<PAGE>
ANNUAL REPORT
DECEMBER 31, 1998
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OPPENHEIMER VARIABLE ACCOUNT FUNDS
DECEMBER 31, 1998
ANNUAL REPORT [LOGO] OPPENHEIMERFUNDS-Registered Trademark-
THE RIGHT WAY TO INVEST
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
OBJECTIVE
OPPENHEIMER MONEY FUND, a series of Oppenheimer Variable Account Funds,
primarily seeks maximum current income in "money market" securities and other
obligations that offer individual investors low capital risk and the maintenance
of liquidity. These may include short-term U.S. government securities,
certificates of deposit (CDs), bankers' acceptances and commercial paper.
NARRATIVE BY CAROL WOLF, CO-PORTFOLIO MANAGER
When international markets become unsteady, investors around the world often
look to U.S. government securities for safety and security, bypassing
high-quality money market instruments such as short-term borrowings issued by
blue-chip corporations. That clearly took place in much of 1998, as Asia's
financial crisis continued to form a backdrop to the global economy. At various
times during the year, demand for Treasury bills surged, boosting prices and
reducing yields, particularly in late summer as Russia's economy weakened.
After Russia defaulted on much of its debt and allowed its currency to fall
sharply in value, emerging markets around the world were suddenly perceived as
extremely risky. Even high-quality U.S. corporate debt suffered because of the
slight credit risk involved. To attract new investors, corporations had to offer
yields considerably higher than risk-free U.S. Treasury securities.
The result? High-quality money market instruments that carried only slightly
higher credit risk offered very attractive yields compared to Treasury bills.
That's one reason why Oppenheimer Money Fund, which invests in a mixture of
certificates of deposit, letters of credit, commercial paper and other money
market instruments, was able to offer healthy returns.(1)
For the fiscal year that ended December 31, 1998, Oppenheimer Money Fund
produced a compounded annual yield of 5.26%. Without compounding, the
corresponding yield was 5.13%. The seven-day annualized yields, with and without
compounding, on December 31, 1998, were 4.92% and 4.81%, respectively.(2) It is
important to remember that an investment in the Fund is neither insured nor
guaranteed by the U.S. government, and there is no assurance that the Fund will
be able to maintain a stable $1.00 share price in the future.
As money-market investors, we keenly follow the actions of the Federal Reserve
Board, which determines short-term interest rates for member banks. In the fall,
the Fed cut short-term interest rates three times in an effort to stimulate the
economy, and dozens of central banks around the world followed suit. The result
of this concerted action was a major rally in stock markets, as well as the
continuation of moderate economic growth in the United States.
Although the Fed was able to stimulate economic growth here in America, much of
Europe is sluggish while most of Asia remains in a recession. With inflation
throughout the world extremely low by historical standards, interest rates are
likely to decline further, and so, we have extended the maturity of the
portfolio in order to earn today's rates for a longer period of time. As
interest rates declined, a portfolio of longer-maturity securities yielding
higher rates translated into higher yields for our investors.
Last but not least, we continue to be especially diligent in our analysis of
credit quality. During the period, we discontinued our investment in securities
issued by certain multinational banks with significant exposure to Asia.
Although we will continue to search for yield, our objectives of safety and
liquidity come first.
Thank you for your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Money Fund. We look forward to helping you reach your investment
goals of safety, liquidity and attractive yield, our commitment to you as THE
RIGHT WAY TO INVEST.
- ----------------------------
1. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
2. Compounded yields assume reinvestment of dividends, and do not include the
charges associated with the separate account products which offer this fund.
Past performance is not indicative of future results. Yields will fluctuate.
1
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
OBJECTIVE
OPPENHEIMER HIGH INCOME FUND, a series of Oppenheimer Variable Account Funds,
seeks a high level of current income from investing in high-yield, high-risk
fixed-income securities, including unrated securities or securities in the lower
rating categories. These securities may be considered to be speculative.
Investing in foreign securities entails additional expenses and risks including
foreign currency fluctuations while investing in junk bonds carries a greater
risk of default.
NARRATIVE BY TOM REEDY, PORTFOLIO MANAGER
Oppenheimer High Income Fund provided generally positive returns during 1998,
although most gains were achieved during the first half of the year when
fixed-income investors appeared encouraged by strong economic growth and low
inflation in the United States. While many analysts warned that the financial
crisis in Southeast Asia and persistent recession in Japan were likely to
adversely affect U.S. corporate earnings and economic growth, U.S. investors
appeared unconcerned.
In contrast, the second half of the year was extremely volatile for the markets
in which the Fund invests. Investor sentiment turned negative at mid-year when
the Asian financial crisis spread to Russia, which effectively defaulted on its
government bonds. The spread of the "Asian contagion" to other emerging markets
renewed concerns that developed markets might suffer, and investors shifted
their assets away from investments they perceived as risky. Emerging-market
debt, preferred stocks and high-yield corporate bonds were particularly hard hit
during this "flight to quality."
Despite our efforts to position the portfolio relatively defensively prior to
the markets' decline, the Fund's performance was adversely affected during the
third quarter of the year. In fact, in the latter part of the spring, we became
concerned that prices on many high-yield securities had risen to the high end of
their valuation ranges, making them more vulnerable to any future
disappointments. At that time, we reduced our exposure to the high-yield
corporate and emerging markets, and we increased our cash position to more than
10% of the Fund's total assets.
We also modified the portfolio's composition during the second half of the year,
adding to those market sectors that we believed would maintain their values
during a downturn, and shifting assets away from sectors that we regarded as
most vulnerable. For example, we established a position in U.S. Treasury
securities, which provided positive returns even as prices of other bonds
declined. That's because U.S. Treasury securities were considered a safe haven
by many investors, and demand for direct obligation of the federal government
soared when perceptions of risk increased.
Within the high-yield corporate portion of the portfolio, we received relatively
good results from our holdings of bonds issued by media companies, including
broadcasters and cable television firms. Companies whose earnings are sensitive
to fluctuations in economic conditions also performed relatively well in a
low-inflation, moderate-growth environment. On the other hand, the portfolio's
performance was hurt by our holdings in the energy and telecommunications
industries, which were relatively hard-hit during last summer's sell-off.
When the fourth quarter of the year began, many of the markets' concerns about
the global financial crisis began to abate. Investors appeared encouraged when
the International Monetary Fund, the U.S. Federal Reserve Board and other
nations' central banks announced measures designed to stimulate global economic
growth. Perhaps most significant, the Japanese government announced plans to
restructure its ailing banking system and boost its economy. With a possible end
to the financial crisis in sight, financial markets worldwide rebounded
strongly, retracing much - but not all - of their previous declines.
During the rebound, we took advantage of opportunities to redeploy some of our
cash reserves and shift assets from U.S. Treasury securities to higher-yielding
bonds. We emphasized quality for these new purchases, focusing on higher-rated
corporate bonds and proceeding cautiously with regard to our investments in the
emerging markets. We also continued to focus on industries where we identified
good growth prospects, such as cable television and telecommunications
companies.
Looking forward, we are cautiously optimistic. Although U.S. economic growth may
continue to moderate in response to global financial problems, we believe that
the domestic economy will continue to expand in an environment characterized by
low inflation and a monetary policy biased toward lower interest rates. In our
view, despite the likelihood of above-average volatility over the near term,
these conditions should prove favorable for high-income securities. Furthermore,
we believe that last summer's market declines created some areas of compelling
value, and we are hopeful that the Fund will benefit as these securities' prices
return to more normal levels. Through it all, Oppenheimer Variable Account Funds
- -Oppenheimer High Income Fund's disciplined investment approach will help make
it an important part of THE RIGHT WAY TO INVEST.
2
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MANAGEMENT'S DISCUSSION OF PERFORMANCE. During High Income Fund's fiscal year
that ended December 31, 1998, stock and bond markets worldwide experienced
considerable instability, with particular tumult felt in Southeast Asia, Russia
and Latin America. In the bond market, yields on U.S. Treasury securities
declined to record lows before rising modestly late in the year. High-yield
corporate bonds were particularly hard hit in 1998, as investors flocked to the
relative security of U.S. government bonds. The Fund reduced its exposure to
high-yield corporate bonds and emerging market bonds, while increasing its cash
position in the late spring -- prior to the market's decline. In the third
quarter, the Manager shifted assets toward market sectors believed to be able to
maintain their value in a downturn, including U.S. government agencies and U.S.
Treasury securities. These positions provided positive returns even as prices of
other bonds declined over the period. In the fourth quarter, the Manager took
advantage of market conditions and shifted assets away from U.S. Treasury
securities to higher-yielding bonds. The Fund's portfolio holdings, allocations
and management strategies are subject to change.
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COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares.
The Fund's performance is compared to the performance of the Merrill Lynch High
Yield Master Index, an unmanaged index of fixed-rate, coupon-bearing bonds with
an outstanding par, which is greater than or equal to $100 million, a maturity
range greater than or equal to one year and a credit rating which must be rated
lower than BBB/Baa3 (by Standard & Poor's or Moody's, respectively) but higher
than C/D (bonds in default). This index is used as a measure of the performance
of the high-yield corporate bond market -- the market in which High Income Fund
principally invests. Index performance reflects the reinvestment of dividends
but does not consider the effect of capital gains or transaction costs, and none
of the data in the graph shows the effect of taxes. The Fund's performance
reflects the effects of Fund's business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's performance, it
must be noted that the Fund's investments are not limited to the investments in
the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer High Income Fund and Merrill Lynch High Yield Master Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MERRILL LYNCH HIGH YIELD MASTER
OPPENHEIMER HIGH INCOME FUND INDEX
<S> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $10,485 $10,415
12/31/90 $10,972 $9,970
12/31/91 $14,693 $13,417
12/31/92 $17,325 $15,853
12/31/93 $21,888 $18,578
12/31/94 $21,193 $18,356
12/31/95 $25,509 $22,017
12/31/96 $29,401 $24,453
12/31/97 $32,992 $27,589
12/31/98 $33,092 $28,600
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 0.30% 5 YEAR 8.62% 10 YEAR 12.71%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
Past performance is not predictive of future performance.
3
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
OBJECTIVE
OPPENHEIMER BOND FUND, a series of Oppenheimer Variable Account Funds, primarily
seeks a high level of current income. The Fund invests in fixed-income
securities. Secondarily, the Fund seeks capital growth when this is consistent
with its primary objective. The Fund may invests in securities in the lower
rating categories, commonly know as "junk bonds," which are subject to a greater
risk of default.
NARRATIVE BY DAVID NEGRI AND JOHN KOWALIK, CO-PORTFOLIO MANAGERS
During one of the most challenging and volatile periods in the history of the
fixed-income markets, Oppenheimer Bond Fund provided positive performance for
the one-year period that ended December 31, 1998.
Both domestic and global economic forces affected the Fund's performance over
the period. During the first half of the year, positive domestic economic
conditions provided a generally favorable environment for the Fund's
investments. Economic growth in the United States was strong while inflation
remained near historically low levels. Corporate bonds of all types performed
especially well because of strong corporate earnings growth. U.S. government
securities provided slightly lower returns.
However, during the second half of the year, widespread economic difficulties in
emerging markets throughout the world sparked fears of a global economic
slowdown. Signs began to appear that U.S. corporate profit growth was suffering
as a result of weakening global demand for a wide range of products. As
investors grew increasingly concerned about the impact of these developments on
the U.S. economy, they became reluctant to invest in corporate debt securities
of any kind. Instead, they turned for shelter to the relative safety of U.S.
Treasury instruments.
These trends culminated in the remarkable events of October. With investors
throughout the world searching for safe, high-quality securities, and with
shrinking demand for other debt instruments, Treasuries began to perform much
more strongly than other types of bonds. The "spread" in the relative yield of
Treasuries versus all other types of bonds widened to extreme levels. High-yield
corporate bonds, which had been the top-performing sector during the first half
of the year, were hit especially hard. Performance of corporate investment grade
securities, as well as commercial and government mortgage-backed securities also
suffered relative to Treasuries.
Then, on October 15, 1998, the Federal Reserve Board (the Fed) stepped in with a
surprise cut in government lending rates. By signaling the Fed's willingness to
act decisively in attempting to avoid a recession in the United States, the move
bolstered investor confidence. As a result, the various bond sectors in which
the Fund invests began to return to their historic relationships to Treasuries.
These economic events offered both challenges and opportunities to the Fund.
During the first half of the year, we made some modest changes to our
allocations to increase our holdings of higher yielding securities. For the
first time, we began adding a small allocation of high yield securities to the
portfolio. We believe high yield securities increase the Fund's diversification
and add new opportunities for higher returns with relatively little additional
risk. We also slightly increased our holdings of commercial mortgage-backed
securities while decreasing our holdings of lower-yielding mortgage-backed
securities issued by U.S. government agencies.
As the non-U.S. Treasury bond markets began to slide during the second half of
the year, we adhered to our disciplined approach to investing and avoided
overreacting to the market's volatility. By maintaining our vigilance and
keeping transaction costs to a minimum, we prepared the Fund to participate in
the corporate bond rally that followed the Fed's October rate cut. As the rally
took shape, we shifted some of the Fund's resources out of Treasuries and cash,
and added to our investment grade corporate holdings in the financial and
industrial sectors. We also increased our holdings of mortgage-backed
securities.
Another strategy we employed was to slightly increase the Fund's AVERAGE
DURATION throughout the year. Duration is a measure of a bond's sensitivity to
changes in interest rates. The longer a portfolio's average duration, the higher
the return investors are likely to receive when interest rates fall, and vice
versa. In anticipation of continued low inflation, we extended the portfolio's
duration throughout the period, which enabled us to benefit from the Fed's rate
cuts and the resulting lower interest rates.
Looking forward, we expect U.S. corporate earnings to continue growing and
inflation to remain low, providing a generally favorable environment for bonds
in the United States. Although spreads between Treasuries and the other bond
sectors in which the Fund invests have narrowed since mid-October, they remain
relatively wide by historical measures. Therefore, we see additional
opportunities to take advantage of attractive bond prices in the corporate and
commercial sectors.
4
<PAGE>
Of course, we will continue to monitor the U.S. economy and bond market
carefully. We remain dedicated to our strict discipline of investing to deliver
solid income potential from a broadly diversified portfolio of quality
securities. That's what makes Oppenheimer Variable Account Funds - Oppenheimer
Bond Fund part of THE RIGHT WAY TO INVEST.
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MANAGEMENT'S DISCUSSION OF PERFORMANCE. An economic environment of strong
domestic growth, low inflation and global uncertainty characterized the Fund's
fiscal year that ended December 31, 1998. Bond Fund increased its holdings of
higher yielding securities during the first half of the year. The Manager also
slightly increased allocations of commercial mortgage-backed securities while
decreasing lower-yielding mortgage-backed securities issued by U.S. government
agencies. As the non-U.S. Treasury bond markets declined during the second half
of the year, the Manager maintained a disciplined investment approach. As a
result, the Fund participated in the corporate bond rally that followed the
Fed's October rate cut. During this time, the Manager shifted some resources out
of Treasuries and cash, and added to investment-grade corporate holdings in the
financial and industrial sectors, while increasing the Fund's mortgage-backed
security position. The Fund's portfolio holdings, allocations and management
strategies are subject to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares.
The Fund's performance is compared to the performance of the Lehman Brothers
Corporate Bond Index, an unmanaged index of publicly-issued non-convertible
investment grade corporate debt of U.S. issuers, widely recognized as a measure
of the U.S. fixed-rate corporate bond market. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital gains or
transaction costs, and none of the data in the graphs that follow shows the
effect of taxes. The Fund's performance reflects the effects of Fund's business
and operating expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Bond Fund and Lehman Brothers Corporate Bond Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
OPPENHEIMER BOND CORPORATE
FUND BOND INDEX
<S> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $11,332 $11,409
12/31/90 $12,229 $12,213
12/31/91 $14,385 $14,474
12/31/92 $15,321 $15,732
12/31/93 $17,318 $17,644
12/31/94 $16,983 $16,950
12/31/95 $19,869 $20,721
12/31/96 $20,822 $21,402
12/31/97 $22,748 $23,592
12/31/98 $24,296 $25,615
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 6.80% 5 YEAR 7.01% 10 YEAR 9.28%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
Past performance is not predictive of future performance.
5
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
OBJECTIVE
OPPENHEIMER AGGRESSIVE GROWTH FUND, a series of Oppenheimer Variable Account
Funds, primarily seeks capital appreciation by investing in "growth-type"
companies. Prior to May 1, 1998, this Fund was named Oppenheimer Capital
Appreciation Fund.
NARRATIVE BY BRUCE BARTLETT, PORTFOLIO MANAGER
1998 was a challenging year for Oppenheimer Aggressive Growth Fund. Strong
performance in the first half of the year was driven by a favorable environment
for large-capitalization stocks, which continued to lead the U.S. markets higher
in a growing economy characterized by low inflation. However, at the start of
the third quarter, stock markets worldwide declined sharply in response to the
spread of the global financial crisis from Southeast Asia to other emerging
markets in Russia and Latin America.
Technology, small-capitalization and mid-capitalization stocks - all of which
are represented in the portfolio - were particularly hard-hit during last
summer's market declines. Many U.S. technology companies sell their products and
services to businesses and consumers in Europe and Asia, and investors became
concerned that earnings would suffer if economic weakness overseas reduced
demand.
Small- and mid-capitalization stocks had lagged their large-capitalization
counterparts for several years, primarily because investors were able to find
good earnings growth in large, well-established companies. Yet, small- and mid-
cap stocks fell more sharply than large-cap stocks during the market correction
because, when the global financial crisis spread, investors shifted their assets
away from investments they perceived as risky. Investors favored large,
blue-chip companies and U.S. Treasury bonds during this "flight to quality," and
they avoided the stocks of small-and medium-sized companies.
When the fourth quarter of the year began, many concerns about the global
financial crisis began to abate. Investors appeared encouraged when the
International Monetary Fund, the U.S. Federal Reserve Board and other nations'
central banks announced measures designed to stimulate global economic growth.
With a possible end to the financial crisis in sight, financial markets
worldwide rebounded strongly, gaining back much - but not all - of their
previous declines.
In this volatile environment, we maintained our longstanding investment
approach, evaluating opportunities on a company-by-company basis rather than
focusing on broad market or economic trends. This "bottom-up" approach led us to
opportunities concentrated in certain industries. For example, we increased our
exposure to the technology industry throughout the year because we continued to
find companies achieving very attractive levels of revenue and earnings growth.
Within the technology sector, we focused on companies that develop networking
and productivity-enhancing software for businesses. We also found attractive
opportunities in manufacturers of telecommunications and Internet-related
equipment. We believe that these companies are well positioned to satisfy the
growing need for voice, image and data transmission services. In addition, we
increased our holdings of specialty retail companies likely to benefit from a
growing consumer economy, low levels of unemployment and low interest rates.
On the other hand, our investment approach led us to reduce our exposure to
certain market sectors, including the health care services industry. Our health
care holdings have been relatively disappointing because competitive and
regulatory pressures have constrained these companies' ability to increase
revenues. Similarly, physician practice management companies have had difficulty
operating profitably under the pricing pressures imposed by managed care
providers such as health maintenance organizations.
Looking forward, we are optimistic about the Fund's potential in 1999. That's
because we expect a particularly positive environment for growth investing.
While the U.S. economy should continue to grow more slowly, we see little
evidence of a recession. In this environment, we believe that the earnings
growth potential of the small- and mid-cap companies in the portfolio should
significantly exceed that of larger companies because smaller companies are
often better able to increase their market share when economic growth is slow.
Yet, the valuations of the companies in the portfolio - as measured by comparing
their stock prices to expected earnings - are only slightly higher than the
large-capitalization marketplace. Therefore, we believe that we are paying only
a small premium for a substantial amount of incremental earnings. Our diligent
approach to investing in growth companies should help the Fund maintain its
focus on companies with high levels of sustainable earnings growth derived
primarily from higher revenues. That's what makes the Oppenheimer Variable
Accounts Funds - Oppenheimer Aggressive Growth Fund an important part of THE
RIGHT WAY TO INVEST.
6
<PAGE>
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MANAGEMENT'S DISCUSSION OF PERFORMANCE. An economic environment of strong
domestic growth, low inflation and global uncertainty characterized Aggressive
Growth Fund's fiscal year that ended December 31, 1998. The Fund maintained its
longstanding investment approach of evaluating opportunities company-by-company.
This "bottom-up" approach led to purchases concentrated in certain industries
such as technology and telecommunications, as well as specialty retail
companies. The Fund reduced its exposure to the healthcare services industry, in
particular, over the period. The Fund's portfolio holdings, allocations and
management strategies are subject to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares.
The Fund's performance is compared to the performance of the S&P 500 Index, a
broad-based index of equity securities widely regarded as a general measurement
of the performance of the U.S. equity securities market. Index performance
reflects the reinvestment of dividends but does not consider the effect of
capital gains or transaction costs, and none of the data in the graph shows the
effect of taxes. The Fund's performance reflects the effects of Fund's business
and operating expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Aggressive Growth Fund and S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPENHEIMER AGGRESSIVE GROWTH S&P 500
FUND INDEX
<S> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $12,757 $13,163
12/31/90 $10,611 $12,754
12/31/91 $16,417 $16,631
12/31/92 $18,949 $17,896
12/31/93 $24,126 $19,696
12/31/94 $22,295 $19,955
12/31/95 $29,545 $27,445
12/31/96 $35,521 $33,743
12/31/97 $39,667 $44,997
12/31/98 $44,570 $57,854
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 12.36% 5 YEAR 13.06% 10 YEAR 16.12%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
Past performance is not predictive of future performance.
7
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
OBJECTIVE
OPPENHEIMER GROWTH FUND, a series of Oppenheimer Variable Account Funds, seeks
capital appreciation from investments in securities of well-known and
established companies. The Fund's focus is in securities of mid- or large-cap
companies with a history of earnings and dividend growth.
NARRATIVE BY JANE PUTNAM, PORTFOLIO MANAGER
During the first half of the year, positive domestic economic conditions
provided a generally favorable environment for the Fund's investments. Economic
growth in the United States was strong while inflation remained near
historically low levels. We maintained an investment strategy based on our
belief that inflation would remain low and that corporate earnings would
continue to grow, though more slowly than in the recent past.
On one hand, we focused on companies we believed were likely to grow strongly
even in a slowing economy. We found our greatest high growth opportunities among
technology companies, such as Microsoft; in investment-related financial
companies, such as Travelers Group; and in consumer cyclicals, such as the
cruise line company, Carnival. On the other hand, we allocated some of the
Fund's assets to companies we considered "defensive" because we not only expect
them to grow faster than the market, but we also have a high degree of
confidence in that growth potential. These included consumer-oriented companies,
such as the grocery and drug chains Safeway and CVS, that have improved their
earnings outlook through positive developments such as management changes or
effective corporate restructuring.(1)
This two-pronged approach served the Fund's investors well during the first six
months of the period. However, during the second half of the year, widespread
economic difficulties in emerging markets throughout the world sparked fears of
a global economic slowdown. Signs began to appear that U.S. corporate profit
growth was suffering as a result of weakening global demand for a wide range of
products. As investors grew increasingly concerned about the impact of these
developments on the U.S. economy, they sought to avoid risk by shifting assets
to the safest possible instruments: cash and U.S. Treasury bonds.
Although our defensive holdings maintained their value relatively well, other
sectors in which the Fund's assets were invested fell sharply. At the same time,
the company and market fundamentals on which our investments were based remained
largely unchanged. As stock prices fell, we continued to believe that the
companies we had selected, especially those among the technology and consumer
cyclical sectors, offered excellent potential for growth.
Accordingly, we viewed falling prices in these sectors as an opportunity to
increase selected holdings at bargain prices. During September and early
October, we put much of the Fund's cash to work purchasing relatively low-priced
shares of attractive technology companies, such as Cisco Systems and Tellabs. We
also increased our holdings of consumer cyclicals on a company-by-company,
investment-by-investment basis. As a result, when market sentiment turned
abruptly positive again in mid-October and these sectors rallied, the Fund
gained sharply.
Going forward, we plan to adhere to our fundamental approach of seeking growth
at the right price. We believe that the U.S. economy's growth is likely to be
slowed by the continuing impact of events throughout the world, but that
opportunities for strong growth remain. As a result, we are maintaining our
focus on domestic, consumer-oriented companies with the potential for above
average growth in a slowing economy.
We continue to believe companies offering technologies that improve productivity
and enhance communications will help drive the economy's future growth.
Likewise, we believe companies that cater to consumers' growing wealth and
financial companies that help meet the world's increasing need for investment
and retirement products hold potential for success. Our goal is to identify the
specific companies most likely to succeed, and to invest in them at a reasonable
price.
In today's volatile economic environment, we believe our disciplined approach
and emphasis on individual stock selection should serve investors well. That's
why we're pleased that Oppenheimer Variable Account Funds - Oppenheimer Growth
Fund continues to be part of THE RIGHT WAY TO INVEST.
- ----------------------------
1. The Fund's portfolio is subject to change.
8
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PERFORMANCE. An economic environment of strong
domestic growth, low inflation and global uncertainty characterized Growth
Fund's fiscal year that ended December 31, 1998. The U.S. stock market climbed
to record levels through July before correcting sharply in the third quarter and
rebounding to new highs in the fourth quarter of 1998. The Fund focused on
companies believed likely to maintain strong growth in a slowing economy. The
greatest high-growth opportunities were found among technology companies,
investment-related financial companies and consumer cyclicals. The Fund also
invested in "defensive" companies - those expected to grow faster than the
overall market - including consumer-oriented companies, such as grocery and drug
store chains. The Fund's portfolio holdings, allocations and management
strategies are subject to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares. The Fund's performance is compared to the performance of
the S&P 500 Index, a broad-based index of equity securities widely regarded as a
general measurement of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but does not consider
the effect of capital gains or transaction costs, and none of the data in the
graph shows the effect of taxes. The Fund's performance reflects the effects of
Fund's business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Growth Fund and S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPENHEIMER S & P 500*
GROWTH FUND INDEX
<S> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $12,358 $13,163
12/31/90 $11,344 $12,754
12/31/91 $14,241 $16,631
12/31/92 $16,309 $17,896
12/31/93 $17,492 $19,696
12/31/94 $17,662 $19,955
12/31/95 $24,135 $27,445
12/31/96 $30,218 $33,743
12/31/97 $38,281 $44,997
12/31/98 $47,469 $57,854
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 24.00% 5 YEAR 22.10% 10 YEAR 16.85%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gain distributions.
Past performance is not predictive of future performance.
9
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
OBJECTIVE
OPPENHEIMER MULTIPLE STRATEGIES FUND, a series of Oppenheimer Variable Account
Funds, seeks a total investment return, which includes current income and
capital appreciation, from investments in common stocks and other equity
securities, bonds and other debt securities and money market securities.
NARRATIVE BY RICHARD RUBINSTEIN, CO-PORTFOLIO MANAGER
Sharp declines in some of the world's equity and bond markets limited the
performance of Oppenheimer Multiple Strategies Fund during 1998. Nevertheless,
our strategy of broad diversification across asset classes and investment styles
enabled us to limit our losses and realize current income while taking advantage
of opportunities that arose in this very challenging environment.
Throughout the past year, Asian markets experienced complex economic
difficulties. With no resolution to Asia's problems in sight, and with Russia
facing an economic and political crisis of its own, investors began to lose
confidence in emerging markets throughout the world. As a result, emerging stock
and bond markets suffered sharp losses.
The impact was felt in developed markets as well. Many U.S. and European
multi-national companies saw profits decline as foreign demand for products
weakened. Financial institutions with exposure to emerging markets suffered from
concerns over asset quality. In bonds, as spreads widened, the performance of
corporate and high yield bonds suffered.
Within the United States, corporate profit growth slowed and average stock
prices experienced dramatic fluctuations. Much of the equity market's strength
became concentrated among the largest and most visible companies. On the other
hand, the U.S. Treasury market responded favorably to an environment of slowing
growth and continuing low inflation. Long-term U.S. Treasury bonds performed
well throughout the period, providing investors with a combination of
competitive yields and capital appreciation.
As of December 31, 1998, the Fund's invested assets were allocated 49.1% to
stocks, 40.8% to bonds and 10.1% to cash.1 Not surprisingly, considering its
diversified nature, the Fund shared in both the strengths and weaknesses of the
financial markets. By maintaining the Fund's exposure to a wide range of U.S.
and global equities and bonds, we enabled shareholders to participate in
attractive investment opportunities, while not putting too many eggs in any one
basket.
Because we were concerned about relatively high valuations in U.S. equities, we
sold some of our most successful holdings during the period to lock in profits.
We reallocated those assets to cash and the fixed-income markets. During
October, many of our remaining positions suffered as equity markets weakened.
For example, the value of our technology holdings fell as a result of the crisis
in Asia, a major market for technology products. Many of our financial stocks
were negatively affected by concerns over their exposure to emerging market
loans. Oil service stocks dropped in the face of slackening global energy demand
and lower oil prices. Since October, the equity market has recovered
significantly.
We responded by focusing on high quality companies in areas that we believe
continue to hold significant potential for future growth. With stocks beaten
down throughout these sectors, many of the best companies in their respective
industries were available at prices we believed to be excellent values.
Therefore, we took the opportunity to trade up to companies we considered likely
to be among the first to rebound when conditions again became favorable.
We also found selected opportunities in emerging markets. Stock prices in many
of these markets fell without regard for the strengths and weaknesses of
individual companies. Even companies with stable finances, recession-resistant
products and strong balance sheets saw their stock prices fall. We cautiously
explored these markets for such opportunities, and made small investments in a
few companies that met our criteria.
- ----------------------------
1. The Fund's portfolio is subject to change.
10
<PAGE>
Our approach to fixed-income investing is to diversify the Fund's assets among
U.S. Treasury securities, high-yield corporate bonds and foreign bonds. This
approach enables us to capture extra yield while reducing risks over the long
term. That's because these three bond markets generally react differently to
changing environments. For example, within the U.S. Treasury market, the main
risk is interest rates; within foreign bond markets, the major risk is currency
fluctuation; and for high-yield corporate bonds, the greatest risk is credit. By
participating in all three markets, we've been able to earn incrementally higher
yields because we've always enjoyed some exposure to whichever areas are
performing more favorably under existing conditions.
As we mentioned earlier, the Fund's portfolio of U.S. Treasuries performed
particularly well this year. We also took advantage of volatility in overseas
fixed-income markets, particularly in Latin America. During the first half of
this fiscal year, we purchased Brady Bonds of developed countries, which are
U.S. dollar-denominated. As the value of those bonds increased, we took the
opportunity to sell some of our holdings.
We remain cautiously optimistic about the market's prospects over the coming
months. Although economies in Asia and Russia continue to struggle, the rest of
the world has thus far weathered the situation fairly well. In Europe, companies
are beginning to benefit from the management changes and corporate
restructurings that helped U.S. companies become more efficient over the past
decade. In the United States, consumer spending is slowing, but still remains
strong.
The last twelve months of volatility and uncertainty illustrate the importance
of a broad-based investment strategy. We remain dedicated to our highly
diversified approach as we face the challenges ahead, searching for attractive
investments throughout the world. It's a strategy that in the past has generally
served our shareholders well...and that we believe continues to make Oppenheimer
Variable Account Funds - Oppenheimer Multiple Strategies Fund part of THE RIGHT
WAY TO INVEST.
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PERFORMANCE. An economic environment of strong
domestic growth, low inflation and global uncertainty characterized Multiple
Strategies Fund's fiscal year that ended December 31, 1998. Stock and bond
markets worldwide experienced considerable instability, with particular tumult
felt in Southeast Asia, Russia and Latin America. The U.S. stock market climbed
to record levels through July before correcting sharply in the third quarter and
rebounding to new highs in the fourth quarter of 1998. In the bond market,
yields on U.S. Treasury securities declined to record lows before rising
modestly late in the year. The Fund maintained its exposure to a wide range of
U.S. and global equities and bonds throughout the fiscal year, but focused on
cash and fixed-income investments during the heightened market volatility. The
Fund held equity positions in the technology, financial and oil services
industries. In addition to U.S. Treasury securities, the Fund also purchased
Brady Bonds of developed countries, which are U.S. dollar-denominated. The
Fund's portfolio holdings, allocations and management strategies are subject to
change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares.
The Fund's performance is compared to the performance of the S&P 500 Index and
the Lehman Brothers Aggregate Bond Index. The S&P 500 Index is a broad-based
index of equity securities widely regarded as a general measurement of the
performance of the U.S. equity securities market. The Lehman Brothers Aggregate
Bond Index is a broad-based, unmanaged index of U.S. corporate bond issues, U.S.
Government securities and mortgage-backed securities, widely recognized as a
measure of the performance of the domestic debt securities market. Index
performance reflects the reinvestment of dividends but does not consider the
effect of capital gains or transaction costs, and none of the data in the graph
shows the effect of taxes. The Fund's performance reflects the effects of Fund's
business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the indices.
11
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Multiple Strategies Fund, S&P 500 Index and Lehman Brothers
Aggregate Bond Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE S & P 500 LEHMAN BROTHERS
STRATEGIES FUND INDEX AGGREGATE BOND INDEX
<S> <C> <C> <C>
12/31/88 $10,000 $10,000 $10,000
12/31/89 $11,576 $13,163 $11,453
12/31/90 $11,356 $12,754 $12,479
12/31/91 $13,340 $16,631 $14,476
12/31/92 $14,539 $17,896 $15,548
12/31/93 $16,857 $19,696 $17,064
12/31/94 $16,529 $19,955 $16,566
12/31/95 $20,060 $27,445 $19,626
12/31/96 $23,168 $33,743 $20,339
12/31/97 $27,158 $44,997 $22,302
12/31/98 $28,965 $57,854 $24,240
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 6.65% 5 YEAR 11.43% 10 YEAR 11.22%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
Past performance is not predictive of future performance.
12
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
OBJECTIVE
OPPENHEIMER GLOBAL SECURITIES FUND, a series of Oppenheimer Variable Account
Funds, seeks long-term capital appreciation from growth companies worldwide.
NARRATIVE BY BILL WILBY, PORTFOLIO MANAGER
OPPENHEIMER GLOBAL SECURITIES FUND'S performance for the period that ended
December 31, 1998, was consistent with the extreme volatility experienced by the
world's stock markets over the past year.
This past summer's stock market corrections were a response to the spread of the
global financial crisis that began in Asia in late 1997. When it became apparent
during the third quarter of 1998 that the Asian financial crisis had spread to
Russia, investors shifted their assets away from investments they perceived as
risky. Instead, they preferred the relatively safe haven of U.S. government
bonds.
This "flight to quality" contributed to a scarcity of capital in many markets,
especially Latin America. In our opinion, investors pulled capital out of the
region without regard to the fundamental soundness of Latin American business
conditions. As a result, stock prices there plummeted.
With regard to the industrialized markets, in the United States, large,
well-established companies providing consistent earnings growth fueled the
market's rise over the past several years. In the wake of the Asian crisis, some
U.S. companies revealed that their earnings would not meet analysts'
expectations because of reduced overseas demand and increased competitive
pressures domestically. Investors sold stocks that became too expensive relative
to revised earnings forecasts.
Unlike in the United States, the Japanese stock market has been in decline for
several years. Japan's political and economic leadership has so far been unable
to pull the country out of a persistent recession. Only recently has the
Japanese government announced programs designed to begin the restructuring and
recovery process.
Europe has been the bright spot on the financial globe throughout 1998. Although
some European companies' stocks have declined in response to the crises in the
emerging markets, others have continued to prosper as they restructure in
anticipation of the formation of the European Monetary Union (EMU) in 1999.
In this investment environment, our strategy has been to continue to adhere to
our long standing investment philosophy: we seek to build a diversified
portfolio of good companies in good businesses at good prices. For this reason,
we continued to avoid Southeast Asia throughout the year. This strategy proved
to be beneficial to the Fund when it became apparent that the region's financial
problems were worse than many experts originally expected. Instead, we
emphasized the stocks of Europe, which proved to be the top-performing
geographic region for 1998.
We believe that our portfolio of high-quality companies puts us in a good
position to deliver attractive returns as the global markets recover. We're now
finding attractive opportunities in well-managed companies with strong
businesses that, in our view, were unfairly punished in this year's sell-off.
In particular, for much of the year, European financial companies provided
especially attractive returns. That's because European banks, insurance
companies and investment banks have been restructuring in order to become more
efficient. EMU has provided a catalyst for financial institutions to improve
their operations with the purpose of attracting the capital they need to compete
in the European marketplace. However, during the third quarter of 1998, when
European financial stocks were hit in the wake of global turmoil, we sold many
of our positions.
Our outlook for the global stock markets is mixed. We are cautious over the near
term and optimistic over the long term. Economic growth in much of the world is
slowing right now, which has negative implications for corporate earnings in
some markets. However, we believe that most stock markets have already
incorporated lower earnings into stock prices. As a result, we have increasingly
found attractive opportunities in well-managed, fundamentally sound companies.
Regardless of the short-term challenges and opportunities the global stock
markets provide over the next few months, we will continue to maintain a
long-term view of the markets that is measured in years, not weeks or fiscal
quarters. At OppenheimerFunds, we believe that this approach to investing is an
important part of THE RIGHT WAY TO INVEST.
13
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PERFORMANCE. An economic environment of strong
domestic growth, low inflation and global uncertainty characterized the Funds'
fiscal year that ended December 31, 1998. Stock and bond markets worldwide
experienced considerable instability, with particular tumult felt in Southeast
Asia, Russia and Latin America. The Fund maintained a low exposure to Southeast
Asia throughout 1998. Instead, the Fund emphasized the stocks of industrialized
Europe. In particular, the Fund focused on European financial companies and
consumer-oriented companies. The Fund's portfolio holdings, allocations and
management strategies are subject to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares.
The Fund's performance is compared to the performance of the Morgan Stanley
Capital International (MSCI) World Index, an unmanaged index of issuers listed
on the stock exchanges of 20 foreign countries and the United States. It is
widely recognized as a measure of global stock market performance. Index
performance reflects the reinvestment of dividends but does not consider the
effect of capital gains or transaction costs, and none of the data in the graphs
that follow shows the effect of taxes. The Fund's performance reflects the
effects of Fund's business and operating expenses. While index comparisons may
be useful to provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the investments in the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Global Securities Fund and Morgan Stanley Capital International
(MSCI) World Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL MSCI
SECURITIES FUND WORLD INDEX
<S> <C> <C>
11/12/90 $10,000 $10,000
12/31/90 $10,040 $10,046
12/31/91 $10,380 $11,951
12/31/92 $9,642 $11,394
12/31/93 $16,424 $14,029
12/31/94 $15,483 $14,812
12/31/95 $15,830 $17,970
12/31/96 $18,648 $20,485
12/31/97 $22,829 $23,809
12/31/98 $26,050 $29,713
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 14.10% 5 YEAR 9.66% LIFE 12.49%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information in the graph for the MSCI World Index begins on
10/31/90.
The inception date of the Fund was 11/12/90.
Past performance is not predictive of future performance.
14
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
OBJECTIVE
OPPENHEIMER STRATEGIC BOND FUND, a series of Oppenheimer Variable Account Funds,
primarily seeks a high level of current income from debt securities. The Fund
primarily invests in three sectors: foreign fixed-income securities, U.S.
government securities and lower rated high-yield domestic corporate bonds
(commonly know as "junk bonds.") Investing in foreign securities entails
additional expenses and risks including foreign currency fluctuations while
investing in junk bonds carries a greater risk of default.
NARRATIVE BY DAVID NEGRI, CO-PORTFOLIO MANAGER
The month of August was one of the most difficult in memory both for the Fund
and the markets in which it invests. Of the three market sectors in which the
Fund invests - U.S. government, foreign and high-yield bonds - two declined
sharply in August, causing the Fund's net asset value to fall. A severe and
simultaneous decline in two different market sectors is a highly unusual event.
Historically, declines in any one sector tend to be offset by good performance
in the two other sectors.
The emerging-markets segment of the foreign bond sector and the domestic
high-yield bond market both experienced difficulties. Bond prices in the
emerging markets of Southeast Asia began to decline in October 1997, when
currency devaluations forced some overextended Asian companies to default on
their debt. Risk-averse investors pulled their capital out of Southeast Asia and
other emerging markets, causing prices of both bonds and stocks to plummet. In
addition, Japan was slow to enact the reforms necessary to fix their troubled
economy, and this placed further pressure on the emerging markets in Asia.
Meanwhile, Russia was forced to devalue its currency in mid-August because of
the apparent ineffectiveness of a plan by the International Monetary Fund to
support Russia's economy. Finally, plunging oil prices led to fears of currency
devaluation in certain Latin American countries.
Closer to home, the domestic high-yield bond market responded to many of the
same influences that drove the U.S. stock market lower during the third quarter
of 1998. In the wake of the Asian crisis, some U.S. companies revealed that
their earnings would not meet analysts expectations. In response, investors
attempted to sell all but the most creditworthy securities, including high-yield
bonds. In our opinion, they did so without regard to the degree of fundamental
soundness of the individual issuers or business conditions.
The "flight to quality" that negatively influenced stocks and corporate bonds in
the United States affected even relatively high-quality fixed-income investments
such as U.S. agency securities. Despite guarantees from government agencies such
as the Government National Mortgage Association (Ginnie Mae), risk-averse
investors sold these triple-A rated securities in favor of U.S. Treasury
securities, which are considered the most secure investments in the world. In
fact, yields on 30-year Treasury bonds dropped to record low levels.
The Fund benefited from the rally of U.S. Treasury securities because nearly 18%
of the Fund's assets were committed to this market sector as of July 31, before
the foreign and high-yield markets' sharp declines in August. In effect, our
holdings of U.S. Treasury securities served as an anchor for the portfolio.(1)
Our focus continues to be on long-term performance, not short-term volatility.
We will continue to diversify the Fund's assets in varying degrees among U.S.
government, foreign and domestic high-yield bonds. In our view, August 1998 was
an anomaly that is not likely to reoccur anytime soon.
In this uncertain environment, however, effective risk management has become
more important than ever. What's required in nervous markets like this one is a
long-term perspective combined with some tolerance for short-term volatility.
With patience and discipline, we believe that today's short-term challenges
should give way to longer-term opportunities.
In our view, most sectors of the global bond markets are extraordinarily
inexpensive compared to their historical relationships with U.S. Treasury
securities. As a result, we're finding some very attractive values in bonds
that, in our opinion, were unfairly punished in the recent declines. We're
finding particularly good values in North America and Europe.
We are also finding similar values in high-yield bonds. Many corporate bond
prices have declined to levels that appear to reflect a worst-case scenario,
such as a recession in the United States. We believe that a recession is
unlikely in today's low-inflation environment. If and when it becomes clear to
the broader investment community that a recession is unlikely, we expect
corporate bond prices to rise to more normal valuations.
News from overseas markets may continue to be unsettling until evidence appears
that Southeast Asia, Japan, Russia and other troubled economies are on the mend.
On the other hand, we believe that Latin American bonds are generally
undervalued, and we are watchful for opportunities to obtain creditworthy bonds
at attractive prices.
