------------------------------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 635,000 466,725
- --------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 250,000 226,250
- --------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 765,000 757,350
- --------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 521,250
- --------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 700,000 712,250
- --------------------------------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 560,000 495,600
- --------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,447,500
- --------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 532,000
- --------------------------------------------------------------------------------------------------------------------------------
Terex Corp.:
8.875% Sr. Unsec. Sub. Nts., 4/1/08 630,000 604,800
8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08(4) 400,000 384,000
------------
9,427,550
Oppenheimer High Income Fund/VA 9
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--2.2%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 $ 915,000 $ 933,300
- --------------------------------------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 975,000 976,219
9% Sr. Unsec. Sub. Nts., 10/1/08 2,200,000 2,249,500
10.50% Sr. Sub. Nts., Series B, 1/15/07 450,000 474,750
- --------------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Sub. Nts., 3/15/09(4) 1,500,000 1,434,375
- --------------------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(5) 400,000 414,000
- --------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 9% Sr. Unsec. Sub. Nts., 7/15/07 885,000 878,363
- --------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 25,000 26,875
------------
7,387,382
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--4.7%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 360,000 335,700
8.125% Sr. Nts., Series B, 7/15/03 1,000,000 985,000
8.375% Sr. Nts., Series B, 2/1/08 1,000,000 967,500
9.25% Sr. Nts., 10/1/02 390,000 396,825
9.875% Sr. Nts., Series B, 3/1/07 140,000 147,000
10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 362,950
- --------------------------------------------------------------------------------------------------------------------------------
Bresnan Communications, Inc.:
0%/9.25% Sr. Disc. Nts., 2/1/09(4)(7) 810,000 530,550
8% Sr. Nts., 2/1/09(4) 250,000 248,125
- --------------------------------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings Capital Corp.:
0%/9.92% Sr. Disc. Nts., 4/1/11(4)(7) 1,000,000 625,000
8.25% Sr. Nts., 4/1/07(4) 350,000 336,875
8.625% Sr. Nts., 4/1/09(4) 250,000 241,250
- --------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 952,500
9.875% Sr. Sub. Nts., 5/15/06 550,000 585,750
10.50% Sr. Sub. Debs., 5/15/16 250,000 284,063
- --------------------------------------------------------------------------------------------------------------------------------
Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(7) 500,000 146,875
- --------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09(4) 3,500,000 3,578,750
- --------------------------------------------------------------------------------------------------------------------------------
Falcon Holding Group LP:
0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(7) 1,300,000 916,500
8.375% Sr. Unsec. Debs., Series B, 4/15/10 2,200,000 2,183,500
- --------------------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03(3) 885,000 929,250
- --------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 500,000 344,583
- --------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(7) 1,040,000 689,000
------------
15,787,546
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--2.4%
Ackerley Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 1/15/09 1,250,000 1,240,625
- --------------------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 500,000 472,500
- --------------------------------------------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(2) 446,433 426,634
- --------------------------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(7)(GBP) 1,000,000 810,928
- --------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10 750,000 693,750
9.50% Sr. Unsec. Sub. Nts., 6/1/08 750,000 705,000
10 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media (continued)
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 $ 900,000 $ 877,500
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 1,800,000 1,773,000
- --------------------------------------------------------------------------------------------------------------------------------
TV Guide, Inc., 8.125% Sr. Sub. Nts., 3/1/09(4) 250,000 237,813
- --------------------------------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09 1,000,000 945,000
------------
8,182,750
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--18.3%
Amazon.Com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(7) 2,620,000 1,722,650
- --------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(7) 225,000 187,875
7.625% Bonds, 7/31/08(DEM) 1,925,000 1,011,211
8.875% Sr. Nts., 11/30/07(DEM) 250,000 137,548
10.125% Sr. Nts., 11/30/07(GBP) 400,000 680,142
Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts.,
12/15/06 and one warrant to purchase 7.8 ordinary shares)(7)(10) 1,775,000 1,482,125
- --------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 800,000 842,000
- --------------------------------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 600,000 525,750
- --------------------------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc.:
0%/13.50% Sr. Disc. Nts., 3/15/08(7) 1,500,000 832,500
12.50% Sr. Nts., 2/15/09 800,000 764,000
- --------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(7) 2,350,000 2,126,750
- --------------------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 400,000 403,000
- --------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07 500,000 392,500
- --------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
11.25% Sr. Nts., 7/1/08(4) 600,000 633,000