- ----------------------------
1. The Fund's portfolio is subject to change.
15
<PAGE>
In the United States, we remain encouraged by the fundamentals of a resilient
economy, particularly the absence of inflationary pressures. We expect our core
holdings of U.S. Treasury securities to provide a stable foundation from which
we can begin investing opportunistically in carefully selected, higher yielding
domestic and foreign fixed-income securities. In our view, this type of
multi-sector diversification continues to be an important part of THE RIGHT WAY
TO INVEST in the fixed-income markets.
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the Fund's fiscal year that ended
December 31, 1998, stock and bond markets worldwide experienced considerable
instability, with particular tumult felt in Southeast Asia, Russia and Latin
America. In the bond market, yields on U.S. Treasury securities declined to
record lows before rising modestly late in the year. High-yield corporate bonds
were particularly hard hit in 1998, as investors flocked to the relative
security of U.S. government bonds. As a result, Strategic Bond Fund's
allocations to the emerging-markets segment of the foreign bond sector and the
domestic high-yield bond market both experienced difficulties over the period.
However, the Fund benefited from the rally in U.S. Treasury securities that
occurred during the period's "flight to quality." The Fund's portfolio holdings,
allocations and management strategies are subject to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund and is not restated to reflect the
increased management fee rates that took effect on September 1, 1994. If these
charges and expenses were taken into account, performance would be lower. The
graph assumes that all dividends and capital gains distributions were reinvested
in additional shares.
The Fund's performance is compared to the performance of both Lehman Brothers
Aggregate Bond Index and Salomon Brothers World Government Bond Index. The
Lehman Brothers Aggregate Bond Index is a broad-based, unmanaged index of U.S.
corporate bond issues, U.S. Government securities and mortgage-backed
securities, widely recognized as a measure of the performance of the domestic
debt securities market. The Salomon Brothers World Government Bond Index is an
unmanaged index of fixed-rate bonds having a maturity of one year or more, and
is widely recognized as a benchmark of fixed income performance on a world-wide
basis. Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
in the graph shows the effect of taxes. The Fund's performance reflects the
effects of Fund's business and operating expenses. While index comparisons may
be useful to provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the investments in the indices.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Strategic Bond Fund, Lehman Brothers Aggregate Bond Index and
Salomon Brothers World Government Bond Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SALOMON BROTHERS
OPPENHEIMER STRATEGIC LEHMAN BROTHERS U.S. WORLD GOVERNMENT
BOND FUND AGGREGATE BOND INDEX BOND INDEX
<S> <C> <C> <C>
5/3/93 $10,000 $10,000 $10,000
12/31/93 $10,425 $10,466 $10,530
12/31/94 $10,031 $10,161 $10,777
12/31/95 $11,569 $12,038 $12,829
12/31/96 $12,965 $12,475 $13,293
12/31/97 $14,094 $13,680 $13,324
12/31/98 $14,503 $14,868 $15,364
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 2.90% 5 YEAR 6.83% LIFE 6.79%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information in the graph for both indices begins on 4/30/93.
The inception date of the Fund was 5/3/93.
Past performance is not predictive of future performance.
16
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
OBJECTIVE
OPPENHEIMER GROWTH & INCOME FUND, a series of Oppenheimer Variable Account
Funds, seeks high total return, which includes growth in the value of its
shares, as well as current income from equity and debt securities.
NARRATIVE BY MIKE LEVINE, PORTFOLIO MANAGER
A surprisingly strong U.S. economy in early 1998 combined with very low
inflation propelled the equity markets to record highs by mid-July. However, the
global economic crisis, highlighted by the Asian financial crisis and the
Russian currency devaluation, led to a sharp decline in global stock markets in
late summer and increased concerns about slowing economic growth in the U.S. As
these problems and concerns began to unfold, our strategy was to focus more on
companies with limited emerging market exposure, and strong prospects for
relatively stable, predictable earnings in a slowing economic environment.
For example, demands for certain basic needs, including food, shelter, utilities
and routine transportation, continue regardless of whether the economy grows
fast or slowly. That's one reason why we invested in Fred Meyer, Inc., a leading
grocery and general retailer in the Western U.S. In our opinion, Fred Meyer,
Inc. should be able to continue generate above average earnings, even in a
decelerating economy because their revenues are not dependent on the strength of
the economy. Furthermore, Fred Meyer, Inc. was recently acquired by Kroger, one
of the nation's largest supermarket chains, and this should help accelerate Fred
Meyer, Inc.'s growth. Another example of a company is AutoZone, Inc., a leading
auto parts retailer. In a weakened economy, consumers are more likely to repair
their cars than buy new ones.(1)
An additional example of our focus on domestic companies is our emphasis on the
radio industry. The radio industry has an impressive record of over 25 years of
stable profit growth as it continues to gain advertising dollars from the
newspaper and network TV industry. Companies such as CBS Corp. and Jacor
Communications, Inc. have taken advantage of deregulation in the broadcasting
industry to increase the number of stations and market share they control in
selected markets. This additional market share provides economies of scale and
greater penetration of targeted demographic audiences which leads to better
advertising rates.
Although the financial services industry was hit hard during the third quarter,
we continue to have a major focus there. We believe that industry fundamentals
remain positive, driven by low interest rates and positive demographics.
Furthermore, valuations remain appealing. As a result, we increased our holdings
in a number of companies, including Citigroup, Inc., Chase Manhattan Corp. and
BancOne Corp. during the past few months.
In general, our goal is to invest in stocks of companies that exhibit positive
business fundamentals at reasonable prices. We believe that we can also generate
above average investment returns by having the courage to buy stocks that are
temporarily out of favor. This contrarian approach is why we still maintain
exposure in the energy area. Despite the substantial decline in oil prices, we
believe that oil service stocks represent attractive long term value, and that
they should rebound when energy prices recover. Even with the economic slowdown
in Asia, demand for energy continues to grow at 1-2% per year. Meanwhile, OPEC
has been cutting back production, and lower exploration and production budgets
from domestic operators will further curtain production. We believe that growing
demand and shrinking supply will eventually lead to a better environment for
energy companies, ultimately boosting their share prices.
Income generation is also very important in times when markets are volatile.
That's one reason why we have included convertible securities in our portfolio.
Convertible securities are debt or preferred instruments that may be converted
to shares of the issuer's common stock. While their performance is linked to
movements in the underlying stock, their yields may provide some downside
protection. When the stock market corrected sharply during the third quarter, we
reduced our convertible securities holdings from about 13% of the portfolio to
about 8% at the end of the third quarter. The majority of these securities were
redeployed into equities.
Looking into 1999, we remain cautiously optimistic. While we concerned about
high valuation levels, slowing corporate earnings and the continuing impact of
the global economic slowdown, we nevertheless believe that low interest rates,
low inflation and a surprisingly resilient domestic economy provide a positive
environment for equities.
Thank you for your confidence in Oppenheimer Variable Account Funds -
Oppenheimer Growth & Income Fund. We look forward to helping you reach your
long-term investment goals, part of our commitment to you as THE RIGHT WAY TO
INVEST.
- ----------------------------
1. The Fund's portfolio is subject to change.
17
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the Fund's fiscal year that ended
December 31, 1998, stock and bond markets worldwide experienced considerable
instability. The U.S. stock market climbed to record levels through July before
correcting sharply in the third quarter and rebounding to new highs in the
fourth quarter of 1998. During this period, the Fund focused on companies with
little international exposure, as well as consumer-oriented companies believed
likely to withstand a slowing economic environment. The Fund also purchased
stocks of financial services companies, as well as oil services companies. In
addition, the Fund's convertible securities holdings helped the Fund's
performance when the stock market corrected sharply during the third quarter.
The Fund's portfolio holdings, allocations and management strategies are subject
to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund that took effect on September 1, 1994.
If these charges and expenses were taken into account, performance would be
lower. The graph assumes that all dividends and capital gains distributions were
reinvested in additional shares.
The Fund's performance is compared to the performance of the S&P 500 Index, a
broad-based index of equity securities widely regarded as a general measure of
the performance of the U.S. equity securities market. Index performance reflects
the reinvestment of dividends but does not consider the effect of capital gains
or transaction costs, and none of the data in the graphs that follow shows the
effect of taxes. The Fund's performance reflects the effects of Fund's business
and operating expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Growth & Income Fund and S&P 500 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH S & P 500
& INCOME FUND INDEX
<S> <C> <C>
7/5/95 $10,000 $10,000
12/31/95 $12,525 $11,443
12/31/96 $16,598 $14,069
12/31/97 $21,989 $18,761
12/31/98 $23,022 $24,123
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF THE FUND AT 12/31/98
1 YEAR 4.70% LIFE 27.00%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information in the graph for the S&P 500 Index begins on
6/30/95.
The inception date of the Fund was 7/5/95.
Past performance is not predictive of future performance.
18
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
OBJECTIVE
OPPENHEIMER SMALL CAP GROWTH FUND, a series of Oppenheimer Variable Account
Funds, seeks capital appreciation. In seeking its objective, the Fund emphasizes
investments in securities of growth-type companies with market capitalizations
less than $1 billion.
NARRATIVE BY JAY TRACEY, CO-PORTFOLIO MANAGER
1998 has been a sharply negative year for small-cap stocks, and Oppenheimer
Small Cap Growth Fund shared in the overall decline. Market uncertainties
abounded during the period, especially during the summer and fall of 1998.
Investors continued to fear the effects of the Asian crisis, and new worries
surfaced about Russia's financial woes, the spread of the contagion to Latin
America, and the economic slowdown in the United States.
In this unstable stock market, the most prized stocks were those whose earnings
growth seemed most assured and least vulnerable. Investors sought earnings
predictability and trading liquidity, and they generally found it in the
blue-chip stocks of big companies.
We're growth investors, so the Fund's performance tends to be more sensitive in
market downturns, while gaining ground in market upswings. Over the course of
the fiscal year, we emphasized "non-cyclical" companies -- companies that have
the potential to grow steadily without relying on the strength of the overall
economy. This strategy proved to be relatively successful, as the market favored
companies with predictable growth.
Our best results have been achieved in non-cyclical industries such as
healthcare. Serologicals is a good example. This company produces specialty
medical supplies, the demand for which is not economically sensitive. In
technology, we have focused our holdings on software and service firms, which
are typically less affected by the economy than hardware manufacturers.(1)
For similar reasons, the education-related stocks in the Fund's portfolio fared
better than most other small-cap stocks over the past year. One of our holdings
is a for-profit institution that provides vocational training for adults.
Revenues in this company have been consistent. In a good or bad economy, we
believe people will still seek continuing education to advance their careers.
What's more, the company enjoys a strong competitive position. It has a superb
reputation for placing graduates in good jobs. When we combine these reasons, we
see a company whose revenues and earnings are relatively consistent over all
market cycles.
Our holdings in companies with reasonably steady earnings cushioned the Fund's
performance over the past year. We also benefited from our investments in more
typical "growth" companies -- those with rapidly growing earnings.
As a group, small companies tend to depend very little on foreign sales. So, no
matter how the current crises in Asia, Russia, and elsewhere evolve, they will
probably have a minimal direct impact on small companies' revenues and earnings.
It's important to note that small-cap stocks have been out of favor for quite
some time. In fact, despite the rebound we've seen since early October,
small-cap stocks are priced at lower valuations relative to large-cap stocks.
Consider these facts. Many small companies have been reporting higher earnings
growth -- and more positive earnings surprises -- than large companies. So far
this year, large companies have experienced little or no growth.
Markets move in cycles, and we do not believe small-cap stocks will underperform
indefinitely. As we await the eventual turnaround, we will continue our
disciplined strategy of investing in rapidly growing small companies with strong
fundamentals and healthy growth prospects -- what makes Oppenheimer Variable
Account Funds - Oppenheimer Small Cap Growth Fund part of THE RIGHT WAY TO
INVEST.
- ----------------------------
1. The Fund's portfolio is subject to change.
19
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PERFORMANCE. Small Cap Growth Fund was negatively
affected by the sharp decline in small-cap stocks over the Fund's fiscal year
that ended December 31, 1998. Stock and bond markets worldwide experienced
considerable instability, with particular tumult felt in Southeast Asia, Russia
and Latin America. The U.S. stock market climbed to record levels through July
before correcting sharply in the third quarter and rebounding to new highs in
the fourth quarter of 1998. During the period, the Fund emphasized
"non-cyclical" companies, which have the potential to grow steadily, regardless
of the strength of the economy. In light of the difficult environment for
small-cap stocks, the Fund's most successful investments were in industries such
as healthcare and technology. The Fund's portfolio holdings, allocations and
management strategies are subject to change.
- --------------------------------------------------------------------------------
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1998. Performance information does not reflect charges that apply to
separate accounts investing in the Fund. If these charges and expenses were
taken into account, performance would be lower. The graph assumes that all
dividends and capital gains distributions were reinvested in additional shares.
The Fund's performance is compared to the performance of the Russell 2000 Index,
which is an index of the 2000 smallest securities in the Russell 3000 Index with
market values ranging from $25 million to $275 million. Index performance
reflects the reinvestment of dividends but does not consider the effect of
capital gains or transaction costs, and none of the data in the graphs that
follow shows the effect of taxes. The Fund's performance reflects the effects of
Fund's business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
OVAF/Oppenheimer Small Cap Fund and Russell 2000 Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPENHEIMER SMALL CAP RUSSELL
GROWTH FUND 2000 INDEX
<S> <C> <C>
5/1/98 $10,000 $10,000
12/31/98 $9,600 $8,806
</TABLE>
CUMULATIVE TOTAL RETURN OF THE FUND AT 12/31/98
LIFE -4.00%
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information in the graph for the Russell 2000 Index begins on
4/30/98.
The inception date of the Fund was 5/1/98.
Past performance is not predictive of future performance.
20
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
- -------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 1.2%
- -------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 6.25%, dated
12/31/98, to be repurchased at $1,801,250 on 1/4/99,
collateralized by Federal National Mortgage Assn.
Participation Nts., 6% 12/1/13, with a value of $1,842,032 $ 1,800,000 $ 1,800,000
- -------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 2.0%
- -------------------------------------------------------------------------------------------
Societe Generale, 5.80%, 3/31/99 3,000,000 3,000,215
- -------------------------------------------------------------------------------------------
LETTERS OF CREDIT - 9.6%
- -------------------------------------------------------------------------------------------
Abbey National plc, guaranteeing commercial paper of Abbey
National North America Corp., 5.50%, 2/4/99 3,500,000 3,481,820
- -------------------------------------------------------------------------------------------
Bank of America, NT & SA, guaranteeing commercial paper of
Minmetals Capitals & Securities, Inc., 4.95%, 3/8/99 4,000,000 3,963,700
- -------------------------------------------------------------------------------------------
Barclays Bank plc, guaranteeing commercial paper of:
Banca Serfin, SA, Institucion de Banca Multiple, Grupo
Financiero Serfin, Nassau Branch, 5.42%, 5/26/99 1,500,000 1,467,254
Pactual Overseas Corp., 5.05%, 5/14/99 2,750,000 2,698,693
- -------------------------------------------------------------------------------------------
Bayerische Veriensbank AG, guaranteeing commercial paper of
Unibanco-Uniao de Bancos Brasileiros, Series D, 5.05%,
4/16/99 3,000,000 2,955,813
---------------
Total Letters of Credit 14,567,280
- -------------------------------------------------------------------------------------------
SHORT-TERM NOTES - 86.9%
- -------------------------------------------------------------------------------------------
ASSET-BACKED - 11.1%
Atlantis One Funding Corp., 5.20%, 5/14/99(1) 2,500,000 2,451,326
- -------------------------------------------------------------------------------------------
Cooperative Assn. of Tractor Dealers, Inc.:
Series A, 4.92%, 4/21/99 1,500,000 1,477,450
Series B, 4.92%, 4/23/99 1,000,000 984,693
- -------------------------------------------------------------------------------------------
Park Avenue Receivables Corp., 5.60%, 1/13/99(1) 4,000,000 3,992,600
- -------------------------------------------------------------------------------------------
Preferred Receivables Funding Corp., 4.93%, 6/21/99(1) 3,000,000 2,929,890
- -------------------------------------------------------------------------------------------
Sigma Finance, Inc.:
5.50%, 1/29/99(1) 2,500,000 2,489,500
5.50%, 2/12/99(1) 2,500,000 2,483,958
---------------
16,809,417
- -------------------------------------------------------------------------------------------
BANK HOLDING COMPANIES - 4.5%
Bankers Trust Co., New York:
5.01%, 7/15/99 2,000,000 1,945,725
5.05%, 6/2/99 5,000,000 4,893,389
---------------
6,839,114
- -------------------------------------------------------------------------------------------
BEVERAGES - 2.3%
Coca-Cola Enterprises, Inc., 5.11%, 3/4/99(1) 3,500,000 3,469,198
- -------------------------------------------------------------------------------------------
BROKER/DEALERS - 17.5%
Bear Stearns Cos., Inc., 4.92%, 2/18/99(2) 2,000,000 2,000,000
- -------------------------------------------------------------------------------------------
Goldman Sachs Group, LP:
5%, 4/20/99 4,000,000 3,939,445
5.10%, 3/22/99 3,000,000 2,966,000
</TABLE>
21
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------
BROKER/DEALERS (CONTINUED)
Lehman Brothers Holdings, Inc., 5.495%, 2/25/99 $ 1,000,000 $ 991,605
- -------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
5.50%, 2/26/99 3,000,000 2,974,333
5.51%, 2/12/99 2,500,000 2,483,929
- -------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co., 5.50%, 1/4/99(2) 4,300,000 4,300,000
- -------------------------------------------------------------------------------------------
NationsBanc Montgomery Securities, LLC, 5.70%, 1/4/99(2) 5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc., 5.15%, 2/18/99 2,000,000 1,986,267
---------------
26,641,579
- -------------------------------------------------------------------------------------------
COMMERCIAL FINANCE - 12.6%
Countrywide Home Loans:
5.25%, 2/27/99(2) 1,200,000 1,200,000
5.50%, 1/8/99 4,000,000 3,995,722
- -------------------------------------------------------------------------------------------
FINOVA Capital Corp.:
5.32%, 5/7/99 2,300,000 2,257,174
5.33%, 2/26/99 1,250,000 1,239,597
5.38%, 5/21/99 1,000,000 979,311
- -------------------------------------------------------------------------------------------
Heller Financial, Inc.:
5.289%, 1/11/99(2) 1,500,000 1,500,000
6.51%, 9/20/99 2,080,000 2,095,221
- -------------------------------------------------------------------------------------------
Safeco Cedit Co., 4.95%, 6/11/99 2,000,000 1,955,725
- -------------------------------------------------------------------------------------------
TransAmerica Finance Corp., 5.11%, 3/1/99 4,000,000 3,966,501
---------------
19,189,251
- -------------------------------------------------------------------------------------------
CONSUMER FINANCE - 2.6%
Sears Roebuck Acceptance Corp., 4.90%, 6/23/99 4,000,000 3,905,811
- -------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 7.5%
General Motors Acceptance Corp.:
5.48%, 1/28/99 3,000,000 2,987,603
5.50%, 2/19/99 1,500,000 1,488,771
- -------------------------------------------------------------------------------------------
Household Finance Corp., 4.948%, 3/29/99(2) 5,000,000 4,999,178
- -------------------------------------------------------------------------------------------
Household International, Inc., 5.21%, 2/3/99(1) 2,000,000 1,990,448
---------------
11,466,000
- -------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.6%
Atlas Copco AB:
5.27%, 4/21/99(1) 3,000,000 2,951,692
5.42%, 1/19/99(1) 4,000,000 3,989,160
---------------
6,940,852
- -------------------------------------------------------------------------------------------
INSURANCE - 17.8%
AIG Life Insurance Co., 5.62%, 1/4/99(2)(3) 3,000,000 3,000,000
- -------------------------------------------------------------------------------------------
General American Life Insurance Co., 5.24%, 1/4/99(2) 5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Pacific Life Insurance Co., 4.73%, 1/4/99(2)(3) 5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Protective Life Insurance Co., 5.577%, 1/4/99(2) 5,000,000 5,000,000
- -------------------------------------------------------------------------------------------
Safeco Corp., 4.90%, 6/17/99 2,000,000 1,954,539
- -------------------------------------------------------------------------------------------
Security Benefit Life Insurance Co., 5.577%, 1/4/99(2) 5,000,000 5,000,000
</TABLE>
22
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NOTE 1
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (CONTINUED)
Travelers Insurance Co., 5.034%, 1/4/99(2)(3) $ 2,000,000 $ 2,000,000
---------------
26,954,539
- -------------------------------------------------------------------------------------------
LEASING & FACTORING - 4.4%
American Honda Finance Corp., 5.219%, 1/20/99(2)(4) 3,000,000 3,000,000
- -------------------------------------------------------------------------------------------
International Lease Finance Corp., 6.625%, 4/1/99 3,675,000 3,685,758
---------------
6,685,758
- -------------------------------------------------------------------------------------------
SPECIAL PURPOSE FINANCIAL - 2.0%
SMM Trust, Series 1998-I, 5.624%, 5/28/99(2)(3) 3,000,000 3,000,000
---------------
Total Short-Term Notes 131,901,519
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 99.7% 151,269,014
- -------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.3 529,786
----------- ---------------
NET ASSETS 100.0% $ 151,798,800
----------- ---------------
----------- ---------------
</TABLE>
Short-term notes and letters of credit are generally traded on a discount basis;
the interest rate is the discount rate received by the Fund at the time of
purchase. Other securities normally bear interest at the rates shown.
1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $26,747,772, or 17.62% of the
Fund's net assets, and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.
2. Floating or variable rate obligation. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to change
periodically and is the effective rate on December 31, 1998. This instrument may
also have a demand feature which allows, on up to 30 days' notice, the recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature.
3. Identifies issues considered to be illiquid or restricted -- See applicable
note of Notes to Financial Statements.
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 $3,000,000, or 1.98% of the Fund's net
assets as of December 31, 1998.
See accompanying Notes to Financial Statements.
23
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 2.5%
- -------------------------------------------------------------------------
AMRESCO Commercial Mortgage Funding
I Corp., Multiclass Mtg.
Pass-Through Certificates, Series
1997-C1, Cl. H, 7%, 6/17/29(2) $ 200,000 $ 137,562
- -------------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-D4:
Cl. B1, 7.525%, 4/14/29(3) 167,000 133,913
Cl. B2, 7.525%, 4/14/29(3) 167,000 129,477
Cl. B3, 7.525%, 4/14/29(3) 166,000 117,186
- -------------------------------------------------------------------------
CBA Mortgage Corp., Mtg.
Pass-Through Certificates, Series
1993-C1:
Cl. E, 7.76%, 12/25/03(2)(3) 250,000 232,969
Cl. F, 7.76%, 12/25/03(2)(3) 700,000 571,594
- -------------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. F, 7.50%, 6/20/13(2) 300,000 233,906
Cl. G, 7.50%, 6/20/14(2) 500,000 357,969
Cl. H, 7.50%, 8/20/14(2) 225,000 154,406
- -------------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1,
8.098%, 2/25/11-5/25/08(2)(3) 1,800,000 1,423,500
- -------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl.
E, 7.436%, 3/15/06(2)(3) 835,342 781,567
- -------------------------------------------------------------------------
Mortgage Capital Funding, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(2) 254,890 211,768
- -------------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 638,732 629,102
Series 1994-C2, Cl. G, 8%, 4/25/25 702,303 684,746
Series 1995-C1, Cl. F, 6.90%,
2/25/27 574,328 537,401
- -------------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.132%, 4/25/26(2) 1,452,915 1,072,433
- -------------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates, Series 1996-C3, Cl.
E, 8.458%, 6/25/30(4) 650,000 628,977
---------------
Total Mortgage-Backed Obligations
(Cost $7,948,598) 8,038,476
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
2.2%
- -------------------------------------------------------------------------
Argentina (Republic of) Bonds,
Bonos de Consolidacion de Deudas,
Series I, 3.011%, 4/1/07(3)(ARP) 2,880,683 1,856,930
- -------------------------------------------------------------------------
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 588,810 351,814
- -------------------------------------------------------------------------
Brazil (Federal Republic of)
Eligible Interest Bonds, 6.125%,
4/15/06(3) 1,056,000 681,120
- -------------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds,
Tranche A, 2.50%, 7/28/12(5) 500,000 286,250
- -------------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.688%, 7/28/11(3) 1,450,000 975,125
- -------------------------------------------------------------------------
Germany (Republic of) Treasury
Bills, Zero Coupon, 3.404%,
1/15/99(6)(DEM) 3,000,000 1,799,162
- -------------------------------------------------------------------------
Panama (Government of) Interest
Reduction Bonds, 4%, 7/17/14(5) 275,000 205,563
- -------------------------------------------------------------------------
Peru (Republic of) Past Due
Interest Bonds, Series 20 yr., 4%,
3/7/17(5) 400,000 252,000
</TABLE>
24
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS
(CONTINUED)
- -------------------------------------------------------------------------
Philippines (Republic of) Debs.,
6%, 12/1/09(3) $ 149,600 $ 122,298
- -------------------------------------------------------------------------
PT Hutama Karya Promissory Nts.,
Zero Coupon, 2/10/98 (2)(7)(IDR) 1,000,000,000 31,250
- -------------------------------------------------------------------------
Russia (Government of) Debs.,
5.969%, 12/15/15(3) 17,680 1,956
- -------------------------------------------------------------------------
Russia (Government of) Principal
Loan Debs., Series 24 yr., 5.969%,
12/15/20(3) 1,050,000 64,982
- -------------------------------------------------------------------------
United Mexican States Sr. Nts.,
8.625%, 3/12/08 500,000 463,750
---------------
Total Foreign Government
Obligations (Cost $7,573,982) 7,092,200
- -------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 77.1%
- -------------------------------------------------------------------------
AEROSPACE/DEFENSE - 3.5%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 1,000,000 1,045,000
- -------------------------------------------------------------------------
Amtran, Inc.:
9.625% Nts., 12/15/05 800,000 804,000
10.50% Sr. Nts., 8/1/04 700,000 731,500
- -------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08(2) 1,325,000 1,328,312
9.375% Sr. Nts., 11/15/06(4) 1,000,000 1,025,000
10.75% Sr. Nts., 8/1/05 700,000 738,500
- -------------------------------------------------------------------------
BE Aerospace, Inc., 9.50% Sr. Sub.
Nts., 11/1/08(4) 1,840,000 1,959,600
- -------------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts., Series 1997-1, 1/1/01(2) 800,000 784,000
- -------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc.,
Units (each unit consists of $1,000
principal amount of 12% sr. sub.
nts., 9/30/08 and one warrant to
purchase 1.55 shares of common
stock)(4)(8) 1,750,000 1,758,750
- -------------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Series 1997-A, Cl. B,
6/15/04(2) 317,051 338,104
- -------------------------------------------------------------------------
Trans World Airlines Lease, 14%
Equipment Trust, 7/2/08(2) 855,765 847,208
---------------
11,359,974
- -------------------------------------------------------------------------
CHEMICALS - 1.5%
Brunner Mond Group plc, 12.50% Sr.
Sub. Nts., 7/15/08(4)(GBP) 1,200,000 1,840,381
- -------------------------------------------------------------------------
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 500,000 505,000
- -------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 275,000 257,125
- -------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., Series B, 9/15/07 330,000 265,650
- -------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Sec. Nts., 10/15/07 500,000 387,500
- -------------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 400,000 322,000
- -------------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 795,000 810,900
- -------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.25%
Sr. Sub. Nts., 4/1/07 250,000 211,250
- -------------------------------------------------------------------------
Texas Petrochemicals Corp., 11.125%
Sr. Sub. Nts., 7/1/06 280,000 277,200
---------------
4,877,006
- -------------------------------------------------------------------------
CONSUMER DURABLES - 0.3%
Holmes Products Corp., 9.875% Sr.
Unsec. Sub. Nts., Series B,
11/15/07 425,000 403,750
</TABLE>
25
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------
CONSUMER DURABLES (CONTINUED)
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(2) $ 350,000 $ 406,353
---------------
810,103
- -------------------------------------------------------------------------
CONSUMER NON-DURABLES - 3.0%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs.,
7/1/09(4)(9) 1,080,000 426,600
10.50% Sr. Nts., 7/1/08(4) 1,000,000 955,000
- -------------------------------------------------------------------------
American Pad & Paper Co., 13% Sr.
Sub. Nts., Series B, 11/15/05 880,000 506,000
- -------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Sub.
Nts., 8/15/08(4) 900,000 918,000
- -------------------------------------------------------------------------
Globe Manufacturing, Inc., 10% Sr.
Sub. Nts., 8/1/08(4) 900,000 819,000
- -------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50%
Sr. Unsec. Sub. Nts., 5/1/08 720,000 723,600
- -------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 2,200,000 2,013,000
9% Sr. Nts., 11/1/06(4) 1,000,000 1,000,000
- -------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts., Series B,
11.41%, 3/15/01(6) 1,250,000 718,750
- -------------------------------------------------------------------------
Salton/Maxim Housewares, Inc.,
10.75% Sr. Sub. Nts., 12/15/05(4) 1,000,000 1,011,250
- -------------------------------------------------------------------------
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08 600,000 573,000
- -------------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 235,000 249,100
---------------
9,913,300
- -------------------------------------------------------------------------
ENERGY - 4.0%
AEI Resources, Inc., 11.50% Sr.
Sub. Nts., 12/15/06(4) 750,000 744,375
- -------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr.
Sub. Nts., 6/15/07 480,000 391,200
- -------------------------------------------------------------------------
Clark Refinancing & Marketing,
Inc., 8.875% Sr. Sub. Nts.,
11/15/07 1,040,000 930,800
- -------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 275,000 254,375
- -------------------------------------------------------------------------
Dailey International, Inc., 9.50%
Sr. Unsec. Nts., Series B, 2/15/08 800,000 356,000
- -------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr.
Sub. Nts., 3/1/08 800,000 676,000
- -------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50%
Sr. Debs., 6/15/05(4) 1,000,000 685,000
- -------------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., Series B, 5/1/05(4) 500,000 392,500
- -------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/15/08 1,025,000 702,125
- -------------------------------------------------------------------------
National Energy Group, Inc., 10.75%
Sr. Nts., Series D, 11/1/06(7) 810,000 303,750
- -------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr.
Sec. Nts., 6/1/08 1,420,000 1,143,100
- -------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 1,800,000 1,827,000
- -------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sr. Sub. Debs., 2/1/06 1,175,000 1,104,500
- -------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 800,000 744,000
- -------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec.
Nts., 2/15/08 1,060,000 747,300
- -------------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts., Series B, 11/15/03 225,000 226,125
- -------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 735,000 712,950
- -------------------------------------------------------------------------
Universal Compression Holdings,
Inc.:
0%/9.875% Sr. Disc. Nts.,
2/15/08(9) 1,325,000 801,625
</TABLE>
26
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
Universal Compression Holdings,
Inc.: (Continued)
0%/11.375% Sr. Disc. Nts.,
2/15/09(9) $ 720,000 $ 432,000
---------------
13,174,725
- -------------------------------------------------------------------------
FINANCIAL - 1.5%
Bakrie Investindo, Zero Coupon
Promissory Nts., 3/26/98(2)(7)(IDR) 1,000,000,000 31,250
- -------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 517,000 416,185
- -------------------------------------------------------------------------
CB Richard Ellis Services, Inc.,
8.875% Sr. Unsec. Sub. Nts., 6/1/06 900,000 886,500
- -------------------------------------------------------------------------
ECM Fund, L.P. I., 14% Sub. Nts.,
6/10/02(2) 36,714 36,807
- -------------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(4) 800,000 812,000
- -------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875%
Capital Nts., 8/1/27 450,000 362,250
- -------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 24% Nts.,
6/19/03(IDR) 657,200,000 9,858
- -------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts., Series
B, 4/1/08 2,000,000 1,870,000
- -------------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04(7) 300,000 81,000
- -------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts.,
1/1/28 550,000 496,375
---------------
5,002,225
- -------------------------------------------------------------------------
FOOD & DRUG - 1.7%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B,
12/1/04 300,000 285,000
10.625% Sr. Sub. Nts., Series B,
7/31/07 1,135,000 1,064,062
- -------------------------------------------------------------------------
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03(9) 2,710,000 2,235,750
12.625% Sub. Nts., 6/15/02 900,000 882,000
- -------------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., Series B,
7/1/07 1,060,000 1,152,750
---------------
5,619,562
- -------------------------------------------------------------------------
FOOD/TOBACCO - 1.6%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., Series B, 7/1/08 520,000 543,400
- -------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., Series B, 12/15/07(9) 750,000 517,500
- -------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/1/05 1,600,000 1,608,000
- -------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec.
Sub. Nts., 3/15/10 400,000 410,000
- -------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr.
Unsec. Sub. Nts., 2/15/08 925,000 934,250
- -------------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sec. Sub. Nts., 11/15/07 1,175,000 1,139,750
---------------
5,152,900
- -------------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 1.0%
Ball Corp.:
7.75% Sr. Nts., 8/1/06(4) 700,000 735,000
8.25% Sr. Sub. Nts., 8/1/08(4) 800,000 836,000
- -------------------------------------------------------------------------
Four M Corp., 12% Sr. Sec. Nts.,
Series B, 6/1/06 190,000 141,550
- -------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 1,330,000 1,323,350
10.875% Sr. Sub. Nts., 4/1/08 200,000 182,000
</TABLE>
27
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
FOREST PRODUCTS/CONTAINERS
(CONTINUED)
SF Holdings Group, Inc., 0%/12.75%
Sr. Disc. Nts., 3/15/08(9) $ 600,000 $ 213,000
---------------
3,430,900
- -------------------------------------------------------------------------
GAMING/LEISURE - 5.5%
AP Holdings, Inc., 0%/11.25% Sr.
Disc. Nts., 3/15/08(9) 450,000 245,250
- -------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub.
Nts., 3/15/08 940,000 869,500
- -------------------------------------------------------------------------
Capital Gaming International, Inc.,
11.50% Promissory Nts., 8/1/95(7) 9,500 --
- -------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 840,000 823,200
- -------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125%
Sr. Sub. Nts., 7/1/06 500,000 500,000
- -------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First
Mtg. Sec. Nts., 12/1/03 630,000 689,850
- -------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr.
Sub. Nts., 4/1/05 1,600,000 1,608,000
- -------------------------------------------------------------------------
Harveys Casino Resorts, 10.625% Sr.
Unsec. Sub. Nts., 6/1/06 120,000 130,200
- -------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 1,300,000 1,348,750
- -------------------------------------------------------------------------
Intrawest Corp.:
9.75% Sr. Nts., 8/15/08 900,000 927,000
9.75% Sr. Unsec. Nts., 8/15/08(4) 600,000 618,000
- -------------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02 725,000 873,625
- -------------------------------------------------------------------------
Outboard Marine Corp., 10.75% Sr.
Nts., 6/1/08(4) 590,000 578,200
- -------------------------------------------------------------------------
Park Place Entertainment Corp.,
7.875% Sr. Sub. Nts., 12/15/05(4) 800,000 805,000
- -------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(9) 1,200,000 819,000
9.25% Sr. Nts., 4/1/06 600,000 623,250
- -------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
9.50% Sr. Sub. Nts., 4/15/07 1,000,000 1,110,000
10.625% Sr. Sub. Nts., 7/15/05 125,000 136,875
- -------------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts.,
Series B, 3/15/03 1,125,000 1,276,875
- -------------------------------------------------------------------------
Six Flags Entertainment Corp.,
8.875% Sr. Nts., 4/1/06 1,000,000 1,031,250
- -------------------------------------------------------------------------
Station Casinos, Inc.:
8.875% Sr. Sub. Nts., 12/1/08(4) 1,250,000 1,275,000
9.625% Sr. Sub. Nts., 6/1/03 200,000 207,220
9.75% Sr. Sub. Nts., 4/15/07 800,000 840,000
10.125% Sr. Sub. Nts., 3/15/06 800,000 842,000
---------------
18,178,045
- -------------------------------------------------------------------------
HEALTHCARE - 2.1%
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 1,300,000 1,287,000
- -------------------------------------------------------------------------
Fresenius Medical Care Capital
Trust III, 7.375% Nts., 2/1/08(DEM) 1,225,000 775,957
- -------------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr.
Nts., 11/15/08(4) 1,065,000 1,080,975
- -------------------------------------------------------------------------
Integrated Health Services, Inc.:
9.25% Sr. Sub. Nts., Series A,
1/15/08 90,000 84,600
9.50% Sr. Sub. Nts., 9/15/07 760,000 725,800
10.25% Sr. Sub. Nts., 4/30/06 35,000 34,475
- -------------------------------------------------------------------------
Magellan Health Services, Inc., 9%
Sr. Sub. Nts., 2/15/08 1,000,000 885,000
</TABLE>
28
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE (CONTINUED)
Oxford Health Plans, Inc., 11% Sr.
Nts., 5/15/05(4) $ 1,200,000 $ 1,134,000
- -------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07 635,000 517,525
- -------------------------------------------------------------------------
Tenet Healthcare Corp., 8.125% Sr.
Sub. Nts., 12/1/08(4) 250,000 257,500
---------------
6,782,832
- -------------------------------------------------------------------------
HOUSING - 1.1%
Engle Homes, Inc., 9.25% Sr. Unsec.
Nts., Series C, 2/1/08 1,300,000 1,306,500
- -------------------------------------------------------------------------
Nortek, Inc.:
8.875% Sr. Nts., 8/1/08(4) 250,000 256,250
9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,449,000
9.25% Sr. Nts., Series B, 3/15/07 625,000 643,750
---------------
3,655,500
- -------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 1.2%
Covad Communications Group, Inc.,
0%/13.50% Sr. Disc. Nts.,
3/15/08(9) 900,000 499,500
- -------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
Series B, 11/15/05 1,125,000 1,074,375
- -------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 625,000 628,125
- -------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 275,000 320,375
- -------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec.
Disc. Nts., Series B, 3/1/05(9) 1,750,000 962,500
- -------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 500,000 477,500
---------------
3,962,375
- -------------------------------------------------------------------------
MANUFACTURING - 2.8%
American Standard Cos., Inc.,
7.625% Sr. Nts., 2/15/10(10) 1,500,000 1,507,500
- -------------------------------------------------------------------------
Axia, Inc. (New), 10.75% Sr. Sub.
Nts., 7/15/08 420,000 428,400
- -------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr.
Sub. Nts., 8/15/07 400,000 390,000
- -------------------------------------------------------------------------
Eagle-Picher Industries, Inc.,
9.375% Sr. Unsec. Sub. Nts., 3/1/08 850,000 803,250
- -------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub.
Nts., 5/1/08 635,000 574,675
- -------------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 725,000 692,375
- -------------------------------------------------------------------------
Insilco Corp., Units (each unit
consists of $1,000 principal amount
of 12% Sr. Sub. Nts., 8/15/07 and
one warrant to purchase 0.52 shares
of common stock)(4)(8) 765,000 795,600
- -------------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 500,000 528,750
- -------------------------------------------------------------------------
MOLL Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(4) 560,000 551,600
- -------------------------------------------------------------------------
Polymer Group, Inc.:
8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,481,250
9% Sr. Sub. Nts., 7/1/07 250,000 248,750
- -------------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Sr. Sub. Nts., Series
B, 6/15/07 560,000 546,000
- -------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub.
Nts., 4/1/08 630,000 620,550
---------------
9,168,700
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
2.3%
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 915,000 951,600
</TABLE>
29
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-BROADCASTING
(CONTINUED)
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series
B, 6/15/07 $ 975,000 $ 1,004,250
9% Sr. Sub. Nts., 10/1/08(4) 2,200,000 2,332,000
10.50% Sr. Sub. Nts., Series B,
1/15/07 450,000 495,000
- -------------------------------------------------------------------------
Jacor Communications, Inc., 8% Sr.
Sub. Nts., 2/15/10 1,180,000 1,250,800
- -------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(5) 400,000 402,000
- -------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 9%
Sr. Unsec. Sub. Nts., 7/15/07 1,085,000 1,112,125
- -------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
11% Sr. Nts., 3/15/04 25,000 26,625
---------------
7,574,400
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 5.0%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03 1,000,000 1,028,750
8.375% Sr. Nts., Series B, 2/1/08 1,000,000 1,037,500
9.25% Sr. Nts., 10/1/02 390,000 413,400
9.875% Sr. Nts., Series B, 3/1/07 140,000 155,400
10.50% Sr. Unsec. Nts., Series B,
7/15/04 340,000 382,500
- -------------------------------------------------------------------------
CSC Holdings, Inc.:
7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 1,041,600
9.875% Sr. Sub. Debs., 4/1/23 1,000,000 1,117,500
9.875% Sr. Sub. Nts., 5/15/06 550,000 602,250
10.50% Sr. Sub. Debs., 5/15/16 250,000 295,000
- -------------------------------------------------------------------------
Diva Systems Corp., Units (each
unit consists of $1,000 principal
amount of 0%/12.625% sr. disc.
nts., 3/1/08 and three warrants to
purchase three shares of common
stock)(4)(8)(9) 500,000 207,500
- -------------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(9) 200,000 206,000
- -------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Sr. Sec.
Nts., 7/1/02 1,700,000 1,963,500
- -------------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(9) 2,005,000 2,010,012
- -------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285%
Sr. Disc. Debs., Series B,
4/15/10(9) 1,300,000 897,000
- -------------------------------------------------------------------------
Falcon Holding Group LP, 8.375% Sr.
Unsec. Debs., Series B, 4/15/10 2,200,000 2,288,000
- -------------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(3) 885,000 924,825
- -------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 1,020,000 1,014,900
- -------------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07(CAD) 500,000 315,299
- -------------------------------------------------------------------------
United International Holdings,
Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(9)(10) 1,040,000 566,800
---------------
16,467,736
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 2.0%
Ackerley Group, Inc., 9% Sr. Sub.
Nts., 1/15/09(4) 1,250,000 1,275,000
- -------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg.
Bonds, 6/24/10(2) 452,782 461,956
- -------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07 225,000 167,062
- -------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Sub. Nts., 12/15/10(4) 1,250,000 1,246,875
</TABLE>
30
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA (CONTINUED)
Regal Cinemas, Inc.: (Continued)
9.50% Sr. Sub. Nts., 6/1/08(4) $ 750,000 $ 783,750
- -------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Sub. Nts., 12/1/08(4) 900,000 905,625
9.125% Sr. Unsec. Sub. Nts., Series
B, 2/1/08 1,800,000 1,791,000
---------------
6,631,268
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -16.3%
Amazon.Com, Inc., 0%/10% Sr. Unsec.
Disc. Nts., 5/1/08(9) 2,500,000 1,662,500
- -------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts.,
12/15/06(9) 225,000 190,125
7.625% Bonds, 7/31/08(DEM) 1,925,000 1,143,511
8.875% Sr. Nts., 11/30/07(DEM) 250,000 154,231
10.125% Sr. Nts., 11/30/07(GBP) 400,000 699,676
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 common
shares)(8)(9) 1,775,000 1,499,875
- -------------------------------------------------------------------------
Concentric Network Corp., 12.75%
Sr. Unsec. Nts., 12/15/07 800,000 820,000
- -------------------------------------------------------------------------
Convergent Communications, Inc.,
13% Sr. Nts., 4/1/08 800,000 388,000
- -------------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(9) 2,100,000 1,748,250
- -------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr.
Nts., 2/1/08 400,000 384,000
- -------------------------------------------------------------------------
DTI Holdings, Inc., 0%/12.50% Sr.
Unsec. Disc. Nts., Series B,
3/1/08(9) 1,500,000 397,500
- -------------------------------------------------------------------------
e.spire Communications, Inc.,
13.75% Sr. Nts., 7/15/07 725,000 679,687
- -------------------------------------------------------------------------
Exodus Communications, Inc., 11.25%
Sr. Nts., 7/1/08 715,000 718,575
- -------------------------------------------------------------------------
FaciliCom International, Inc.,
10.50% Sr. Nts., Series B, 1/15/08 545,000 438,725
- -------------------------------------------------------------------------
FirstWorld Communications, Inc.,
0%/13% Sr. Disc. Nts., 4/15/08(9) 1,100,000 335,500
- -------------------------------------------------------------------------
Focal Communications Corp.,
0%/12.125% Sr. Unsec. Disc. Nts.,
2/15/08(9) 810,000 433,350
- -------------------------------------------------------------------------
Global Crossing Holdings Ltd.,
9.625% Sr. Nts., 5/15/08 950,000 1,011,750
- -------------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts.,
5/1/05 1,800,000 1,485,000
- -------------------------------------------------------------------------
GST Telecommunications, Inc.:
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(4)(9) 178,000 141,287
12.75% Sr. Sub. Nts., 11/15/07 1,250,000 1,168,750
- -------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/10% Sr. Unsec. Disc. Nts.,
2/15/08(9) 1,220,000 652,700
0%/12.50% Sr. Sec. Disc. Nts.,
5/1/06(9) 115,000 86,250
0%/13.50% Sr. Disc. Nts.,
9/15/05(9) 980,000 813,400
- -------------------------------------------------------------------------
Intermedia Communications, Inc.:
8.60% Sr. Unsec. Nts., Series B,
6/1/08 905,000 864,275
8.875% Sr. Nts., 11/1/07 460,000 446,200
- -------------------------------------------------------------------------
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08 1,000,000 980,000
11% Sr. Nts., 6/1/07 750,000 806,250
</TABLE>
31
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
KMC Telecom Holdings, Inc.,
0%/12.50% Sr. Unsec. Disc. Nts.,
2/15/08(9) $ 2,455,000 $ 1,190,675
- -------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. 12/1/08(4)(9) 900,000 528,750
9.125% Sr. Unsec. Nts., 5/1/08 2,000,000 1,985,000
- -------------------------------------------------------------------------
Long Distance International, Inc.,
12.25% Sr. Nts., 4/15/08(4) 800,000 668,000
- -------------------------------------------------------------------------
Metromedia Fiber Network, Inc., 10%
Sr. Nts., 11/15/08(4) 1,600,000 1,652,000
- -------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Sr. Disc.
Nts., 11/1/07(9)(DEM) 700,000 240,615
- -------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts.,
4/15/08(9) 1,015,000 583,625
9% Sr. Nts., 3/15/08 800,000 756,000
9.625% Sr. Nts., 10/1/07 1,210,000 1,161,600
10.75% Sr. Nts., 11/15/08(4) 1,200,000 1,227,000
- -------------------------------------------------------------------------
NorthEast Optic Network, Inc.,
12.75% Sr. Nts., 8/15/08 750,000 738,750
- -------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts.,
4/1/08(4)(9) 350,000 218,750
0%/12.375% Sr. Nts., 10/1/08(4)(9) 3,400,000 2,146,250
7% Cv. Sub. Nts., 12/15/08(4) 1,500,000 1,623,750
10% Sr. Nts., Series B, 2/15/07 1,055,000 1,086,650
11.50% Sr. Nts., 10/1/08(4) 1,600,000 1,756,000
- -------------------------------------------------------------------------
Petersburg Long Distance, Inc., 9%
Cv. Sub. Nts., 6/1/06(4) 170,000 63,112
- -------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 3,170,000 3,154,150
- -------------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07(9) 1,460,000 1,135,150
- -------------------------------------------------------------------------
RSL Communications plc:
0%/10.125% Sr. Disc. Nts.,
3/1/08(9) 720,000 415,800
9.125% Sr. Unsec. Nts., 3/1/08 500,000 462,500
10.50% Sr. Nts., 11/15/08(4) 1,450,000 1,417,375
- -------------------------------------------------------------------------
TeleWest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(9) 990,000 831,600
11.25% Sr. Nts., 11/1/08(4) 1,610,000 1,811,250
- -------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr.
Nts., 7/15/08 1,300,000 1,371,500
- -------------------------------------------------------------------------
US Xchange LLC, 15% Sr. Nts.,
7/1/08 800,000 824,000
- -------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,457,800
11.25% Sr. Nts., 12/1/08(4) 1,300,000 1,313,000
13.50% Sr. Unsec. Nts., 6/15/04 385,000 417,725
- -------------------------------------------------------------------------
Viatel, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts.,
4/15/08(9) 765,000 455,175
11.25% Sr. Sec. Nts., 4/15/08 580,000 595,950
---------------
53,438,869
- -------------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 7.0%
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(4) 200,000 201,000
- -------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14%
Sr. Disc. Nts., 10/1/07(9) 2,319,000 591,345
</TABLE>
32
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS (CONTINUED)
Cellular Communications
International, Inc., 0%/9.50%
Bonds, 4/1/05(9)(XEU) $ 2,750,000 $ 2,728,674
- -------------------------------------------------------------------------
Centennial Cellular Corp., 10.75%
Sr. Sub. Nts., 12/15/08(4) 800,000 800,000
- -------------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Unsec. Disc. Nts.,
11/15/07(9) 940,000 662,700
- -------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr.
Deferred Coupon Nts., 4/15/08(9) 1,000,000 455,000
- -------------------------------------------------------------------------
Dobson Communications Corp., 11.75%
Sr. Nts., 4/15/07 240,000 246,000
- -------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15%
Sr. Sec. Disc. Nts., Series B,
7/15/05(7)(9) 226,000 46,330
- -------------------------------------------------------------------------
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)(8) 700,000 525,000
- -------------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts., 6/1/06(9) 300,000 213,750
- -------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts.,
10/31/07(9) 1,130,000 689,300
0%/10.65% Sr. Disc. Nts.,
9/15/07(9) 1,095,000 703,538
- -------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts.,
Series A, 8/15/06 2,765,000 1,935,500
- -------------------------------------------------------------------------
Orange plc:
7.625% Sr. Nts., 8/1/08(GBP) 400,000 478,509
8% Sr. Nts., 8/1/08 2,600,000 2,639,000
- -------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 1,125,000 1,164,375
- -------------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(9) 1,150,000 724,500
- -------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr.
Unsec. Disc. Nts., 3/15/08(9) 2,400,000 1,410,000
- -------------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 11.25% Sr. Nts.,
8/15/08(11) 425,000 403,750
- -------------------------------------------------------------------------
Price Communications Wireless,
Inc.:
9.125% Sr. Sec. Nts., 12/15/06(4) 800,000 812,000
11.75% Sr. Sub. Nts., 7/15/07 425,000 450,500
- -------------------------------------------------------------------------
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 common
shares)(4)(8)(9) 1,000,000 465,000
- -------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 1,900,000 1,914,250
- -------------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Unsec. Disc. Nts., 3/1/08(9) 3,220,000 1,867,600
- -------------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(4)(9) 1,640,000 828,200
---------------
22,955,821
- -------------------------------------------------------------------------
METALS/MINERALS - 2.1%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 885,000 924,825
- -------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 340,000 260,100
- -------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 320,000 343,200
- -------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,518,750
- -------------------------------------------------------------------------
International Utility Structures,
Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 378,000
- -------------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Sec. Nts., 8/1/07 850,000 816,000
</TABLE>
33
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
METALS/MINERALS (CONTINUED)
Metallurg Holdings, Inc., 0%/12.75%
Sr. Disc. Nts., 7/15/08(9) $ 2,000,000 $ 690,000
- -------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07 540,000 504,900
- -------------------------------------------------------------------------
Republic Engineered Steels, Inc.,
9.875% First Mtg. Nts., 12/15/01 1,400,000 1,438,500
---------------
6,874,275
- -------------------------------------------------------------------------
RETAIL - 1.5%
Boyds Collection Ltd., 9% Sr. Sub.
Nts., 5/15/08(4) 1,250,000 1,281,250
- -------------------------------------------------------------------------
Eye Care Centers of America, Inc.,
9.125% Sr. Sub. Nts., 5/1/08(4) 1,100,000 1,050,500
- -------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs.,
5/1/08 900,000 796,500
- -------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 600,000 555,000
- -------------------------------------------------------------------------
Home Interiors & Gifts, Inc.,
10.125% Sr. Sub. Nts., 6/1/08(4) 1,000,000 995,000
- -------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07 325,000 342,063
---------------
5,020,313
- -------------------------------------------------------------------------
SERVICE - 4.5%
Allied Waste North America, Inc.,
7.875% Sr. Nts., 1/1/09(4) 835,000 849,613
- -------------------------------------------------------------------------
Borg-Warner Security Corp., 9.625%
Sr. Sub. Nts., 3/15/07 125,000 135,625
- -------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(9) 775,000 639,375
- -------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr.
Nts., Series B, 12/1/07 750,000 753,750
- -------------------------------------------------------------------------
Fisher Scientific International,
Inc.:
9% Sr. Sub. Nts., 2/1/08(4) 365,000 366,825
9% Sr. Unsec. Sub. Nts., 2/1/08 2,050,000 2,060,250
- -------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp.,
11.25% Sr. Sub. Nts., 8/15/08(4) 915,000 933,300
- -------------------------------------------------------------------------
Intermedia Communications, Inc.,
8.50% Sr. Nts., Series B, 1/15/08 660,000 630,300
- -------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 1,225,000 1,292,375
9.625% Sr. Sub. Nts., 12/1/06 815,000 876,125
- -------------------------------------------------------------------------
Newcor, Inc., 9.875% Sr. Unsec.
Sub. Nts., Series B, 3/1/08 1,500,000 1,402,500
- -------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds,
Series 1A, Cl. C2, 8/13/10(2) 1,500,000 1,500,000
- -------------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 950,000 974,938
13.625% Sr. Sub. Disc. Nts.,
6/30/05 400,000 458,000
- -------------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr.
Sub. Nts., 1/15/09(4) 2,000,000 2,015,000
---------------
14,887,976
- -------------------------------------------------------------------------
TRANSPORTATION - 4.1%
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., Series B, 7/15/07 500,000 432,500
- -------------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub.
Nts., Series B, 7/1/07 390,000 399,750
- -------------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Sr. Unsec. Sub. Nts.,
4/15/06 125,000 130,625
- -------------------------------------------------------------------------
Hayes Wheels International, Inc.,
11% Sr. Sub. Nts., 7/15/06 600,000 669,000
- -------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr.
Sub. Nts., 8/1/05(4) 950,000 859,750
- -------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 25,000 23,500
</TABLE>
34
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION (CONTINUED)
Millenium Seacarriers, Inc., Units
(each unit consists of $1,000
principal amount of 12% first
priority ship mtg. nts., 7/15/05
and one warrant to purchase five
shares of common stock)(4)(8) $ 1,500,000 $ 1,207,500
- -------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07(4) 1,175,000 1,039,875
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(4)(8) 500,000 452,500
- -------------------------------------------------------------------------
Oxford Automotive, Inc.:
10.125% Sr. Sub. Nts., 6/15/07(2) 600,000 627,000
10.125% Sr. Unsec. Sub. Nts.,
6/15/07 1,525,000 1,586,000
- -------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc.,
11.50% First Preferred Ship Mtg.
Nts., 5/30/08 700,000 528,500
- -------------------------------------------------------------------------
Sea Containers Ltd., 7.875% Sr.
Nts., 2/15/08 1,500,000 1,432,500
- -------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04(10) 1,850,000 1,563,250
- -------------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(9) 2,600,000 2,509,000
---------------
13,461,250
- -------------------------------------------------------------------------
UTILITY - 1.5%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 545,000 553,175
10.50% Sr. Nts., 5/15/06 25,000 27,688
- -------------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Sec. Nts., Series E,
5/1/11(12) 555,000 645,188
- -------------------------------------------------------------------------
ESI Tractebel Acquisition Corp.,
7.99% Bonds, 12/30/11 1,000,000 987,312
- -------------------------------------------------------------------------
Niagara Mohawk Power Corp., 7.75%
Sr. Unsec. Nts., Series G, 10/1/08 2,400,000 2,637,211
---------------
4,850,574
---------------
Total Corporate Bonds and Notes
(Cost $261,935,960) 253,250,629
</TABLE>
<TABLE>
<CAPTION>
SHARES
- --------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS - 5.3%
- --------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(2)(11) 74,045 1,851,125
- --------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cum.
Cv.(4) 24,575 251,894
- --------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum.
Exchangeable(11) 430 362,275
- --------------------------------------------------------------------
Concentric Network Corp., 13.50%
Preferred, Series B(11) 532 456,190
- --------------------------------------------------------------------
Dobson Communications Corp., 12.25%
Sr. Exchangeable(11) 1,092 974,610
- --------------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable Preferred
Stock 1,167 574,747
- --------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Cum.
Exchangeable, Series B, 3/1/08,
Non-Vtg.(13) 8,000 406,000
- --------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable
Exchangeable, Series B,
Non-Vtg.(11) 819 952,087
- --------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, l2% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A 20 465
- --------------------------------------------------------------------
Global Crossing Holdings Ltd.,
10.50% Sr. Exchangeable Preferred,
12/1/08(4)(13) 15,000 1,473,750
- --------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable(11) 264 291,060
- --------------------------------------------------------------------
Intermedia Communications, Inc.,
13.50% Exchangeable, Series B(11) 792 786,060
</TABLE>
35
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
- --------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25%
Cum. Exchangeable(11) 6,510 327,127
- --------------------------------------------------------------------
Nextel Communications, Inc.,
11.125% Exchangeable, Series E(11) 790 712,975
- --------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Cum. Exchangeable, Vtg.(11) 32,362 1,723,277
- --------------------------------------------------------------------
Paxson Communications Corp., 13.25%
Cum. Jr. Exchangeable, Non-Vtg.(11) 40 341,000
- --------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
Jr. Cv. Preferred Stock(13) 3,963 6,935
- --------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable 10,000 965,000
9.20% Exchangeable, Series F 2,500 246,250
- --------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum.
Sr., Series B, Non-Vtg.(11) 1,057 985,653
- --------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable, Series B,
Non-Vtg.(13) 25,000 1,281,250
- --------------------------------------------------------------------
SF Holdings Group, Inc., 13.75%
Cum. Nts., Series B, 3/15/09,
Non-Vtg.(11) 196 847,700
- --------------------------------------------------------------------
SFX Broadcasting, Inc./Capstar
Broadcasting Corp., 12.625% Cum.,
Series E, Non-Vtg.(11) 1,314 158,994
- --------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Exchangeable,
Non-Vtg.(4)(11) 602 615,545
- --------------------------------------------------------------------
Viatel, Inc., 10% Cv., Series A(11) 672 74,088
- --------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv., Series B 30,000 690,000
9.20% Preferred 8,950 194,663
---------------
Total Preferred Stocks (Cost
$21,439,498) 17,550,720
- --------------------------------------------------------------------
COMMON STOCKS - 0.2%
- --------------------------------------------------------------------
Celcaribe SA(4)(13) 121,950 259,144
- --------------------------------------------------------------------
Coinstar, Inc.(13) 5,250 56,437
- --------------------------------------------------------------------
ECM Fund, L.P. I.(2) 150 132,750
- --------------------------------------------------------------------
Equitable Bag, Inc.(2)(13) 3,723 3,723
- --------------------------------------------------------------------
Golden State Bancorp, Inc.(13) 15,626 259,782
- --------------------------------------------------------------------
Gulfstream Holding, Inc.(13) 56 --
- --------------------------------------------------------------------
Horizon Group Properties, Inc.(13) 851 3,298
- --------------------------------------------------------------------
Intermedia Communications, Inc.(13) 206 3,554
- --------------------------------------------------------------------
Omnipoint Corp.(13) 5,000 46,563
- --------------------------------------------------------------------
Optel, Inc.(13) 945 9
- --------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(13) 8,452 16,904
---------------
Total Common Stocks (Cost $542,407) 782,164
UNITS
- --------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.4%
- --------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(2) 6,000 60
- --------------------------------------------------------------------
Ames Department Stores, Inc.,
Litigation Trust(2) 39,658 397
- --------------------------------------------------------------------
Australis Holdings PTY
Ltd./Australia Media Ltd. Wts.,
Exp. 5/00(2) 125 1
</TABLE>
36
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES
(CONTINUED)
- --------------------------------------------------------------------
Capital Gaming International, Inc.
Wts., Exp. 2/99 21,112 $ --
- --------------------------------------------------------------------
CellNet Data Systems, Inc. Wts.,
Exp. 10/07(4) 1,919 9,835
- --------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2) 62,000 18,600
- --------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05 660 1,567
- --------------------------------------------------------------------
Concentric Network Corp. Wts., Exp.
12/07(2) 750 111,682
- --------------------------------------------------------------------
Covad Communications Group, Inc.
Wts., Exp. 3/08(2) 900 45,000
- --------------------------------------------------------------------
Covergent Communications, Inc.
Wts., Exp. 4/08(2) 3,200 4,000
- --------------------------------------------------------------------
DTI Holdings, Inc. Wts., Exp.
3/08(2) 7,500 375
- --------------------------------------------------------------------
e.spire Communications, Inc. Wts.,
Exp. 11/05 475 11,465
- --------------------------------------------------------------------
FirstWorld Communications, Inc.
Wts., Exp. 4/08(2) 1,100 11,000
- --------------------------------------------------------------------
Foamex LP/JPS Automotive Corp.
Wts., Exp. 7/99(2) 500 10,500
- --------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(2) 52,500 525
- --------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/05(2) 1,800 18,000
- --------------------------------------------------------------------
Golden State Bancorp, Inc. Wts.,
Exp. 1/01 15,626 71,294
- --------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(4) 13,117 131
Exp. 9/04(2) 14,000 15,750
- --------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(2) 5,940 81,411
- --------------------------------------------------------------------
IHF Capital, Inc.:
Series I Wts., Exp. 11/99(2) 400 4
Wts., Exp. 11/99(5) 250 2
- --------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 950 --
- --------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts.,
Exp. 4/08(2) 2,455 6,444
- --------------------------------------------------------------------
Long Distance International, Inc.
Wts., 4/08(2) 800 2,000
- --------------------------------------------------------------------
Microcell Telecommunications, Inc.
Wts., Exp. 6/06(2) 3,200 58,000
- --------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/05(2) 1,500 9,375
- --------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 7,500 69,844
- --------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(2) 800 10,000
- --------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(2) 8,600 410,650
- --------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(2) 28,000 350,000
Exp. 6/05(2) 1,600 16,000
- --------------------------------------------------------------------
Trizec Hahn Corp. Wts., Exp. 7/99 3,970 11,665
- --------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(2) 1,440 21,780
- --------------------------------------------------------------------
Venezuela (Republic of) Oil Linked
Payment Obligation Wts., Exp. 4/20 3,570 --
- --------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/05(2) 5,250 42,000
---------------
Total Rights, Warrants and
Certificates (Cost $368,233) 1,419,357
</TABLE>
37
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 8.4%
- --------------------------------------------------------------------
Bankers Trust/Bear Stearns High
Yield Composite Index Linked Nts.,
8.55%, 4/5/99-5/4/99 $ 6,000,000 5,765,550
- --------------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts.:
8.5%, 4/9/99-5/14/99 12,000,000 11,805,840
9%, 2/5/99 1,500,000 1,382,865
- --------------------------------------------------------------------
Goldman Sachs Group LP, High Yield
Index Nts., 8%, 3/4/99 1,500,000 1,403,400
- --------------------------------------------------------------------
J.P. Morgan & Co., Inc., The
Emerging Markets Bond Index Linked
Nts., 9.50%, 1/29/99(14) 3,000,000 2,515,290
- --------------------------------------------------------------------
Shoshone Partners Loan Trust Sr.
Nts., 6.97%, 4/28/02 (representing
a basket of reference loans and a
total return swap between Chase
Manhattan Bank and the Trust)(2)(3) 5,360,000 4,806,894
---------------
Total Structured Instruments (Cost
$29,503,421) 27,679,839
- --------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.6%
- --------------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98, to be repurchased
at $5,102,692 on 1/4/99,
collateralized by U.S. Treasury
Nts., 4%-8.875%, 2/15/99-7/15/06,
with a value of $5,204,061 (Cost
$5,100,000) 5,100,000 5,100,000
- --------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$334,412,099) 97.7% 320,913,385
- --------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.3 7,649,272
-------------- ---------------
NET ASSETS 100.0% $ 328,562,657
-------------- ---------------
-------------- ---------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP - Argentine Peso
CAD - Canadian Dollar
DEM - German Mark
GBP - British Pound Sterling
IDR - Indonesian Rupiah
XEU - European Currency Units
2. Identifies issues considered to be illiquid or restricted - See applicable
note 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 $62,611,444 or 19.06% of the Fund's net
assets as of December 31, 1998.
5. Represents the current interest rate for an increasing rate security.
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
7. Non-income producing - issuer is in default.
8. 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, face amount disclosed represents total underlying
principal.
9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
10. Securities with an aggregate market value of $2,919,300 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See applicable note of Notes to Financial Statements.
38
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
11. Interest or dividend is paid in kind.
12. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See applicable note of Notes to
Financial Statements.
13. Non-income producing security.
14. Security is linked to the Emerging Markets Bond Index (EMBI). The EMBI
tracks total returns for currency denominated debt instruments of the emerging
markets. Countries covered are Argentina, Brazil, Bulgaria, Ecuador, Mexico,
Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela.
See accompanying Notes to Financial Statements.
39
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- ------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 43.5%
- ------------------------------------------------------------------
GOVERNMENT AGENCY - 26.6%
- ------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 12.7%
Federal Home Loan Mortgage Corp.,
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates:
Series 1092, Cl. K, 8.50%, 6/15/21 $ 3,000,000 $ 3,181,890
Series 151, Cl. F, 9%, 5/15/21 866,526 912,825
Series 1541, Cl. H, 7%, 10/15/22 4,750,000 4,987,500
Series 1712, Cl. B, 6%, 3/15/09 1,000,000 995,930
Series 1714, Cl. M, 7%, 8/15/23 2,000,000 2,038,120
- ------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Gtd. Multiclass Mtg. Participation
Certificates, 7%, 4/1/26 3,854,379 3,930,812
- ------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Gtd. Real Estate Mtg. Investment
Conduit
Pass-Through Certificates, Series
1914, Cl. G, 6.50%, 2/15/24 3,000,000 3,036,540
- ------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Interest-Only Stripped Mtg.-Backed
Security, Series 197, Cl. IO,
9.643%, 4/1/28(2) 14,642,987 3,807,177
- ------------------------------------------------------------------
Federal Home Loan Mortgage
Corp.-Government National Mortgage
Assn., Gtd. Multiclass Mtg.
Participation Certificates, Series
26, Cl. B, 6%, 5/25/15 6,499,999 6,485,764
- ------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 1/25/28(4) 16,500,000 16,610,880
6.50%, 3/1/11-11/1/28 9,097,770 9,165,493
7%, 1/25/28(4) 15,000,000 15,302,400
7%, 4/1/04-11/1/25 986,546 1,004,337
7.50%, 1/1/08-1/1/26 3,076,835 3,161,912
8%, 5/1/17 425,154 443,491
- ------------------------------------------------------------------
Federal National Mortgage Assn.,
Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
8.75%, 11/25/05 1,894,061 1,970,411
- ------------------------------------------------------------------
Federal National Mortgage Assn.,
Gtd. Real Estate Mtg. Investment
Conduit
Pass-Through Certificates:
Trust 1989-17, Cl. E, 10.40%,
4/25/19 877,884 967,315
Trust 1997-25, Cl. B, 7%, 12/18/22 1,370,000 1,390,975
- ------------------------------------------------------------------
Federal National Mortgage Assn.,
Principal-Only Stripped Mtg.-Backed
Security:
Trust 277-C1, 21.711%, 4/1/27(5) 632,721 555,806
Trust 294, Cl. 1, 5.206%, 2/1/28(5) 3,557,954 3,024,262
-------------
82,973,840
- ------------------------------------------------------------------
GUARANTEED - 13.9%
Government National Mortgage Assn.:
6.50%, 9/15/24 15,628,113 15,805,493
7%, 1/1/28(4) 15,000,000 15,346,950
7%, 1/15/09-8/15/28 8,941,590 9,154,395
7.50%, 1/15/27-9/15/28 39,204,128 40,441,375
8%, 1/15/28-9/15/28 9,884,125 10,273,267
-------------
91,021,480
</TABLE>
40
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- ------------------------------------------------------------------
<S> <C> <C>
PRIVATE - 16.9%
- ------------------------------------------------------------------
COMMERCIAL - 12.5%
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-D5, Cl. A6, 7.185%,
2/14/41(6) $ 3,000,000 $ 2,746,406
Series 1997-D5, Cl. B2, 6.93%,
2/14/41 5,400,000 3,904,875
Series 1998-MD6, Cl. A3, 6.98%,
3/15/28(6) 6,000,000 6,143,437
- ------------------------------------------------------------------
Asset Securitization Corp.,
Interest-Only Stripped Mtg.-Backed
Security,
Series 1997-D5, Cl. PS1, 9.092%,
2/14/41(2) 18,497,284 1,789,034
- ------------------------------------------------------------------
BKB Commercial Mortgage Trust,
Commercial Mtg. Obligations,
Series 1997-C1, Cl. C, 7.45%,
10/25/00(3) 815,000 813,727
- ------------------------------------------------------------------
Capital Lease Funding
Securitization LP, Interest-Only
Stripped Mtg.-Backed Security,
Series 1997-CTL1, 10.611%,
6/22/24(2)(3) 31,405,361 1,293,901
- ------------------------------------------------------------------
Commercial Mortgage Acceptance
Corp., Collateralized Mtg.
Obligations,
Series 1996-C1, Cl. D, 7.746%,
12/25/20(3)(6) 2,500,000 2,464,844
- ------------------------------------------------------------------
CRIMMI MAE Trust I, Collateralized
Mtg. Obligations,
Series 1996-C1, Cl. A2, 8/30/05(7) 2,000,000 1,961,909
- ------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Interest-Only Stripped
Mtg.-Backed Security, Series
1998-C1, Cl. AX, 8.082%,
4/11/30(2)(3) 25,105,463 1,796,610
- ------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates:
Series 1994-C1, Cl. 2-D, 8.70%,
9/25/25 1,500,000 1,530,000
Series 1994-C1, Cl. 2-E, 8.70%,
9/25/25 1,500,000 1,494,375
- ------------------------------------------------------------------
First Union-Lehman Brothers
Commercial Mortgage Trust,
Commercial Mtg.
Pass-Through Certificates, Series
1998-C2, Cl. E, 6.778%, 5/18/13 2,000,000 1,731,250
- ------------------------------------------------------------------
First Union-Lehman Brothers
Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed
Security:
Series 1997-C1, Cl. IO, 10.173%,
4/18/27(2) 8,454,887 587,218
Series 1997-C1, 8.357%-8.992%,
4/18/27(2) 24,962,333 1,733,712
Series 1998-C2, 8.971%, 5/18/28(2) 29,808,827 1,227,285
- ------------------------------------------------------------------
General Motors Acceptance Corp.,
Collateralized Mtg. Obligations:
Series 1997-C2, Cl. D, 7.192%,
1/15/08 3,500,000 3,469,375
Series 1998-C1, Cl. E, 7.086%,
3/15/11(6) 3,500,000 3,520,781
- ------------------------------------------------------------------
General Motors Acceptance Corp.,
Interest-Only Stripped Mtg.-Backed
Security,
Series 1997-C1, Cl. X,
8.665%-9.155%, 7/15/27(2) 28,232,978 2,523,322
- ------------------------------------------------------------------
GS Mortgage Securities Corp. II,
Commercial Mtg. Pass-Through
Certificates,
Series 1997-CL1, Cl. F,
7.309%-7.779%, 7/13/30(6) 5,000,000 4,752,187
- ------------------------------------------------------------------
Lehman Brothers Commercial Conduit
Mortgage Trust, Interest-Only
Stripped
Mtg.-Backed Security, Series
1998-C1, Cl. IO, 8.783%, 2/18/28(2) 44,613,659 2,718,645
- ------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D, 7.42%,
4/25/28 2,000,000 2,047,500
Series 1997-C2, Cl. D, 7.072%,
12/10/29(6) 4,000,000 3,877,500
- ------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. D-1, 7.436%,
2/15/28(3)(6) 1,000,000 1,028,125
Series 1997-RR, Cl. D, 7.436%,
4/30/39(3) 4,300,000 4,055,437
Series 1997-XL1, Cl. F, 7.413%,
10/3/30(6) 2,500,000 2,523,437
- ------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates,
Series-DMC, Cl. B, 8.562%-8.921%,
8/12/11(3) 6,000,000 6,319,000
</TABLE>
41
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- ------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL (CONTINUED)
Potomac Gurnee Financial Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1, Cl. C, 7.21%, 12/21/26(3) $ 250,000 $ 247,891
Series 1, Cl. D, 7.68%, 12/21/26(3) 500,000 501,563
- ------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,505,391
Series 1995-C1, Cl. D, 6.90%,
2/25/27 3,000,000 2,981,953
- ------------------------------------------------------------------
Structured Asset Securities Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
E, 7.30%, 4/12/12 4,000,000 3,773,750
- ------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates:
Series 1996-C3, Cl. C, 7.375%,
6/25/30(3)(6) 3,000,000 3,044,063
Series 1996-CFL, Cl. D, 7.034%,
2/25/28 1,800,000 1,815,750
-------------
81,924,253
- ------------------------------------------------------------------
MULTI-FAMILY - 0.2%
Countrywide Funding Corp., Mtg.
Pass-Through Certificates, Series
1993-12, Cl. B1, 6.625%, 2/25/24 996,193 970,043
- ------------------------------------------------------------------
Merrill Lynch Trust, Collateralized
Mtg. Obligations, Gtd. Multiclass
Mtg. Participation Certificates,
Series 43, Cl. E, 6.50%, 8/27/15 444,793 445,487
- ------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates,
Series 1991-M5, Cl. A, 9%,
3/25/17(3) 189,239 187,820
-------------
1,603,350
- ------------------------------------------------------------------
OTHER - 0.0%
Salomon Brothers Mortgage
Securities VI, Interest-Only
Stripped Mtg.-Backed Security,
Series 1987-3, Cl. B,
23.059%-24.103%, 10/23/17(2) 74,644 20,155
- ------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VI, Principal-Only
Stripped Mtg.-Backed Security,
Series 1987-3, Cl. A,
16.254%-24.103%, 10/23/17(5) 110,461 95,169
-------------
115,324
- ------------------------------------------------------------------
RESIDENTIAL - 4.2%
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates,
Series 1997-C1, Cl. E, 7.50%,
3/1/11(3) 5,006,000 4,790,116
- ------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates,
Series 1997-CHL1, 8.098%,
7/25/06(3)(6) 4,024,000 3,939,748
- ------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-HF1, Cl. E, 7.55%,
7/15/29(3) 1,500,000 1,543,125
Series 1997-WF1, Cl. E, 7.49%,
5/15/09(3) 1,000,000 1,012,813
- ------------------------------------------------------------------
NationsBank Trust, Lease
Pass-Through Certificates, Series
1997A-1, 7.442%, 1/10/11(6) 2,500,000 2,656,641
- ------------------------------------------------------------------
Residential Accredit Loans, Inc.,
Mtg. Asset-Backed Pass-Through
Certificates, Series 1997-QS11, 7%,
10/25/12 13,039,614 13,259,658
- ------------------------------------------------------------------
Ryland Mortgage Securities Corp.
III Sub. Bonds, Series 1992-A, Cl.
1A, 8.256%, 3/29/30(6) 310,293 314,075
-------------
27,516,176
-------------
Total Mortgage-Backed Obligations
(Cost $285,512,044) 285,154,423
</TABLE>
42
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
0.1%
- -----------------------------------------------------------------------
Ontario, Canada (Province of)
Bonds, 8%, 10/17/01 $ 750,000 $ 803,977
- -----------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts.,
Zero Coupon, 3/17/99 (3)(8)IDR 1,000,000,000 31,250
-------------
Total Foreign Government
Obligations (Cost $1,102,252) 835,227
- -----------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.1%
- -----------------------------------------------------------------------
Colombia (Republic of) 1989-1990
Integrated Loan Facility Bonds,
6.375%, 7/1/01(3)(6) (Cost
$795,958) 825,799 761,800
- -----------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 0.8%
- -----------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority Exchangeable
Revenue Bonds, University of Miami,
Prerefunded, MBIA Insured, 7.65%,
4/1/10 175,000 187,808
- -----------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority Revenue Bonds,
University of Miami, MBIA Insured,
7.65%, 4/1/10 205,000 219,252
- -----------------------------------------------------------------------
Dade County, FL Educational
Facilities Authority Taxable
Exchange Revenue Bonds, University
of Miami, MBIA Insured, 7.65%,
4/1/10 120,000 128,342
- -----------------------------------------------------------------------
Pinole, CA Redevelopment Agency Tax
Allocation Taxable Bonds, Pinole
Vista Redevelopment, Series B,
8.35%, 8/1/17 670,000 708,659
- -----------------------------------------------------------------------
Port of Portland, OR Special
Obligation Taxable Revenue Bonds,
PAMCO Project, 9.20%, 5/15/22 500,000 552,200
- -----------------------------------------------------------------------
Virgin Islands Public Finance
Authority Taxable Revenue Refunding
Bonds, Sr. Lien Loan Nts., Series
B, 6.99%, 10/1/01 3,265,000 3,337,124
-------------
Total Municipal Bonds and Notes
(Cost $4,928,533) 5,133,385
- -----------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 54.1%
- -----------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.6%
Amtran, Inc., 9.625% Nts., 12/15/05 800,000 804,000
- -----------------------------------------------------------------------
Atlas Air, Inc., 8.01% Nts., 1/2/10 3,000,000 3,022,332
-------------
3,826,332
- -----------------------------------------------------------------------
CHEMICALS - 1.4%
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 300,000 303,000
- -----------------------------------------------------------------------
IMC Global, Inc., 7.625% Bonds,
11/1/05 9,000,000 9,222,048
-------------
9,525,048
- -----------------------------------------------------------------------
CONSUMER DURABLES - 0.1%
Toro Co., 7.125% Nts., 6/15/07 1,000,000 969,152
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES - 1.2%
AKI Holdings, Inc., 10.50% Sr.
Nts., 7/1/08(7) 300,000 286,500
- -----------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Sub.
Nts., 8/15/08(7) 110,000 112,200
- -----------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs.,
3/15/11 1,097,000 988,345
- -----------------------------------------------------------------------
Harman International Industries,
Inc., 7.32% Nts., 7/1/07 5,000,000 5,244,195
- -----------------------------------------------------------------------
Procter & Gamble Co., 9.36% Debs.,
Series A, 1/1/21 500,000 664,743
- -----------------------------------------------------------------------
Revlon Consumer Products Corp., 9%
Sr. Nts., 11/1/06(7) 500,000 500,000
</TABLE>
43
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER NON-DURABLES (CONTINUED)
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08 $ 360,000 $ 343,800
-------------
8,139,783
- -----------------------------------------------------------------------
ENERGY - 5.0%
BP America, Inc., 10.875% Unsec.
Unsub. Nts., 8/1/01CAD 1,000,000 737,839
- -----------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts.,
5/15/99 500,000 505,244
- -----------------------------------------------------------------------
Colorado Interstate Gas Corp., 10%
Sr. Debs., 6/15/05 500,000 615,642
- -----------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr.
Nts., 12/1/06(7) 2,000,000 2,104,710
- -----------------------------------------------------------------------
Enron Corp., 9.875% Debs., 6/15/03 375,000 427,440
- -----------------------------------------------------------------------
ENSCO International, Inc.:
6.75% Nts., 11/15/07 5,000,000 5,096,110
7.20% Debs., 11/15/27 3,000,000 3,047,355
- -----------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts.,
9/15/07 4,000,000 3,981,300
- -----------------------------------------------------------------------
Global Marine, Inc., 7.125% Nts.,
9/1/07 8,000,000 8,128,224
- -----------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., Series B, 5/1/05(7) 300,000 235,500
- -----------------------------------------------------------------------
Gulf Canada Resources Ltd., 8.375%
Sr. Nts., 11/15/05 500,000 495,000
- -----------------------------------------------------------------------
HNG Internorth/Enron Corp., 9.625%
Debs., 3/15/06 500,000 612,929
- -----------------------------------------------------------------------
McDermott, Inc., 9.375% Nts.,
3/15/02 400,000 427,277
- -----------------------------------------------------------------------
Mitchell Energy & Development
Corp., 9.25% Sr. Nts., 1/15/02 55,000 58,200
- -----------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr.
Sec. Nts., 6/1/08 400,000 322,000
- -----------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 1,200,000 1,218,000
- -----------------------------------------------------------------------
Saga Petroleum ASA, 7.25% Debs.,
9/23/27 1,000,000 920,550
- -----------------------------------------------------------------------
Talisman Energy, Inc., 7.25% Debs.,
10/15/27 2,500,000 2,411,257
- -----------------------------------------------------------------------
Texaco Capital, Inc., 8.875% Gtd.
Debs., 9/1/21 500,000 648,127
- -----------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875%
Debs., 1/1/21 750,000 961,927
-------------
32,954,631
- -----------------------------------------------------------------------
FINANCIAL - 13.7%
Aeltus CBO II Ltd./Aeltus CBO II
Corp., 7.982% Sr. Sec. Sub. Bonds,
8/6/09(3) 5,000,000 4,831,250
- -----------------------------------------------------------------------
Aetna Services, Inc., 7.125% Nts.,
8/15/06 1,000,000 1,051,813
- -----------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs.,
2/3/27(9) 2,000,000 2,241,142
- -----------------------------------------------------------------------
American General Finance Corp.,
5.875% Sr. Nts., 7/1/00 196,000 197,088
- -----------------------------------------------------------------------
BankAmerica Corp. (New), 7.75% Sub.
Nts., 7/15/02 750,000 805,140
- -----------------------------------------------------------------------
Banque Centrale de Tunisie, 7.50%
Nts., 9/19/07 900,000 821,056
- -----------------------------------------------------------------------
Chase Manhattan Corp. (New),
10.125% Sub. Nts., 11/1/00 750,000 809,707
- -----------------------------------------------------------------------
Citicorp Capital I, 7.933% Gtd.
Bonds, 2/15/27 2,000,000 2,193,572
- -----------------------------------------------------------------------
CNA Financial Corp., 6.25% Nts.,
11/15/06 2,195,000 2,199,572
- -----------------------------------------------------------------------
EOP Operating LP, 6.625% Sr. Unsec.
Nts., 2/15/05 1,000,000 985,431
- -----------------------------------------------------------------------
Farmers Exchange Capital, 7.05%
Trust Surplus Nts., 7/15/28(7) 3,000,000 3,027,762
</TABLE>
44
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL (CONTINUED)
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 $ 750,000 $ 834,676
9% Sub. Nts., 6/15/99 150,000 152,283
- -----------------------------------------------------------------------
Fleet Mtg. Group, Inc., 6.50% Nts.,
9/15/99 500,000 502,804
- -----------------------------------------------------------------------
Ford Motor Credit Co., 6.75% Nts.,
8/15/08 1,000,000 1,064,037
- -----------------------------------------------------------------------
Franchise Finance Corp. of America,
8.25% Sr. Unsec. Nts., 10/30/03 7,850,000 7,984,047
- -----------------------------------------------------------------------
Household Finance Corp.:
6.40% Sr. Unsec. Unsub. Nts.,
Series EMTN, 6/17/08 2,000,000 2,063,900
8.95% Debs., 9/15/99 500,000 511,410
- -----------------------------------------------------------------------
Household International BV, 6% Gtd.
Sr. Nts., 3/15/99 131,000 131,127
- -----------------------------------------------------------------------
HSBC America Capital Trust II,
8.38% Capital Securities,
5/15/27(7) 3,000,000 3,061,941
- -----------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr.
Sub. Nts., 2/15/08 3,000,000 3,000,228
- -----------------------------------------------------------------------
Liberty Mutual Insurance Co.,
7.697% Unsec. Nts., 10/15/2097(7) 7,000,000 7,069,440
- -----------------------------------------------------------------------
Long Island Savings Bank, 6.20%
Nts., 4/2/01 4,000,000 4,038,592
- -----------------------------------------------------------------------
Lumbermens Mutual Casualty Co.,
8.30% Surplus Nts., 12/1/37(7) 2,000,000 2,242,676
- -----------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.56% Nts., 12/16/07 2,000,000 2,084,358
6.875% Nts., 3/1/03-11/15/18 7,450,000 7,774,573
- -----------------------------------------------------------------------
Metropolitan Life Insurance Co.,
6.30% Nts., 11/1/03(7) 3,000,000 3,016,956
- -----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.,
7% Debs., 10/1/13 1,000,000 1,059,171
- -----------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75%
Sr. Nts., 5/15/99 1,000,000 1,009,119
- -----------------------------------------------------------------------
Prudential Insurance Co. of
America, 6.875% Nts., 4/15/03(7) 3,000,000 3,108,741
- -----------------------------------------------------------------------
Rank Group Finance plc, 6.75% Gtd.
Nts., 11/30/04 3,000,000 3,018,534
- -----------------------------------------------------------------------
Salomon Smith Barney Holdings,
Inc., 6.25% Bonds, 1/15/05 3,000,000 3,037,068
- -----------------------------------------------------------------------
Salomon, Inc., 7.30% Nts., 5/15/02 1,000,000 1,044,339
- -----------------------------------------------------------------------
SunAmerica, Inc.:
9% Sr. Nts., 1/15/99 196,000 196,152
9.95% Unsec. Debs., 8/1/08 3,000,000 3,814,737
- -----------------------------------------------------------------------
Travelers Group, Inc.:
6.875% Debs., 2/15/2098 1,000,000 1,018,395
7.25% Sr. Unsec. Nts., 5/1/01 3,300,000 3,414,117
- -----------------------------------------------------------------------
U.S. Leasing International, Inc.,
6.625% Sr. Nts., 5/15/03 750,000 774,986
- -----------------------------------------------------------------------
Washington Mutual Capital I, 8.375%
Sub. Capital Income Nts., 6/1/27 3,000,000 3,314,010
-------------
89,505,950
- -----------------------------------------------------------------------
FOOD & DRUG - 0.2%
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03(10) 1,095,000 903,375
12.625% Sub. Nts., 6/15/02 400,000 392,000
-------------
1,295,375
- -----------------------------------------------------------------------
FOOD/TOBACCO - 0.3%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., Series B, 7/1/08 300,000 313,500
- -----------------------------------------------------------------------
Bass America, Inc., 6.75% Gtd.