11.25% Sr. Nts., 7/1/08 715,000 754,325
- --------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(2)(7) 500,000 262,500
- --------------------------------------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(7) 810,000 457,650
- --------------------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 950,000 973,750
- --------------------------------------------------------------------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05(2) 1,000,000 960,000
- --------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc.:
0%/12.75% Sr. Sub. Nts., 11/15/07(7) 1,250,000 1,331,250
0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(4)(7) 178,000 241,413
- --------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc./GST Network Funding Corp., Inc.,
0%/10.50% Sr. Disc. Nts., 5/1/08(4)(7) 350,000 199,500
- --------------------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunication, Inc., 12% Sr. Sub. Nts., 11/1/07(4) 1,200,000 1,233,000
- --------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(7) 115,000 90,275
- --------------------------------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(7) 1,220,000 701,500
- --------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(7) 800,000 448,000
8.50% Sr. Nts., Series B, 1/15/08 660,000 607,200
8.60% Sr. Unsec. Nts., Series B, 6/1/08 300,000 277,500
8.875% Sr. Nts., 11/1/07 460,000 433,550
- --------------------------------------------------------------------------------------------------------------------------------
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08 750,000 818,438
11% Sr. Nts., 6/1/07 1,000,000 993,750
Oppenheimer High Income Fund/VA 11
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
- --------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(2)(7) $ 2,455,000 $ 1,362,525
13.50% Sr. Nts., 5/15/09(4) 200,000 201,250
- --------------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(7) 1,250,000 775,000
9.125% Sr. Unsec. Nts., 5/1/08 250,000 246,875
- --------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 8.125% Sr. Nts., 2/15/09(4) 300,000 279,000
- --------------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08 1,600,000 1,652,000
- --------------------------------------------------------------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(7)(DEM) 700,000 230,686
- --------------------------------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.125% Sr. Nts., 6/15/09(4) 500,000 505,000
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(7) 200,000 120,000
9% Sr. Nts., 3/15/08 800,000 756,000
9.625% Sr. Nts., 10/1/07 1,210,000 1,182,775
10.75% Sr. Unsec. Nts., 6/1/09 250,000 257,500
10.75% Sr. Unsec. Nts., 11/15/08 1,200,000 1,233,000
- --------------------------------------------------------------------------------------------------------------------------------
NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08 750,000 780,000
- --------------------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Nts., 4/15/09(7)(GBP) 3,225,000 3,018,368
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(7) 350,000 241,500
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(7) 500,000 343,750
7% Cv. Sub. Nts., 12/15/08(4) 2,250,000 3,585,938
10% Sr. Nts., Series B, 2/15/07 1,055,000 1,097,200
11.50% Sr. Unsec. Nts., Series B, 10/1/08 1,600,000 1,770,000
- --------------------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 1,800,000 1,377,000
- --------------------------------------------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc., 9% Cv. Sub. Nts., 6/1/06(4) 170,000 94,563
- --------------------------------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 2,170,000 2,191,700
- --------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts., 10/15/07(7) 1,000,000 785,000
- --------------------------------------------------------------------------------------------------------------------------------
RSL Communications plc:
9.125% Sr. Unsec. Nts., 3/1/08 500,000 463,750
10.50% Gtd. Sr. Nts., 11/15/08 1,450,000 1,442,750
- --------------------------------------------------------------------------------------------------------------------------------
Tele1 Europe BV, Units (each unit consists of $1,000 principal amount of 13% sr. nts.,
5/15/09 and one warrant to purchase 40.403 shares of common stock)(4)(10) 500,000 521,250
- --------------------------------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/9.25% Sr. Nts., 4/15/09(4)(7) 1,500,000 1,006,875
0%/9.875% Sr. Nts., 4/15/09(4)(7)(GBP) 1,300,000 1,352,465
0%/11% Sr. Disc. Debs., 10/1/07(7) 990,000 886,050
11.25% Sr. Nts., 11/1/08 1,990,000 2,243,725
- --------------------------------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 1,300,000 1,339,000
- --------------------------------------------------------------------------------------------------------------------------------
US Xchange LLC, 15% Sr. Unsec. Nts., 7/1/08(2) 800,000 836,000
- --------------------------------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,513,300
11.25% Sr. Nts., 12/1/08 500,000 526,250
13.50% Sr. Unsec. Nts., 6/15/04 385,000 433,125
- --------------------------------------------------------------------------------------------------------------------------------
Viatel, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 4/15/08(7) 765,000 493,425
11.25% Sr. Sec. Nts., 4/15/08 830,000 850,750
- --------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(2)(7) 1,750,000 1,067,500
------------
61,587,497
12 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--6.5%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 $ 200,000 $ 173,000
- --------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(7) 1,834,000 779,450
- --------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08(4) 800,000 830,000
- --------------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(7) 400,000 234,000
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(7) 940,000 658,000
9% Sr. Nts., 5/15/11 750,000 738,750
- --------------------------------------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(7) 1,000,000 487,500
- --------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 240,000 255,600
- --------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(6)(7) 226,000 96,050
- --------------------------------------------------------------------------------------------------------------------------------
ICO Global Communications (Holdings) Ltd., Units (each unit consists of
$1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to purchase
19.85 shares of common stock)(10) 700,000 290,500
- --------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 250,000 218,125
- --------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/12% Sr. Disc. Nts., 6/1/09(4)(7) 1,000,000 575,000
0%/14% Sr. Disc. Nts., Series B, 6/1/06(7) 700,000 568,750
- --------------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(7) 300,000 222,000
- --------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(7) 600,000 421,500
0%/10.65% Sr. Disc. Nts., 9/15/07(7) 900,000 659,250
- --------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06 2,400,000 2,460,000
- --------------------------------------------------------------------------------------------------------------------------------
Orange plc, 8% Sr. Nts., 8/1/08 2,600,000 2,496,000
- --------------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 1,125,000 1,096,875
- --------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(7) 1,150,000 638,250
- --------------------------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(7) 2,400,000 1,386,000
- --------------------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 800,000 812,000
11.75% Sr. Sub. Nts., 7/15/07 425,000 478,125
- --------------------------------------------------------------------------------------------------------------------------------
Real Time Data, Inc., Units (each unit consists of $1,000 principal amount
of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant to purchase
six ordinary shares)(2)(7)(10) 1,000,000 465,000
- --------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,900,000 1,919,000
- --------------------------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(7) 2,720,000 1,577,600
- --------------------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc.:
0%/11.25% Sr. Disc. Nts., 4/15/09(4)(7) 675,000 381,375
0%/12% Sr. Disc. Nts., 7/15/08(4)(7) 1,640,000 1,041,400
------------
21,959,100
- --------------------------------------------------------------------------------------------------------------------------------
Metals/Minerals--2.6%
AK Steel Corp.:
7.875% Sr. Nts., 2/15/09(4) 1,250,000 1,206,250
9.125% Sr. Nts., 12/15/06 1,200,000 1,242,000
- --------------------------------------------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 320,000 331,600
- --------------------------------------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Nts., 4/1/09(4) 500,000 489,375
- --------------------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,470,000
- --------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 403,000
Oppenheimer High Income Fund/VA 13
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Metals/Minerals (continued)
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 $ 410,000 $ 420,250
- --------------------------------------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(7) 2,000,000 770,000
- --------------------------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 540,000 521,100
- --------------------------------------------------------------------------------------------------------------------------------
National Steel Corp.:
9.875% First Mtg. Bonds, Series D, 3/1/09 400,000 409,000
9.875% Nts., Series B, 3/1/09(4) 200,000 204,500
- --------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 1,400,000 1,459,500
------------
8,926,575
- --------------------------------------------------------------------------------------------------------------------------------
Retail--1.3%
Boyds Collection Ltd. (The), 9% Sr. Sub. Nts., 5/15/08(4) 752,000 746,360
- --------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 1,100,000 962,500
- --------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 864,000
- --------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 582,000
- --------------------------------------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 1,000,000 995,000
- --------------------------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 329,063
------------
4,478,923
- --------------------------------------------------------------------------------------------------------------------------------
Service--6.4%
Allied Waste North America, Inc., 7.875% Sr. Unsec. Nts., Series B, 1/1/09 1,000,000 932,500
- --------------------------------------------------------------------------------------------------------------------------------
American Plumbing & Mechanical, Inc., 11.625% Gtd. Sr. Sub. Nts., 10/15/08(4) 500,000 485,000
- --------------------------------------------------------------------------------------------------------------------------------
Cherokee International LLC, 10.50% Sr. Sub. Nts., 5/1/09(4) 1,000,000 1,002,500
- --------------------------------------------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(7) 600,000 615,000
- --------------------------------------------------------------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07(2) 750,000 709,688
- --------------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp.:
9% Sr. Sub. Nts., 5/1/09(4) 1,300,000 1,248,000
9% Sr. Sub. Nts., 5/1/09(4)(EUR) 300,000 297,780
- --------------------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc.:
9% Sr. Unsec. Sub. Nts., 2/1/08 2,050,000 1,957,750
9% Sr. Unsec. Sub. Nts., 2/1/08 365,000 348,575
- --------------------------------------------------------------------------------------------------------------------------------
Formica Corp., 10.875% Sr. Sub. Nts., 3/1/09(4) 1,000,000 975,000