Nts., 8/1/99 750,000 755,815
</TABLE>
45
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FOOD/TOBACCO (CONTINUED)
Coca-Cola Enterprises, Inc., 6.95%
Debs., 11/15/26 $ 1,000,000 $ 1,067,105
-------------
2,136,420
- -----------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.6%
Boise Cascade Corp., 9.90% Nts.,
3/15/00 750,000 774,358
- -----------------------------------------------------------------------
Fletcher Challenge Capital Canada,
Inc., 7.75% Nts., 6/20/06 1,800,000 1,834,477
- -----------------------------------------------------------------------
Mail-Well I Corp., 8.75% Sr. Sub.
Nts., 12/15/08(7) 800,000 804,000
- -----------------------------------------------------------------------
Potlatch Corp., 9.46% Medium-Term
Nts., 4/2/02 500,000 548,572
-------------
3,961,407
- -----------------------------------------------------------------------
GAMING/LEISURE - 2.5%
Circus Circus Enterprises, Inc.,
6.75% Nts., 7/15/03 375,000 348,440
- -----------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr.
Nts., 4/15/07 4,000,000 4,150,864
- -----------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr.
Nts., Series C, 12/1/08 300,000 301,500
- -----------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts.,
8/15/08 950,000 978,500
- -----------------------------------------------------------------------
Marriott International, Inc.,
6.875% Nts., 11/15/05(7) 8,500,000 8,542,373
- -----------------------------------------------------------------------
Park Place Entertainment Corp.,
7.875% Sr. Sub. Nts., 12/15/05(7) 600,000 603,750
- -----------------------------------------------------------------------
Premier Parks, Inc., 0%/10% Sr.
Disc. Nts., 4/1/08(10) 300,000 204,750
- -----------------------------------------------------------------------
Station Casinos, Inc.:
8.875% Sr. Sub. Nts., 12/1/08(7) 400,000 408,000
9.75% Sr. Sub. Nts., 4/15/07 550,000 577,500
-------------
16,115,677
- -----------------------------------------------------------------------
HEALTHCARE - 0.3%
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 600,000 594,000
- -----------------------------------------------------------------------
ICN Pharmaceutical, Inc., 8.75% Sr.
Nts., 11/15/08(7) 125,000 126,875
- -----------------------------------------------------------------------
Roche Holdings, Inc., 2.75% Bonds,
4/14/00 1,250,000 1,210,938
-------------
1,931,813
- -----------------------------------------------------------------------
HOUSING - 1.2%
Building Materials Corp. of
America, 8% Sr. Nts., 12/1/08(7) 800,000 802,000
- -----------------------------------------------------------------------
Nationwide Health Properties, Inc.,
7.60% Nts., Series C, 11/20/28 6,900,000 6,934,500
-------------
7,736,500
- -----------------------------------------------------------------------
INFORMATION TECHNOLOGY - 1.6%
Motorola, Inc., 6.50% Unsec. Debs.,
11/15/28 10,000,000 10,185,970
- -----------------------------------------------------------------------
MANUFACTURING - 0.4%
MOLL Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(7) 250,000 246,250
- -----------------------------------------------------------------------
Norsk Hydro AS, 8.75% Bonds,
10/23/01 1,000,000 1,073,750
- -----------------------------------------------------------------------
Tenneco, Inc. (New):
10.20% Debs., 3/15/08 400,000 490,210
8.075% Nts., 10/1/02 650,000 694,406
-------------
2,504,616
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
1.9%
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series
B, 6/15/07 2,500,000 2,575,000
9% Sr. Sub. Nts., 10/1/08(7) 2,200,000 2,332,000
</TABLE>
46
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-BROADCASTING
(CONTINUED)
Clear Channel Communications, Inc.,
6.625% Nts., 6/15/08 $ 3,000,000 $ 3,045,828
- -----------------------------------------------------------------------
Time Warner, Inc., 6.95% Debs.,
1/15/28 4,000,000 4,250,416
-------------
12,203,244
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 1.4%
Comcast Cable Communications, Inc.,
8.125% Unsec. Nts., 5/1/04 5,000,000 5,524,825
- -----------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr.
Unsec. Debs., 7/15/18 1,500,000 1,478,400
- -----------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr.
Debs., 10/30/07 2,200,000 2,395,351
-------------
9,398,576
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 3.3%
GSP I Corp., 10.15% First Mtg.
Bonds, 6/24/10(3) 1,086,678 1,108,694
- -----------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts.,
12/1/05 900,000 913,500
- -----------------------------------------------------------------------
Reed Elsevier, Inc., 6.625% Nts.,
10/15/23(7) 600,000 591,516
- -----------------------------------------------------------------------
Reed Publishing (USA), Inc., 7.66%
Medium-Term Nts., 2/19/99 500,000 501,083
- -----------------------------------------------------------------------
Regal Cinemas, Inc., 9.50% Sr. Sub.
Nts., 6/1/08(7) 500,000 522,500
- -----------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr.
Sub. Nts., 12/1/08(7) 600,000 603,750
- -----------------------------------------------------------------------
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 1,295,000 1,588,491
- -----------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs.,
2/1/23 12,000,000 15,822,516
-------------
21,652,050
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -1.9%
Cable & Wireless Communications
plc, 6.625% Nts., 3/6/05 1,000,000 1,010,803
- -----------------------------------------------------------------------
Intermedia Communications, Inc.,
8.60% Sr. Unsec. Nts., Series B,
6/1/08 905,000 864,275
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc.,
9.625% Sr. Nts., 10/1/07 2,200,000 2,112,000
- -----------------------------------------------------------------------
NTL, Inc., 11.50% Sr. Nts.,
10/1/08(7) 1,000,000 1,097,500
- -----------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B,
2/15/05 1,000,000 995,000
11.50% Sr. Nts., 11/1/08(7) 1,000,000 1,052,500
- -----------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/8.29% Sr. Unsec. Disc.
Nts., Series B, 2/1/08(10) 1,350,000 1,026,000
- -----------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27CAD 3,000,000 2,031,401
- -----------------------------------------------------------------------
TCI Communications, Inc., 6.875%
Sr. Unsec. Nts., 2/15/06 2,000,000 2,150,738
-------------
12,340,217
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 0.9%
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(7) 200,000 201,000
- -----------------------------------------------------------------------
Price Communications Wireless,
Inc., 9.125% Sr. Sec. Nts.,
12/15/06(7) 1,000,000 1,015,000
- -----------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Unsec. Disc. Nts., 3/1/08(10) 700,000 406,000
- -----------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(7)(10) 600,000 303,000
- -----------------------------------------------------------------------
U.S. Cellular Corp., 7.25% Nts.,
8/15/07 4,000,000 4,253,488
-------------
6,178,488
- -----------------------------------------------------------------------
METALS/MINERALS - 0.1%
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., Series B, 5/15/08 750,000 759,375
</TABLE>
47
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL - 1.3%
Eye Care Centers of America, Inc.,
9.125% Sr. Sub. Nts., 5/1/08(7) $ 250,000 $ 238,750
- -----------------------------------------------------------------------
Neiman Marcus Group, Inc., 6.65%
Sr. Nts., 6/1/08 3,000,000 3,014,988
- -----------------------------------------------------------------------
Staples, Inc., 7.125% Sr. Nts.,
8/15/07 5,000,000 5,159,805
-------------
8,413,543
- -----------------------------------------------------------------------
SERVICE - 4.3%
Allied Waste North America, Inc.,
7.875% Sr. Nts., 1/1/09(7) 665,000 676,638
- -----------------------------------------------------------------------
Archer Daniels Midland Co., 7.125%
Debs., 3/1/13 750,000 849,599
- -----------------------------------------------------------------------
Arvin Industries, Inc., 6.75% Nts.,
3/15/08 2,500,000 2,585,635
- -----------------------------------------------------------------------
Cendant Corp., 7.75% Sr. Unsec.
Nts., 12/1/03(11) 10,000,000 10,230,150
- -----------------------------------------------------------------------
Great Lakes Dredge & Dock Corp.,
11.25% Sr. Sub. Nts., 8/15/08(7) 135,000 137,700
- -----------------------------------------------------------------------
Tyco International Group SA, 5.875%
Nts., 11/1/04(7) 13,500,000 13,436,375
-------------
27,916,097
- -----------------------------------------------------------------------
TRANSPORTATION - 4.7%
Chrysler Corp., 7.40% Debs.,
8/1/2097 2,000,000 2,262,372
- -----------------------------------------------------------------------
CSX Corp.:
6.80% Fixed Nts., 12/1/28 2,700,000 2,697,808
7.25% Sr. Unsec. Debs., 5/1/27 4,820,000 5,145,480
- -----------------------------------------------------------------------
Johnson Controls, Inc., 7.70%
Debs., 3/1/15 500,000 574,979
- -----------------------------------------------------------------------
Kansas City Southern Industries,
Inc., 6.625% Nts., 3/1/05 750,000 777,202
- -----------------------------------------------------------------------
UAL Corp., 9.125% Debs., 1/15/12 5,000,000 5,780,190
- -----------------------------------------------------------------------
Union Pacific Corp.:
6.39% Medium-Term Nts., Series E,
11/1/04 13,000,000 13,152,724
9.65% Medium-Term Nts., 4/17/00 400,000 418,300
-------------
30,809,055
- -----------------------------------------------------------------------
UTILITY - 5.2%
AES Corp., 8% Sr. Nts., 12/31/08 6,600,000 6,537,762
- -----------------------------------------------------------------------
Alltel Corp., 6.50% Debs., 11/1/13 1,000,000 1,051,429
- -----------------------------------------------------------------------
Cincinnati Bell Telephone Co.,
6.30% Sr. Unsec. Bonds, 12/1/28 1,000,000 1,005,723
- -----------------------------------------------------------------------
Cleveland Electric Illuminating
Co./Toledo Edison Co., 7.13% Sec.
Nts., Series B, 7/1/07 3,000,000 3,218,124
- -----------------------------------------------------------------------
Consolidated Natural Gas Co.,
6.625% Debs., 12/1/13 1,000,000 1,032,508
- -----------------------------------------------------------------------
GTE Corp., 9.375% Debs., 12/1/00 500,000 538,142
- -----------------------------------------------------------------------
Long Island Lighting Co., 8.20%
Debs., 3/15/23 3,300,000 3,574,250
- -----------------------------------------------------------------------
National Fuel Gas Co., 7.75% Debs.,
2/1/04 500,000 546,822
- -----------------------------------------------------------------------
Northern Telecom Ltd., 6.875% Nts.,
10/1/02 500,000 525,985
- -----------------------------------------------------------------------
Public Service Co. of Colorado,
8.75% First Mtg. Bonds, 3/1/22 750,000 826,739
- -----------------------------------------------------------------------
South Carolina Electric & Gas Co.,
9% Mtg. Bonds, 7/15/06 500,000 601,390
- -----------------------------------------------------------------------
Sprint Capital Corp., 6.875% Sr.
Unsec. Nts., 11/15/28 6,000,000 6,250,440
- -----------------------------------------------------------------------
TE Products Pipeline Co., 6.45% Sr.
Nts., 1/15/08 4,000,000 4,061,760
- -----------------------------------------------------------------------
Texas Gas Transmission Corp.,
8.625% Nts., 4/1/04 500,000 565,720
- -----------------------------------------------------------------------
Washington Gas Light Co., 8.75%
First Mtg. Bonds, 7/1/19 500,000 506,909
</TABLE>
48
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT (1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
UTILITY (CONTINUED)
Williams Cos., Inc., 6.125% Sec.
Nts., 2/15/02 $ 3,000,000 $ 3,026,301
-------------
33,870,004
-------------
Total Corporate Bonds and Notes
(Cost $347,798,759) 354,329,323
</TABLE>
<TABLE>
<CAPTION>
SHARES
- -----------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS - 1.6%
- -----------------------------------------------------------------
Centaur Funding Corp., 9.08%, Cum.
Preferred Shares, 4/21/20(3)(12) 6,600 6,917,625
- -----------------------------------------------------------------
United Dominion Realty Trust, Inc.,
8.50% Unsec. Unsub. Preferred Nts. 135,000 3,493,125
-------------
Total Preferred Stocks (Cost
$9,975,000) 10,410,750
- -----------------------------------------------------------------
OTHER SECURITIES - 0.5%
- -----------------------------------------------------------------
Allstate Financing I, 7.95% Gtd.
Quarterly Income Preferred
Securities, Series A (Cost
$3,000,000) 120,000 3,120,000
PRINCIPAL
AMOUNT (1)
- -----------------------------------------------------------------
STRUCTURED INSTRUMENTS - 3.9%
- -----------------------------------------------------------------
Bankers Trust/Bear Stearns High
Yield Composite Index Linked Nts.,
8.135%, 6/1/99 $ 5,000,000 5,088,850
- -----------------------------------------------------------------
Bankers Trust/Lehman High Yield
Composite Index Linked Nts., 7.70%,
5/4/99 1,000,000 1,033,950
- -----------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch), Lehman High
Yield Index Nts., 8.50%, 3/8/99 6,000,000 5,655,000
- -----------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts., 8.50%, 4/9/99 3,000,000 2,788,140
- -----------------------------------------------------------------
Commerzbank International SA,
Lehman High Yield Composite Index
Linked Nts., 7.80%, 2/5/99-4/5/99 10,000,000 9,973,000
- -----------------------------------------------------------------
Merrill Lynch & Co., Inc., Units,
9.75%, 6/15/99 (representing debt
of Chemical Banking Corp., sub.
capital nts., and equity of
Citicorp, 7.75% preferred,
series 22)(3) 1,000,000 1,130,000
-------------
Total Structured Instruments (Cost
$26,100,540) 25,668,940
- -----------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.4%
- -----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98, to be repurchased
at $2,601,372 on 1/4/99,
collateralized by U.S. Treasury
Nts., 4%-8.875%, 2/15/99-7/15/06,
with a value of $2,653,050 (Cost
$2,600,000) 2,600,000 2,600,000
- -----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$681,813,086) 105.0% 688,013,848
- -----------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (5.0) (32,471,149)
------------- -------------
NET ASSETS 100.0% $655,542,699
------------- -------------
------------- -------------
</TABLE>
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
CAD - Canadian Dollar
IDR - Indonesian Rupiah
49
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
4. When-issued security to be delivered and settled after December 31, 1998.
5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
6. Represents the current interest rate for a variable rate security.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $60,469,812 or 9.22% of the Fund's net
assets as of December 31, 1998.
8. Non-income producing - issuer is in default.
9. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See applicable note of Notes to
Financial Statements.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
11. Securities with an aggregate market value of $5,115,075 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See applicable note of Notes to Financial Statements.
12. Non-income producing security.
See accompanying Notes to Financial Statements.
50
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 88.6%
- ------------------------------------------------------------------------------------------
CAPITAL GOODS - 9.8%
- ------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.2%
Gulfstream Aerospace Corp.(1) 242,200 $ 12,897,150
- ------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.9%
Allied Waste Industries, Inc. (New)(1) 875,835 20,691,602
- ------------------------------------------------------------------------------------------
Republic Services, Inc., Cl. A(1) 325,200 5,995,875
- ------------------------------------------------------------------------------------------
United Rentals, Inc.(1) 294,693 9,761,706
- ------------------------------------------------------------------------------------------
Waste Management, Inc. (New) 344,600 16,066,975
--------------
52,516,158
- ------------------------------------------------------------------------------------------
MANUFACTURING - 3.7%
Tyco International Ltd. 525,000 39,604,687
- ------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 10.5%
- ------------------------------------------------------------------------------------------
MEDIA - 1.0%
Infinity Broadcasting Corp., Cl. A(1) 391,900 10,728,262
- ------------------------------------------------------------------------------------------
RETAIL: GENERAL - 3.9%
Fred Meyer, Inc.(1) 220,000 13,255,000
- ------------------------------------------------------------------------------------------
Kohl's Corp.(1) 200,000 12,287,500
- ------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 200,000 16,287,500
--------------
41,830,000
- ------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 5.6%
Abercrombie & Fitch Co., Cl. A(1) 105,000 7,428,750
- ------------------------------------------------------------------------------------------
Guitar Center, Inc.(1) 120,000 2,955,000
- ------------------------------------------------------------------------------------------
Home Depot, Inc. 375,000 22,945,312
- ------------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 669,000 26,509,125
--------------
59,838,187
- ------------------------------------------------------------------------------------------
CONSUMER STAPLES - 7.5%
- ------------------------------------------------------------------------------------------
CONSUMER SERVICES - 0.6%
Young & Rubicam, Inc.(1) 186,300 6,031,462
- ------------------------------------------------------------------------------------------
ENTERTAINMENT - 3.5%
Outback Steakhouse, Inc.(1) 210,000 8,373,750
- ------------------------------------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1) 275,000 15,090,625
- ------------------------------------------------------------------------------------------
Starbucks Corp.(1) 250,000 14,031,250
--------------
37,495,625
- ------------------------------------------------------------------------------------------
FOOD & DRUG RETAILERS - 3.4%
CVS Corp. 665,000 36,575,000
- ------------------------------------------------------------------------------------------
FINANCIAL - 10.9%
- ------------------------------------------------------------------------------------------
BANKS - 2.0%
Fifth Third Bancorp 200,000 14,262,500
- ------------------------------------------------------------------------------------------
First Tennessee National Corp. 200,000 7,612,500
--------------
21,875,000
</TABLE>
51
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL - 8.9%
Associates First Capital Corp., Cl. A 432,000 $ 18,306,000
- ------------------------------------------------------------------------------------------
Freddie Mac 380,000 24,486,250
- ------------------------------------------------------------------------------------------
Providian Financial Corp. 375,000 28,125,000
- ------------------------------------------------------------------------------------------
Schwab (Charles) Corp. 450,000 25,284,375
--------------
96,201,625
- ------------------------------------------------------------------------------------------
HEALTHCARE - 12.1%
- ------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 4.7%
Biogen, Inc.(1) 260,000 21,580,000
- ------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 50,000 6,690,625
- ------------------------------------------------------------------------------------------
Pfizer, Inc. 75,000 9,407,812
- ------------------------------------------------------------------------------------------
Warner Lambert Co. 175,000 13,157,812
--------------
50,836,249
- ------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 7.4%
Cardinal Health, Inc. 450,000 34,143,750
- ------------------------------------------------------------------------------------------
Guidant Corp. 100,000 11,025,000
- ------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 59,300 915,444
- ------------------------------------------------------------------------------------------
McKesson Corp. 230,000 18,184,375
- ------------------------------------------------------------------------------------------
Medtronic, Inc. 125,900 9,348,075
- ------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(1) 50,000 6,087,500
--------------
79,704,144
- ------------------------------------------------------------------------------------------
TECHNOLOGY - 33.3%
- ------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 7.7%
3Com Corp.(1) 25,000 1,120,313
- ------------------------------------------------------------------------------------------
Ascend Communications, Inc.(1) 300,000 19,725,000
- ------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 225,000 20,882,813
- ------------------------------------------------------------------------------------------
Dell Computer Corp.(1) 175,000 12,807,813
- ------------------------------------------------------------------------------------------
EMC Corp.(1) 340,000 28,900,000
--------------
83,435,939
- ------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 16.8%
Affiliated Computer Services, Inc., Cl. A(1) 200,000 9,000,000
- ------------------------------------------------------------------------------------------
Cap Gemini SA 116,666 18,734,205
- ------------------------------------------------------------------------------------------
Citrix Systems, Inc.(1) 360,000 34,942,500
- ------------------------------------------------------------------------------------------
Compuware Corp.(1) 400,000 31,250,000
- ------------------------------------------------------------------------------------------
Electronic Arts, Inc.(1) 200,000 11,225,000
- ------------------------------------------------------------------------------------------
HBO & Co. 760,000 21,802,500
- ------------------------------------------------------------------------------------------
Lernout & Hauspie Speech Products NV(1) 317,600 10,361,700
- ------------------------------------------------------------------------------------------
Microsoft Corp.(1) 225,000 31,204,688
- ------------------------------------------------------------------------------------------
Visio Corp.(1) 345,000 12,614,063
--------------
181,134,656
- ------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.3%
General Instrument Corp.(1) 100,000 3,393,750
- ------------------------------------------------------------------------------------------
Lucent Technologies, Inc. 100,000 11,000,000
--------------
14,393,750
</TABLE>
52
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS - 7.5%
JDS Fitel, Inc.(1) 425,000 $ 10,545,217
- ------------------------------------------------------------------------------------------
Level One Communications, Inc.(1) 200,000 7,100,000
- ------------------------------------------------------------------------------------------
Uniphase Corp.(1)(2) 228,000 15,817,500
- ------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 420,000 19,162,500
- ------------------------------------------------------------------------------------------
Waters Corp.(1) 325,000 28,356,250
--------------
80,981,467
- ------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 4.5%
- ------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 4.5%
Global Crossing Ltd.(1) 362,700 16,366,838
- ------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(1) 350,000 25,112,500
- ------------------------------------------------------------------------------------------
Qwest Communications International, Inc.(1) 146,610 7,330,500
--------------
48,809,838
--------------
Total Common Stocks (Cost $603,144,720) 954,889,199
- ------------------------------------------------------------------------------------------
OTHER SECURITIES - 0.8%
- ------------------------------------------------------------------------------------------
L & H Capital Trust, Inc., 4.75% Cv. Preferred Income Equity
Redeemable Securities(3) 132,500 4,223,437
- ------------------------------------------------------------------------------------------
United Rental Trust I, 6.50% Cv. Quarterly Income Preferred
Securities(3) 100,000 4,812,500
--------------
Total Other Securities (Cost $11,695,000) 9,035,937
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.3%
- ------------------------------------------------------------------------------------------
United Waste Systems, Inc., 4.50% Cv. Sub. Nts., 6/1/01
(Cost $2,000,000) $ 2,000,000 3,137,500
- ------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.4%
- ------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
4.75%, dated 12/31/98, to be repurchased at $112,559,375 on
1/4/99, collateralized by U.S. Treasury Nts., 4%-8.875%,
2/15/99-7/15/06, with a value of $114,795,454 (Cost
$112,500,000) 112,500,000 112,500,000
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $729,339,720) 100.1% 1,079,562,636
- ------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (1,602,476)
------------ --------------
NET ASSETS 100.0% $1,077,960,160
------------ --------------
------------ --------------
</TABLE>
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES MARKET
SUBJECT EXPIRATION EXERCISE PREMIUM VALUE
TO CALL DATE PRICE RECEIVED NOTE 1
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Uniphase Corp. 13,800 1/99 $70 $34,764 $32,775
</TABLE>
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $9,035,937, or 0.84% of the Fund's net
assets as of December 31, 1998.
See accompanying Notes to Financial Statements.
53
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 91.5%
- -----------------------------------------------------------------
BASIC MATERIALS - 1.7%
- -----------------------------------------------------------------
CHEMICALS - 1.5%
Crompton & Knowles Corp. 100,200 $ 2,072,887
- -----------------------------------------------------------------
Morton International, Inc. 139,000 3,405,500
- -----------------------------------------------------------------
PPG Industries, Inc. 100,000 5,825,000
-------------
11,303,387
- -----------------------------------------------------------------
PAPER - 0.2%
Rayonier, Inc. 32,400 1,488,375
- -----------------------------------------------------------------
CAPITAL GOODS - 4.1%
- -----------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.4%
Emerson Electric Co. 45,000 2,815,312
- -----------------------------------------------------------------
Sanmina Corp.(1) 128,500 8,031,250
-------------
10,846,562
- -----------------------------------------------------------------
INDUSTRIAL SERVICES - 0.9%
Coflexip SA, Sponsored ADR 49,200 1,580,550
- -----------------------------------------------------------------
Southdown, Inc. 95,500 5,652,406
-------------
7,232,956
- -----------------------------------------------------------------
MANUFACTURING - 1.8%
Herman Miller, Inc. 120,000 3,225,000
- -----------------------------------------------------------------
Illinois Tool Works, Inc. 57,500 3,335,000
- -----------------------------------------------------------------
Owens-Illinois, Inc.(1) 40,000 1,225,000
- -----------------------------------------------------------------
Tyco International Ltd. 75,022 5,659,472
-------------
13,444,472
- -----------------------------------------------------------------
CONSUMER CYCLICALS - 16.8%
- -----------------------------------------------------------------
AUTOS & HOUSING - 3.3%
Arvin Industries, Inc. 99,300 4,139,569
- -----------------------------------------------------------------
Centex Corp. 136,000 6,128,500
- -----------------------------------------------------------------
Ethan Allen Interiors, Inc. 80,000 3,280,000
- -----------------------------------------------------------------
Magna International, Inc., Cl. A 22,000 1,364,000
- -----------------------------------------------------------------
Pulte Corp. 44,000 1,223,750
- -----------------------------------------------------------------
Toll Brothers, Inc.(1) 156,200 3,524,262
- -----------------------------------------------------------------
USG Corp. 110,000 5,603,125
-------------
25,263,206
- -----------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.1%
Callaway Golf Co. 95,000 973,750
- -----------------------------------------------------------------
Carnival Corp. 410,000 19,680,000
- -----------------------------------------------------------------
Harley-Davidson, Inc. 70,000 3,316,250
- -----------------------------------------------------------------
Harrah's Entertainment, Inc.(1) 153,000 2,400,187
- -----------------------------------------------------------------
International Game Technology 50,000 1,215,625
</TABLE>
54
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
Premier Parks, Inc.(1) 130,000 $ 3,932,500
-------------
31,518,312
- -----------------------------------------------------------------
MEDIA - 3.2%
CBS Corp. 150,000 4,912,500
- -----------------------------------------------------------------
Chancellor Media Corp.(1) 130,000 6,223,750
- -----------------------------------------------------------------
Infinity Broadcasting Corp., Cl.
A(1) 223,900 6,129,262
- -----------------------------------------------------------------
New York Times Co., Cl. A 200,000 6,937,500
-------------
24,203,012
- -----------------------------------------------------------------
RETAIL: GENERAL - 4.2%
Dayton Hudson Corp. 65,000 3,526,250
- -----------------------------------------------------------------
Federated Department Stores,
Inc.(1) 50,000 2,178,125
- -----------------------------------------------------------------
Fred Meyer, Inc.(1) 160,000 9,640,000
- -----------------------------------------------------------------
Jones Apparel Group, Inc.(1) 200,000 4,412,500
- -----------------------------------------------------------------
Nordstrom, Inc. 125,000 4,335,937
- -----------------------------------------------------------------
Tommy Hilfiger Corp.(1) 120,000 7,200,000
- -----------------------------------------------------------------
WestPoint Stevens, Inc.(1) 35,000 1,104,687
-------------
32,397,499
- -----------------------------------------------------------------
RETAIL: SPECIALTY - 2.0%
Barnes & Noble, Inc.(1) 80,000 3,400,000
- -----------------------------------------------------------------
Intimate Brands, Inc., Cl. A 62,000 1,852,250
- -----------------------------------------------------------------
Nine West Group, Inc.(1) 130,000 2,023,125
- -----------------------------------------------------------------
Republic Industries, Inc.(1) 206,000 3,038,500
- -----------------------------------------------------------------
TJX Cos., Inc. 184,000 5,336,000
-------------
15,649,875
- -----------------------------------------------------------------
CONSUMER STAPLES - 12.6%
- -----------------------------------------------------------------
CONSUMER SERVICES - 2.5%
Budget Group, Inc., Cl. A(1) 271,800 4,314,825
- -----------------------------------------------------------------
Hertz Corp., Cl. A 73,000 3,330,625
- -----------------------------------------------------------------
Omnicom Group, Inc. 145,000 8,410,000
- -----------------------------------------------------------------
Young & Rubicam, Inc.(1) 94,500 3,059,437
-------------
19,114,887
- -----------------------------------------------------------------
ENTERTAINMENT - 2.9%
CKE Restaurants, Inc. 127,270 3,746,511
- -----------------------------------------------------------------
Royal Caribbean Cruises Ltd. 190,000 7,030,000
- -----------------------------------------------------------------
Time Warner, Inc. 180,000 11,171,250
-------------
21,947,761
- -----------------------------------------------------------------
FOOD - 1.0%
IBP, Inc. 72,800 2,120,300
- -----------------------------------------------------------------
Keebler Foods Co.(1) 145,000 5,455,625
-------------
7,575,925
</TABLE>
55
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
FOOD & DRUG RETAILERS - 4.5%
CVS Corp. 280,000 $ 15,400,000
- -----------------------------------------------------------------
Safeway, Inc.(1) 310,000 18,890,625
-------------
34,290,625
- -----------------------------------------------------------------
HOUSEHOLD GOODS - 1.7%
Avon Products, Inc. 287,000 12,699,750
- -----------------------------------------------------------------
ENERGY - 1.6%
- -----------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.8%
BJ Services Co.(1) 50,000 781,250
- -----------------------------------------------------------------
Global Industries Ltd.(1) 60,100 368,112
- -----------------------------------------------------------------
Halliburton Co. 129,800 3,845,325
- -----------------------------------------------------------------
Varco International, Inc.(1) 166,200 1,288,050
-------------
6,282,737
- -----------------------------------------------------------------
OIL - DOMESTIC - 0.4%
Mobil Corp. 18,200 1,585,675
- -----------------------------------------------------------------
Texaco, Inc. 29,000 1,533,375
-------------
3,119,050
- -----------------------------------------------------------------
OIL - INTERNATIONAL - 0.4%
Total SA, Sponsored ADR 60,000 2,985,000
- -----------------------------------------------------------------
FINANCIAL - 11.9%
- -----------------------------------------------------------------
BANKS - 2.9%
Bank One Corp. 124,488 6,356,668
- -----------------------------------------------------------------
BankBoston Corp. 30,000 1,168,125
- -----------------------------------------------------------------
Chase Manhattan Corp. (New) 31,280 2,128,995
- -----------------------------------------------------------------
Credito Italiano SpA 376,000 2,233,572
- -----------------------------------------------------------------
Fleet Financial Group, Inc. 150,000 6,703,125
- -----------------------------------------------------------------
Skandinaviska Enskilda Banken Group 177,500 1,872,330
- -----------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR 133,000 1,920,188
-------------
22,383,003
- -----------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.5%
Associates First Capital Corp., Cl.
A 180,000 7,627,500
- -----------------------------------------------------------------
Boston Properties, Inc. 110,000 3,355,000
- -----------------------------------------------------------------
Citigroup, Inc. 228,499 11,310,701
- -----------------------------------------------------------------
Fannie Mae 36,000 2,664,000
- -----------------------------------------------------------------
Finova Group, Inc. 60,800 3,279,400
- -----------------------------------------------------------------
Franklin Resources, Inc. 71,200 2,278,400
- -----------------------------------------------------------------
Freddie Mac 60,000 3,866,250
- -----------------------------------------------------------------
Merrill Lynch & Co., Inc. 70,000 4,672,500
- -----------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 80,000 5,680,000
- -----------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 65,000 2,226,250
</TABLE>
56
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Schwab (Charles) Corp. 60,000 $ 3,371,250
-------------
50,331,251
INSURANCE - 2.5%
CMAC Investment Corp. 30,000 1,378,125
- -----------------------------------------------------------------
Conseco, Inc. 190,000 5,806,875
- -----------------------------------------------------------------
Equitable Cos., Inc. 100,000 5,787,500
- -----------------------------------------------------------------
SunAmerica, Inc. 78,500 6,368,313
-------------
19,340,813
- -----------------------------------------------------------------
HEALTHCARE - 8.7%
- -----------------------------------------------------------------
HEALTHCARE/DRUGS - 5.2%
Elan Corp. plc, ADR(1) 100,000 6,956,250
- -----------------------------------------------------------------
Lilly (Eli) & Co. 45,000 3,999,375
- -----------------------------------------------------------------
Pfizer, Inc. 142,000 17,812,125
- -----------------------------------------------------------------
Schering-Plough Corp. 205,600 11,359,400
-------------
40,127,150
- -----------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
3.5%
Baxter International, Inc. 63,000 4,051,688
- -----------------------------------------------------------------
Cardinal Health, Inc. 95,400 7,238,475
- -----------------------------------------------------------------
First Health Group Corp.(1) 157,600 2,610,250
- -----------------------------------------------------------------
HEALTHSOUTH Corp.(1) 88,000 1,358,500
- -----------------------------------------------------------------
Lincare Holdings, Inc.(1) 30,000 1,216,875
- -----------------------------------------------------------------
Medtronic, Inc. 55,000 4,083,750
- -----------------------------------------------------------------
Safeskin Corp.(1) 130,000 3,136,250
- -----------------------------------------------------------------
Total Renal Care Holdings, Inc.(1) 101,750 3,007,984
-------------
26,703,772
- -----------------------------------------------------------------
TECHNOLOGY - 29.0%
- -----------------------------------------------------------------
COMPUTER HARDWARE - 7.7%
Cisco Systems, Inc.(1) 200,000 18,562,500
- -----------------------------------------------------------------
Compaq Computer Corp. 250,000 10,484,375
- -----------------------------------------------------------------
Data General Corp.(1) 159,000 2,613,563
- -----------------------------------------------------------------
Dell Computer Corp.(1) 25,000 1,829,688
- -----------------------------------------------------------------
EMC Corp.(1) 94,000 7,990,000
- -----------------------------------------------------------------
Gateway 2000, Inc.(1) 100,000 5,118,750
- -----------------------------------------------------------------
Seagate Technology, Inc.(1) 210,000 6,352,500
- -----------------------------------------------------------------
Sun Microsystems, Inc.(1) 74,000 6,336,250
-------------
59,287,626
- -----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 10.2%
BMC Software, Inc.(1) 180,000 8,021,250
- -----------------------------------------------------------------
Cambridge Technology Partners,
Inc.(1) 50,000 1,106,250
- -----------------------------------------------------------------
Gartner Group, Inc., Cl. A(1) 91,000 1,933,750
</TABLE>
57
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES
(CONTINUED)
HBO & Co. 170,000 $ 4,876,875
- -----------------------------------------------------------------
Microsoft Corp.(1) 185,000 25,657,188
- -----------------------------------------------------------------
Network Associates, Inc.(1) 120,000 7,950,000
- -----------------------------------------------------------------
Oracle Corp.(1) 180,000 7,762,500
- -----------------------------------------------------------------
Peoplesoft, Inc.(1) 188,000 3,560,250
- -----------------------------------------------------------------
PLATINUM Technology, Inc.(1) 148,300 2,836,238
- -----------------------------------------------------------------
Saville Systems Ireland plc,
Sponsored ADR(1) 85,000 1,615,000
- -----------------------------------------------------------------
Sungard Data Systems, Inc.(1) 163,300 6,480,969
- -----------------------------------------------------------------
Unisys Corp.(1) 110,000 3,788,125
- -----------------------------------------------------------------
Veritas Software Corp.(1) 50,000 2,996,875
-------------
78,585,270
- -----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.3%
Alcatel SA, Sponsored ADR 140,000 3,421,250
- -----------------------------------------------------------------
CIENA Corp.(1) 100,000 1,462,500
- -----------------------------------------------------------------
General Instrument Corp.(1) 250,000 8,484,375
- -----------------------------------------------------------------
Lucent Technologies, Inc. 35,000 3,850,000
- -----------------------------------------------------------------
Premisys Communications, Inc.(1) 160,000 1,470,000
- -----------------------------------------------------------------
Tellabs, Inc.(1) 323,000 22,145,688
-------------
40,833,813
- -----------------------------------------------------------------
ELECTRONICS - 5.8%
Applied Materials, Inc.(1) 70,000 2,988,125
- -----------------------------------------------------------------
LSI Logic Corp.(1) 63,000 1,015,875
- -----------------------------------------------------------------
Micron Technology, Inc.(1) 105,000 5,309,063
- -----------------------------------------------------------------
Motorola, Inc. 70,000 4,274,375
- -----------------------------------------------------------------
Novellus Systems, Inc.(1) 78,000 3,861,000
- -----------------------------------------------------------------
Uniphase Corp.(1) 80,000 5,550,000
- -----------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 286,100 13,053,313
- -----------------------------------------------------------------
Waters Corp.(1) 100,000 8,725,000
-------------
44,776,751
- -----------------------------------------------------------------
TELECOMMUNICATIONS - 3.9%
- -----------------------------------------------------------------
TELEPHONE UTILITIES - 1.2%
Embratel Participacoes SA, ADR(1) 80,000 1,115,000
- -----------------------------------------------------------------
SBC Communications, Inc. 70,000 3,753,750
- -----------------------------------------------------------------
Telesp Celular Participacoes SA,
ADR(1) 100,000 1,750,000
- -----------------------------------------------------------------
Telesp Participacoes SA, ADR(1) 115,000 2,544,375
-------------
9,163,125
- -----------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
2.7%
MCI WorldCom, Inc.(1) 211,000 15,139,250
- -----------------------------------------------------------------
Qwest Communications International,
Inc.(1) 113,942 5,697,100
-------------
20,836,350
</TABLE>
58
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 1.2%
- -----------------------------------------------------------------
RAILROADS & TRUCKERS - 1.2%
Kansas City Southern Industries,
Inc. 190,000 $ 9,345,625
-------------
Total Common Stocks (Cost
$511,894,542) 703,077,940
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 8.4%
- -----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98, to be repurchased
at $64,433,989 on 1/4/99,
collateralized by U.S. Treasury
Nts.,
4%-8.875%, 2/15/99-7/15/06, with a
value of $65,714,020 (Cost
$64,400,000) $ 64,400,000 64,400,000
- -----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$576,294,542) 99.9% 767,477,940
- -----------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.1 1,071,756
------------ -------------
NET ASSETS 100.0% $768,549,696
------------ -------------
------------ -------------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
59
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 48.3%
- --------------------------------------------------------------------------
BASIC MATERIALS - 1.5%
- --------------------------------------------------------------------------
CHEMICALS - 0.9%
Bayer AG, Sponsored ADR 47,000 $ 1,962,659
- --------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 27,000 1,432,687
- --------------------------------------------------------------------------
Potash Corp. of Saskatchewan, Inc.(1) 32,500 2,075,937
---------------
5,471,283
- --------------------------------------------------------------------------
METALS - 0.2%
De Beers Consolidated Mines Ltd., ADR 100,000 1,275,000
- --------------------------------------------------------------------------
PAPER - 0.4%
MacMillan Bloedel Ltd. 130,883 1,307,548
- --------------------------------------------------------------------------
Wausau-Mosinee Paper Corp. 77,000 1,361,937
---------------
2,669,485
- --------------------------------------------------------------------------
CAPITAL GOODS - 1.8%
- --------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.3%
Rockwell International Corp. 42,500 2,063,906
- --------------------------------------------------------------------------
MANUFACTURING - 1.5%
AGCO Corp. 90,000 708,750
- --------------------------------------------------------------------------
ASM Lithography Holding NV(1)(2) 50,400 1,537,200
- --------------------------------------------------------------------------
Cognex Corp.(2) 70,000 1,400,000
- --------------------------------------------------------------------------
Hexcel Corp. (New)(2) 125,000 1,046,875
- --------------------------------------------------------------------------
Hutchison Whampoa Ltd. 35,000 247,353
- --------------------------------------------------------------------------
JLK Direct Distribution, Inc.(2) 30,000 305,625
- --------------------------------------------------------------------------
Pall Corp. 105,000 2,657,812
- --------------------------------------------------------------------------
Tenneco, Inc. (New) 50,000 1,703,125
---------------
9,606,740
- --------------------------------------------------------------------------
CONSUMER CYCLICALS - 8.1%
- --------------------------------------------------------------------------
AUTOS & HOUSING - 1.3%
Dana Corp. 37,500 1,532,812
- --------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 10,000 410,000
- --------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 363,877 997,923
- --------------------------------------------------------------------------
Lear Corp.(2) 52,500 2,021,250
- --------------------------------------------------------------------------
Owens Corning 58,000 2,055,375
- --------------------------------------------------------------------------
Toll Brothers, Inc.(2) 46,000 1,037,875
---------------
8,055,235
- --------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.9%
Berjaya Sports Toto Berhad(3) 410,000 409,137
- --------------------------------------------------------------------------
Brunswick Corp. 65,000 1,608,750
- --------------------------------------------------------------------------
Callaway Golf Co. 87,000 891,750
- --------------------------------------------------------------------------
Carnival Corp. 27,500 1,320,000
</TABLE>
60
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
Crestline Capital Corp.(2) 9,000 $ 138,375
- --------------------------------------------------------------------------
Host Marriott Corp.(2) 90,000 1,243,125
- --------------------------------------------------------------------------
International Game Technology 120,000 2,917,500
- --------------------------------------------------------------------------
Marriott International, Inc., Cl. A 35,000 1,015,000
- --------------------------------------------------------------------------
Mattel, Inc. -- 6
- --------------------------------------------------------------------------
Mirage Resorts, Inc.(2) 170,000 2,539,375
- --------------------------------------------------------------------------
Nintendo Co. Ltd. 32,000 3,094,040
- --------------------------------------------------------------------------
Shimano, Inc. 100,000 2,573,951
---------------
17,751,009
- --------------------------------------------------------------------------
MEDIA - 1.6%
CBS Corp.(1) 110,000 3,602,500
- --------------------------------------------------------------------------
MediaOne Group, Inc.(2) 57,600 2,707,200
- --------------------------------------------------------------------------
RCN Corp.(2) 135,000 2,387,812
- --------------------------------------------------------------------------
South China Morning Post Holdings Ltd. 2,258,000 1,158,580
---------------
9,856,092
- --------------------------------------------------------------------------
RETAIL: GENERAL - 1.6%
Cone Mills Corp.(2) 154,000 866,250
- --------------------------------------------------------------------------
Dayton Hudson Corp. 28,000 1,519,000
- --------------------------------------------------------------------------
Federated Department Stores, Inc.(1)(2) 47,500 2,069,219
- --------------------------------------------------------------------------
Jones Apparel Group, Inc.(2) 77,000 1,698,812
- --------------------------------------------------------------------------
Neiman Marcus Group, Inc.(2) 79,000 1,970,062
- --------------------------------------------------------------------------
Saks, Inc.(2) 51,660 1,630,519
---------------
9,753,862
- --------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.7%
AutoZone, Inc.(1)(2) 57,000 1,877,437
- --------------------------------------------------------------------------
General Nutrition Cos., Inc.(2) 104,000 1,690,000
- --------------------------------------------------------------------------
Petco Animal Supplies, Inc.(2) 60,000 603,750
---------------
4,171,187
- --------------------------------------------------------------------------
CONSUMER STAPLES - 4.5%
- --------------------------------------------------------------------------
BEVERAGES - 0.6%
Coca-Cola Beverages plc(2) 55,000 95,750
- --------------------------------------------------------------------------
Diageo plc 155,800 1,744,928
- --------------------------------------------------------------------------
Whitman Corp.(1) 62,000 1,573,250
---------------
3,413,928
- --------------------------------------------------------------------------
CONSUMER SERVICES - 0.4%
Alternative Living Services, Inc.(2) 74,000 2,534,500
- --------------------------------------------------------------------------
Intermedia Communications, Inc.(2) 462 7,969
- --------------------------------------------------------------------------
Intermedia Communications, Inc.(2)(3) 58 800
---------------
2,543,269
</TABLE>
61
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT - 1.0%
Cracker Barrel Old Country Store, Inc. 76,000 $ 1,771,750
- --------------------------------------------------------------------------
Luby's Cafeterias, Inc. 90,000 1,389,375
- --------------------------------------------------------------------------
Time Warner, Inc. 48,000 2,979,000
---------------
6,140,125
- --------------------------------------------------------------------------
FOOD - 0.7%
Groupe Danone 10,000 2,864,300
- --------------------------------------------------------------------------
Nestle SA, Sponsored ADR 14,000 1,523,866
---------------
4,388,166
- --------------------------------------------------------------------------
FOOD & DRUG RETAILERS - 0.0%
Cia Brasileira de Distribuicao Grupo Pao
de Acucar, Sponsored ADR 14,000 217,000
- --------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.7%