- --------------------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 915,000 947,025
- --------------------------------------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Sub. Nts., 4/1/09(4) 650,000 627,250
- --------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 815,000 843,525
- --------------------------------------------------------------------------------------------------------------------------------
Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08(2) 1,500,000 1,350,000
- --------------------------------------------------------------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(2) 1,500,000 1,275,000
- --------------------------------------------------------------------------------------------------------------------------------
Panolam Industries International, Inc., 11.50% Sr. Sub. Nts., 2/15/09(4) 1,000,000 1,037,500
- --------------------------------------------------------------------------------------------------------------------------------
Premier Graphics, Inc., 11.50% Sr. Unsec. Nts., 12/1/05(2) 700,000 675,500
- --------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 950,000 865,688
13.625% Sr. Sub. Disc. Nts., 6/30/05 400,000 449,500
- --------------------------------------------------------------------------------------------------------------------------------
Quest Diagnostic, Inc., 9.875% Sr. Sub. Nts., 7/1/09(4)(11) 1,000,000 1,012,500
- --------------------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc., 10.25% First Mtg. Nts., 4/1/09(4) 650,000 643,500
- --------------------------------------------------------------------------------------------------------------------------------
Tembec Industries, Inc., 8.625% Sr. Nts., 6/30/09 800,000 800,000
- --------------------------------------------------------------------------------------------------------------------------------
United Rentals, Inc.:
9% Nts., 4/1/09(4) 350,000 344,750
9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 2,000,000 1,980,000
------------
21,423,531
14 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Transportation--3.7%
Budget Group, Inc., 9.125% Sr. Nts., 4/1/06(4) $ 1,000,000 $ 935,000
- --------------------------------------------------------------------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 390,000 407,550
- --------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 600,000 652,500
- --------------------------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(4) 950,000 964,250
- --------------------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 25,000 24,625
- --------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc., Units (each unit consists of $1,000
principal amount of 12% first priority ship mtg. sr. sec. nts., 7/15/05
and one warrant to purchase five shares of common stock)(2)(10) 1,500,000 847,500
- --------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 1,175,000 581,625
Units (each unit consists of $1,000 principal amount of 12% second priority ship
mtg. nts., 6/30/07 and 7.66 warrants)(4)(10) 500,000 162,500
- --------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc.:
10.125% Sr. Sub. Nts., 6/15/07(4) 600,000 603,000
10.125% Sr. Unsec. Sub. Nts., 6/15/07 1,525,000 1,532,625
- --------------------------------------------------------------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship Mtg. Nts., 5/30/08 700,000 282,625
- --------------------------------------------------------------------------------------------------------------------------------
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 1,485,000
- --------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,700,000 1,506,625
- --------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts.,
Series B, 12/15/03(7) 2,600,000 2,587,000
------------
12,572,425
- --------------------------------------------------------------------------------------------------------------------------------
Utility--0.8%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 545,000 539,550
10.50% Sr. Nts., 5/15/06 25,000 26,750
- --------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(12) 555,000 615,250
- --------------------------------------------------------------------------------------------------------------------------------
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 1,000,000 953,974
- --------------------------------------------------------------------------------------------------------------------------------
Integrated Electric Services, Inc., 9.375% Sr. Sub. Nts., 2/1/09(4) 600,000 594,000
------------
2,729,524
------------
Total Corporate Bonds and Notes (Cost $293,488,822) 279,668,943
Shares
================================================================================================================================
Preferred Stocks--5.2%
- --------------------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(9) 15,000 333,750
- --------------------------------------------------------------------------------------------------------------------------------
Capstar Communications, Inc., 12.625% Cum. Exchangeable, Series E, Non-Vtg.(2)(9) 1,396 162,285
- --------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A(2)(9) 76,590 1,914,750
- --------------------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable(9) 454 307,585
- --------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable Preferred Stock,
Series B, Non-Vtg.(9) 568 532,500
- --------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable(9) 1,161 1,100,047
13% Sr. Exchangeable(4)(9) 1,000 982,500
- --------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable Preferred Stock, Non-Vtg.(9) 412 145,230
- --------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Cum. Exchangeable, Series B, 3/1/08, Non-Vtg.(13) 8,000 418,000
Oppenheimer High Income Fund/VA 15
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
- --------------------------------------------------------------------------------------------------------------------------------
Preferred Stocks (continued)
Fidelity Federal Bank FSB Glendale California, l2% Non-Cum. Exchangeable
Perpetual Preferred Stock, Series A(2)(13) 20 $ 465
- --------------------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 10.50% Sr. Exchangeable Preferred, 12/1/08 10,000 1,062,500
- --------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg(9) 284 283,290
- --------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(9) 846 831,195
- --------------------------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable
Preferred Stock, Non-Vtg.(9) 6,881 273,520
- --------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Preferred, Series E, Non-Vtg.(9) 1,218 1,221,045
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(9) 30,000 1,522,500
- --------------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 12.375%, Preferred Stock(4)(9) 2,000 211,500
- --------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(9) 45 393,187
- --------------------------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 10,000 953,750
9.20% Exchangeable, Series F, Non-Vtg. 2,500 245,312
- --------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 13.875% Cum. Sr. Preferred, Units (one $1,000 sr. preferred shares
and one warrant to purchase 35 shares common stock at $9.50 per share)(2)(10)(13) 1,200 1,239,000
- --------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(9) 1,118 1,131,975
- --------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(9) 196 436,100
13.75% Exchangeable(4)(9) 26 57,850
- --------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable, Non-Vtg.(4)(9)(13) 645 701,438
- --------------------------------------------------------------------------------------------------------------------------------
Star Gas Partners, LP, Units (representing Ltd. Partnership Interests) 517 8,886
- --------------------------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv., Series B, Non-Vtg.(13) 30,000 736,875
9.20% Preferred, Vtg.(13) 8,950 193,544
------------
Total Preferred Stocks (Cost $20,350,007) 17,400,579
================================================================================================================================
Common Stocks--0.3%
- --------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(4)(13) 121,950 320,119
- --------------------------------------------------------------------------------------------------------------------------------
Coinstar, Inc.(13) 5,250 150,609
- --------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(2) 150 132,750
- --------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(2)(13) 3,723 3,723
- --------------------------------------------------------------------------------------------------------------------------------
Gulfstream Holding, Inc.(13) 56 --
- --------------------------------------------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(13) 851 2,766
- --------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(13) 206 6,180
- --------------------------------------------------------------------------------------------------------------------------------
Optel, Inc.(13) 945 9
- --------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp.(13) 36,646 549,690
- --------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(13) 7,252 73
- --------------------------------------------------------------------------------------------------------------------------------
Zale Corp.(13) 650 26,000
------------
Total Common Stocks (Cost $839,390) 1,191,919
16 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Units Note 1
================================================================================================================================
Rights, Warrants and Certificates--0.8%
- --------------------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(2) 39,658 $ 397
- --------------------------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/00(2) 125 1
- --------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 10/07(4) 1,434 5,557
- --------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 18,600
- --------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/05 660 5,559
- --------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/07(2) 750 262,594
- --------------------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/08(2) 3,200 24,400
- --------------------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/08 1,750 --
- --------------------------------------------------------------------------------------------------------------------------------
Diva Systems Corp. Wts., Exp. 3/08(2) 1,500 18,000
- --------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/05 475 27,340
- --------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/08(4) 500 25,062
- --------------------------------------------------------------------------------------------------------------------------------
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(2) 500 2,750
- --------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/05(2) 52,500 525
- --------------------------------------------------------------------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/05(2) 1,800 180,000
- --------------------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/01 15,626 20,509
- --------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03 8,351 --
Exp. 1/03(2) 4,766 48
Exp. 9/04(2) 14,000 14,882
- --------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(2) 5,940 85,676
- --------------------------------------------------------------------------------------------------------------------------------
IHF Capital, Inc.:
Series H Exp. 11/99(4) 250 2
Series I Wts., Exp. 11/99(2) 400 4
- --------------------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 950 --
- --------------------------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/07(2) 765 --
- --------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/08(2) 2,455 6,292
- --------------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/08(2) 800 2,400
- --------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/07(2) 800 9,700