Fort James Corp. 43,000 1,720,000
- --------------------------------------------------------------------------
Rexall Sundown, Inc.(2) 52,100 729,400
- --------------------------------------------------------------------------
Wella AG 2,150 1,471,608
- --------------------------------------------------------------------------
Wella AG, Preference 200 168,115
---------------
4,089,123
- --------------------------------------------------------------------------
TOBACCO - 1.1%
Imperial Tobacco Group plc 225,400 2,406,714
- --------------------------------------------------------------------------
Philip Morris Cos., Inc.(1) 87,000 4,654,500
---------------
7,061,214
- --------------------------------------------------------------------------
ENERGY - 2.2%
- --------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.9%
Baker Hughes, Inc. 33,750 596,953
- --------------------------------------------------------------------------
Input/Output, Inc.(2) 193,000 1,411,312
- --------------------------------------------------------------------------
Santa Fe International Corp. 99,000 1,447,875
- --------------------------------------------------------------------------
Schlumberger Ltd. 25,000 1,153,125
- --------------------------------------------------------------------------
Transocean Offshore, Inc. 44,000 1,179,750
---------------
5,789,015
- --------------------------------------------------------------------------
OIL - DOMESTIC - 0.6%
Comstock Resources, Inc.(2) 175,000 535,937
- --------------------------------------------------------------------------
Kerr-McGee Corp. 35,000 1,338,750
- --------------------------------------------------------------------------
Unocal Corp. 65,000 1,897,187
---------------
3,771,874
- --------------------------------------------------------------------------
OIL - INTERNATIONAL - 0.7%
Petroleo Brasileiro SA, Preference 3,330,000 377,595
- --------------------------------------------------------------------------
Talisman Energy, Inc.(2) 95,510 1,680,702
- --------------------------------------------------------------------------
Total SA, Sponsored ADR 17,501 870,675
- --------------------------------------------------------------------------
YPF SA, Cl. D, ADR 50,000 1,396,875
---------------
4,325,847
</TABLE>
62
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL - 11.1%
- --------------------------------------------------------------------------
BANKS - 6.3%
ABN Amro Holding NV 62,700 $ 1,319,707
- --------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 95,000 675,109
- --------------------------------------------------------------------------
Bank One Corp. 36,000 1,838,250
- --------------------------------------------------------------------------
BankAmerica Corp. (New)(1) 167,500 10,070,937
- --------------------------------------------------------------------------
Chase Manhattan Corp. (New) 165,000 11,230,312
- --------------------------------------------------------------------------
Credit Suisse Group 5,225 817,595
- --------------------------------------------------------------------------
Credito Italiano SpA 460,700 2,736,720
- --------------------------------------------------------------------------
J.P. Morgan & Co., Inc.(1) 18,500 1,943,656
- --------------------------------------------------------------------------
Societe Generale 26,200 4,244,714
- --------------------------------------------------------------------------
UBS AG 4,175 1,282,278
- --------------------------------------------------------------------------
Wells Fargo Co. 70,000 2,795,625
---------------
38,954,903
- --------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 1.5%
American Express Co.(1) 20,000 2,045,000
- --------------------------------------------------------------------------
Avalonbay Communities, Inc. 30,732 1,052,571
- --------------------------------------------------------------------------
ICICI Ltd., GDR(4) 35,500 236,963
- --------------------------------------------------------------------------
Merrill Lynch & Co., Inc.(1) 31,000 2,069,250
- --------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.(1) 40,000 2,840,000
- --------------------------------------------------------------------------
Simon Property Group, Inc. (New) 37,500 1,068,750
---------------
9,312,534
- --------------------------------------------------------------------------
INSURANCE - 1.1%
Everest Reinsurance Holdings, Inc. 56,000 2,180,500
- --------------------------------------------------------------------------
Skandia Forsakrings AB 162,000 2,478,305
- --------------------------------------------------------------------------
UNUM Corp. 40,000 2,335,000
---------------
6,993,805
- --------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 2.2%
Archstone Communities Trust 52,000 1,053,000
- --------------------------------------------------------------------------
Brandywine Realty Trust 56,000 1,001,000
- --------------------------------------------------------------------------
Camden Property Trust 40,000 1,040,000
- --------------------------------------------------------------------------
CarrAmerica Realty Corp. 48,000 1,152,000
- --------------------------------------------------------------------------
Chastain Capital Corp. 134,000 603,000
- --------------------------------------------------------------------------
Chelsea GCA Realty, Inc. 32,000 1,140,000
- --------------------------------------------------------------------------
Cornerstone Properties, Inc. 68,000 1,062,500
- --------------------------------------------------------------------------
CRIIMI MAE, Inc. 115,000 402,500
- --------------------------------------------------------------------------
Developers Diversified Realty Corp. 62,000 1,100,500
- --------------------------------------------------------------------------
JDN Realty Corp. 60,000 1,293,750
- --------------------------------------------------------------------------
Manufactured Home Communities, Inc. 44,000 1,102,750
- --------------------------------------------------------------------------
Post Properties, Inc. 28,000 1,076,250
- --------------------------------------------------------------------------
Shurgard Storage Centers, Inc. 44,000 1,135,750
</TABLE>
63
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS
(CONTINUED)
Sunstone Hotel Investors, Inc. 80,000 $ 755,000
---------------
13,918,000
- --------------------------------------------------------------------------
HEALTHCARE - 4.1%
- --------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.4%
Abbott Laboratories 42,000 2,058,000
- --------------------------------------------------------------------------
American Home Products Corp. 56,000 3,153,500
- --------------------------------------------------------------------------
Astra AB Free, Series A 120,000 2,450,176
- --------------------------------------------------------------------------
Centocor, Inc.(1)(2) 60,500 2,730,063
- --------------------------------------------------------------------------
Johnson & Johnson 21,000 1,761,375
- --------------------------------------------------------------------------
Mylan Laboratories, Inc.(1) 69,500 2,189,250
- --------------------------------------------------------------------------
Novartis AG 2,000 3,930,131
- --------------------------------------------------------------------------
SmithKline Beecham plc, Cl. A.,
Sponsored ADR 38,000 2,641,000
---------------
20,913,495
- --------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.7%
Acuson Corp.(2) 104,000 1,547,000
- --------------------------------------------------------------------------
Biomet, Inc. 20,000 805,000
- --------------------------------------------------------------------------
Innovasive Devices, Inc.(2) 110,000 371,250
- --------------------------------------------------------------------------
Pliva d.d., Sponsored GDR(4) 20,000 332,000
- --------------------------------------------------------------------------
United Healthcare Corp. 32,800 1,412,450
---------------
4,467,700
- --------------------------------------------------------------------------
TECHNOLOGY - 10.8%
- --------------------------------------------------------------------------
COMPUTER HARDWARE - 3.4%
3Com Corp.(2) 33,000 1,478,813
- --------------------------------------------------------------------------
Canon, Inc. 50,000 1,066,225
- --------------------------------------------------------------------------
Cisco Systems, Inc.(1)(2) 45,000 4,176,563
- --------------------------------------------------------------------------
Compaq Computer Corp. 17,500 733,906
- --------------------------------------------------------------------------
Hewlett-Packard Co. 39,000 2,664,188
- --------------------------------------------------------------------------
International Business Machines Corp.(1) 60,000 11,085,000
---------------
21,204,695
- --------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.4%
America Online, Inc.(1) 34,200 4,950,450
- --------------------------------------------------------------------------
Computer Associates International,
Inc.(1) 62,999 2,685,354
- --------------------------------------------------------------------------
Electronic Arts, Inc.(1)(2) 25,000 1,403,125
- --------------------------------------------------------------------------
First Data Corp. 80,000 2,535,000
- --------------------------------------------------------------------------
Novell, Inc.(1)(2) 126,000 2,283,750
- --------------------------------------------------------------------------
PLATINUM Technology, Inc.(2) 70,000 1,338,750
- --------------------------------------------------------------------------
Rational Software Corp.(1)(2) 128,000 3,392,000
- --------------------------------------------------------------------------
Sabre Group Holdings, Inc.(1)(2) 60,000 2,670,000
- --------------------------------------------------------------------------
SELECT Software Tools Ltd., ADR(2) 100,000 106,250
</TABLE>
64
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
Structural Dynamics Research Corp.(2) 167 $ 3,319
---------------
21,367,998
- --------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.2%
Tellabs, Inc.(1)(2) 17,500 1,199,844
- --------------------------------------------------------------------------
ELECTRONICS - 3.3%
Analog Devices, Inc.(1)(2) 69,000 2,164,875
- --------------------------------------------------------------------------
General Motors Corp., Cl. H(1)(2) 40,200 1,595,438
- --------------------------------------------------------------------------
Intel Corp.(1) 86,000 10,196,375
- --------------------------------------------------------------------------
Keyence Corp. 9,000 1,104,636
- --------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A 105,000 1,640,625
- --------------------------------------------------------------------------
STMicroelectronics NV, NY Shares(1)(2) 17,500 1,366,094
- --------------------------------------------------------------------------
Teradyne, Inc.(1)(2) 29,000 1,228,875
- --------------------------------------------------------------------------
Xilinx, Inc.(1)(2) 21,000 1,367,625
---------------
20,664,543
- --------------------------------------------------------------------------
PHOTOGRAPHY - 0.5%
Xerox Corp.(1) 24,000 2,832,000
- --------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.8%
- --------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.4%
SBC Communications, Inc. 44,000 2,359,500
- --------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 8,100,000 670
---------------
2,360,170
- --------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.4%
Airtouch Communications, Inc.(1)(2) 35,000 2,524,375
- --------------------------------------------------------------------------
Embratel Participacoes SA(2) 8,100,000 70,394
- --------------------------------------------------------------------------
MCI WorldCom, Inc.(1)(2) 62,195 4,462,491
- --------------------------------------------------------------------------
Qwest Communications International,
Inc.(2) 25,000 1,250,000
- --------------------------------------------------------------------------
Tele Celular Sul Participacoes SA(2) 8,100,000 7,509
- --------------------------------------------------------------------------
Tele Centro Oeste Celular Participacoes
SA(2) 8,100,000 6,369
- --------------------------------------------------------------------------
Tele Centro Sul Participacoes SA(2) 8,100,000 53,634
- --------------------------------------------------------------------------
Tele Leste Celular Participacoes SA(2) 8,100,000 3,218
- --------------------------------------------------------------------------
Tele Nordeste Celular Participacoes
SA(2) 8,100,000 4,090
- --------------------------------------------------------------------------
Tele Norte Celular Participacoes SA(2) 8,100,000 2,615
- --------------------------------------------------------------------------
Tele Norte Leste Participacoes SA(2) 8,100,000 66,372
- --------------------------------------------------------------------------
Tele Sudeste Celular Participacoes SA(2) 8,100,000 22,794
- --------------------------------------------------------------------------
Telemig Celular Participacoes SA(2) 8,100,000 5,699
- --------------------------------------------------------------------------
Telesp Celular Participacoes SA(2) 8,100,000 34,862
- --------------------------------------------------------------------------
Telesp Participacoes SA(2) 8,100,000 103,915
---------------
8,618,337
</TABLE>
65
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 1.2%
- --------------------------------------------------------------------------
AIR TRANSPORTATION - 0.6%
Alaska Air Group, Inc.(1)(2) 29,500 $ 1,305,375
- --------------------------------------------------------------------------
AMR Corp.(1)(2) 40,000 2,375,000
---------------
3,680,375
- --------------------------------------------------------------------------
RAILROADS & TRUCKERS - 0.4%
Burlington Northern Santa Fe Corp. 74,000 2,497,500
- --------------------------------------------------------------------------
SHIPPING - 0.2%
Stolt-Nielsen SA 73,000 739,125
- --------------------------------------------------------------------------
Stolt-Nielsen SA, Sponsored ADR 17,650 180,913
- --------------------------------------------------------------------------
Transportacion Maritima Mexicana SA de
CV, Sponsored ADR, L Shares(2) 75,700 406,888
---------------
1,326,926
- --------------------------------------------------------------------------
UTILITIES - 1.2%
- --------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.0%
Allegheny Energy, Inc. 48,000 1,656,000
- --------------------------------------------------------------------------
Houston Industries, Inc. 76,000 2,441,500
- --------------------------------------------------------------------------
Southern Co. 75,000 2,179,688
---------------
6,277,188
- --------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Enron Corp. 25,600 1,460,800
---------------
Total Common Stocks (Cost $218,199,678) 300,464,173
- --------------------------------------------------------------------------
PREFERRED STOCKS - 0.9%
- --------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cv.(4) 20,000 775,000
- --------------------------------------------------------------------------
IGG Communications, Inc., 6.75% Cv.
Preferred Stock 45,000 2,356,875
- --------------------------------------------------------------------------
Intermedia Communications, Inc.:
7% Cv. Preferred Securities(4) 5,000 71,250
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr. Preferred
Stock, Series D, Non-Vtg. 30,000 750,000
- --------------------------------------------------------------------------
Monsanto Co., 6.50% Cv.(2) 35,000 1,715,000
---------------
Total Preferred Stocks (Cost $6,872,031) 5,668,125
UNITS
- --------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- --------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp.
6/99(3) 6,000 60
- --------------------------------------------------------------------------
Covergent Communications, Inc. Wts.,
Exp. 4/08(3) 2,000 2,500
- --------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 9,232 50,776
- --------------------------------------------------------------------------
IHF Capital, Inc. Series I Wts., Exp.
11/99(3) 1,000 10
- --------------------------------------------------------------------------
Perkin-Elmer Corp. Wts., Exp. 9/03 249 1,992
- --------------------------------------------------------------------------
Terex Corp. Rts., Exp. 5/02(3) 4,000 56,500
---------------
Total Rights, Warrants and Certificates
(Cost $20,772) 111,838
</TABLE>
66
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
<S> <C> <C>
- --------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 1.4%
- --------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50%,
11/1/27-12/1/27 $ 4,672,379 $ 4,704,386
- --------------------------------------------------------------------------
Government National Mortgage Assn., 8%,
7/15/22-4/15/23 2,948,105 3,074,413
- --------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 651,810 649,060
---------------
Total Mortgage-Backed Obligations (Cost
$8,273,574) 8,427,859
- --------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 11.0%
- --------------------------------------------------------------------------
U.S. Treasury Bonds:
8.875%, 8/15/17 2,900,000 4,089,908
STRIPS, 7.26%, 11/15/18(6) 10,000,000 3,332,330
STRIPS, 7.10%, 11/15/18(6) 16,000,000 5,311,200
STRIPS, 7.30%, 8/15/19(6) 18,000,000 5,730,606
- --------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02 15,000,000 15,600,000
6.125%, 9/30/00 15,000,000 15,375,000
6.25%, 2/15/07 8,800,000 9,655,254
6.375%, 8/15/02 5,000,000 5,275,000
6.50%, 10/15/06 3,710,000 4,119,261
---------------
Total U.S. Government Obligations (Cost
$62,146,404) 68,488,559
- --------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 22.4%
- --------------------------------------------------------------------------
ARGENTINA - 6.2%
Argentina (Republic of) Bonds, Bonos de
Consolidacion de Deudas,
Series I, 5.010%, 4/1/01(7) 1,473,768 1,363,501
- --------------------------------------------------------------------------
Argentina (Republic of) Bonds, Series L,
6.188%, 3/31/05(7) 8,648,000 7,372,420
- --------------------------------------------------------------------------
Argentina (Republic of) Nts., 14.25%,
11/30/02(7) 13,125,000 12,895,312
- --------------------------------------------------------------------------
Argentina (Republic of) Par Bonds,
5.75%, 3/31/23(8) 23,750,000 17,129,687
---------------
38,760,920
- --------------------------------------------------------------------------
AUSTRALIA - 0.5%
New South Wales Treasury Corp. Gtd.
Bonds, 7%, 4/1/04(AUD) 3,160,000 2,098,810
- --------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable
Gtd. Nts., 10.50%, 5/15/03(AUD) 1,800,000 1,338,833
---------------
3,437,643
- --------------------------------------------------------------------------
BRAZIL - 3.7%
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 21,079,398 12,594,940
- --------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible
Interest Bonds, 6.125%, 4/15/06(7) 15,792,000 10,185,840
---------------
22,780,780
- --------------------------------------------------------------------------
CANADA - 2.8%
Canada (Government of) Bonds:
8.50%, 4/1/02(CAD) 1,500,000 1,089,060
8.75%, 12/1/05(CAD) 12,200,000 9,782,863
9.75%, 12/1/01(CAD) 3,000,000 2,220,607
9.75%, 6/1/01(CAD) 2,000,000 1,452,419
Series WL43, 5.75%, 6/1/29(CAD) 3,670,000 2,618,341
---------------
17,163,290
</TABLE>
67
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
DENMARK - 1.0%
Denmark (Kingdom of) Bonds, 8%,
3/15/06(DKK) 32,100,000 $ 6,219,920
- --------------------------------------------------------------------------
GREAT BRITAIN - 1.3%
United Kingdom Treasury Bonds, 6.75%,
11/26/04(GBP) 2,680,000 4,983,321
- --------------------------------------------------------------------------
United Kingdom Treasury Nts., 13%,
7/14/00(GBP) 1,590,000 2,939,123
---------------
7,922,444
- --------------------------------------------------------------------------
IRELAND - 0.3%
Ireland (Government of) Bonds, 9.25%,
7/11/03(IEP) 1,110,000 2,057,171
- --------------------------------------------------------------------------
MEXICO - 0.6%
United Mexican States Collateralized
Fixed Rate Par Bonds, Series W-A, 6.25%,
12/31/19 4,450,000 3,476,562
- --------------------------------------------------------------------------
NEW ZEALAND - 4.9%
New Zealand (Government of) Bonds:
10%, 3/15/02(NZD) 16,800,000 10,045,321
8%, 2/15/01(NZD) 19,440,000 10,793,288
- --------------------------------------------------------------------------
New Zealand (Government of) Nts., 6.50%,
2/15/00(NZD) 18,600,000 9,937,733
---------------
30,776,342
- --------------------------------------------------------------------------
PHILIPPINES - 0.4%
Philippines (Republic of) Bonds, 8.60%,
6/15/27 1,500,000 1,265,625
- --------------------------------------------------------------------------
Philippines (Republic of) Par Bonds,
Series B, 6.50%, 12/1/17 (3)(8) 1,675,000 1,461,437
---------------
2,727,062
- --------------------------------------------------------------------------
POLAND - 0.4%
Poland (Republic of) Bonds, 15%,
10/12/99(PLZ) 9,000,000 2,589,805
- --------------------------------------------------------------------------
SOUTH AFRICA - 0.3%
Eskom Depositary Receipts, Series E168,
11%, 6/1/08(ZAR) 12,570,000 1,591,691
---------------
Total Foreign Government Obligations
(Cost $140,372,132) 139,503,630
</TABLE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND
NOTES - 6.2%
- --------------------------------------------------------------------------
BASIC MATERIALS - 0.9%
- --------------------------------------------------------------------------
CHEMICALS - 0.2%
Laroche Industries, Inc., 9.50% Sr. Sub.
Nts., Series B, 9/15/07 500,000 402,500
- --------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec.
Nts., 10/15/03 85,000 90,737
- --------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr.
Unsec. Sub. Nts., 8/15/06 535,000 462,775
---------------
956,012
- --------------------------------------------------------------------------
METALS - 0.4%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 1,015,000 1,060,675
- --------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75%
Sr. Sub. Nts., 2/1/03 1,000,000 985,000
- --------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 420,750
---------------
2,466,425
</TABLE>
68
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
PAPER - 0.3%
Aracruz Celulose SA, 10.375% Debs.,
1/31/02(3) $ 430,000 $ 363,350
- --------------------------------------------------------------------------
Riverwood International Corp., 10.625%
Sr. Unsec. Nts., 8/1/07 500,000 497,500
- --------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series
B, 12/15/04 750,000 820,312
---------------
1,681,162
- --------------------------------------------------------------------------
CAPITAL GOODS - 0.3%
- --------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.1%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 522,500
- --------------------------------------------------------------------------
MANUFACTURING - 0.2%
International Wire Group, Inc., 11.75%
Sr. Sub. Nts., Series B, 6/1/05 500,000 528,750
- --------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts.,
7/1/07 500,000 497,500
---------------
1,026,250
- --------------------------------------------------------------------------
CONSUMER CYCLICALS - 2.2%
- --------------------------------------------------------------------------
AUTOS & HOUSING - 0.5%
American Standard Cos., Inc., 10.875%
Sr. Nts., 5/15/99 500,000 502,500
- --------------------------------------------------------------------------
Building Materials Corp. of America,
8.625% Sr. Nts., Series B, 12/15/06 100,000 102,250
- --------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr.
Sub. Nts., Series B, 7/15/07 500,000 432,500
- --------------------------------------------------------------------------
Chrysler Financial LLC, 13.25% Debs.,
10/15/99 500,000 529,524
- --------------------------------------------------------------------------
Hayes Wheels International, Inc., 11%
Sr. Sub. Nts., 7/15/06 500,000 557,500
- --------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr.
Sub. Nts., Series B, 7/15/02 610,000 369,050
- --------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr.
Nts., 10/15/04 400,000 404,000
---------------
2,897,324
- --------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 0.3%
Casino America, Inc., 12.50% Sr. Nts.,
8/1/03 250,000 278,125
- --------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First Mtg.
Sec. Nts., 12/1/03 460,000 503,700
- --------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub.
Nts., 4/1/05 500,000 502,500
- --------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50% Sr. Sub.
Nts., 4/15/07 750,000 832,500
---------------
2,116,825
- --------------------------------------------------------------------------
MEDIA - 1.4%
American Telecasting, Inc., 0%/14.50%
Sr. Disc. Nts., 6/15/04(9) 129,908 20,136
- --------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc.,
9.25% Sr. Sub. Nts., 7/1/07 400,000 416,000
- --------------------------------------------------------------------------
Chancellor Media Corp., 8.75% Sr. Unsec.
Sub. Nts., Series B, 6/15/07 1,000,000 1,030,000
- --------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub.
Nts., 5/15/06 250,000 273,750
- --------------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts., 6/1/04(9) 540,000 556,200
- --------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285% Sr.
Disc. Debs., Series B, 4/15/10(9) 600,000 414,000
- --------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp.,
11% Sr. Sec. Nts., Series B, 11/1/03(7) 550,000 574,750
- --------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second
Priority Sr. Sec. Debs., 12/1/07 1,000,000 1,125,000
- --------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 507,500
9% Sr. Unsec. Sub. Nts., 7/15/07 375,000 384,375
- --------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15%
Sr. Nts., 5/1/12 500,000 675,355
- --------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 634,470
</TABLE>
69
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
TKR Cable I, Inc., 10.50% Sr. Debs.,
10/30/07 $ 1,000,000 $ 1,088,796
- --------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub.
Debs., 6/15/07 900,000 918,000
---------------
8,618,332
- --------------------------------------------------------------------------
CONSUMER STAPLES - 0.5%
- --------------------------------------------------------------------------
CONSUMER SERVICES - 0.1%
Intermedia Communications, Inc., 8.50%
Sr. Nts., Series B, 1/15/08 500,000 477,500
- --------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub.
Nts., 12/1/06 150,000 161,250
---------------
638,750
- --------------------------------------------------------------------------
FOOD - 0.1%
RJR Nabisco, Inc., 8.625% Medium-Term
Nts., 12/1/02 500,000 509,414
- --------------------------------------------------------------------------
FOOD & DRUG RETAILERS - 0.2%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 300,000 285,000
10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 525,000
- --------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr.
Sub. Nts., Series B, 7/1/07 500,000 543,750
---------------
1,353,750
- --------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.1%
Revlon Consumer Products Corp., 8.625%
Sr. Unsec. Sub. Nts., 2/1/08 500,000 457,500
- --------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr.
Sec. Disc. Nts., Series B, 10.09%,
3/15/01(6) 465,000 267,375
---------------
724,875
- --------------------------------------------------------------------------
ENERGY - 0.1%
- --------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.1%
Gothic Production Corp., 11.125% Sr.
Sec. Nts., Series B, 5/1/05(4) 950,000 745,750
- --------------------------------------------------------------------------
FINANCIAL - 0.1%
- --------------------------------------------------------------------------
BANKS - 0.1%
First Chicago Corp.:
11.25% Sub. Nts., 2/20/01 250,000 278,226
9% Sub. Nts., 6/15/99 250,000 253,806
---------------
532,032
- --------------------------------------------------------------------------
HEALTHCARE - 0.1%
- --------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.0%
Integrated Health Services, Inc., 9.50%
Sr. Sub. Nts., 9/15/07 170,000 162,350
- --------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.1%
Sun Healthcare Group, Inc., 9.375% Sr.
Sub. Nts., 5/1/08(4) 1,000,000 805,000
- --------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.3%
- --------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.3%
Convergent Communications, Inc., 13% Sr.
Nts., 4/1/08 500,000 242,500
- --------------------------------------------------------------------------
FaciliCom International, Inc., 10.50%
Sr. Nts., Series B, 1/15/08 245,000 197,225
- --------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625%
Sr. Nts., 5/15/08 750,000 798,750
- --------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc.
Nts., 12/15/05(9) 415,000 299,838
- --------------------------------------------------------------------------
ICG Holdings, Inc., 0%/13.50% Sr. Disc.
Nts., 9/15/05(9) 765,000 634,950
- --------------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts., 6/1/06(9) 750,000 534,375
</TABLE>
70
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(5) NOTE 1
- --------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY
(CONTINUED)
NTL, Inc., 0%/9.75% Sr. Deferred Coupon
Nts., 4/1/08(4)(9) $ 500,000 $ 312,500
- --------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 590,000 413,000
11.625% Sr. Nts., Series A, 8/15/06 110,000 77,000
- --------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp.,
14% Sr. Nts., 8/15/04 200,000 207,000
- --------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 1,250,000 1,243,750
- --------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub.
Nts., Series B, 5/15/08 750,000 755,625
- --------------------------------------------------------------------------
TeleWest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(9) 1,000,000 840,000
9.625% Sr. Debs., 10/1/06 500,000 517,500
- --------------------------------------------------------------------------
USA Mobile Communications, Inc. II,
9.50% Sr. Nts., 2/1/04 1,000,000 905,000
---------------
7,979,013
- --------------------------------------------------------------------------
TRANSPORTATION - 0.2%
- --------------------------------------------------------------------------
AIR TRANSPORTATION - 0.1%
Trans World Airlines, Inc., 11.50% Sr.
Sec. Nts., 12/15/04 1,000,000 845,000
- --------------------------------------------------------------------------
SHIPPING - 0.1%
Navigator Gas Transport plc, 10.50%
First Priority Ship Mtg. Nts.,
6/30/07(4) 500,000 442,500
- --------------------------------------------------------------------------
UTILITIES - 0.5%
- --------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.3%
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 750,000 788,438
- --------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 800,000 886,000
8.75% Sr. Nts., 7/15/07 400,000 406,000
---------------
2,080,438
- --------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds, 6/1/17 989,000 1,117,570
---------------
Total Non-Convertible Corporate Bonds
and Notes (Cost $39,457,840) 38,221,272
- --------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.1%
- --------------------------------------------------------------------------
Repurchase agreement with First Chicago
Capital Markets, 4.75%, dated 12/31/98,
to be repurchased at $63,033,250 on
1/4/99, collateralized by U.S. Treasury
Nts., 4% - 8.875%, 2/15/99 - 7/15/06,
with a value of $64,285,454 (Cost
$63,000,000) 63,000,000 63,000,000
- --------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$538,342,432) 100.3% 623,885,456
- --------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (1,552,155 )
--------------- ---------------
NET ASSETS 100.0% $ 622,333,301
--------------- ---------------
--------------- ---------------
</TABLE>
71
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL DATE PRICE RECEIVED NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Airtouch Communications, Inc. 10,500 4/99 $ 65.00 $ 41,684 $122,063
Alaska Air Group, Inc. 14,500 4/99 45.00 32,189 68,875
America Online, Inc. 16,000 1/99 52.50 119,756 1,516,000
America Online, Inc. 18,200 1/99 72.50 63,425 1,319,500
American Express Co. 6,000 4/99 105.00 18,569 49,500
AMR Corp. 12,000 2/99 75.00 25,889 3,750
Analog Devices, Inc. 20,000 3/99 30.00 20,649 90,000
ASM Lithography Holding NV 27,000 4/99 30.00 72,517 111,375
AutoZone, Inc. 14,000 3/99 30.00 27,579 54,250
BankAmerica Corp. (New) 24,000 5/99 75.00 54,778 40,500
CBS Corp. 22,500 1/99 40.00 33,074 1,406
CBS Corp. 33,000 4/99 32.50 56,758 107,250
Centocor, Inc. 11,000 4/99 60.00 40,919 15,125
Cisco Systems, Inc. 22,000 4/99 70.00 114,836 583,000
Computer Associates International, Inc. 19,000 2/99 50.00 25,554 19,000
Electronic Arts, Inc. 5,000 3/99 55.00 14,225 27,500
Federated Department Stores, Inc. 13,500 5/99 45.00 43,469 47,250
General Motors Corp., Cl. H 10,000 3/99 40.00 39,699 35,000
Intel Corp. 17,000 4/99 105.00 69,613 333,625
International Business Machines Corp. 2,000 4/99 180.00 9,940 33,500
J.P. Morgan & Co. 5,500 3/99 110.00 25,959 41,938
MCI WorldCom, Inc. 13,000 6/99 65.00 51,608 160,875
Merrill Lynch & Co., Inc. 7,000 4/99 95.00 22,539 7,875
Morgan Stanley Dean Witter & Co. 9,000 1/99 90.00 28,979 1,125
Morgan Stanley Dean Witter & Co. 9,000 4/99 80.00 41,354 45,000
Mylan Laboratories, Inc. 19,000 4/99 40.00 40,338 15,438
Novell, Inc. 37,000 5/99 20.00 77,512 67,063
Philip Morris Cos., Inc. 16,000 3/99 60.00 20,519 19,000
Potash Corp. of Saskatchewan, Inc. 5,500 1/99 75.00 10,835 344
Rational Software Corp. 37,000 4/99 22.50 113,224 208,125
Rational Software Corp. 37,000 4/99 30.00 100,637 90,188
Sabre Group Holdings, Inc. 2,100 2/99 45.00 3,218 3,938
STMicroelectronics NV 2,500 1/99 85.00 7,112 2,813
STMicroelectronics NV 1,800 4/99 85.00 10,746 11,250
Tellabs, Inc. 17,500 3/99 75.00 45,411 74,375
Teradyne, Inc. 15,000 4/99 35.00 67,048 146,250
Whitman Corp. 17,000 3/99 25.00 19,677 32,938
Xerox Corp. 4,000 4/99 105.00 26,879 70,000
Xilinx, Inc. 10,000 1/99 55.00 19,699 102,500
Xilinx, Inc. 5,000 3/99 55.00 27,971 61,246
--------------- ---------------
$ 1,686,387 $5,740,750
--------------- ---------------
--------------- ---------------
</TABLE>
2. Non-income producing security.
3. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
72
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $3,720,963 or 0.60% of the Fund's net
assets as of December 31, 1998.
5. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
AUD - Australian Dollar
CAD - Canadian Dollar
DKK - Danish Krone
GBP - British Pound Sterling
IEP - Irish Punt
NZD - New Zealand Dollar
PLZ - Polish Zloty
ZAR - South African Rand
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
7. Represents the current interest rate for a variable rate security.
8. Represents the current interest rate for an increasing rate security.
9. Denotes a step bond; a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
See accompanying Notes to Financial Statements.
73
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 98.5%
- ---------------------------------------------------------------
BASIC MATERIALS - 1.5%
- ---------------------------------------------------------------
CHEMICALS - 1.4%
Cresud SA, Sponsored ADR 475,171 $ 5,702,052
- ---------------------------------------------------------------
International Flavors & Fragrances,
Inc. 144,200 6,371,837
- ---------------------------------------------------------------
Minerals Technologies, Inc. 100,000 4,093,750
-------------
16,167,639
- ---------------------------------------------------------------
METALS - 0.1%
Cia de Minas Buenaventura SA,
Sponsored ADR, B Shares 46,000 598,000
- ---------------------------------------------------------------
CAPITAL GOODS - 7.9%
- ---------------------------------------------------------------
AEROSPACE/DEFENSE - 1.3%
Rolls-Royce plc 3,502,838 14,461,194
- ---------------------------------------------------------------
INDUSTRIAL SERVICES - 4.9%
Adecco SA 10,303 4,701,587
- ---------------------------------------------------------------
Coflexip SA, Sponsored ADR 43,800 1,407,075
- ---------------------------------------------------------------
Grupo Elektra SA de CV 3,159,000 1,590,726
- ---------------------------------------------------------------
McDermott International, Inc. 240,000 5,925,000
- ---------------------------------------------------------------
Rentokil Initial plc 2,950,000 22,107,783
- ---------------------------------------------------------------
Service Corp. International 186,400 7,094,850
- ---------------------------------------------------------------
WPP Group plc 2,000,000 12,302,366
-------------
55,129,387
- ---------------------------------------------------------------
MANUFACTURING - 1.7%
Bombardier, Inc., Cl. B 506,000 7,268,691
- ---------------------------------------------------------------
Societe BIC SA 224,032 12,432,838
-------------
19,701,529
- ---------------------------------------------------------------
CONSUMER CYCLICALS - 26.5%
- ---------------------------------------------------------------
AUTOS & HOUSING - 12.0%
Autoliv, Inc. SDR 170,000 6,103,232
- ---------------------------------------------------------------
Brazil Realty SA, GDR(1) 260,000 3,250,000
- ---------------------------------------------------------------
Brisa-Auto Estradas de Portugal SA 70,300 4,138,276
- ---------------------------------------------------------------
Granada Group plc 482,100 8,492,798
- ---------------------------------------------------------------
Hanson plc 1,608,400 12,726,962
- ---------------------------------------------------------------
Hasbro, Inc. 300,000 10,837,500
- ---------------------------------------------------------------
International Game Technology 494,000 12,010,375
- ---------------------------------------------------------------
IRSA Inversiones y Representaciones
SA 1,796,108 4,925,779
- ---------------------------------------------------------------
Nintendo Co. Ltd. 64,000 6,188,079
- ---------------------------------------------------------------
Porsche AG, Preference 14,700 33,803,756
- ---------------------------------------------------------------
Solidere, GDR(2) 110,000 1,119,250
- ---------------------------------------------------------------
Volkswagen AG 400,000 32,374,176
-------------
135,970,183
</TABLE>
74
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
MEDIA - 11.2%
Canal Plus 170,000 $ 46,410,611
- ---------------------------------------------------------------
Carlton Communications plc 2,747,300 25,212,067
- ---------------------------------------------------------------
Grupo Televisa SA, Sponsored
GDR(2)(3) 349,200 8,620,875
- ---------------------------------------------------------------
Prosieben Media AG, Preferred 54,000 2,587,292
- ---------------------------------------------------------------
Publicis SA 28,000 5,012,525
- ---------------------------------------------------------------
Reed International plc 200,000 1,636,447
- ---------------------------------------------------------------
Singapore Press Holdings Ltd. 560,000 6,075,310
- ---------------------------------------------------------------
Television Broadcasts Ltd. 1,200,000 3,097,964
- ---------------------------------------------------------------
Television Francaise 1 50,000 8,906,183
- ---------------------------------------------------------------
TeleWest Communications plc(3) 6,999,970 19,991,260
-------------
127,550,534
- ---------------------------------------------------------------
RETAIL: GENERAL - 1.1%
Sonae Investimentos 260,000 12,640,071
- ---------------------------------------------------------------
RETAIL: SPECIALTY - 2.2%
Best Buy Co., Inc.(3) 50,200 3,081,025
- ---------------------------------------------------------------
Circuit City Stores-Circuit City
Group 207,800 10,377,013
- ---------------------------------------------------------------
Dixons Group plc 800,000 11,247,878
-------------
24,705,916
- ---------------------------------------------------------------
CONSUMER STAPLES - 6.7%
- ---------------------------------------------------------------
BEVERAGES - 2.5%
Cadbury Schweppes plc 1,500,000 25,491,763
- ---------------------------------------------------------------
Cia Cervejaria Brahma, Preference 7,335,000 3,156,933
-------------
28,648,696
- ---------------------------------------------------------------
ENTERTAINMENT - 0.3%
Corporacion Interamericana de
Entretenimiento SA(3) 140,101 290,410
- ---------------------------------------------------------------
Corporacion Interamericana de
Entretenimiento SA, Cl. B(3) 1,050,764 2,868,702
- ---------------------------------------------------------------
Resorts World Berhad(1) 563,000 519,145
-------------
3,678,257
- ---------------------------------------------------------------
FOOD - 0.2%
Raisio Group plc 249,400 2,758,366
- ---------------------------------------------------------------
FOOD & DRUG RETAILERS - 1.7%
Carrefour Supermarche SA 12,000 9,063,361
- ---------------------------------------------------------------
Dairy Farm International Holdings
Ltd. 9,080,216 10,442,248
-------------
19,505,609
- ---------------------------------------------------------------
HOUSEHOLD GOODS - 1.5%
Wella AG, Preference 20,000 16,811,516
- ---------------------------------------------------------------
TOBACCO - 0.5%
Cie Financiere Richemont AG, A
Units 4,000 5,653,566
- ---------------------------------------------------------------
ENERGY - 0.7%
- ---------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.3%
Transocean Offshore, Inc. 120,818 3,239,433
</TABLE>
75
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
OIL - INTERNATIONAL - 0.4%
British Petroleum Co. plc, ADR 46,894 $ 4,202,875
- ---------------------------------------------------------------
FINANCIAL - 14.1%
- ---------------------------------------------------------------
BANKS - 6.9%
Banco Bradesco SA, Preference 983,276,747 5,452,711
- ---------------------------------------------------------------
Banco Espirito Santo e Comercial de
Lisboa SA 180,000 5,586,818
- ---------------------------------------------------------------
Banco Frances del Rio de la Plata
SA, Sponsored ADR 317,250 6,582,938
- ---------------------------------------------------------------
Banco Latinoamericano de
Exportaciones SA, Cl. E 146,200 2,430,575
- ---------------------------------------------------------------
Credito Italiano SpA 2,291,900 13,614,690
- ---------------------------------------------------------------
Istituto Mobiliare Italiano 671,000 11,882,643
- ---------------------------------------------------------------
National Westminster Bank plc 618,070 11,866,728
- ---------------------------------------------------------------
UBS AG 50,000 15,356,623
- ---------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR 390,000 5,630,625
-------------
78,404,351
- ---------------------------------------------------------------
DIVERSIFIED FINANCIAL - 5.4%
American Express Co. 99,000 10,122,750
- ---------------------------------------------------------------
Associates First Capital Corp., Cl.
A 320,000 13,560,000
- ---------------------------------------------------------------
Credit Saison Co. Ltd. 390,000 9,590,728
- ---------------------------------------------------------------
Fannie Mae 190,000 14,060,000
- ---------------------------------------------------------------
Housing Development Finance Corp.
Ltd. 22,290 1,142,693
- ---------------------------------------------------------------
ICICI Ltd., GDR(2) 405,300 2,705,378
- ---------------------------------------------------------------
ICICI Ltd., GDR 6,000 40,050
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc. 19,400 1,294,950
- ---------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 15,300 1,086,300
- ---------------------------------------------------------------
Nichiei Co. Ltd. 98,000 7,788,079
-------------
61,390,928
- ---------------------------------------------------------------
INSURANCE - 1.8%
Allianz AG 20,000 7,445,100
- ---------------------------------------------------------------
American International Group, Inc. 45,550 4,401,269
- ---------------------------------------------------------------
Chubb Corp. 140,000 9,082,500
-------------
20,928,869
- ---------------------------------------------------------------
HEALTHCARE - 11.2%
- ---------------------------------------------------------------
HEALTHCARE/DRUGS - 7.8%
Agouron Pharmaceuticals, Inc.(3) 68,600 4,030,250
- ---------------------------------------------------------------
Amgen, Inc.(3) 85,000 8,887,813
- ---------------------------------------------------------------
BioChem Pharma, Inc.(3) 161,000 4,608,625
- ---------------------------------------------------------------
Elan Corp. plc, ADR(3) 80,000 5,565,000
- ---------------------------------------------------------------
Fresenius AG, Preference 90,000 18,912,955
- ---------------------------------------------------------------
Genzyme Corp. (General Division)(3) 240,000 11,940,000
- ---------------------------------------------------------------
Gilead Sciences, Inc.(3) 172,700 7,091,494
- ---------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 140,000 9,730,000
</TABLE>
76
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS (CONTINUED)
Incyte Pharmaceuticals, Inc.(3) 83,250 $ 3,111,469
- ---------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(3) 123,000 3,182,625
- ---------------------------------------------------------------
Pfizer, Inc. 90,000 11,289,375
-------------
88,349,606
- ---------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES -
3.4%
Fresenius Medical Care AG 179,600 12,508,728
- ---------------------------------------------------------------
Pliva d.d., Sponsored GDR(2) 800,000 13,280,000
- ---------------------------------------------------------------
Quintiles Transnational Corp.(3) 250,000 13,343,750
-------------
39,132,478
- ---------------------------------------------------------------
TECHNOLOGY - 17.3%
- ---------------------------------------------------------------
COMPUTER HARDWARE - 4.7%
Ascend Communications, Inc.(3) 10,000 657,500
- ---------------------------------------------------------------
Cisco Systems, Inc.(3) 132,475 12,295,336
- ---------------------------------------------------------------
International Business Machines
Corp. 100,000 18,475,000
- ---------------------------------------------------------------
Sun Microsystems, Inc.(3) 250,000 21,406,250
-------------
52,834,086
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 4.3%
Cap Gemini SA 150,000 24,086,973
- ---------------------------------------------------------------
Lernout & Hauspie Speech Products
NV(3) 250,100 8,159,513
- ---------------------------------------------------------------
Microsoft Corp.(3) 66,000 9,153,375
- ---------------------------------------------------------------
SAP AG, Preference 15,000 7,200,432
-------------
48,600,293
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.0%
General Instrument Corp.(3) 600,000 20,362,500
- ---------------------------------------------------------------
Lucent Technologies, Inc. 20,000 2,200,000
- ---------------------------------------------------------------
QUALCOMM, Inc.(3) 240,000 12,435,000
- ---------------------------------------------------------------
Scientific-Atlanta, Inc. 934,200 21,311,438
-------------
56,308,938
- ---------------------------------------------------------------
ELECTRONICS - 3.3%
Advanced Micro Devices, Inc.(3) 500,000 14,468,750
- ---------------------------------------------------------------
National Semiconductor Corp.(3) 1,000,000 13,500,000
- ---------------------------------------------------------------
Royal Philips Electronics NV 100,000 6,714,031
- ---------------------------------------------------------------
STMicroelectronics NV, NY Shares(3) 34,000 2,654,125
-------------
37,336,906
- ---------------------------------------------------------------
TELECOMMUNICATIONS - 11.7%
- ---------------------------------------------------------------
TELEPHONE UTILITIES - 7.3%
Cable & Wireless Communications
plc(3) 380,000 3,462,072
- ---------------------------------------------------------------
Energis plc(3) 620,000 13,826,069
- ---------------------------------------------------------------
Hellenic Telecommunication
Organization SA 488,888 13,005,978
- ---------------------------------------------------------------
Olivetti SpA(3) 5,000,000 17,435,946
</TABLE>
77
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ---------------------------------------------------------------
<S> <C> <C>
TELEPHONE UTILITIES (CONTINUED)
SK Telecom Co. Ltd. 8,710 $ 6,384,602
- ---------------------------------------------------------------
Telecom Italia Mobile SpA 2,500,000 18,497,264
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo SA,
Preference 41,995,329 5,724,749
- ---------------------------------------------------------------
Telesp Celular SA, Cl. B(3) 35,902,000 1,634,343
- ---------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR(2) 250,000 3,093,750
-------------
83,064,773
- ---------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
4.4%
AT&T Corp. 200,000 15,050,000
- ---------------------------------------------------------------
Ericsson LM, B Shares 295,200 7,028,969
- ---------------------------------------------------------------
Kinnevik Investments AB Free,
Series B 150,000 3,516,113
- ---------------------------------------------------------------
MCI WorldCom, Inc.(3) 326,200 23,404,850
- ---------------------------------------------------------------
Societe Europeene de Communication
SA, A Shares, Sponsored ADR(3) 6,000 111,750
- ---------------------------------------------------------------
Societe Europeene de Communication
SA, B Shares, Sponsored ADR(3) 54,000 985,500
-------------
50,097,182
- ---------------------------------------------------------------
UTILITIES - 0.9%
- ---------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Vivendi (Ex-Generale des Eaux) 40,000 10,383,088
-------------
Total Common Stocks (Cost
$915,181,348) 1,118,254,269
UNITS
- ---------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.0%
- ---------------------------------------------------------------
American Satellite Network, Inc.