- --------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/06(2) 3,200 48,800
- --------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts., Exp. 7/05(2) 1,500 2,625
- --------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 217,031
- --------------------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc., 9% Cv. Sub. Nts. Wts., Exp. 3/03 170 8
- --------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/07(2) 8,600 786,900
- --------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(2) 28,000 350,000
Exp. 6/05(2) 1,600 11,200
- --------------------------------------------------------------------------------------------------------------------------------
Trizec Hahn Corp. Wts., Exp. 7/99 3,970 8,584
- --------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc. Wts., Exp. 11/99(2) 1,440 331,380
- --------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/05(4) 5,250 117,469
------------
Total Rights, Warrants and Certificates (Cost $277,296) 2,584,295
Oppenheimer High Income Fund/VA 17
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount(1) Note 1
================================================================================================================================
Structured Instruments--1.5%
- --------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 6.653%, 4/28/02 (representing a basket
of reference loans and a total return swap between Chase Manhattan Bank
and the Trust)(2)(3) (Cost $5,445,451) $ 5,360,000 $ 5,081,759
================================================================================================================================
Repurchase Agreements--4.5%
- --------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 4.80%, dated 6/30/99,
to be repurchased at $15,202,027 on 7/1/99, collateralized by U.S. Treasury Nts.,
5.50%-8%, 11/30/99-7/15/06, with a value of $12,831,859, U.S. Treasury Bonds,
6%-9.25%, 2/15/16-2/15/26, with a value of $2,687,096 (Cost $15,200,000) 15,200,000 15,200,000
- --------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $346,859,918) 98.5% 332,170,086
- --------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.5 5,018,052
------------- ------------
Net Assets 100.0% $337,188,138
============= ============
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP -- Argentine Peso EUR -- Euro
CAD -- Canadian Dollar GBP -- British Pound Sterling
DEM -- German Mark IDR -- Indonesian Rupiah
2. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $60,400,810 or 17.91% of the Fund's net
assets as of June 30, 1999.
5. Represents the current interest rate for an increasing rate security.
6. Non-income producing--issuer is in default.
7. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Interest or dividend is paid-in-kind.
10. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
11. When-issued security to be delivered and settled after June 30, 1999.
12. A sufficient amount of securities has been designated to cover outstanding
foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
13. Non-income producing security.
See accompanying Notes to Financial Statements.
18 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Assets and Liabilities June 30, 1999 (Unaudited)
<TABLE>
=====================================================================================================
<S> <C>
Assets
Investments, at value (cost $346,859,918)--see accompanying statement $332,170,086
- -----------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency exchange contracts--Note 5 158,698
- -----------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 6,370,326
Shares of beneficial interest sold 727,973
Investments sold 515,522
Closed forward foreign currency exchange contracts 124,071
Daily variation on futures contracts 9,590
Other 3,017
------------
Total assets 340,079,283
=====================================================================================================
Liabilities
Bank overdraft 3,354
- -----------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency exchange contracts--Note 5 10,217
- -----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $1,000,000 purchased on a when-issued basis)--Note 1 2,115,668
Shares of beneficial interest redeemed 712,392
Shareholder reports 22,090
Custodian fees 11,495
Legal, auditing and other professional fees 8,226
Daily variation on futures contracts 335
Transfer and shareholder servicing agent fees 183
Closed forward foreign currency exchange contracts 90
Other 7,095
------------
Total liabilities 2,891,145
=====================================================================================================
Net Assets $337,188,138
============
=====================================================================================================
Composition of Net Assets
Paid-in capital $342,456,635
- -----------------------------------------------------------------------------------------------------
Undistributed net investment income 15,981,987
- -----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (6,704,897)
- -----------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (14,545,587)
------------
Net assets--applicable to 31,611,767 shares of beneficial interest outstanding $337,188,138
============
=====================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $10.67
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer High Income Fund/VA 19
<PAGE>
Statement of Operations For the Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
======================================================================================
<S> <C>
Investment Income
Interest $16,409,915
- --------------------------------------------------------------------------------------
Dividends 1,061,311
-----------
Total income 17,471,226
======================================================================================
Expenses
Management fees--Note 4 1,260,067
- --------------------------------------------------------------------------------------
Legal, auditing and other professional fees 10,388
- --------------------------------------------------------------------------------------
Custodian fees and expenses 7,256
- --------------------------------------------------------------------------------------
Shareholder reports 6,750
- --------------------------------------------------------------------------------------
Registration and filing fees 4,184
- --------------------------------------------------------------------------------------
Insurance expenses 2,042
- --------------------------------------------------------------------------------------
Trustees' compensation 1,889
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,053
- --------------------------------------------------------------------------------------
Other 645
-----------
Total expenses 1,294,274
Less expenses paid indirectly--Note 1 (5,095)
-----------
Net expenses 1,289,179
======================================================================================
Net Investment Income 16,182,047
======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (2,332,456)
Closing of futures contracts (327,696)
Foreign currency transactions 246,182
-----------
Net realized loss (2,413,970)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (489,309)
Translation of assets and liabilities denominated in foreign currencies (589,683)
-----------
Net change (1,078,992)
-----------
Net realized and unrealized loss (3,492,962)
======================================================================================
Net Increase in Net Assets Resulting from Operations $12,689,085
===========
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer High Income Fund/VA
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
=====================================================================================================================
<S> <C> <C>
Operations
Net investment income $ 16,182,047 $ 27,929,383
- ---------------------------------------------------------------------------------------------------------------------
Net realized loss (2,413,970) (2,889,367)
- ---------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (1,078,992) (24,125,468)
------------ ------------
Net increase in net assets resulting from operations 12,689,085 914,548
=====================================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income (23,246,834) (6,694,100)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- (8,113,249)
=====================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions--Note 2 19,183,230 51,132,667
=====================================================================================================================
Net Assets
Total increase 8,625,481 37,239,866
- ---------------------------------------------------------------------------------------------------------------------
Beginning of period 328,562,657 291,322,791
------------ ------------
End of period (including undistributed net investment
income of $15,981,987 and $23,046,774, respectively) $337,188,138 $328,562,657
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer High Income Fund/VA 21
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1999 Year Ended December 31,
(Unaudited) 1998 1997 1996 1995 1994
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $11.02 $11.52 $11.13 $10.63 $ 9.79 $11.02
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .49 .95 .94 .97 .98 .94
Net realized and unrealized gain (loss) (.09) (.90) .37 .58 .94 (1.27)
- -------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations .40 .05 1.31 1.55 1.92 (.33)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.75) (.25) (.91) (1.05) (1.08) (.66)
Distributions from net realized gain -- (.30) (.01) -- -- (.24)
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.75) (.55) (.92) (1.05) (1.08) (.90)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.67 $11.02 $11.52 $11.13 $10.63 $9.79
======= ======= ======= ======= ======= =======
===============================================================================================================================
Total Return, at Net Asset Value(1) 3.80% 0.31% 12.21% 15.26% 20.37% (3.18)%
===============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $337,188 $328,563 $291,323 $191,293 $133,451 $ 95,698
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $344,623 $322,748 $223,617 $157,203 $115,600 $101,096
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.47% 8.65% 8.88% 9.18% 9.81% 9.15%
Expenses(3) 0.75% 0.78% 0.82% 0.81% 0.81% 0.67%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 19% 161% 168% 125% 107% 110%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. Annualized for periods less than one full year.
3. Beginning in fiscal 1995, the expense ratio reflects the effect of expenses
paid indirectly by the Fund. Prior year expense ratios have not been adjusted.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended June 30, 1999, were $88,652,672 and $58,075,066, respectively.
See accompanying Notes to Financial Statements.
22 Oppenheimer High Income Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited)
================================================================================
1. Significant Accounting Policies
Oppenheimer High Income Fund/VA (the Fund) is a separate series of Oppenheimer
Variable Account Funds (the Trust), a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund operated under the name Oppenheimer High Income Fund through
April 30, 1999. The Fund's investment objective seeks a high level of current
income from investment in high-yield fixed income securities. The Trust's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the fund may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
date. During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Fund maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the volatility of the
Fund's net asset value to the extent the Fund makes such purchases while
remaining substantially fully invested. As of June 30, 1999, the Fund had
entered into outstanding when-issued or forward commitments of $1,000,000.