Wts., Exp. 6/99 6,250 --
- ---------------------------------------------------------------
Banco Bradesco SA Rts., Exp. 2/99 40,755,977 --
- ---------------------------------------------------------------
Industrial Finance Corp. of
Thailand (The) Rts., Exp. 6/99 528,500 --
- ---------------------------------------------------------------
PT Pan Indonesia Bank Wts., Exp.
6/00 423,810 3,708
-------------
Total Rights, Warrants and
Certificates (Cost $0) 3,708
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.5%
- ----------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 4.75%,
dated 12/31/98,
to be repurchased at $27,914,725 on
1/4/99, collateralized by U.S.
Treasury Nts.,
4%-8.875%, 2/15/99-7/15/06, with a
value of $28,469,272 (Cost
$27,900,000) $27,900,000 27,900,000
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$943,081,348) 101.0% 1,146,157,977
- ----------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (1.0) (11,128,843)
----------- --------------
NET ASSETS 100.0% $1,135,029,134
----------- --------------
----------- --------------
</TABLE>
1. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $28,819,253 or 2.54% of the Fund's net
assets as of December 31, 1998.
3. Non-income producing security.
78
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Distribution of investments by a country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE PERCENT
- ----------------------------------------------------------
<S> <C> <C>
United States $ 392,135,325 34.1%
- ----------------------------------------------------------
Great Britain 196,758,262 17.1
- ----------------------------------------------------------
Germany 131,643,956 11.5
- ----------------------------------------------------------
France 120,356,779 10.5
- ----------------------------------------------------------
Italy 61,430,543 5.4
- ----------------------------------------------------------
Switzerland 25,711,777 2.2
- ----------------------------------------------------------
Brazil 24,849,361 2.2
- ----------------------------------------------------------
Japan 23,566,887 2.1
- ----------------------------------------------------------
Portugal 22,365,165 2.0
- ----------------------------------------------------------
Argentina 17,210,768 1.5
- ----------------------------------------------------------
Sweden 16,648,315 1.5
- ----------------------------------------------------------
Singapore 16,517,558 1.4
- ----------------------------------------------------------
Mexico 13,370,713 1.2
- ----------------------------------------------------------
Croatia 13,280,000 1.2
- ----------------------------------------------------------
Greece 13,005,978 1.1
- ----------------------------------------------------------
Canada 11,877,316 1.0
- ----------------------------------------------------------
Belgium 8,159,513 0.7
- ----------------------------------------------------------
India 6,981,871 0.6
- ----------------------------------------------------------
The Netherlands 6,714,031 0.6
- ----------------------------------------------------------
Korea, Republic of (South) 6,384,602 0.6
- ----------------------------------------------------------
Ireland 5,565,000 0.5
- ----------------------------------------------------------
Other 11,624,257 1.0
-------------- -----
Total $1,146,157,977 100.0%
-------------- -----
-------------- -----
See accompanying Notes to Financial
Statements.
</TABLE>
79
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 13.9%
- -----------------------------------------------------------------------
GOVERNMENT AGENCY - 10.2%
- -----------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 1.6%
Federal Home Loan Mortgage Corp.,
Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation
Certificates, Series 151, Cl. F,
9%, 5/15/21 $ 1,299,790 $ 1,369,238
- -----------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Interest-Only Stripped
Mtg.-Backed Security, Series 177,
Cl. B, 0.62%, 7/1/26(2) 4,943,848 947,056
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
7.50%, 8/1/25 625,857 643,062
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
Interest-Only Stripped
Mtg.-Backed Security, Trust 276,
Cl. 2, 4.43%, 10/1/24(2) 3,292,524 722,298
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
Principal-Only Stripped
Mtg.-Backed Security, Trust 277-C1,
10.59%, 4/1/27(3) 803,069 705,446
---------------
4,387,100
- -----------------------------------------------------------------------
GUARANTEED - 8.6%
Government National Mortgage Assn.:
7%, 11/20/25 - 7/15/28 17,119,028 17,521,752
7.50%, 2/15/27 3,316,976 3,420,035
8%, 11/15/25 - 5/15/26 3,076,718 3,197,849
---------------
24,139,636
- -----------------------------------------------------------------------
PRIVATE - 3.7%
- -----------------------------------------------------------------------
COMMERCIAL - 2.5%
AMRESCO Commercial Mortgage Funding
I Corp., Multiclass Mtg.
Pass-Through Certificates, Series
1997-C1, Cl. G, 7%, 6/17/29(4) 100,000 79,844
- -----------------------------------------------------------------------
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-D4, Cl. B1, 7.525%,
4/14/29(5) 375,000 300,703
Series 1997-D5, Cl. B1, 6.93%,
2/14/41 300,000 225,891
Series 1997-D5, Cl. B2, 6.93%,
2/14/41 1,250,000 903,906
- -----------------------------------------------------------------------
CRIMMI MAE Trust I, Collateralized
Mtg. Obligations, Series 1996-C1,
Cl. A2, 8/30/05(6) 100,000 98,095
- -----------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C2, Cl.
F, 7.46%, 5/17/14 150,000 127,078
- -----------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates, Series 1994-C1, Cl.
2-G, 8.70%, 9/25/25(4) 153,594 158,490
- -----------------------------------------------------------------------
General Motors Acceptance Corp.,
Collateralized Mtg. Obligations:
Series 1997-C1, Cl. G, 7.414%,
11/15/11 440,000 334,262
Series 1997-C2, Cl. F, 6.75%,
4/16/29 250,000 170,234
- -----------------------------------------------------------------------
General Motors Acceptance Corp.,
Interest-Only Stripped
Mtg.-Backed Security, Series
1997-C1, Cl. X, 8.80%, 7/15/27(2) 4,157,596 371,585
- -----------------------------------------------------------------------
Merrill Lynch Mortgage Investors,
Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl.
D, 7.863%, 6/15/21(5) 289,584 295,240
</TABLE>
80
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL (CONTINUED)
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. F, 7.436%,
2/15/28(4)(5) $ 162,744 $ 139,350
Series 1997-HF1, Cl. F, 6.86%,
2/15/10(4) 150,000 134,625
Series 1997-RR, Cl. D, 7.67%,
4/30/39(4) 450,000 424,406
Series 1997-RR, Cl. E, 7.762%,
4/30/39(4)(5) 300,000 271,875
Series 1997-RR, Cl. F, 7.79%,
4/30/39(4) 600,000 435,750
Series 1997-XL1, Cl. G, 7.695%,
10/3/30(4)(5) 390,000 373,425
- -----------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates, Series-DMC, Cl. C,
8.921%, 8/12/11(4) 200,000 210,000
- -----------------------------------------------------------------------
Nykredit AS, 8% Cv. Bonds,
10/1/26(DKK) 3,474,000 562,229
- -----------------------------------------------------------------------
Resolution Trust Corp., Commercial
Mtg. Pass-Through Certificates:
Series 1992-CHF, Cl. D, 8.25%,
12/25/20 64,223 63,953
Series 1993-C1, Cl. D, 9.45%,
5/25/24 91,000 90,147
Series 1994-C2, Cl. E, 8%, 4/25/25 998,084 993,874
- -----------------------------------------------------------------------
Structured Asset Securities Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl.
F, 7.30%, 4/12/12(4) 200,000 160,188
- -----------------------------------------------------------------------
Structured Asset Securities Corp.,
Multiclass Pass-Through
Certificates, Series 1995-C4, Cl.
E, 8.559%, 6/25/26(4)(5) 46,290 43,744
---------------
6,968,894
- -----------------------------------------------------------------------
MULTI-FAMILY - 0.6%
Mortgage Capital Funding, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl.
F, 7.452%, 5/20/07(4) 63,720 52,940
- -----------------------------------------------------------------------
Mortgage Capital Funding, Inc.,
Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl.
G, 7.15%, 6/15/06(6) 800,000 659,375
- -----------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-CL, Cl.
F, 9.175%, 1/20/06(5) 1,000,000 840,000
---------------
1,552,315
- -----------------------------------------------------------------------
RESIDENTIAL - 0.6%
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates:
Series 1997-C1, Cl. F, 7.50%,
6/20/13(4) 100,000 77,969
Series 1997-C1, Cl. G, 7.50%,
6/20/14(4) 100,000 71,594
Series 1997-C1, Cl. H, 7.50%,
8/20/14(4) 60,000 41,175
Series 1997-C2, Cl. H, 7.46%,
1/17/35 100,000 68,000
- -----------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1,
8.098%, 5/25/08 - 2/25/11(4)(5) 950,000 766,985
- -----------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B, Cl.
1, 7.132%, 4/25/26(4) 387,444 285,982
- -----------------------------------------------------------------------
Salomon, Inc., Commercial Mtg.
Pass-Through Certificates, Series
1998-A1, 5%, 12/25/00(4) 340,798 327,166
---------------
1,638,871
---------------
Total Mortgage-Backed Obligations
(Cost $39,666,758) 38,686,816
</TABLE>
81
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 25.5%
- -----------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 2/15/26(7) $ 1,730,000 $ 1,888,404
6.125%, 11/15/27(8)(9) 2,500,000 2,800,782
6.50%, 11/15/26 7,000,000 8,148,441
8%, 11/15/21 300,000 402,000
8.125%, 8/15/19 500,000 668,750
9.375%, 2/15/06 4,700,000 6,005,721
10.75%, 8/15/05 3,260,000 4,347,008
11.875%, 11/15/03 4,950,000 6,459,750
STRIPS, 5.75%, 2/15/19(10) 6,500,000 2,131,805
STRIPS, 5.30%, 5/15/17(10) 6,000,000 2,180,208
- -----------------------------------------------------------------------
U.S. Treasury Nts.:
5.375%, 6/30/00 3,600,000 3,638,250
6.50%, 5/15/05 - 10/15/06 25,420,000 28,145,263
6.875%, 5/15/06 3,900,000 4,409,438
---------------
Total U.S. Government Obligations
(Cost $68,599,709) 71,225,820
- -----------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -
20.2%
- -----------------------------------------------------------------------
ARGENTINA - 3.7%
Argentina (Republic of) Bonds, 5%,
12/20/02(JPY) 60,000,000 467,259
- -----------------------------------------------------------------------
Argentina (Republic of) Bonds,
Bonos de Consolidacion de Deudas,
Series I:
3.011%, 4/1/07(5)(ARP) 3,474,104 2,239,458
5.010%, 4/1/01(5) 100,836 93,292
- -----------------------------------------------------------------------
Argentina (Republic of) Bonds,
Series L, 6.188%, 3/31/05(5) 1,297,200 1,105,863
- -----------------------------------------------------------------------
Argentina (Republic of) Global
Unsec. Unsub. Bonds., Series BGL5,
11.375%, 1/30/17 2,380,000 2,380,000
- -----------------------------------------------------------------------
Argentina (Republic of) Nts:
11%, 12/4/05 1,065,000 1,065,000
Series REGS, 11.75%, 2/12/07(ARP) 450,000 379,467
- -----------------------------------------------------------------------
Argentina (Republic of) Sr. Unsec.
Unsub. Bonds, 11%, 10/9/06 50,000 49,125
- -----------------------------------------------------------------------
Argentina (Republic of) Unsec.
Unsub. Medium-Term Nts.:
5.50%, 3/27/01(4)(JPY) 170,000,000 1,445,354
8.75%, 7/10/02(ARP) 660,000 541,689
- -----------------------------------------------------------------------
Banco Hipotecario Nacional
(Argentina) Medium-Term Unsec.
Nts., Series 3, 10.625%, 8/7/06 400,000 388,000
- -----------------------------------------------------------------------
City of Buenos Aires Bonds, Series
3, 10.50%, 5/28/04(ARP) 160,000 124,913
---------------
10,279,420
- -----------------------------------------------------------------------
AUSTRALIA - 0.3%
Australia (Government of) Bonds,
Series 904, 9%, 9/15/04(AUD) 1,335,000 986,654
- -----------------------------------------------------------------------
BRAZIL - 1.5%
Brazil (Federal Republic of) Bonds,
Series RG, 6.188%, 4/15/12(5) 1,000,000 502,500
- -----------------------------------------------------------------------
Brazil (Federal Republic of)
Capitalization Bonds, 8%, 4/15/14 1,731,101 1,034,333
- -----------------------------------------------------------------------
Brazil (Federal Republic of) Debt
Conversion Bonds, 6.188%,
4/15/12(5) 2,660,000 1,336,650
- -----------------------------------------------------------------------
Brazil (Federal Republic of)
Eligible Interest Bonds, 6.125%,
4/15/12(5) 672,000 433,440
</TABLE>
82
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
BRAZIL (CONTINUED)
Brazil (Federal Republic of) Gtd.
Disc. Bonds, 6.125%, 4/15/24(5) $ 1,400,000 $ 822,500
---------------
4,129,423
- -----------------------------------------------------------------------
BULGARIA - 0.4%
Bulgaria (Republic of) Disc. Bonds,
Tranche A, 6.688%, 7/28/24(5) 690,000 484,725
- -----------------------------------------------------------------------
Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds,
Tranche A, 2.50%, 7/28/12(11) 1,080,000 618,300
- -----------------------------------------------------------------------
Bulgaria (Republic of) Interest
Arrears Bonds, 6.688%, 7/28/11(5) 160,000 107,600
---------------
1,210,625
- -----------------------------------------------------------------------
DENMARK - 0.5%
Denmark (Kingdom of) Bonds:
7%, 11/10/24(DKK) 1,190,000 239,333
8%, 5/15/03(DKK) 5,740,000 1,046,294
- -----------------------------------------------------------------------
Denmark (Kingdom of) Bullet Bonds,
7%, 11/15/07(DKK) 1,190,000 224,506
---------------
1,510,133
- -----------------------------------------------------------------------
ECUADOR - 0.1%
Ecuador (Republic of) Debs.,
6.625%, 2/27/15(5) 441,347 178,746
- -----------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds,
6.625%, 2/28/25(5) 50,000 25,125
- -----------------------------------------------------------------------
Ecuador (Republic of) Past Due
Interest Bonds, 6.625%, 2/27/15(5) 56,578 22,914
---------------
226,785
- -----------------------------------------------------------------------
FINLAND - 0.3%
Finland (Republic of) Bonds, 9.50%,
3/15/04(FIM) 3,000,000 756,285
- -----------------------------------------------------------------------
FRANCE - 2.2%
France (Government of) Bonds:
Obligations Assimilables du Tresor,
5.25%, 4/25/08(FRF) 23,780,000 4,704,484
Obligations Assimilables du Tresor,
5.50%, 10/25/07(FRF) 7,720,000 1,543,583
---------------
6,248,067
- -----------------------------------------------------------------------
GERMANY - 1.2%
Germany (Republic of) Bonds, 4.50%,
2/18/03(DEM) 1,070,000 670,258
- -----------------------------------------------------------------------
Germany (Republic of) Nts., Series
98, 4%, 3/17/00(DEM) 4,390,000 2,662,954
---------------
3,333,212
- -----------------------------------------------------------------------
GREAT BRITAIN - 0.7%
United Kingdom Treasury Bonds:
8.50%, 12/7/05(GBP) 880,000 1,810,378
9%, 8/6/12(GBP) 40,000 96,462
---------------
1,906,840
- -----------------------------------------------------------------------
GREECE - 0.2%
Hellenic Republic Government Bonds,
8.90%, 4/1/03(GRD) 158,200,000 587,513
- -----------------------------------------------------------------------
HUNGARY - 0.3%
Hungary (Government of) Bonds:
Series 00/G, 16%, 11/24/00(HUF) 60,900,000 290,858
Series 03/I, 13%, 7/24/03(HUF) 61,190,000 289,011
</TABLE>
83
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
HUNGARY (CONTINUED)
Hungary (Government of) Bonds:
(Continued)
Series 99-G, 16.50%, 7/24/99(HUF) 44,000,000 $ 204,949
---------------
784,818
- -----------------------------------------------------------------------
INDONESIA - 0.1%
PT Bank Negara Indonesia Sr. Nts.,
7.625%, 2/15/07 317,000 175,142
- -----------------------------------------------------------------------
ITALY - 1.8%
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali:
8.50%, 1/1/04(ITL) 2,855,000,000 2,112,388
8.75%, 7/1/06(ITL) 3,575,000,000 2,823,979
10.50%, 4/1/05(ITL) 175,000,000 144,392
---------------
5,080,759
- -----------------------------------------------------------------------
IVORY COAST - 0.1%
Ivory Coast (Government of) Past
Due Interest Bonds, 2%,
3/29/18(6)(11) 579,662 169,551
- -----------------------------------------------------------------------
JORDAN - 0.0%
Hashemite (Kingdom of Jordan)
Bonds, Series DEF, 5%, 12/23/23(11) 210,000 120,225
- -----------------------------------------------------------------------
KOREA, REPUBLIC OF (SOUTH) - 0.4%
Export-Import Bank of Korea Unsec.
Nts., 7.10%, 3/15/07 300,000 267,750
- -----------------------------------------------------------------------
Korea (Republic of) Nts., 7.813%,
4/8/00(4)(5) 580,000 537,225
- -----------------------------------------------------------------------
Korea Electric Power Unsec. Unsub.
Nts., 6.375%, 12/1/03 300,000 255,509
---------------
1,060,484
- -----------------------------------------------------------------------
MEXICO - 2.9%
United Mexican States Bills, Zero
Coupon, 32.91%, 5/6/99(10)(MXP) 13,850,000 1,262,555
- -----------------------------------------------------------------------
United Mexican States Bonds:
6.63%, 12/31/19(FRF) 7,500,000 1,087,539
8.125%, 9/10/04(11)(DEM) 750,000 461,791
10.375%, 1/29/03(DEM) 725,000 466,857
11.50%, 5/15/26 1,920,000 2,040,000
16.50%, 9/1/08(4)(GBP) 20,000 39,792
- -----------------------------------------------------------------------
United Mexican States
Collateralized Fixed Rate Par
Bonds:
Series B, 6.25%, 12/31/19 600,000 468,750
Series W-A, 6.25%, 12/31/19 550,000 429,687
Series W-B, 6.25%, 12/31/19 2,100,000 1,640,625
- -----------------------------------------------------------------------
United Mexican States Petroleos
Mexicanos Unsec. Unsub. Nts.,
7.875%, 3/2/99(CAD) 200,000 130,101
---------------
8,027,697
- -----------------------------------------------------------------------
NIGERIA - 0.0%
Nigeria (Federal Republic of)
Promissory Nts., Series RC, 5.092%,
1/5/10 68,192 43,288
- -----------------------------------------------------------------------
PANAMA - 0.1%
Panama (Government of) Past Due
Interest Debs., 6.688%, 7/17/16(5) 232,025 172,279
</TABLE>
84
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
PERU - 0.6%
Peru (Republic of) Past Due
Interest Bonds, Series 20 yr., 4%,
3/7/17(11) $ 600,000 $ 378,000
- -----------------------------------------------------------------------
Peru (Republic of) Sr. Nts., Zero
Coupon, 4.50%, 2/28/16(10) 3,305,417 1,422,982
---------------
1,800,982
- -----------------------------------------------------------------------
POLAND - 0.7%
Poland (Republic of) Bonds, 12%,
10/12/03(PLZ) 1,010,000 300,921
- -----------------------------------------------------------------------
Poland (Republic of) Bonds, Series
2 yr., 14%, 2/12/00(PLZ) 1,000,000 289,181
- -----------------------------------------------------------------------
Poland (Republic of) Past Due
Interest Bonds, 5%, 10/27/14(11) 1,155,000 1,081,369
- -----------------------------------------------------------------------
Poland (Republic of) Treasury
Bills, Series 52, Zero Coupon,
14.86%, 10/13/99(10)(PLZ) 770,000 199,244
- -----------------------------------------------------------------------
Poland (Republic of) Treasury
Bills, Series 52, Zero Coupon,
15.13%, 8/11/99(10)(PLZ) 450,000 119,013
---------------
1,989,728
- -----------------------------------------------------------------------
RUSSIA - 0.1%
City of St. Petersburg Sr. Unsub.
Nts., 9.50%, 6/18/02(4) 180,000 43,650
- -----------------------------------------------------------------------
Russia (Government of) Bonds:
18.29%, 4/28/99(4)(12)(RUR) 860,000 9,091
29.80%, 7/14/99(4)(12)(RUR) 1,500,000 19,031
Series 2, 29.80%,
7/14/99(4)(12)(RUR) 745,000 9,452
Series 3, 18.29%,
4/28/99(4)(12)(RUR) 790,000 8,351
- -----------------------------------------------------------------------
Russia (Government of) Debs.,
5.969%, 12/15/15(5) 24,195 2,677
- -----------------------------------------------------------------------
Russia (Government of) Federal Loan
Bonds, Series 5022, 15%,
2/23/00(4)(12)(RUR) 5,417,000 98,866
- -----------------------------------------------------------------------
Russia (Government of) Principal
Loan Debs., Series 24 yr., 5.969%,
12/15/20(5) 1,730,000 107,066
---------------
298,184
- -----------------------------------------------------------------------
SPAIN - 1.5%
Spain (Kingdom of) Gtd. Bonds,
Bonos y Obligacion del Estado:
4.50%, 7/30/04(ESP) 271,340,000 1,969,251
5.25%, 1/31/03(ESP) 273,920,000 2,073,278
6%, 1/31/08(ESP) 12,200,000 98,609
---------------
4,141,138
- -----------------------------------------------------------------------
THAILAND - 0.1%
Industrial Finance Corp. of
Thailand (The) Sr. Nts., 6.875%,
4/1/03(6) 200,000 174,373
- -----------------------------------------------------------------------
TURKEY - 0.2%
Turkey (Republic of) Treasury
Bills, Zero Coupon, 85.01%,
1/27/99(10)(TRL) 20,300,000,000 641,495
- -----------------------------------------------------------------------
VENEZUELA - 0.2%
Venezuela (Republic of) Bonds,
9.25%, 9/15/27 380,000 224,200
- -----------------------------------------------------------------------
Venezuela (Republic of) Disc.
Bonds, Series DL, 5.938%,
12/18/07(5) 214,285 136,339
</TABLE>
85
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA (CONTINUED)
Venezuela (Republic of)
Front-Loaded Interest Reduction
Bonds, Series B, 6.75%, 3/31/07(5) $ 202,380 $ 126,361
- -----------------------------------------------------------------------
Venezuela (Republic of) New Money
Bonds, Series A, 6.063%,
12/18/05(5) 205,883 128,548
---------------
615,448
- -----------------------------------------------------------------------
VIETNAM - 0.0%
Vietnam (Government of) Bonds, 3%,
3/12/28(5) 54,000 13,770
---------------
Total Foreign Government
Obligations (Cost $58,599,197) 56,484,318
- -----------------------------------------------------------------------
LOAN PARTICIPATIONS - 0.2%
- -----------------------------------------------------------------------
Jamaica (Government of) 1990
Refinancing Agreement Nts., Tranche
A, 6.188%, 10/16/00(4)(5) 25,000 21,625
- -----------------------------------------------------------------------
Morocco (Kingdom of) Loan
Participation Agreement, Tranche A,
6.312%, 1/1/09(4)(5) 740,000 586,450
---------------
Total Loan Participations (Cost
$680,509) 608,075
- -----------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 27.2%
- -----------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.9%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 450,000 470,250
- -----------------------------------------------------------------------
Amtran, Inc.:
9.625% Nts., 12/15/05 100,000 100,500
10.50% Sr. Nts., 8/1/04 150,000 156,750
- -----------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08(4) 300,000 300,750
9.375% Sr. Nts., 11/15/06(6) 300,000 307,500
10.75% Sr. Nts., 8/1/05 125,000 131,875
12.25% Pass-Through Certificates,
12/1/02 350,000 378,000
- -----------------------------------------------------------------------
Constellation Finance LLC, 9.80%
Airline Receivable Asset-Backed
Nts., Series 1997-1, 1/1/01(4) 175,000 171,500
- -----------------------------------------------------------------------
Greater Toronto Airport, 5.40%
Debs., 12/3/02(CAD) 240,000 158,014
- -----------------------------------------------------------------------
Pegasus Aircraft Lease
Securitization Trust, 11.76% Sr.
Nts., Series 1997-A, Cl. B,
6/15/04(4) 90,586 96,601
- -----------------------------------------------------------------------
SC International Services, Inc.,
9.25% Sr. Sub. Nts., Series B,
9/1/07 200,000 201,000
---------------
2,472,740
- -----------------------------------------------------------------------
CHEMICALS - 0.5%
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 150,000 151,500
- -----------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 50,000 46,750
- -----------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., Series B, 9/15/07 150,000 120,750
- -----------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 140,000 149,450
- -----------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25%
Sec. Nts., 10/15/07 175,000 135,625
- -----------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 150,000 120,750
- -----------------------------------------------------------------------
Polytama International Finance BV,
11.25% Sec. Nts., 6/15/07 125,047 27,823
- -----------------------------------------------------------------------
Sovereign Specialty Chemicals,
Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 425,000 433,500
</TABLE>
86
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
CHEMICALS (CONTINUED)
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 $ 50,000 $ 42,250
11.75% Sr. Unsec. Sub. Nts.,
8/15/06 190,000 164,350
---------------
1,392,748
- -----------------------------------------------------------------------
CONSUMER DURABLES - 0.1%
Holmes Products Corp., 9.875% Sr.
Unsec. Sub. Nts., Series B,
11/15/07 200,000 190,000
- -----------------------------------------------------------------------
Icon Health & Fitness, Inc., 13%
Sr. Sub. Nts., Series B, 7/15/02 125,000 75,625
- -----------------------------------------------------------------------
TAG Heuer International SA, 12% Sr.
Sub. Nts., 12/15/05(4) 100,000 116,101
---------------
381,726
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.7%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs.,
7/1/09(6)(13) 150,000 59,250
10.50% Sr. Nts., 7/1/08(6) 100,000 95,500
- -----------------------------------------------------------------------
American Pad & Paper Co., 13% Sr.
Sub. Nts., Series B, 11/15/05 295,000 169,625
- -----------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Sub.
Nts., 8/15/08(6) 305,000 311,100
- -----------------------------------------------------------------------
Chattem, Inc., 8.875% Sr. Unsec.
Sub. Nts., Series B, 4/1/08 100,000 103,000
- -----------------------------------------------------------------------
Globe Manufacturing, Inc., 10% Sr.
Sub. Nts., 8/1/08(6) 315,000 286,650
- -----------------------------------------------------------------------
Indorayon International Finance Co.
BV, 10% Gtd. Unsec. Unsub. Nts.,
3/29/01(4) 100,000 29,000
- -----------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50%
Sr. Unsec. Sub. Nts., 5/1/08 200,000 201,000
- -----------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 100,000 91,500
9% Sr. Nts., 11/1/06(6) 100,000 100,000
- -----------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon
Sr. Sec. Disc. Nts., Series B,
9.89%, 3/15/01(10) 220,000 126,500
- -----------------------------------------------------------------------
Styling Technology Corp., 10.875%
Sr. Sub. Nts., 7/1/08 70,000 66,850
- -----------------------------------------------------------------------
William Carter Co., 10.375% Sr.
Sub. Nts., Series A, 12/1/06 135,000 143,100
- -----------------------------------------------------------------------
Williams (J. B.) Holdings, Inc.,
12% Sr. Nts., 3/1/04 100,000 105,500
---------------
1,888,575
- -----------------------------------------------------------------------
ENERGY - 1.9%
AEI Resources, Inc., 11.50% Sr.
Sub. Nts., 12/15/06(6) 250,000 248,125
- -----------------------------------------------------------------------
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 100,000 75,500
9.625% Sr. Unsec. Nts., Series B,
5/1/05 155,000 117,025
- -----------------------------------------------------------------------
Clark Refinancing & Marketing,
Inc., 8.875% Sr. Sub. Nts.,
11/15/07 245,000 219,275
- -----------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts.,
Series B, 12/1/05 125,000 115,625
- -----------------------------------------------------------------------
Dailey International, Inc., 9.50%
Sr. Unsec. Nts., Series B, 2/15/08 400,000 178,000
- -----------------------------------------------------------------------
Denbury Management, Inc., 9% Sr.
Sub. Nts., 3/1/08 400,000 338,000
- -----------------------------------------------------------------------
Empresa Electric Del Norte, 10.50%
Sr. Debs., 6/15/05(6) 100,000 68,500
- -----------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B,
2/15/07 90,000 67,050
</TABLE>
87
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY (CONTINUED)
Forcenergy, Inc.: (Continued)
9.50% Sr. Sub. Nts., 11/1/06 $ 400,000 $ 310,000
- -----------------------------------------------------------------------
Gothic Energy Corp., 0%/14.125% Sr.
Disc. Nts., 5/1/06(13) 275,000 90,750
- -----------------------------------------------------------------------
Gothic Production Corp., 11.125%
Sr. Sec. Nts., Series B, 5/1/05(6) 200,000 157,000
- -----------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/15/08 560,000 383,600
- -----------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr.
Sec. Nts., 6/1/08 250,000 201,250
- -----------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 600,000 609,000
- -----------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sr. Sub. Debs., 2/1/06 425,000 399,500
- -----------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub.
Nts., 5/15/07 370,000 344,100
- -----------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec.
Nts., 2/15/08 630,000 444,150
- -----------------------------------------------------------------------
Statia Terminals
International/Statia Terminals
(Canada), Inc., 11.75% First Mtg.
Nts., Series B, 11/15/03 175,000 175,875
- -----------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 270,000 261,900
- -----------------------------------------------------------------------
Universal Compression Holdings,
Inc.:
0%/9.875% Sr. Disc. Nts.,
2/15/08(13) 500,000 302,500
0%/11.375% Sr. Disc. Nts.,
2/15/09(13) 400,000 240,000
---------------
5,346,725
- -----------------------------------------------------------------------
FINANCIAL - 3.6%
AMRESCO, Inc.:
9.875% Sr. Sub. Nts., Series 98-A,
3/15/05 300,000 205,500
10% Sr. Sub. Nts., Series 97-A,
3/15/04 100,000 71,250
- -----------------------------------------------------------------------
Bakrie Investindo, Zero Coupon
Promissory Nts.,
7/10/98(4)(12)(IDR) 1,000,000,000 31,250
- -----------------------------------------------------------------------
Banco Nacional de Mexico SA, 11%
Sub. Exchangeable Capital Debs.,
7/15/03(4) 130,000 113,750
- -----------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts.,
7/18/07 7,000 5,635
- -----------------------------------------------------------------------
Bayerische Vereinsbank AG, 5% Sec.
Nts., Series 661, 7/28/04(DEM) 4,055,000 2,584,400
- -----------------------------------------------------------------------
CB Richard Ellis Services, Inc.,
8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 246,250
- -----------------------------------------------------------------------
Deutsche Pfandbrief & Hypobank,
4.75% Sec. Nts., Series 452,
3/20/03(DEM) 2,800,000 1,755,458
- -----------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr.
Nts., Series B, 9/15/04 80,000 40,400
- -----------------------------------------------------------------------
Federal Home Loan Bank, 5.625%,
6/10/03(GBP) 115,000 193,244
- -----------------------------------------------------------------------
Federal National Mortgage Assn.,
6.875% Sr. Unsec. Nts., 6/7/02(GBP) 325,000 566,803
- -----------------------------------------------------------------------
Ford Motor Credit Co., 5.25% Bonds,
6/16/08(DEM) 1,350,000 840,444
- -----------------------------------------------------------------------
Hypothekenbank in Essen AG:
4.50% Sec. Nts., Series 478,
5/2/03(DEM) 575,000 357,044
- -----------------------------------------------------------------------
5.25% Sec. Nts., Series 502,
1/22/08(DEM) 890,000 571,772
- -----------------------------------------------------------------------
5.50% Sec. Nts., Series 459,
2/20/07(DEM) 830,000 544,936
- -----------------------------------------------------------------------
Industrial Bank of Japan Preferred
Capital Co. (The) LLC, 8.79% Bonds,
12/29/49(5)(6) 400,000 344,624
- -----------------------------------------------------------------------
Kreditanstalt fuer Wiederaufbau, 5%
Bonds, 1/4/09(DEM) 650,000 416,610
- -----------------------------------------------------------------------
Local Financial Corp., 11% Sr.
Nts., 9/8/04(6) 150,000 152,250
- -----------------------------------------------------------------------
Ocwen Capital Trust I, 10.875%
Capital Nts., 8/1/27 150,000 120,750
</TABLE>
88
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL (CONTINUED)
Ocwen Financial Corp., 11.875%
Nts., 10/1/03 $ 150,000 $ 134,250
- -----------------------------------------------------------------------
Ongko International Finance Co. BV,
10.50% Gtd. Nts., 3/29/04(4)(12) 90,000 5,625
- -----------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/27/01-6/18/03(4) 100,000 12,000
24% Nts., 6/27/01-6/19/03(IDR) 164,300,000 2,464
- -----------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts., Series
B, 4/1/08 350,000 327,250
- -----------------------------------------------------------------------
SBS Agro Finance BV Bonds, 10.25%,
7/21/00 339,000 26,272
- -----------------------------------------------------------------------
Southern Pacific Funding Corp.,
11.50% Sr. Nts., 11/1/04(12) 100,000 27,000
- -----------------------------------------------------------------------
Veritas Capital Trust, 10% Nts.,
1/1/28 100,000 90,250
- -----------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr.
Nts., 12/15/03 129,000 129,000
- -----------------------------------------------------------------------
Wilshire Financial Services Group,
Inc., 13% Nts., 1/1/04 60,000 18,000
---------------
9,934,481
- -----------------------------------------------------------------------
FOOD & DRUG - 0.5%
Ameriking, Inc., 10.75% Sr. Nts.,
12/1/06(12) 125,000 130,937
- -----------------------------------------------------------------------
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B,
12/1/04 50,000 47,500
10.625% Sr. Sub. Nts., Series B,
7/31/07 560,000 525,000
- -----------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75%
Jr. Sub. Deferred Coupon Nts.,
11/1/03(13) 260,000 214,500
- -----------------------------------------------------------------------
Randall's Food Markets, Inc.,
9.375% Sr. Sub. Nts., Series B,
7/1/07 350,000 380,625
- -----------------------------------------------------------------------
Shoppers Food Warehouse Corp.,
9.75% Sr. Nts., 6/15/04 155,000 169,725
---------------
1,468,287
- -----------------------------------------------------------------------
FOOD/TOBACCO - 0.4%
Aurora Foods, Inc., 8.75% Sr. Sub.
Nts., Series B, 7/1/08 150,000 156,750
- -----------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr.
Disc. Nts., Series B, 12/15/07(13) 100,000 69,000
- -----------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr.
Unsec. Nts., Series B, 2/1/05 200,000 201,000
- -----------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec.
Sub. Nts., 3/15/10 200,000 205,000
- -----------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr.
Unsec. Sub. Nts., 2/15/08 400,000 404,000
- -----------------------------------------------------------------------
Sparkling Spring Water Group Ltd.,
11.50% Sr. Sec. Sub. Nts., 11/15/07 200,000 194,000
---------------
1,229,750
- -----------------------------------------------------------------------
FOREST PRODUCTS/CONTAINERS - 0.7%
Ball Corp.:
7.75% Sr. Nts., 8/1/06(6) 125,000 131,250
8.25% Sr. Sub. Nts., 8/1/08(6) 125,000 130,625
- -----------------------------------------------------------------------
Consumers International, Inc.,
10.25% Sr. Sec. Nts., 4/1/05 250,000 268,750
- -----------------------------------------------------------------------
Fletcher Challenge Finance U.S.A.,
Inc., 8.05% Debs., 6/15/03(NZD) 80,000 43,838
- -----------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts.,
4/30/05(NZD) 60,000 34,074
14.50% Cv. Sub. Nts., 9/30/00(NZD) 60,000 34,967
</TABLE>
89
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
FOREST PRODUCTS/CONTAINERS
(CONTINUED)
Florida Coast Paper Co. LLC, 12.75%
First Mtg. Nts., Series B,
6/1/03(12) $ 230,000 $ 124,200
- -----------------------------------------------------------------------
Four M Corp., 12% Sr. Sec. Nts.,
Series B, 6/1/06 105,000 78,225
- -----------------------------------------------------------------------
Indah Kiat International Finance
Co. BV, 11.375% Sec. Nts., Series
A, 6/15/99(4) 205,000 182,450
- -----------------------------------------------------------------------
Riverwood International Corp.,
10.625% Sr. Unsec. Nts., 8/1/07 400,000 398,000
- -----------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts.,
Series B, 12/15/04 200,000 218,750
- -----------------------------------------------------------------------
SF Holdings Group, Inc., 0%/12.75%
Sr. Disc. Nts., 3/15/08(13) 100,000 35,500
- -----------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr.
Nts., 11/15/07 150,000 151,500
---------------
1,832,129
- -----------------------------------------------------------------------
GAMING/LEISURE - 1.6%
AP Holdings, Inc., 0%/11.25% Sr.
Disc. Nts., 3/15/08(13) 50,000 27,250
- -----------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub.
Nts., 3/15/08 100,000 92,500
- -----------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 275,000 269,500
- -----------------------------------------------------------------------
Casino America, Inc., 12.50% Sr.
Nts., 8/1/03 50,000 55,625
- -----------------------------------------------------------------------
Casino Magic of Louisiana Corp.,
13% First Mtg. Nts., Series B,
8/15/03 120,000 136,200
- -----------------------------------------------------------------------
Empress Entertainment, Inc., 8.125%
Sr. Sub. Nts., 7/1/06 400,000 400,000
- -----------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First
Mtg. Sec. Nts., 12/1/03 325,000 355,875
- -----------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375%
Bonds, 2/13/02 50,000 43,312
- -----------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr.
Sub. Nts., 4/1/05 300,000 301,500
- -----------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 425,000 440,938
- -----------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts.,
8/15/08 350,000 360,500
- -----------------------------------------------------------------------
Majestic Star Casino LLC (The),
12.75% Sr. Sec. Nts., 5/15/03 400,000 417,000
- -----------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02 200,000 241,000
- -----------------------------------------------------------------------
Outboard Marine Corp., 10.75% Sr.
Nts., 6/1/08(6) 110,000 107,800
- -----------------------------------------------------------------------
Premier Cruise Ltd., 11% Sr. Nts.,
3/15/08(6) 250,000 126,250
- -----------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(13) 200,000 136,500
9.25% Sr. Nts., 4/1/06 100,000 103,875
- -----------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50% Sr.
Sub. Nts., 4/15/07 200,000 222,000
- -----------------------------------------------------------------------
Showboat Marina Casino
Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts.,
Series B, 3/15/03 350,000 397,250
- -----------------------------------------------------------------------
Six Flags Entertainment Corp.,
8.875% Sr. Nts., 4/1/06 200,000 206,250
- -----------------------------------------------------------------------
Venetian Casino Resort LLC/Las
Vegas Sands, Inc., 10% Sr. Unsec.
Sub. Nts., 11/15/05 (11) 150,000 132,750
---------------
4,573,875
- -----------------------------------------------------------------------
HEALTHCARE - 0.8%
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 500,000 495,000
- -----------------------------------------------------------------------
Fresenius Medical Care Capital
Trust III, 7.375% Nts., 2/1/08(DEM) 400,000 253,374
</TABLE>
90
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE (CONTINUED)
ICN Pharmaceutical, Inc., 8.75% Sr.
Nts., 11/15/08(6) $ 350,000 $ 355,250
- -----------------------------------------------------------------------
Integrated Health Services, Inc.:
10.25% Sr. Sub. Nts., 4/30/06 15,000 14,775
9.50% Sr. Sub. Nts., 9/15/07 115,000 109,825
- -----------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Sr.
Unsec. Sub. Nts., Series B, 11/1/07 500,000 481,250
- -----------------------------------------------------------------------
Magellan Health Services, Inc., 9%
Sr. Sub. Nts., 2/15/08 250,000 221,250
- -----------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr.
Nts., 5/15/05(6) 150,000 141,750
- -----------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 7/1/07 250,000 203,750
---------------
2,276,224
- -----------------------------------------------------------------------
HOUSING - 0.5%
Building Materials Corp. of
America, 8.625% Sr. Nts., Series B,
12/15/06 50,000 51,125
- -----------------------------------------------------------------------
Falcon Building Products, Inc.,
9.50% Sr. Sub. Nts., 6/15/07 100,000 90,500
- -----------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr.
Nts., 3/1/04 50,000 53,000
- -----------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75%
Sr. Nts., 10/15/04 300,000 303,000
- -----------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 650,000 672,750
9.25% Sr. Nts., Series B, 3/15/07 150,000 154,500
---------------
1,324,875
- -----------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.6%
Covad Communications Group, Inc.,
0%/13.50% Sr. Disc. Nts.,
3/15/08(13) 600,000 333,000
- -----------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts.,
Series B, 11/15/05 250,000 238,750
- -----------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub.
Nts., 9/15/07 20,000 19,900
- -----------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 350,000 351,750
- -----------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub.
Nts., 9/30/09 150,000 155,250
- -----------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts.,
10/15/04 150,000 174,750
- -----------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec.
Disc. Nts., Series B, 3/1/05(13) 500,000 275,000
- -----------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub.
Nts., 6/15/07 175,000 167,125
---------------
1,715,525
- -----------------------------------------------------------------------
MANUFACTURING - 0.8%
Axia, Inc. (New), 10.75% Sr. Sub.
Nts., 7/15/08 125,000 127,500
- -----------------------------------------------------------------------
Burke Industries, Inc., 10% Sr.
Sub. Nts., 8/15/07 150,000 146,250
- -----------------------------------------------------------------------
Cia Latino Americana de
Infraestructura & Servicios SA -
CLISA, 11.625% Sr. Unsec. Nts.,
6/1/04(4) 30,000 19,650
- -----------------------------------------------------------------------
Communications & Power Industries,
Inc., 12% Sr. Sub. Nts., Series B,
8/1/05 250,000 261,875
- -----------------------------------------------------------------------
Eagle-Picher Industries, Inc.,
9.375% Sr. Unsec. Sub. Nts., 3/1/08 300,000 283,500
- -----------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub.
Nts., 5/1/08 100,000 90,500
- -----------------------------------------------------------------------
Hydrochem Industrial Services,
Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 143,250
</TABLE>
91
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Insilco Corp., Units (each unit
consists of $1,000 principal amount
of 12% Sr. Sub. Nts., 8/15/07 and
one warrant to purchase 0.52 shares
of common stock)(6)(14) $ 270,000 $ 280,800
- -----------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B,
6/1/05 125,000 132,188
- -----------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75%
Gtd. Sr. Sec. Sub. Nts., Series B,
12/30/99 85,000 58,013
- -----------------------------------------------------------------------
MOLL Industries, Inc., 10.50% Sr.
Sub. Nts., 7/1/08(6) 200,000 197,000
- -----------------------------------------------------------------------
Paragon Corp. Holdings, Inc.,
9.625% Sr. Unsec. Nts., Series B,
4/1/08 125,000 106,563
- -----------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub.
Nts., 7/1/07 100,000 99,500
- -----------------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Sr. Sub. Nts., Series
B, 6/15/07 140,000 136,500
- -----------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub.
Nts., 4/1/08 150,000 147,750
- -----------------------------------------------------------------------
Unifrax Investment Corp., 10.50%
Sr. Nts., 11/1/03 50,000 52,250
---------------
2,283,089
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-BROADCASTING -
1.2%
Azteca Holdings SA, 11% Sr. Sec.
Nts., 6/15/02 155,000 131,750
- -----------------------------------------------------------------------
Capstar Broadcasting Partners,
Inc., 9.25% Sr. Sub. Nts., 7/1/07 275,000 286,000
- -----------------------------------------------------------------------
CBS Radio, Inc., 11.375% Unsec.
Sub. Debs., 1/15/09(15) 75,100 89,745
- -----------------------------------------------------------------------
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B,
12/15/07 200,000 200,500
8.75% Sr. Unsec. Sub. Nts., Series
B, 6/15/07 400,000 412,000
10.50% Sr. Sub. Nts., Series B,
1/15/07 90,000 99,000
- -----------------------------------------------------------------------
Jacor Communications, Inc.:
8% Sr. Sub. Nts., 2/15/10 500,000 530,000
8.75% Gtd. Sr. Sub. Nts., Series B,
6/15/07 100,000 108,250
- -----------------------------------------------------------------------
Paxson Communications Corp.,
11.625% Sr. Sub. Nts., 10/1/02 95,000 97,850
- -----------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts.,
Series B, 5/15/04(11) 100,000 100,500
- -----------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 150,000 152,250
9% Sr. Unsec. Sub. Nts., 7/15/07 210,000 215,250
10% Sr. Sub. Nts., 9/30/05 100,000 106,500
- -----------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
11% Sr. Nts., 3/15/04 100,000 106,500
- -----------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Sr. Nts., Series A, 2/15/04 100,000 85,250
10.50% Sr. Nts., Series B, 2/15/07 150,000 123,750
- -----------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 280,500
9% Sr. Sub. Nts., Series B, 1/15/06 100,000 101,500
---------------
3,227,095
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO - 1.2%
Adelphia Communications Corp.:
8.375% Sr. Nts., Series B, 2/1/08 100,000 103,750
</TABLE>
92
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-CABLE/WIRELESS
VIDEO (CONTINUED)
Adelphia Communications Corp.:
(Continued)
9.25% Sr. Nts., 10/1/02 $ 100,000 $ 106,000
10.50% Sr. Unsec. Nts., Series B,
7/15/04 70,000 78,750
- -----------------------------------------------------------------------
American Telecasting, Inc.,
0%/14.50% Sr. Disc. Nts.,
6/15/04(13) 40,545 6,284
- -----------------------------------------------------------------------
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 4/1/23 150,000 167,625
9.875% Sr. Sub. Nts., 5/15/06 250,000 273,750
- -----------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts.,
6/1/04(13) 40,000 41,200
- -----------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Sr. Sec.
Nts., 7/1/02 250,000 288,750
- -----------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(4) 111,983 111,983
- -----------------------------------------------------------------------
EchoStar II, 8.25% Sinking Fund
Bonds, 11/9/01(4) 114,318 114,318
- -----------------------------------------------------------------------
EchoStar Satellite Broadcasting
Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(13) 400,000 401,000
- -----------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285%
Sr. Disc. Debs., Series B,
4/15/10(13) 350,000 241,500
- -----------------------------------------------------------------------
Helicon Group LP/Helicon Capital
Corp., 11% Sr. Sec. Nts., Series B,
11/1/03(5) 175,000 182,875
- -----------------------------------------------------------------------
Marcus Cable Operating Co.
LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts.,
Series II, 8/1/04(13) 200,000 202,500
- -----------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series
B, 2/15/05 310,000 308,450
- -----------------------------------------------------------------------
Rogers Cablesystems Ltd., 10%
Second Priority Sr. Sec. Debs.,
12/1/07 200,000 225,000
- -----------------------------------------------------------------------
Rogers Communications, Inc., 8.75%
Sr. Nts., 7/15/07(CAD) 400,000 252,239
- -----------------------------------------------------------------------
United International Holdings,
Inc.:
0%/10.75% Sr. Disc. Nts., Series B,
2/15/08(13) 70,000 38,150
0%/14% Sr. Disc. Nts., Series B,
5/15/06(13) 400,000 210,000
---------------
3,354,124
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-DIVERSIFIED
MEDIA - 0.6%
Hollywood Theaters, Inc., 10.625%
Sr. Sub. Nts., 8/1/07 100,000 74,250
- -----------------------------------------------------------------------
IPC Magazines Group plc, 9.625%
Bonds, 3/15/08(GBP) 300,000 435,225
- -----------------------------------------------------------------------
Regal Cinemas, Inc., 8.875% Sr.
Sub. Nts., 12/15/10(6) 250,000 249,375
- -----------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr.
Unsec. Sub. Nts., Series B, 2/1/08 500,000 497,500
- -----------------------------------------------------------------------
Time Warner Entertainment Co. LP,
8.375% Sr. Debs., 3/15/23 300,000 367,990
---------------
1,624,340
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
- -4.0%
Amazon.Com, Inc., 0%/10% Sr. Unsec.
Disc. Nts., 5/1/08(13) 260,000 172,900
- -----------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts.,
12/15/06(13) 200,000 169,000
7.625% Bonds, 7/31/08(DEM) 500,000 297,016
8.875% Sr. Nts., 11/30/07(DEM) 100,000 61,692
10.125% Sr. Nts., 11/30/07(GBP) 170,000 297,362
</TABLE>
93
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
COLT Telecom Group plc: (Continued)
Units (each unit consists of $1,000
principal amount of 0%/12% sr.
disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary
shares)(13)(14) $ 200,000 $ 169,000
- -----------------------------------------------------------------------
Comcast UK Cable Partner Ltd.,
0%/11.20% Sr. Disc. Debs.,
11/15/07(13) 250,000 212,500
- -----------------------------------------------------------------------
Concentric Network Corp., 12.75%
Sr. Unsec. Nts., 12/15/07 80,000 82,000
- -----------------------------------------------------------------------
Convergent Communications, Inc.,
13% Sr. Nts., 4/1/08 250,000 121,250
- -----------------------------------------------------------------------
Diamond Cable Communications plc,
0%/11.75% Sr. Disc. Nts.,
12/15/05(13) 825,000 686,813
- -----------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr.
Nts., 2/1/08 50,000 48,000
- -----------------------------------------------------------------------
e.spire Communications, Inc.,
13.75% Sr. Nts., 7/15/07 110,000 103,125
- -----------------------------------------------------------------------
Exodus Communications, Inc., 11.25%
Sr. Nts., 7/1/08 165,000 165,825
- -----------------------------------------------------------------------
FaciliCom International, Inc.,
10.50% Sr. Nts., Series B, 1/15/08 340,000 273,700
- -----------------------------------------------------------------------
FirstWorld Communications, Inc.,
0%/13% Sr. Disc. Nts., 4/15/08(13) 190,000 57,950
- -----------------------------------------------------------------------
Focal Communications Corp.,
0%/12.125% Sr. Unsec. Disc. Nts.,
2/15/08(13) 515,000 275,525
- -----------------------------------------------------------------------
Global Crossing Holdings Ltd.,
9.625% Sr. Nts., 5/15/08 210,000 223,650
- -----------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts.,
5/1/05 325,000 268,125
- -----------------------------------------------------------------------
GST Telecommunications, Inc.,
0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(6)(13) 25,000 19,844
- -----------------------------------------------------------------------
GST Telecommunications, Inc./GST
Network Funding Corp., Inc.,
0%/10.50% Sr. Disc. Nts.,
5/1/08(6)(13) 75,000 32,625
- -----------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05(13) 355,000 256,488
- -----------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Sr. Sec. Disc. Nts.,
5/1/06(13) 195,000 146,250
0%/13.50% Sr. Disc. Nts.,
9/15/05(13) 120,000 99,600
- -----------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr.
Unsec. Disc. Nts., 2/15/08(13) 115,000 61,525
- -----------------------------------------------------------------------
Intermedia Communications, Inc.:
8.60% Sr. Unsec. Nts., Series B,
6/1/08 225,000 214,875
8.875% Sr. Nts., 11/1/07 200,000 194,000
- -----------------------------------------------------------------------
KMC Telecom Holdings, Inc.,
0%/12.50% Sr. Unsec. Disc. Nts.,
2/15/08(13) 725,000 351,625
- -----------------------------------------------------------------------
Level 3 Communications, Inc.,
9.125% Sr. Unsec. Nts., 5/1/08 450,000 446,625
- -----------------------------------------------------------------------
Long Distance International, Inc.,
12.25% Sr. Nts., 4/15/08(6) 200,000 167,000
- -----------------------------------------------------------------------
McLeodUSA, Inc., 9.25% Sr. Nts.,
7/15/07 75,000 78,750
- -----------------------------------------------------------------------
Netia Holdings BV:
10.25% Sr. Nts., Series B, 11/1/07 50,000 42,625
0%/11% Sr. Disc. Nts.,
11/1/07(13)(DEM) 400,000 137,494
0%/11% Sr. Disc. Nts., Series B,
11/1/07(13)(DEM) 200,000 68,747
0%/11.25% Sr. Disc. Nts., Series B,
11/1/07(13) 100,000 57,250
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts.,
4/15/08(13) 260,000 149,500
9% Sr. Nts., 3/15/08 200,000 189,000
</TABLE>
94
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-TELECOMMUNICATIONS
(CONTINUED)
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc.:
(Continued)
9.625% Sr. Nts., 10/1/07 $ 350,000 $ 336,000
10.75% Sr. Nts., 11/15/08(6) 100,000 102,250
- -----------------------------------------------------------------------
NorthEast Optic Network, Inc.,
12.75% Sr. Nts., 8/15/08 200,000 197,000
- -----------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts.,
4/1/08(6)(13) 300,000 187,500
0%/10.75% Sr. Unsec. Unsub. Nts.,
Series REGS, 4/1/08(13)(GBP) 200,000 208,079
7% Cv. Sub. Nts., 12/15/08(6) 400,000 433,000
10% Sr. Nts., Series B, 2/15/07 100,000 103,000
- -----------------------------------------------------------------------
PLD Telekom, Inc., 0%/14% Sr. Disc.
Nts., 6/1/04(13) 300,000 160,500
- -----------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts.,
Series B, 2/15/05 750,000 746,250
- -----------------------------------------------------------------------
PTC International Finance BV,
0%/10.75% Gtd. Sr. Unsec. Sub.
Bonds, 7/1/07(4)(13) 134,000 92,795
- -----------------------------------------------------------------------
Qwest Communications International,
Inc.:
0%/8.29% Sr. Unsec. Disc. Nts.,
Series B, 2/1/08(13) 365,000 277,400
0%/9.47% Sr. Disc. Nts.,
10/15/07(13) 495,000 384,863
- -----------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(13)(DEM) 350,000 116,236
0%/10.125% Sr. Disc. Nts.,
3/1/08(13) 300,000 173,250
10.50% Sr. Nts., 11/15/08(6) 250,000 244,375
- -----------------------------------------------------------------------
Shaw Communications, Inc., 8.54%
Debs., 9/30/27(CAD) 340,000 230,225
- -----------------------------------------------------------------------
TeleWest Communications plc, 0%/11%
Sr. Disc. Debs., 10/1/07(13) 200,000 168,000
- -----------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr.
Nts., 7/15/08 100,000 105,500
- -----------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 225,000 221,625
13.50% Sr. Unsec. Nts., 6/15/04 65,000 70,525
- -----------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts.,
4/15/08 300,000 308,250
---------------
11,265,879
- -----------------------------------------------------------------------
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS - 2.3%
Arch Communications, Inc., 12.75%
Sr. Nts., 7/1/07(6) 100,000 100,500
- -----------------------------------------------------------------------
Celcaribe SA, 13.50% Sr. Sec. Nts.,
3/15/04 150,000 143,250
- -----------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14%
Sr. Disc. Nts., 10/1/07(13) 500,000 127,500
- -----------------------------------------------------------------------
Cellular Communications
International, Inc., 0%/9.50%
Bonds, 4/1/05(13)(XEU) 650,000 644,959
- -----------------------------------------------------------------------
Clearnet Communications, Inc.,
0%/14.75% Sr. Disc. Nts.,
12/15/05(13) 50,000 43,000
- -----------------------------------------------------------------------
Comunicacion Celular SA, 0%/14.125%
Sr. Unsec. Deferred Bonds,
3/1/05(4)(13) 350,000 245,000
- -----------------------------------------------------------------------
Crown Castle International Corp.,
0%/10.625% Sr. Unsec. Disc. Nts.,
11/15/07(13) 500,000 352,500
- -----------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr.
Deferred Coupon Nts., 4/15/08(13) 175,000 79,625
- -----------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., Series
B, 7/15/05(12)(13) 90,000 18,450
12% Cv. Sr. Sub. Nts., 2/15/01(12) 210,000 --
</TABLE>
95
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA/ENTERTAINMENT-WIRELESS
COMMUNICATIONS (CONTINUED)
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 buy 19.85 shares of
common stock)(14) $ 100,000 $ 75,000
- -----------------------------------------------------------------------
Microcell Telecommunications, Inc.,
0%/11.125% Sr. Disc. Nts., Series
B, 10/15/07(13)(CAD) 300,000 108,227
- -----------------------------------------------------------------------
Millicom International Cellular SA,
0%/13.50% Sr. Disc. Nts.,
6/1/06(13) 210,000 149,625
- -----------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts.,
10/31/07(13) 345,000 210,450
0%/9.95% Sr. Disc. Nts.,
2/15/08(13) 245,000 146,388
0%/10.65% Sr. Disc. Nts.,
9/15/07(13) 480,000 308,400
- -----------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 365,000 255,500
11.625% Sr. Nts., Series A, 8/15/06 265,000 185,500
- -----------------------------------------------------------------------
Orange plc, 8% Sr. Nts., 8/1/08 250,000 253,750
- -----------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 300,000 310,500
- -----------------------------------------------------------------------
Orion Network Systems, Inc.,
0%/12.50% Sr. Disc. Nts.,
1/15/07(13) 550,000 346,500
- -----------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr.
Unsec. Disc. Nts., 3/15/08(13) 325,000 190,938
- -----------------------------------------------------------------------
Price Communications Cellular
Holdings, Inc., 11.25% Sr. Nts.,
8/15/08(15) 150,000 142,500
- -----------------------------------------------------------------------
Price Communications Wireless,
Inc.:
11.75% Sr. Sub. Nts., 7/15/07 275,000 291,500
9.125% Sr. Sec. Nts., 12/15/06(6) 250,000 253,750
- -----------------------------------------------------------------------
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)(6)(13)(14) 300,000 139,500
- -----------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr.
Sub. Nts., Series B, 5/15/08 300,000 302,250
- -----------------------------------------------------------------------
Satelites Mexicanos SA, 10.125% Sr.
Nts., 11/1/04 100,000 80,250
- -----------------------------------------------------------------------
SBA Communications Corp., 0%/12%
Sr. Unsec. Disc. Nts., 3/1/08(13) 700,000 406,000
- -----------------------------------------------------------------------
Spectrasite Holdings, Inc., 0%/12%
Sr. Disc. Nts., 7/15/08(6)(13) 500,000 252,500
- -----------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum
Finance Corp., 0%/12.50% Sr. Disc.
Nts., 8/15/06(13) 65,000 58,825
- -----------------------------------------------------------------------
USA Mobile Communications, Inc. II:
9.50% Sr. Nts., 2/1/04 100,000 90,500
14% Sr. Nts., 11/1/04 200,000 207,000
---------------
6,520,137
- -----------------------------------------------------------------------
METALS/MINERALS - 0.7%
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 220,000 229,900
- -----------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First
Mtg. Nts., 7/15/05 45,000 34,425
- -----------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr.
Sec. Nts., 4/1/01 45,000 48,263
- -----------------------------------------------------------------------
Centaur Mining & Exploration Ltd.,
11% Sr. Nts., 12/1/07 100,000 91,500
- -----------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25%
Sr. Sub. Nts., Series B, 5/15/08 500,000 506,250
</TABLE>
96
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
METALS/MINERALS (CONTINUED)
International Utility Structures,
Inc., 10.75% Sr. Sub. Nts., 2/1/08 $ 50,000 $ 47,250
- -----------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Sec. Nts., 8/1/07 200,000 192,000
- -----------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75%
Sr. Disc. Nts., 7/15/08(13) 250,000 86,250
- -----------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts.,
12/1/07 745,000 696,575
---------------
1,932,413
- -----------------------------------------------------------------------
RETAIL - 0.5%
Boyds Collection Ltd., 9% Sr. Sub.
Nts., 5/15/08(6) 400,000 410,000
- -----------------------------------------------------------------------
Central Termica Guemes, 12% Bonds,
11/26/01(4) 100,000 56,875
- -----------------------------------------------------------------------
Eye Care Centers of America, Inc.,
9.125% Sr. Sub. Nts., 5/1/08(6) 300,000 286,500
- -----------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs.,
5/1/08 100,000 88,500
- -----------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 100,000 92,500
- -----------------------------------------------------------------------
Home Interiors & Gifts, Inc.,
10.125% Sr. Sub. Nts., 6/1/08(6) 225,000 223,875
- -----------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub.
Nts., 10/15/07 200,000 210,500
---------------
1,368,750
- -----------------------------------------------------------------------
SERVICE - 0.9%
Allied Waste North America, Inc.,
7.875% Sr. Nts., 1/1/09(6) 335,000 340,863
- -----------------------------------------------------------------------
Borg-Warner Security Corp., 9.625%
Sr. Sub. Nts., 3/15/07 100,000 108,500
- -----------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc.
Nts., 10/1/06(13) 100,000 82,500
- -----------------------------------------------------------------------
Fisher Scientific International,
Inc.:
9% Sr. Sub. Nts., 2/1/08(6) 105,000 105,525
9% Sr. Unsec. Sub. Nts., 2/1/08 600,000 603,000
- -----------------------------------------------------------------------
Great Lakes Dredge & Dock Corp.,
11.25% Sr. Sub. Nts., 8/15/08(6) 375,000 382,500
- -----------------------------------------------------------------------
Intermedia Communications, Inc.,
8.50% Sr. Nts., Series B, 1/15/08 250,000 238,750
- -----------------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 50,000 50,000
- -----------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 150,000 158,250
9.625% Sr. Sub. Nts., 12/1/06 50,000 53,750
- -----------------------------------------------------------------------
Protection One Alarm Monitoring,
Inc., 6.75% Cv. Sr. Sub. Nts.,
9/15/03 125,000 128,281
- -----------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr.
Sub. Nts., 1/15/09(6) 250,000 251,875
---------------
2,503,794
- -----------------------------------------------------------------------
TRANSPORTATION - 1.8%
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., Series B, 7/15/07 75,000 64,875
- -----------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub.
Nts., Series B, 7/1/07 80,000 82,000
- -----------------------------------------------------------------------
Collins & Aikman Products Co.,
11.50% Sr. Unsec. Sub. Nts.,
4/15/06 300,000 313,500
- -----------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts.,
7/1/10 300,000 307,741
- -----------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Sub. Nts., 7/15/07 100,000 104,250
11% Sr. Sub. Nts., 7/15/06 225,000 250,875
- -----------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr.
Sub. Nts., 8/1/05(6) 250,000 226,250
</TABLE>
97
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION (CONTINUED)
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 $ 300,000 $ 282,000
- -----------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts.,
7/15/06 200,000 221,000
- -----------------------------------------------------------------------
Millenium Seacarriers, Inc., Units
(each unit consists of $1,000
principal amount of 12% first
priority ship mtg. nts., 7/15/05
and one warrant to purchase five
shares of common stock)(6)(14) 250,000 201,250
- -----------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07(6) 275,000 243,375
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants)(6)(14) 150,000 135,750
- -----------------------------------------------------------------------
Oxford Automotive, Inc.:
10.125% Sr. Sub. Nts., 6/15/07(4) 400,000 418,000
10.125% Sr. Unsec. Sub. Nts.,
6/15/07 900,000 936,000
- -----------------------------------------------------------------------
Pycsa Panama SA, 10.28% Sr. Sec.
Bonds, 12/15/12(4) 200,000 156,500
- -----------------------------------------------------------------------
TFM SA de CV, 10.25% Sr. Nts.,
6/15/07 200,000 165,000
- -----------------------------------------------------------------------
Trans World Airlines, Inc., 11.50%
Sr. Sec. Nts., 12/15/04 580,000 490,100
- -----------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(13) 300,000 289,500
- -----------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50%
Nts., Series 1993-A, 12/1/11(6) 192,214 116,770
---------------
5,004,736
- -----------------------------------------------------------------------
UTILITY - 0.4%
Beaver Valley II Funding Corp., 9%
Second Lease Obligation Bonds,
6/1/17 199,000 224,870
- -----------------------------------------------------------------------
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 150,000 157,688
- -----------------------------------------------------------------------
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 230,000 233,450
10.50% Sr. Nts., 5/15/06 100,000 110,750
- -----------------------------------------------------------------------
El Paso Electric Co., 9.40% First
Mtg. Sec. Nts., Series E, 5/1/11 250,000 290,625
---------------
1,017,383
---------------
Total Corporate Bonds and Notes
(Cost $80,568,681) 75,939,400
SHARES
- -----------------------------------------------------------------------
PREFERRED STOCKS - 2.2%
- -----------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable, Non-Vtg.(15) 2,638 66,609
- -----------------------------------------------------------------------
BankUnited Capital Trust, 10.25%
Gtd. Bonds, 12/31/26 100,000 100,250
- -----------------------------------------------------------------------
CGA Group Ltd., Preferred Stock,
Series A(4)(15) 19,110 477,750
- -----------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cum.
Cv.(6) 4,000 41,000
- -----------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum.
Exchangeable(15) 55 46,337
- -----------------------------------------------------------------------
Concentric Network Corp., 13.50%
Preferred, Series B(15) 212 181,790
- -----------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv.,
Series B, Non-Vtg. 46,000 644,000
- -----------------------------------------------------------------------
Crown American Realty Trust, 11%
Cum., Series A, Non-Vtg. 2,000 97,750
- -----------------------------------------------------------------------
Doane Products Co., 14.25%
Exchangeable, Non-Vtg.(4)(16) 5,000 191,875
- -----------------------------------------------------------------------
Dobson Communications Corp., 12.25%
Sr. Exchangeable(15) 218 194,565
</TABLE>
98
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
- -----------------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable Preferred
Stock 163 $ 80,277
- -----------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Cum.
Exchangeable, Series B, 3/1/08,
Non-Vtg. (16) 50 253,750
- -----------------------------------------------------------------------
Earthwatch, Inc., 12% Cum. Cv.,
Series C, Non-Vtg.(6)(15) 10,000 15,000
- -----------------------------------------------------------------------
EchoStar Communications Corp.,
12.125% Sr. Redeemable
Exchangeable, Series B,
Non-Vtg.(15) 144 167,400
- -----------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale
California, l2% Non-Cum.
Exchangeable Perpetual Preferred
Stock, Series A 20 465
- -----------------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable(15) 115 126,787
- -----------------------------------------------------------------------
Intermedia Communications, Inc.,
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E,
Non-Vtg.(6) 2,100 38,325
- -----------------------------------------------------------------------
International Utility Structures,
Inc.:
13% Preferred(6)(15) 3 2,588
Units (each unit consists of $1,000
principal amount of 13% sr.
exchangeable preferred stock and
one warrant to purchase 30 shares
of common stock)(4)(15) 50 43,250
- -----------------------------------------------------------------------
Kelley Oil & Gas Corp., $2.625 Cv. 1,800 16,200
- -----------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25%
Cum. Exchangeable(15) 5,425 272,606
- -----------------------------------------------------------------------
Nextel Communications, Inc.,
11.125% Exchangeable, Series E(15) 109 98,373
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc., 14%
Cum. Exchangeable, Vtg.(15) 16,584 883,098
- -----------------------------------------------------------------------
Paxson Communications Corp., 13.25%
Cum. Jr. Exchangeable, Non-Vtg.(15) 21 179,025
- -----------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
Jr. Cv. Preferred Stock(16) 1,434 2,510
- -----------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable 8,000 772,000
9.20% Exchangeable, Series F 1,000 98,500
- -----------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum.
Sr., Series B, Non-Vtg.(15) 210 195,825
- -----------------------------------------------------------------------
SD Warren Co., 14% Cum.
Exchangeable, Series B,
Non-Vtg.(16) 9,000 461,250
- -----------------------------------------------------------------------
SF Holdings Group, Inc., 13.75%
Cum. Nts., Series B, 3/15/09,
Non-Vtg.(15) 10 43,250
- -----------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.,
14.25% Cum. Exchangeable,
Non-Vtg.(6)(15) 121 123,723
- -----------------------------------------------------------------------
Viatel, Inc., 10% Cv., Series A(15) 148 16,317
- -----------------------------------------------------------------------
Walden Residential Properties,
Inc.:
9.16% Cv., Series B 10,000 230,000
9.20% Preferred 1,000 21,750
---------------
Total Preferred Stocks (Cost
$8,171,525) 6,184,195
- -----------------------------------------------------------------------
COMMON STOCKS - 0.4%
- -----------------------------------------------------------------------
Celcaribe SA(6)(16) 24,390 51,829
- -----------------------------------------------------------------------
Coinstar, Inc.(16) 700 7,525
- -----------------------------------------------------------------------
Golden State Bancorp, Inc.(16) 2,404 39,966
</TABLE>
99
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- -----------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------
Horizon Group Properties, Inc.(16) 358 $ 1,387
- -----------------------------------------------------------------------
Intermedia Communications, Inc.(16) 112 1,932
- -----------------------------------------------------------------------
MCI WorldCom, Inc.(16) 6,885 493,999
- -----------------------------------------------------------------------
Optel, Inc.(16) 210 2
- -----------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(16) 570 1,140
- -----------------------------------------------------------------------
Vail Resorts, Inc.(16) 15,500 341,000
---------------
Total Common Stocks (Cost $378,715) 938,780
UNITS
- -----------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES -
0.1%
- -----------------------------------------------------------------------
American Telecasting, Inc. Wts.,
Exp. 6/99(4) 1,500 15
- -----------------------------------------------------------------------
Argentina (Republic of) Wts., Exp.
12/99 1,065 4,659
- -----------------------------------------------------------------------
Central Bank of Nigeria Wts., Exp.
11/20 250 --
- -----------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(4) 16,000 4,800
- -----------------------------------------------------------------------
Clearnet Communications, Inc. Wts.,
Exp. 9/05 165 392
- -----------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp.
11/03 200 12,025
- -----------------------------------------------------------------------
Concentric Network Corp. Wts., Exp.
12/07(4) 100 14,891
- -----------------------------------------------------------------------
Covad Communications Group, Inc.
Wts., Exp. 3/08(4) 600 30,000
- -----------------------------------------------------------------------
Covergent Communications, Inc.
Wts., Exp. 4/08(4) 1,000 1,250
- -----------------------------------------------------------------------
FirstWorld Communications, Inc.
Wts., Exp. 4/08(4) 190 1,900
- -----------------------------------------------------------------------
Geotek Communications, Inc. Wts.,
Exp. 7/05(4) 7,500 75
- -----------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/05(4) 325 3,250
- -----------------------------------------------------------------------
Golden State Bancorp, Inc. Wts.,
Exp. 1/01 2,404 10,968
- -----------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(6) 2,621 26
Exp. 9/04(4) 2,800 3,150
Exp. 5/05(4) 2,181 218
- -----------------------------------------------------------------------
Hyperion Telecommunications, Inc.
Wts., Exp. 4/01 60 3,687
- -----------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp.
9/05(4) 825 11,307
- -----------------------------------------------------------------------
IHF Capital, Inc. Series I Wts.,
Exp. 11/99(4) 200 2
- -----------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp.
8/02 200 --
- -----------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts.,
Exp. 4/08(4) 725 1,903
- -----------------------------------------------------------------------
Long Distance International, Inc.
Wts., 4/08(4) 200 500
- -----------------------------------------------------------------------
Mexican Value Rts., Exp. 6/03 1,100,000 --
- -----------------------------------------------------------------------
Microcell Telecommunications, Inc.
Wts., Exp. 6/06(4) 600 10,875
- -----------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/05(4) 250 1,563
- -----------------------------------------------------------------------
Occidente y Caribe Celular SA Wts.,
Exp. 3/04(4) 800 6,100
- -----------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07(4) 150 1,875
- -----------------------------------------------------------------------
PLD Telekom, Inc. Wts., Exp.
6/06(4) 300 30
- -----------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07(4) 3,096 147,834
</TABLE>
100
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES
(CONTINUED)
- -----------------------------------------------------------------------
United International Holdings, Inc.
Wts., Exp. 11/99(4) 200 $ 3,025
- -----------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/05(4) 1,500 12,000
---------------
Total Rights, Warrants and
Certificates (Cost $47,541) 288,320
PRINCIPAL
AMOUNT(1)
- -----------------------------------------------------------------------
STRUCTURED INSTRUMENTS - 6.1%
- -----------------------------------------------------------------------
Bankers Trust/Bear Stearns High
Yield Composite Index Linked Nts.,
8.55%, 5/4/99 $ 1,000,000 959,570
- -----------------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch), Lehman High
Yield Index Nts., 8.50%, 3/8/99 1,000,000 942,500
- -----------------------------------------------------------------------
Bear Stearns High Yield Composite
Index Linked Nts.:
8.50%, 4/9/99 1,000,000 929,380
9%, 2/16/99 1,600,000 1,474,306
- -----------------------------------------------------------------------
Beta Finance Corp., Japanese Yen
Linked Nts., 2.11%, 9/10/99 1,520,000 1,639,624
- -----------------------------------------------------------------------
Credit Suisse First Boston Corp.
(New York Branch), Russian OFZ
Linked Nts., 15%,
2/23/00(4)(12)(RUR) 8,008,000 146,154
- -----------------------------------------------------------------------
Credit Suisse First Boston Corp.
(New York Branch), Turkish Lira
Currency Linked Nts., 92.556%,
2/2/99(5)(TRL) 18,302,400,000 692,571
- -----------------------------------------------------------------------
Deutsche Bank AG, Turkish Lira O/N
Rate Linked Nts., 91.727%,
2/4/99(5)(TRL) 19,564,000,000 696,165
- -----------------------------------------------------------------------
Deutsche Morgan Grenfell, Russian
Federal Loan Floating Rate Linked
Nts.:
5.20%, 10/25/00(4)(12) 240,000 2,400
5.12%, 2/23/00(4)(12) 240,000 2,400
- -----------------------------------------------------------------------
Deutsche Morgan Grenfell, Russian
OFZ Linked Nts., 14%,
9/27/00(4)(12)(RUR) 3,610,000 33,504
- -----------------------------------------------------------------------
Goldman, Sachs & Co. Argentina
Local Market Securities Trust,
11.30%, 4/1/00 representing debt of
Argentina (Republic of) Bonos del
Tesoro Bonds, Series 10, 11.30%,
4/1/00 and an interest rate swap
between Goldman Sachs and the
Trust(4) 78,260 76,649
- -----------------------------------------------------------------------
J.P. Morgan & Co., Inc., The
Emerging Markets Bond Plus Index
Linked Nts., 9.50%, 7/16/99(17) 2,700,000 2,229,034
- -----------------------------------------------------------------------
Korea Development Bank, Industrial
Bank Finance Linked Nts., Zero
Coupon, 3/5/99 470,000 514,462
- -----------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
Chilean Peso/Japanese Yen Linked
Nts., 18.50%, 1/28/99 600,000 596,520
- -----------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
Greek Drachma/European Currency
Unit Linked Nts., Zero Coupon,
3/26/99 280,000 320,684
- -----------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
Greek Drachma/Swiss Franc Linked
Nts., Zero Coupon, 3/31/99 175,000 202,143
- -----------------------------------------------------------------------
Morgan Guaranty Trust Co. of New
York, The Emerging Markets Bond
Index Linked Nts.:
9.50%, 5/7/99(17) 1,300,000 1,303,719
9.50%, 8/10/99(17) 1,400,000 1,215,850
</TABLE>
101
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET VALUE
AMOUNT(1) NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------
STRUCTURED INSTRUMENTS (CONTINUED)
- -----------------------------------------------------------------------
Salomon Smith Barney, Inc., Brazil
Credit Linked Nts., 6%, 4/2/03 $ 620,000 $ 317,440
- -----------------------------------------------------------------------
Salomon Smith Barney, Inc., United
Mexican States 2016 Linked Nts.,
14.076%, 3/18/99 749,000 747,247
- -----------------------------------------------------------------------
Shoshone Partners Loan Trust Sr.
Nts., 6.97%, 4/28/02 (representing
a basket of reference loans and a
total return swap between Chase
Manhattan Bank and the Trust)(4)(5) 750,000 672,606
- -----------------------------------------------------------------------
Standard Chartered Bank,
Philippines Peso/Japanese Yen
Currency Linked Nts., 16.45%,
1/21/99 116,000 126,858
- -----------------------------------------------------------------------
Standard Chartered Bank,
Philippines Peso/Japanese Yen
Linked Nts.:
20.45%, 2/9/99 240,000 237,360
21.83%, 1/19/99 270,000 219,888
- -----------------------------------------------------------------------
Standard Chartered Bank,
Philippines Peso/Singapore Dollar
Linked Nts.:
18.70%, 3/8/99 150,000 149,340
18.90%, 3/4/99 460,000 458,666
---------------
Total Structured Instruments (Cost
$19,421,140) 16,907,040
</TABLE>
<TABLE>
<CAPTION>
DATE STRIKE CONTRACTS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED - 0.0%
- --------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%,
11/15/27 Call Opt.(4) (Cost
$65,234) 2/99 111.375% 2,500 52,344
- --------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED - 0.0%
- --------------------------------------------------------------------------------------
Japanese Yen Put Opt. 1/99 121.00(JPY) 146,410,000 1,025
- --------------------------------------------------------------------------------------
Japanese Yen Put Opt.(4) 2/99 125(JPY) 78,000,000 1,404
- --------------------------------------------------------------------------------------
Mexican Peso Put Opt.(4) 2/99 10.75(MXP) 13,100,000 5,240
---------------
Total Put Options Purchased (Cost
$55,514) 7,669
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(1)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 2.2%
- -----------------------------------------------------------------------
Repurchase agreement with
PaineWebber, Inc., 4.85%, dated
12/31/98, to be repurchased at
$6,203,341 on 1/4/99,
collateralized by U.S. Treasury
Nts., 4.625%--5.875%,
12/31/00--11/30/01, with a value of
$6,335,417 (Cost $6,200,000) $ 6,200,000 6,200,000
- -----------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$282,454,523) 98.0% 273,522,777
- -----------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.0 5,677,619
------------ ---------------
NET ASSETS 100.0% $ 279,200,396
------------ ---------------
------------ ---------------
</TABLE>
102
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP - Argentine Peso
AUD - Australian Dollar
CAD - Canadian Dollar
DEM - German Mark
DKK - Danish Krone
ESP - Spanish Peseta
FIM - Finnish Markka
FRF - French Franc
GBP - British Pound Sterling
GRD - Greek Drachma
HUF - Hungarian Forint
IDR - Indonesian Rupiah
ITL - Italian Lira
JPY - Japanese Yen
MXP - Mexican Peso
NZD - New Zealand Dollar
PLZ - Polish Zloty
RUR - Russian Ruble
TRL - Turkish Lira
XEU - European Currency Units
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
4. Identifies issues considered to be illiquid or restricted -- See applicable
note of Notes to Financial Statements.
5. Represents the current interest rate for a variable rate security.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $10,081,861 or 3.61% of the Fund's net
assets as of December 31, 1998.
7. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See applicable note of Notes to
Financial Statements.
8. Securities with an aggregate market value of $672,188 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See applicable note of Notes to Financial Statements.
9. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
CONTRACTS/PRINCIPAL EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL DATE PRICE RECEIVED NOTE 1
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Japanese Yen Call Option 134,503,600 1/99 111(JPY) $10,236 $10,357
- --------------------------------------------------------------------------------------------
Mexican Peso Call Option 13,100,000 2/99 10(MXP) 9,140 3,930
- --------------------------------------------------------------------------------------------
U.S. Treasury Bonds,
6.125%, 11/15/27 Call
Opt. 2,500,000 2/99 122% 5,859 1,758
------- ------
$25,235 $16,045
------- ------
------- ------
</TABLE>
10. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
11. Represents the current interest rate for an increasing rate security.
12. Non-income producing -- issuer is in default.
13. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
103
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
14. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
15. Interest or dividend is paid in kind.
16. Non-income producing security.
17. Security is linked to the Emerging Markets Bond Index (EMBI). The EMBI
tracks total returns for currency denominated debt instruments of the emerging
markets. Countries covered are Argentina, Brazil, Bulgaria, Ecuador, Mexico,
Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela.
See accompanying Notes to Financial Statements.
104
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 91.6%
- ----------------------------------------------------------------
BASIC MATERIALS - 0.6%
- ----------------------------------------------------------------
CHEMICALS - 0.6%
Delta & Pine Land Co. 22,500 $ 832,500
- ----------------------------------------------------------------
IMC Global, Inc. 50,000 1,068,750
---------------
1,901,250
- ----------------------------------------------------------------
CAPITAL GOODS - 11.9%
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.8%
CommScope, Inc.(1) 67,500 1,134,844
- ----------------------------------------------------------------
Etec Systems, Inc.(1) 2,500 100,000
- ----------------------------------------------------------------
Raychem Corp. 40,000 1,292,500
---------------
2,527,344
- ----------------------------------------------------------------
INDUSTRIAL SERVICES - 7.2%
Allied Waste Industries, Inc.
(New)(1) 235,000 5,551,875
- ----------------------------------------------------------------
Coflexip SA, Sponsored ADR 60,000 1,927,500
- ----------------------------------------------------------------
Republic Services, Inc., Cl. A(1) 185,000 3,410,937
- ----------------------------------------------------------------
United Rentals, Inc.(1) 25,000 828,125
- ----------------------------------------------------------------
Waste Management, Inc. (New) 227,500 10,607,187
---------------
22,325,624
- ----------------------------------------------------------------
MANUFACTURING - 3.9%
American Standard Cos., Inc.(1) 75,000 2,700,000
- ----------------------------------------------------------------
Halter Marine Group, Inc.(1) 360,000 1,755,000
- ----------------------------------------------------------------
MascoTech, Inc. 30,000 513,750
- ----------------------------------------------------------------
Mettler-Toledo International,
Inc.(1) 220,000 6,173,750
- ----------------------------------------------------------------
Owens-Illinois, Inc.(1) 22,500 689,062
- ----------------------------------------------------------------
Tyco International Ltd. 2,500 188,594
---------------
12,020,156
- ----------------------------------------------------------------
CONSUMER CYCLICALS - 22.8%
- ----------------------------------------------------------------
AUTOS & HOUSING - 2.5%
Champion Enterprises, Inc.(1) 32,500 889,687
- ----------------------------------------------------------------
General Motors Corp. 17,500 1,252,344
- ----------------------------------------------------------------
Lear Corp.(1) 42,500 1,636,250
- ----------------------------------------------------------------
Lennar Corp. 115,000 2,903,750
- ----------------------------------------------------------------
Owens Corning 27,500 974,531
---------------
7,656,562
- ----------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.7%
Crestline Capital Corp.(1) 8,000 123,000
- ----------------------------------------------------------------
Host Marriott Corp.(1) 80,000 1,105,000
- ----------------------------------------------------------------
Mirage Resorts, Inc.(1) 95,000 1,419,062
- ----------------------------------------------------------------
Rio Hotel & Casino, Inc.(1) 155,000 2,460,625
---------------
5,107,687
</TABLE>
105
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
MEDIA - 9.0%
Capstar Broadcasting Corp., Cl.
A(1) 210,000 $ 4,803,750
- ----------------------------------------------------------------
CBS Corp. 205,000 6,713,750
- ----------------------------------------------------------------
Emmis Communications Corp., Cl.
A(1) 77,500 3,361,562
- ----------------------------------------------------------------
Fox Entertainment Group, Inc., A
Shares(1) 171,500 4,319,656
- ----------------------------------------------------------------
Infinity Broadcasting Corp., Cl.