In connection with its ability to purchase securities on a when-issued
or forward commitment basis, the Fund may enter into mortgage dollar-rolls in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
- --------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of June 30, 1999, securities with an
aggregate market value of $1,092,839, representing 0.32% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments
is separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
Oppenheimer High Income Fund/VA 23
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant Accounting Policies (continued)
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. As of December 31,
1998, the Fund had available for federal income tax purposes an unused capital
loss carryover of approximately $3,402,000, expiring in 2006.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Distributions to shareholders, which are
determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of distributions made during the year from net investment income or
net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 Year Ended December 31, 1998
------------------------------ -------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 6,950,070 $ 76,291,148 15,303,847 $ 171,699,925
Dividends and distributions reinvested 2,201,405 23,246,834 1,300,031 14,807,349
Redeemed (7,346,627) (80,354,752) (12,094,532) (135,374,607)
---------- ------------ ----------- -------------
Net increase 1,804,848 $ 19,183,230 4,509,346 $ 51,132,667
========== ============ =========== =============
</TABLE>
24 Oppenheimer High Income Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
3. Unrealized Gains and Losses on Securities
As of June 30, 1999, net unrealized depreciation on investments of $14,689,832
was composed of gross appreciation of $7,382,597, and gross depreciation of
$22,072,429.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund provides for a fee of 0.75% of the first $200
million of average annual net assets, 0.72% of the next $200 million, 0.69% of
the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200
million and 0.50% of average annual net assets over $1 billion. The Fund's
management fee for the six months ended June 30, 1999, was 0.74% of average
annual net assets.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer agent for the Fund and is responsible for maintaining the shareholder
registry and shareholder accounting records for the Fund. OFS provides these
services at cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuation. Risks to the Fund include the
potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of June 30, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Dates Amounts (000s) June 30, 1999 Appreciation Depreciation
- ------------------------------------------------------------------------------------------------------------------------------
Contracts to Sell
- -----------------
<S> <C> <C> <C> <C> <C>
British Pound Sterling (GBP) 7/15/99 44,800 GBP 7,062,475 $157,370 $ --
Canadian Dollar (CAD) 7/15/99 5,400 CAD 364,932 -- 10,217
Euro (EUR) 12/1/99 8,100 EUR 845,100 1,328 --
-------- -------
Total Unrealized Appreciation and Depreciation $158,698 $10,217
======== =======
</TABLE>
Oppenheimer High Income Fund/VA 25
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
6. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund may recognize a realized gain or loss when the contract is
closed or expires.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
================================================================================
7. Illiquid or Restricted Securities
As of June 30, 1999, investments in securities included issues that are illiquid
or restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of June 30, 1999 was $31,369,248, which
represents 9.30% of the Fund's net assets, of which $3,506,369 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Per Unit as of
Security Dates Unit June 30, 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
- -----
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.00% 102.25%
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95- 100.00-
8/13/96 105.75 116.10
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08. 3/19/98 101.00 99.00
Stocks and Warrants
- -------------------
CGA Group Ltd., Preferred Stock, Series A 6/17/98-
12/29/98 $ 25.00 $ 25.00
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .03
ECM Fund, L.P.I. 4/14/92 1,000.00 885.00
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 28.94
</TABLE>
26 Oppenheimer High Income Fund/VA
<PAGE>
Oppenheimer High Income Fund/VA
A Series of Oppenheimer Variable Account Funds
<TABLE>
=======================================================================================
<S> <C>
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, President
Robert G. Avis, Trustee
William A. Baker, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
David P. Negri, Vice President
Thomas P. Reedy, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Vice President and Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
=======================================================================================
Investment Advisor OppenheimerFunds, Inc.
=======================================================================================
Transfer Agent OppenheimerFunds Services
=======================================================================================
Custodian of Portfolio Securities The Bank of New York
=======================================================================================
Independent Auditors Deloitte & Touche LLP
=======================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been
taken from the records of the Fund without
examination of the independent auditors.
This is a copy of a report to shareholders of
Oppenheimer High Income Fund/VA. This report must be
preceded or accompanied by a Prospectus of
Oppenheimer High Income Fund/VA. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount
invested.
</TABLE>
Oppenheimer High Income Fund/VA 27