A(1) 70,300 1,924,462
- ----------------------------------------------------------------
Jacor Communications, Inc.(1) 37,500 2,414,062
- ----------------------------------------------------------------
RCN Corp.(1) 232,500 4,112,344
---------------
27,649,586
- ----------------------------------------------------------------
RETAIL: GENERAL - 2.0%
Federated Department Stores,
Inc.(1) 87,500 3,811,719
- ----------------------------------------------------------------
Fred Meyer, Inc.(1) 41,000 2,470,250
---------------
6,281,969
- ----------------------------------------------------------------
RETAIL: SPECIALTY - 7.6%
AutoZone, Inc.(1) 95,000 3,129,062
- ----------------------------------------------------------------
CSK Auto Corp.(1) 475,000 12,676,562
- ----------------------------------------------------------------
Republic Industries, Inc.(1) 525,000 7,743,750
---------------
23,549,374
- ----------------------------------------------------------------
CONSUMER STAPLES - 16.5%
- ----------------------------------------------------------------
BEVERAGES - 0.9%
Anheuser-Busch Cos., Inc.(2) 41,000 2,690,625
- ----------------------------------------------------------------
CONSUMER SERVICES - 2.9%
Budget Group, Inc., Cl. A(1) 225,000 3,571,875
- ----------------------------------------------------------------
Intermedia Communications, Inc.(1) 11,338 195,580
- ----------------------------------------------------------------
Intermedia Communications,
Inc.(1)(3) 292 4,030
- ----------------------------------------------------------------
United Road Services, Inc.(1) 277,500 5,099,062
---------------
8,870,547
- ----------------------------------------------------------------
ENTERTAINMENT - 8.0%
Brinker International, Inc.(1) 85,000 2,454,375
- ----------------------------------------------------------------
News Corp. Ltd., Sponsored ADR,
Preference 107,500 2,653,906
- ----------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1) 225,000 12,346,875
- ----------------------------------------------------------------
Time Warner, Inc.(2) 70,000 4,344,375
- ----------------------------------------------------------------
Viacom, Inc.(1)(2) 40,000 2,960,000
---------------
24,759,531
- ----------------------------------------------------------------
FOOD - 1.7%
RJR Nabisco Holdings Corp. 130,000 3,859,375
- ----------------------------------------------------------------
Unilever NV(2) 15,000 1,244,062
---------------
5,103,437
- ----------------------------------------------------------------
HOUSEHOLD GOODS - 0.7%
Fort James Corp. 50,000 2,000,000
- ----------------------------------------------------------------
TOBACCO - 2.3%
Philip Morris Cos., Inc. 130,000 6,955,000
</TABLE>
106
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
ENERGY - 2.1%
- ----------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 2.1%
BJ Services Co.(1) 45,000 $ 703,125
- ----------------------------------------------------------------
Cooper Cameron Corp.(1) 45,000 1,102,500
- ----------------------------------------------------------------
Marine Drilling Cos., Inc.(1) 40,000 307,500
- ----------------------------------------------------------------
Santa Fe International Corp. 80,000 1,170,000
- ----------------------------------------------------------------
Stolt Comex Seaway SA, ADR(1) 300,000 1,687,500
- ----------------------------------------------------------------
Transocean Offshore, Inc. 27,500 737,344
- ----------------------------------------------------------------
Weatherford International, Inc.
(New)(1) 35,000 678,125
---------------
6,386,094
- ----------------------------------------------------------------
FINANCIAL - 19.2%
- ----------------------------------------------------------------
BANKS - 9.2%
Bank One Corp. 42,500 2,170,156
- ----------------------------------------------------------------
BankAmerica Corp. (New) 42,500 2,555,313
- ----------------------------------------------------------------
Chase Manhattan Corp. (New) 90,000 6,125,625
- ----------------------------------------------------------------
Commercial Federal Corp. 165,000 3,825,938
- ----------------------------------------------------------------
Compass Bancshares, Inc. 37,500 1,427,344
- ----------------------------------------------------------------
First Union Corp. 72,500 4,408,906
- ----------------------------------------------------------------
Fleet Financial Group, Inc. 50,000 2,234,375
- ----------------------------------------------------------------
Hubco, Inc. 57,500 1,732,188
- ----------------------------------------------------------------
KeyCorp 20,000 640,000
- ----------------------------------------------------------------
Prosperity Bancshares, Inc.(1) 103,100 1,275,863
- ----------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros SA, Sponsored GDR 60,000 866,250
- ----------------------------------------------------------------
Union Planters Corp. 25,000 1,132,813
---------------
28,394,771
- ----------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.2%
American Express Co.(2) 15,000 1,533,750
- ----------------------------------------------------------------
C.I.T. Group, Inc., Cl. A 78,000 2,481,375
- ----------------------------------------------------------------
Citigroup, Inc. 57,750 2,858,625
- ----------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 20,000 1,420,000
- ----------------------------------------------------------------
UniCapital Corp.(1) 210,000 1,548,750
---------------
9,842,500
- ----------------------------------------------------------------
INSURANCE - 5.7%
Allstate Corp.(2) 80,000 3,090,000
- ----------------------------------------------------------------
Arm Financial Group, Inc., Cl. A 50,000 1,109,375
- ----------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 285,000 11,097,188
- ----------------------------------------------------------------
Scottish Annuity & Life Holdings
Ltd.(1) 155,000 2,131,250
---------------
17,427,813
- ----------------------------------------------------------------
SAVINGS & LOANS - 1.1%
Sovereign Bancorp, Inc. 150,000 2,137,500
</TABLE>
107
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
- ----------------------------------------------------------------
<S> <C> <C>
SAVINGS & LOANS (CONTINUED)
Washington Mutual, Inc. 30,000 $ 1,145,625
---------------
3,283,125
- ----------------------------------------------------------------
HEALTHCARE - 1.0%
- ----------------------------------------------------------------
HEALTHCARE/DRUGS - 1.0%
BioChem Pharma, Inc.(1) 50,000 1,431,250
- ----------------------------------------------------------------
Centocor, Inc.(1)(2) 37,500 1,692,188
---------------
3,123,438
- ----------------------------------------------------------------
TECHNOLOGY - 12.0%
- ----------------------------------------------------------------
COMPUTER HARDWARE - 1.5%
Compaq Computer Corp. 7,500 314,531
- ----------------------------------------------------------------
International Business Machines
Corp.(2) 20,000 3,695,000
- ----------------------------------------------------------------
Seagate Technology, Inc.(1)(2) 20,000 605,000
---------------
4,614,531
- ----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 6.8%
First Data Corp. 110,000 3,485,625
- ----------------------------------------------------------------
Microsoft Corp.(1) 2,500 346,719
- ----------------------------------------------------------------
Network Associates, Inc.(1) 10,000 662,500
- ----------------------------------------------------------------
PLATINUM Technology, Inc.(1) 315,000 6,024,375
- ----------------------------------------------------------------
Structural Dynamics Research
Corp.(1) 397,500 7,900,313
- ----------------------------------------------------------------
Unigraphics Solutions, Inc.(1) 185,000 2,682,500
---------------
21,102,032
- ----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.3%
Tellabs, Inc.(1)(2) 15,000 1,028,438
- ----------------------------------------------------------------
ELECTRONICS - 3.4%
Waters Corp.(1) 120,000 10,470,000
- ----------------------------------------------------------------
TELECOMMUNICATIONS - 4.2%
- ----------------------------------------------------------------
TELEPHONE UTILITIES - 0.0%
Embratel Participacoes SA, ADR(1) 750 10,453
- ----------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY -
4.2%
MCI WorldCom, Inc.(1) 95,000 6,816,250
- ----------------------------------------------------------------
Newbridge Networks Corp.(1) 10,000 303,750
- ----------------------------------------------------------------
Qwest Communications International,
Inc.(1) 90,000 4,500,000
- ----------------------------------------------------------------
Telecomunicacoes Brasileiras SA,
Sponsored ADR(1) 19,500 1,417,406
---------------
13,037,406
- ----------------------------------------------------------------
TRANSPORTATION - 1.4%
- ----------------------------------------------------------------
AIR TRANSPORTATION - 1.4%
AMR Corp.(1) 27,500 1,632,813
- ----------------------------------------------------------------
Continental Airlines, Inc., Cl.
B(1) 25,339 848,857
- ----------------------------------------------------------------
Delta Air Lines, Inc. 35,000 1,820,000
---------------
4,301,670
---------------
Total Common Stocks (Cost
$257,894,535) 282,420,963
</TABLE>
108
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES NOTE 1
<S> <C> <C>
- ----------------------------------------------------------------
PREFERRED STOCKS - 3.5%
- ----------------------------------------------------------------
Evergreen Media Corp., 6% Cv.
Preferred(4) 20,000 $ 1,867,500
- ----------------------------------------------------------------
Host Marriott Corp., 6.75%
Preferred Stock 17,500 708,750
- ----------------------------------------------------------------
ICG Communications, Inc.:
6.75% Cv. Preferred Stock(4) 37,500 1,964,063
6.75% Cv. Preferred Stock 35,000 1,833,125
- ----------------------------------------------------------------
Intermedia Communications, Inc.:
7% Cv. Preferred Stock(4) 32,500 463,125
7% Cv. Preferred Stock(4) 40,000 1,000,000
- ----------------------------------------------------------------
Intermedia Communications, Inc.:
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series D, Non-Vtg. 30,000 750,000
Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr.
Preferred Stock, Series E,
Non-Vtg.(4) 2,500 45,625
- ----------------------------------------------------------------
Monsanto Co., 6.50% Cv.(1) 25,000 1,225,000
- ----------------------------------------------------------------
Nextel Communications, Inc.,
Cv.(1)(4) 3,900 989,625
---------------
Total Preferred Stocks (Cost
$11,167,364) 10,846,813
- ----------------------------------------------------------------
OTHER SECURITIES - 3.5%
- ----------------------------------------------------------------
Automatic Commission Exchange
Security Trust II, 6.50% Cv.
Preferred (exchangeable to common
stock of Republic Industries, Inc.,
Trust Automatic Common Exchange
Securities effective 5/15/00) 125,700 1,916,925
- ----------------------------------------------------------------
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated
Preferred Securities 5,000 348,125
- ----------------------------------------------------------------
Host Marriott Financial Trust,
6.75% Cv. Preferred Stock(4) 10,000 405,000
- ----------------------------------------------------------------
Houston Industries, Inc., 7%
Automatic Common Exchange
Securities, Exchangeable for Time
Warner, Inc. Common Stock, 7/1/00 25,000 2,659,375
- ----------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25%
Structured Yield Product
Exchangeable for Stock of IMC
Global, Inc. 17,500 415,625
- ----------------------------------------------------------------
Qwest Trends Trust, $43 Cv.(1)(4) 16,700 780,725
- ----------------------------------------------------------------
United Rental Trust I, 6.50% Cv.
Quarterly Income Preferred
Securities(4) 85,000 4,090,625
---------------
Total Other Securities (Cost
$10,045,078) 10,616,400
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND
NOTES - 1.4%
- ----------------------------------------------------------------
Continental Airlines, Inc.:
6.75% Cv. Sub. Nts., 4/15/06(4) $ 350,000 426,125
6.75% Cv. Sub. Nts., 4/15/06 150,000 182,625
- ----------------------------------------------------------------
PLATINUM Technology, Inc.:
6.25% Cv. Sub. Nts., 12/15/02(4) 2,000,000 1,795,000
6.25%. Cv. Unsec. Sub. Nts.,
12/15/02 1,500,000 1,346,250
6.75% Cv. Sub. Nts., 11/15/01 500,000 683,750
---------------
Total Convertible Corporate Bonds
and Notes (Cost $4,266,795) 4,433,750
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$283,373,772) 100.0% 308,317,926
- ----------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.0 35,388
---------- ---------------
NET ASSETS 100.0% $ 308,353,314
---------- ---------------
---------- ---------------
</TABLE>
109
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover outstanding
written call and put options, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT TO EXPIRATION EXERCISE PREMIUM MARKET VALUE
CALL DATE PRICE RECEIVED NOTE 1
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Allstate Corp. 30,000 1/99 $ 55.00 $ 49,849 $ 1,875
- -----------------------------------------------------------------------------------------------
American Express Co. 7,500 1/99 110.00 11,337 6,563
- -----------------------------------------------------------------------------------------------
American Express Co. 7,500 1/99 115.00 10,712 2,344
- -----------------------------------------------------------------------------------------------
Anheuser-Busch Cos. 7,500 1/99 65.00 11,025 12,188
- -----------------------------------------------------------------------------------------------
Centocor, Inc. 10,000 1/99 45.00 41,574 18,750
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 5,000 4/99 160.00 88,600 155,000
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 4,500 4/99 155.00 89,862 159,188
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 5,500 1/99 160.00 59,646 137,500
- -----------------------------------------------------------------------------------------------
International Business Machines
Corp. 5,000 1/99 150.00 46,723 171,250
- -----------------------------------------------------------------------------------------------
Seagate Technology, Inc. 10,000 1/99 32.50 22,199 5,623
- -----------------------------------------------------------------------------------------------
Tellabs, Inc. 15,000 3/99 65.00 110,171 135,000
- -----------------------------------------------------------------------------------------------
Time Warner, Inc. 10,000 1/99 55.00 16,724 80,000
- -----------------------------------------------------------------------------------------------
Unilever NV 15,000 1/99 85.00 24,862 33,750
- -----------------------------------------------------------------------------------------------
Viacom, Inc. 10,000 1/99 70.00 28,449 48,750
$ 611,733 $967,781
</TABLE>
3. Identifies issues considered to be illiquid or restricted - See applicable
note of Notes to Financial Statements.
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 $13,827,413 or 4.48% of the Fund's net
assets as of December 31, 1998.
See accompanying Notes to Financial Statements.
110
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 85.0%
- --------------------------------------------------------------------------------
BASIC MATERIALS - 1.5%
- --------------------------------------------------------------------------------
PAPER - 1.5%
Daisytek International Corp.(1) 800 $ 15,200
- --------------------------------------------------------------------------------
CAPITAL GOODS - 13.1%
- --------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 11.9%
Casella Waste Systems, Inc., Cl. A(1) 400 14,850
- --------------------------------------------------------------------------------
Eastern Environmental Services, Inc.(1) 400 11,850
- --------------------------------------------------------------------------------
Group Maintenance America Corp.(1) 500 6,062
- --------------------------------------------------------------------------------
Kendle International, Inc.(1) 400 9,350
- --------------------------------------------------------------------------------
Maximus, Inc.(1) 600 22,200
- --------------------------------------------------------------------------------
Metzler Group, Inc.(1) 400 19,475
- --------------------------------------------------------------------------------
Service Experts, Inc.(1) 200 5,850
- --------------------------------------------------------------------------------
Stericycle, Inc.(1) 400 6,450
- --------------------------------------------------------------------------------
Tetra Tech, Inc.(1) 600 16,237
- --------------------------------------------------------------------------------
United Rentals, Inc.(1) 192 6,360
--------
118,684
- --------------------------------------------------------------------------------
MANUFACTURING - 1.2%
Zebra Technologies Corp., Cl. A(1) 400 11,500
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS - 13.7%
- --------------------------------------------------------------------------------
AUTOS & HOUSING - 2.3%
Fairfield Communities, Inc.(1) 1,000 11,062
- --------------------------------------------------------------------------------
Kroll-O'Gara Co. (The)(1) 300 11,831
--------
22,893
- --------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.8%
Handleman Co.(1) 2,000 28,125
- --------------------------------------------------------------------------------
MEDIA - 1.0%
Penton Media, Inc.(1) 500 10,125
- --------------------------------------------------------------------------------
RETAIL: GENERAL - 1.5%
Cutter & Buck, Inc.(1) 400 14,900
- --------------------------------------------------------------------------------
RETAIL: SPECIALTY - 6.1%
Chico's Fas, Inc.(1) 800 18,700
- --------------------------------------------------------------------------------
O'Reilly Automotive, Inc.(1) 400 18,900
- --------------------------------------------------------------------------------
School Specialty, Inc.(1) 1,100 23,512
--------
61,112
- --------------------------------------------------------------------------------
CONSUMER STAPLES - 18.9%
- --------------------------------------------------------------------------------
CONSUMER SERVICES - 10.0%
Applied Analytical Industries, Inc.(1) 1,200 20,850
- --------------------------------------------------------------------------------
Boron, LePore & Associates, Inc.(1) 300 10,350
- --------------------------------------------------------------------------------
Core Laboratories NV(1) 300 5,737
</TABLE>
111
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER SERVICES (CONTINUED)
Cornell Corrections, Inc.(1) 1,000 $ 19,000
- --------------------------------------------------------------------------------
CORT Business Services Corp.(1) 500 12,125
- --------------------------------------------------------------------------------
Getty Images, Inc.(1) 600 10,312
- --------------------------------------------------------------------------------
Rent-Way, Inc.(1) 200 4,862
- --------------------------------------------------------------------------------
Renters Choice, Inc.(1) 500 15,875
--------
99,111
- --------------------------------------------------------------------------------
EDUCATION - 6.3%
Career Education Corp.(1) 500 15,000
- --------------------------------------------------------------------------------
Education Management Corp.(1) 1,000 23,625
- --------------------------------------------------------------------------------
ITT Educational Services, Inc.(1) 400 13,600
- --------------------------------------------------------------------------------
Strayer Education, Inc. 300 10,575
--------
62,800
- --------------------------------------------------------------------------------
ENTERTAINMENT - 2.6%
Cinar Films, Inc., Cl. B(1) 1,000 25,375
- --------------------------------------------------------------------------------
ENERGY - 0.4%
- --------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.4%
Cross Timbers Oil Co. 500 3,750
- --------------------------------------------------------------------------------
FINANCIAL - 5.8%
- --------------------------------------------------------------------------------
BANKS - 1.2%
Investors Financial Services Corp. 200 11,925
- --------------------------------------------------------------------------------
INSURANCE - 4.6%
Advance Paradigm, Inc.(1) 300 10,500
- --------------------------------------------------------------------------------
Annuity & Life RE Holdings Ltd. 500 13,500
- --------------------------------------------------------------------------------
Medical Assurance, Inc. 660 21,821
--------
45,821
- --------------------------------------------------------------------------------
HEALTHCARE - 11.8%
- --------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.1%
Serologicals Corp.(1) 800 24,000
- --------------------------------------------------------------------------------
Ventana Medical Systems, Inc.(1) 300 6,488
--------
30,488
- --------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 8.7%
Covance, Inc.(1) 500 14,563
- --------------------------------------------------------------------------------
Hanger Orthopedic Group, Inc.(1) 700 15,750
- --------------------------------------------------------------------------------
Parexel International Corp.(1) 300 7,500
- --------------------------------------------------------------------------------
Pharmaceutical Product Development, Inc.(1) 800 24,050
- --------------------------------------------------------------------------------
Renal Care Group, Inc.(1) 600 17,288
- --------------------------------------------------------------------------------
VWR Scientific Products Corp.(1) 400 6,950
--------
86,101
- --------------------------------------------------------------------------------
TECHNOLOGY - 19.8%
- --------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.1%
SCM Microsystems, Inc.(1) 300 21,319
</TABLE>
112
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH FUND
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES - 17.0%
Aspen Technologies, Inc.(1) 300 $ 4,350
- --------------------------------------------------------------------------------
Aware, Inc.(1) 1,000 27,188
- --------------------------------------------------------------------------------
Brio Technology, Inc.(1) 1,000 17,688
- --------------------------------------------------------------------------------
Concord Communications, Inc.(1) 200 11,350
- --------------------------------------------------------------------------------
Documentum, Inc.(1) 400 21,375
- --------------------------------------------------------------------------------
Engineering Animation, Inc.(1) 100 5,400
- --------------------------------------------------------------------------------
Medical Manager Corp.(1) 400 12,550
- --------------------------------------------------------------------------------
New Era of Networks, Inc.(1) 200 8,800
- --------------------------------------------------------------------------------
Phoenix International Ltd.(1) 1,000 14,750
- --------------------------------------------------------------------------------
Segue Software, Inc.(1) 500 10,125
- --------------------------------------------------------------------------------
Software AG Systems, Inc.(1) 600 10,875
- --------------------------------------------------------------------------------
SPR, Inc.(1) 1,000 17,250
- --------------------------------------------------------------------------------
Visio Corp.(1) 200 7,313
--------
169,014
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.7%
Pittway Corp., Cl. A 200 6,613
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $739,885) 85.0% 844,856
- --------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 15.0 149,448
------- --------
NET ASSETS 100.0% $994,304
------- --------
------- --------
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
113
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER AGGRESSIVE OPPENHEIMER
MONEY HIGH INCOME BOND GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost *)
(including repurchase agreements **) -
see accompanying statements $ 151,269,014 $ 320,913,385 $ 688,013,848 $ 1,079,562,636 $ 767,477,940
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts -
see applicable note -- 50,410 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash 152,071 1,918,277 178,353 96,737 119,623
- -------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 445,414 6,408,876 8,526,057 226,583 298,939
Daily variation on futures contracts -
see applicable note -- 7,650 2,108 -- --
Shares of beneficial interest sold 638,924 226,088 1,613,778 748,053 3,312,716
Investments sold -- 1,426,850 5,246,858 1,182,183 469,735
- -------------------------------------------------------------------------------------------------------------------------
Other 5,225 6,817 9,388 11,926 9,025
------------- ------------- ------------- --------------- -------------
Total assets 152,510,648 330,958,353 703,590,390 1,081,828,118 771,687,978
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Options written, at value (premiums
received ***) - see accompanying
statements and notes -- -- -- 32,775 --
- -------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- 2,014 14,916 -- --
- -------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends 285,552 -- -- -- --
Custodian fees 1,969 9,396 11,345 12,130 8,092
Registration and filing fees 9,020 14,555 32,077 30,980 52,813
Shareholder reports 21,635 41,202 58,125 74,868 49,376
Legal and auditing fees 8,787 14,151 14,192 18,160 13,773
Investments purchased (including those
purchased on a when-issued basis****) -
see applicable note -- -- 47,434,432 -- --
Shares of beneficial interest redeemed 380,917 2,311,170 392,473 3,694,484 3,010,700
Transfer and shareholder servicing agent
fees 2,905 2,317 2,303 2,905 2,483
Other 1,063 891 87,828 1,656 1,045
------------- ------------- ------------- --------------- -------------
Total liabilities 711,848 2,395,696 48,047,691 3,867,958 3,138,282
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 151,798,800 $ 328,562,657 $ 655,542,699 $ 1,077,960,160 $ 768,549,696
------------- ------------- ------------- --------------- -------------
------------- ------------- ------------- --------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
COMPOSITIONS OF NET ASSETS
Paid-in capital $ 151,805,834 $ 323,273,405 $ 616,406,705 $ 797,996,718 $ 542,115,494
- -------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income 11,314 23,046,774 30,079,292 -- 2,959,139
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss)
from investments and foreign currency
transactions (18,348) (4,290,927) 2,718,207 (70,261,463) 32,291,665
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies -- (13,466,595) 6,338,495 350,224,905 191,183,398
------------- ------------- ------------- --------------- -------------
Net Assets $ 151,798,800 $ 328,562,657 $ 655,542,699 $ 1,077,960,160 $ 768,549,696
------------- ------------- ------------- --------------- -------------
------------- ------------- ------------- --------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 151,805,855 29,806,919 53,210,003 24,043,802 20,956,201
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 1.00 $ 11.02 $ 12.32 $ 44.83 $ 36.67
* Cost $ 151,269,014 $ 334,412,099 $ 681,813,086 $ 729,339,720 $ 576,294,542
** Repurchase agreements $ 1,800,000 $ 5,100,000 $ 2,600,000 $ 112,500,000 $ 64,400,000
*** Premiums received $ -- $ -- $ -- $ 34,764 $ --
**** When-issued $ -- $ -- $ 47,434,432 $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
114
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL STRATEGIC GROWTH & SMALL CAP
STRATEGIES SECURITIES BOND INCOME GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost *)
(including repurchase agreements **) -
see accompanying statements $ 623,885,456 $ 1,146,157,977 $ 273,522,777 $ 308,317,926 $ 844,856
- ------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency exchange contracts -
see applicable note -- 26,055 26,339 -- --
- ------------------------------------------------------------------------------------------------------------------------
Cash 147,269 153,505 495,588 218,017 129,322
- ------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends, interest and principal
paydowns 5,139,170 1,288,216 5,003,192 357,509 41
Daily variation on futures contracts -
see applicable note -- -- -- -- --
Shares of beneficial interest sold 17,862 245,965 213,947 640,011 18,955
Investments sold 33,387 129,251 84,219 -- --
- ------------------------------------------------------------------------------------------------------------------------
Other 8,967 12,495 6,534 5,528 1,514
------------- --------------- ------------- ------------- ------------
Total assets 629,232,111 1,148,013,464 279,352,596 309,538,991 994,688
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Options written, at value (premiums
received ***) - see accompanying
statements and notes 5,740,750 -- 16,045 967,781 --
- ------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward
foreign exchange contracts - see
applicable note -- 1,403 47,561 -- --
- ------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends -- -- -- -- --
Custodian fees 20,840 145,007 11,736 757 --
Registration and filing fees -- 39,978 19,675 43,438 255
Shareholder reports 60,011 75,114 29,632 22,221 --
Legal and auditing fees 17,461 18,232 11,708 9,836 --
Investments purchased (including those
purchased on a when-issued basis****) -
see applicable note 362,598 10,966,196 -- 4,100 --
Shares of beneficial interest redeemed 695,060 1,735,012 11,646 133,103 7
Transfer and shareholder servicing agent
fees 2,062 1,832 2,496 3,122 --
Other 28 1,556 1,701 1,319 122
------------- --------------- ------------- ------------- ------------
Total liabilities 6,898,810 12,984,330 152,200 1,185,677 384
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 622,333,301 $ 1,135,029,134 $ 279,200,396 $ 308,353,314 $ 994,304
------------- --------------- ------------- ------------- ------------
------------- --------------- ------------- ------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
COMPOSITIONS OF NET ASSETS
Paid-in capital $ 490,829,556 $ 885,257,467 $ 274,895,218 $ 284,367,574 $ 934,634
- ------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income 20,748,181 11,592,206 15,570,425 1,425,924 --
- ------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss)
from investments and foreign currency
transactions 29,244,260 35,108,448 (2,352,642) (2,028,281) (45,301)
- ------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies 81,511,304 203,071,013 (8,912,605) 24,588,097 104,971
------------- --------------- ------------- ------------- ------------
Net Assets $ 622,333,301 $ 1,135,029,134 $ 279,200,396 $ 308,353,314 $ 994,304
------------- --------------- ------------- ------------- ------------
------------- --------------- ------------- ------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING 36,497,549 51,429,193 54,569,819 15,054,704 103,531
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 17.05 $ 22.07 $ 5.12 $ 20.48 $ 9.60
* Cost $ 538,342,432 $ 943,081,348 $ 282,454,523 $ 283,373,782 $ 739,885
** Repurchase agreements $ 63,000,000 $ 27,900,000 $ 6,200,000 $ -- $ --
*** Premiums received $ 1,686,387 $ -- $ 25,235 $ 611,733 $ --
**** When-issued $ -- $ -- $ -- $ -- $ --
</TABLE>
See accompanying Notes to Financial Statements.
115
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER OPPENHEIMER AGGRESSIVE OPPENHEIMER
MONEY HIGH INCOME BOND GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of withholding taxes of *) $ 7,738,972 $ 28,358,859 $ 41,073,653 $ 3,823,383 $ 4,035,121
- ----------------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of
**) -- 2,076,307 284,719 1,800,986 3,555,637
------------ ------------- ------------- ------------- -------------
Total income 7,738,972 30,435,166 41,358,372 5,624,369 7,590,758
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Custodian fees and expenses 11,399 212 5,407 37,397 21,434
- ----------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 11,188 17,697 18,655 24,922 18,225
- ----------------------------------------------------------------------------------------------------------------------
Insurance expenses 3,435 5,148 4,274 7,901 5,339
- ----------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,679 4,059 4,107 5,071 2,422
- ----------------------------------------------------------------------------------------------------------------------
Registration and filing fees 6,981 14,562 31,923 31,640 52,918
- ----------------------------------------------------------------------------------------------------------------------
Shareholder reports 29,826 64,833 67,408 108,886 77,895
- ----------------------------------------------------------------------------------------------------------------------
Management fees - see applicable note 619,030 2,383,008 4,218,231 6,564,650 4,369,487
- ----------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent
fees - see applicable note 1,941 4,140 4,074 3,734 4,161
- ----------------------------------------------------------------------------------------------------------------------
Other 2,461 12,124 3,259 2,753 2,628
------------ ------------- ------------- ------------- -------------
Total expenses 688,940 2,505,783 4,357,338 6,786,954 4,554,509
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 7,050,032 27,929,383 37,001,034 (1,162,585) 3,036,249
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 9,101 (1,534,125) 6,485,338 (67,129,354) 32,505,999
Closing of futures contracts -- (1,309,724) (1,285,982) -- --
Closing and expiration of options
written -- (34,656) -- 18,579 --
Foreign currency transactions -- (10,862) 340,635 (14,239) 1,951
- ----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments -- (24,533,407) (4,833,663) 182,808,457 99,910,949
Translation of assets and liabilities
denominated in foreign currencies -- 407,939 (369,485) 676,163 22,616
------------ ------------- ------------- ------------- -------------
Net realized and unrealized gain (loss) 9,101 (27,014,835) 336,843 116,359,606 132,441,515
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 7,059,133 $ 914,548 $ 37,337,877 $ 115,197,021 $ 135,477,764
------------ ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- -------------
* Withholding taxes - interest $ -- $ -- $ 11,251 $ -- $ --
** Withholding taxes - dividends $ -- $ -- $ -- $ 926 $ 23,758
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
See accompanying Notes to Financial Statements.
116
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER OPPENHEIMER
MULTIPLE GLOBAL STRATEGIC GROWTH & SMALL CAP
STRATEGIES SECURITIES BOND INCOME GROWTH
FUND FUND FUND FUND FUND(1)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of withholding taxes of *) $ 25,898,105 $ 8,710,561 $ 21,709,341 $ 913,537 $ 60
- --------------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of
**) 4,857,228 11,995,300 751,928 2,688,093 173
------------ ------------- ------------- ------------ ------------
Total income 30,755,333 20,705,861 22,461,269 3,601,630 233
- --------------------------------------------------------------------------------------------------------------------
EXPENSES
Custodian fees and expenses 110,088 434,535 40,476 14,729 --
- --------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 25,143 29,358 14,398 15,399 --
- --------------------------------------------------------------------------------------------------------------------
Insurance expenses 6,777 7,867 4,008 4,440 --
- --------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 9,595 4,854 1,185 2,501 --
- --------------------------------------------------------------------------------------------------------------------
Registration and filing fees -- 39,654 19,916 43,581 255
- --------------------------------------------------------------------------------------------------------------------
Shareholder reports 97,293 124,964 40,101 26,194 --
- --------------------------------------------------------------------------------------------------------------------
Management fees - see applicable note 4,584,184 7,167,836 1,860,227 1,742,253 2,219
- --------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent
fees - see applicable note 3,476 3,656 4,078 4,790 --
- --------------------------------------------------------------------------------------------------------------------
Other 7,682 6,003 25,063 3,135 98
------------ ------------- ------------- ------------ ------------
Total expenses 4,844,238 7,818,727 2,009,452 1,857,022 2,572
- --------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 25,911,095 12,887,134 20,451,817 1,744,608 (2,339)
- --------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 28,607,655 111,119,684 (2,977,920) (2,457,929) (45,301)
Closing of futures contracts -- (61,569,353) 2,898,440 -- --
Closing and expiration of options
written 2,262,307 -- (97,776) 434,542 --
Foreign currency transactions (1,329,735) (12,587,339) (2,519,662) 66,152 --
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments (15,359,667) 53,953,288 (12,558,792) 6,284,351 104,971
Translation of assets and liabilities
denominated in foreign currencies (536,206) 32,506,738 1,082,185 51,446 --
------------ ------------- ------------- ------------ ------------
Net realized and unrealized gain (loss) 13,644,354 123,423,018 (14,173,525) 4,378,562 59,670
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 39,555,449 $ 136,310,152 $ 6,278,292 $ 6,123,170 $ 57,331
------------ ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------ ------------
* Withholding taxes - interest $ -- $ -- $ 68,298 $ -- $ --
** Withholding taxes - dividends $ 90,320 $ 297,465 $ -- $ 5,250 $ --
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
See accompanying Notes to Financial Statements.
117
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
MONEY HIGH INCOME
FUND FUND
1998 1997 1998 1997
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 7,050,032 $ 6,934,054 $ 27,929,383 $ 19,861,042
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) 9,101 2,232 (2,889,367) 6,265,470
- ---------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation -- -- (24,125,468) 93,210
------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations 7,059,133 6,936,286 914,548 26,219,722
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (7,050,032) (6,937,040) (6,694,100) (18,546,183)
- ---------------------------------------------------------------------------------------------
Distributions from net
realized gain -- -- (8,113,249) (138,778)
- ---------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 25,007,317 (2,935,384) 51,132,667 92,494,657
- ---------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 25,016,418 (2,936,138) 37,239,866 100,029,418
- ---------------------------------------------------------------------------------------------
Beginning of period 126,782,382 129,718,520 291,322,791 191,293,373
------------- ------------- ------------- -------------
End of period $ 151,798,800 $ 126,782,382 $ 328,562,657 $ 291,322,791
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Undistributed
(overdistributed) net
investment income $ -- $ -- $ 23,046,774 $ 1,776,867
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER AGGRESSIVE
BOND GROWTH
FUND FUND
1998 1997 1998 1997
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 37,001,034 $ 30,219,733 $ (1,162,585) $ 2,349,366
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) 5,539,991 4,038,585 (67,125,014) 21,293,313
- -----------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation (5,203,148) 6,440,140 183,484,620 61,517,825
------------- ------------- --------------- -------------
Net increase in net assets
resulting from operations 37,337,877 40,698,458 115,197,021 85,160,504
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (9,009,958) (27,908,616) (2,267,793) (1,547,409)
- -----------------------------------------------------------------------------------------------
Distributions from net
realized gain (8,154,014) (1,447,022) (23,288,487) (30,466,762)
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 115,290,766 82,296,263 110,511,946 207,268,868
- -----------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 135,464,671 93,639,083 200,152,687 260,415,201
- -----------------------------------------------------------------------------------------------
Beginning of period 520,078,028 426,438,945 877,807,473 617,392,272
------------- ------------- --------------- -------------
End of period $ 655,542,699 $ 520,078,028 $ 1,077,960,160 $ 877,807,473
------------- ------------- --------------- -------------
------------- ------------- --------------- -------------
Undistributed
(overdistributed) net
investment income $ 30,079,292 $ 1,857,027 $ -- $ 2,236,363
</TABLE>
See accompanying Notes to Financial Statements.
118
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER MULTIPLE GLOBAL
GROWTH STRATEGIES SECURITIES
FUND FUND FUND
1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,036,249 $ 3,966,775 $ 25,911,095 $ 21,778,851 $ 12,887,134 $ 12,143,675
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 32,507,950 47,435,793 29,540,227 34,197,105 36,962,992 103,718,556
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 99,933,565 34,194,334 (15,895,873) 32,455,612 86,460,026 33,657,002
------------- ------------- ------------- ------------- --------------- -------------
Net increase in net assets
resulting from operations 135,477,764 85,596,902 39,555,449 88,431,568 136,310,152 149,519,233
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,939,379) (1,639,463) (5,964,037) (21,242,764) (21,307,082) (8,181,958)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain (47,530,889) (17,220,011) (34,591,414) (18,354,349) (80,203,951) --
- -------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 190,636,226 141,248,396 (14,211,527) 104,424,895 141,119,795 235,692,756
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 274,643,722 207,985,824 (15,211,529) 153,259,350 175,918,914 377,030,031
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of period 493,905,974 285,920,150 637,544,830 484,285,480 959,110,220 582,080,189
------------- ------------- ------------- ------------- --------------- -------------
End of period $ 768,549,696 $ 493,905,974 $ 622,333,301 $ 637,544,830 $ 1,135,029,134 $ 959,110,220
------------- ------------- ------------- ------------- --------------- -------------
------------- ------------- ------------- ------------- --------------- -------------
Undistributed
(overdistributed) net
investment income $ 2,959,139 $ 3,896,959 $ 20,748,181 $ 1,264,870 $ 11,592,206 $ 18,148,506
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
STRATEGIC GROWTH & SMALL CAP
BOND INCOME GROWTH
FUND FUND FUND(1)
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 20,451,817 $ 13,156,048 $ 1,744,608 $ 1,094,913 $ (2,339)
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (2,696,918) 894,858 (1,957,235) 9,837,467 (45,301)
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation (11,476,607) (441,401) 6,335,797 15,049,196 104,971
------------- ------------- ------------- ------------- ------------
Net increase in net assets
resulting from operations 6,278,292 13,609,505 6,123,170 25,981,576 57,331
- ------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment
income (3,974,494) (12,654,390) (449,201) (976,438) --
- ------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain (2,561,341) (207,080) (9,891,403) (2,670,354) --
- ------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net
assets resulting from
beneficial interest
transactions - see applicable
note 71,618,535 88,374,959 157,202,998 86,023,722 936,973
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 71,360,992 89,122,994 152,985,564 108,358,506 994,304
- ------------------------------------------------------------------------------------------------------------
Beginning of period 207,839,404 118,716,410 155,367,750 47,009,244 --
------------- ------------- ------------- ------------- ------------
End of period $ 279,200,396 $ 207,839,404 $ 308,353,314 $ 155,367,750 $ 994,304
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------
Undistributed
(overdistributed) net
investment income $ 15,570,425 $ 885,276 $ 1,425,924 $ 130,085 $ --
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
See accompanying Notes to Financial Statements.
119
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MONEY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------
Income from investment operations -
net investment income and net
realized gain .05 .05 .05 .06 .04
Dividends and distributions to
shareholders (.05) (.05) (.05) (.06) (.04)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- ------------------------------------------------------------------------------------------
TOTAL RETURN(1) 5.25% 5.31% 5.13% 5.62% 4.25%
- ------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $151,799 $126,782 $129,719 $65,386 $89,671
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $137,633 $133,707 $99,263 $75,136 $90,264
- ------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.12% 5.19% 5.01% 5.52% 4.18%
Expenses 0.50% 0.48% 0.49% 0.51% 0.43%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns are not
annualized for periods of less than one full year. Total returns reflect changes
in net investment income only. Total return information does not reflect
expenses that apply at the separate account level or to related insurance
products. Inclusion of these charges would reduce the total return figures for
all periods shown.
See accompanying Notes to Financial Statements.
120
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $11.52 $11.13 $10.63 $ 9.79 $11.02
- --------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .95 .94 .97 .98 .94
Net realized and unrealized
gain (loss) (.90) .37 .58 .94 (1.27)
- --------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .05 1.31 1.55 1.92 (.33)
- --------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.25) (.91) (1.05) (1.08) (.66)
Distributions from net
realized gain (.30) (.01) -- -- (.24)
- --------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (.55) (.92) (1.05) (1.08) (.90)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $11.02 $11.52 $11.13 $10.63 $ 9.79
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(1) 0.31% 12.21% 15.26% 20.37% (3.18)%
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $328,563 $291,323 $191,293 $133,451 $ 95,698
- --------------------------------------------------------------------------------------------
Average net assets (in
thousands) $322,748 $223,617 $157,203 $115,600 $101,096
- --------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.65% 8.88% 9.18% 9.81% 9.15%
Expenses 0.78% 0.82% 0.81% 0.81% 0.67%
- --------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 161.4% 167.6% 125.0% 107.1% 110.1%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $537,018,561 and $428,828,226, respectively.
See accompanying Notes to Financial Statements.
121
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $11.91 $11.63 $11.84 $10.78 $11.65
- --------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .72 .76 .69 .72 .76
Net realized and unrealized gain
(loss) .07 .28 (.15) 1.07 (.98)
- --------------------------------------------------------------------------------
Total income (loss) from investment
operations .79 1.04 .54 1.79 (.22)
- --------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.20) (.72) (.74) (.73) (.62)
Distributions from net realized
gain (.18) (.04) (.01) -- (.03)
- --------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.38) (.76) (.75) (.73) (.65)
- --------------------------------------------------------------------------------
Net asset value, end of period $12.32 $11.91 $11.63 $11.84 $10.78
------ ------ ------ ------ ------
------ ------ ------ ------ ------
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 6.80% 9.25% 4.80% 17.00% (1.94)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $655,543 $520,078 $426,439 $211,232 $135,067
- --------------------------------------------------------------------------------
Average net assets (in thousands) $586,242 $449,760 $296,253 $170,929 $121,884
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.31% 6.72% 6.72% 6.91% 7.30%
Expenses 0.74% 0.78% 0.78% 0.80% 0.57%
- --------------------------------------------------------------------------------
Portfolio turnover rate(2) 75.8% 116.9% 82.3% 79.4% 35.1%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $523,613,491 and $403,166,088, respectively.
See accompanying Notes to Financial Statements.
122
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $40.96 $38.71 $34.21 $25.95 $31.64
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (.05) .10 .09 .11 .10
Net realized and unrealized gain (loss) 5.09 4.01 6.59 8.29 (2.22)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 5.04 4.11 6.68 8.40 (2.12)
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.10) (.09) (.11) (.09) (.04)
Distributions from net realized gain (1.07) (1.77) (2.07) (.05) (3.53)
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (1.17) (1.86) (2.18) (.14) (3.57)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $44.83 $40.96 $38.71 $34.21 $25.95
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 12.36% 11.67% 20.22% 32.52% (7.59)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $1,077,960 $ 877,807 $ 617,392 $ 325,404 $ 185,774
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 954,848 $ 753,852 $ 467,080 $ 240,730 $ 153,832
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.12)% 0.31% 0.32% 0.47% 0.50%
Expenses 0.71% 0.73% 0.75% 0.78% 0.57%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 79.8% 87.6% 100.1% 125.5% 96.5%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $781,979,929 and $705,990,510, respectively.
See accompanying Notes to Financial Statements.
123
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $32.44 $27.24 $23.55 $17.68 $17.70
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13 .25 .15 .25 .22
Net realized and unrealized gain (loss) 7.28 6.62 5.46 6.10 (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 7.41 6.87 5.61 6.35 .17
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.24) (.15) (.25) (.22) (.15)
Distributions from net realized gain (2.94) (1.52) (1.67) (.26) (.04)
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (3.18) (1.67) (1.92) (.48) (.19)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $36.67 $32.44 $27.24 $23.55 $17.68
----------- ----------- ------ ----------- -----------
----------- ----------- ------ ----------- -----------
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 24.00% 26.68% 25.20% 36.65% 0.97%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $768,550 $493,906 $285,920 $117,710 $63,283
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $609,246 $390,447 $152,466 $ 88,803 $59,953
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.50% 1.02% 1.08% 1.46% 1.38%
Expenses 0.75% 0.75% 0.81%(2) 0.79% 0.58%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 55.7% 66.0% 65.4% 58.2% 53.8%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The expense ratio was 0.79% net of the voluntary reimbursement by the
Manager.
3. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $478,348,867 and $297,133,286, respectively.
See accompanying Notes to Financial Statements.
124
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MULTIPLE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $17.01 $15.63 $14.55 $12.91 $13.88
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .71 .62 .72 .66 .63
Net realized and unrealized gain (loss) .42 1.95 1.45 2.00 (.90)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 1.13 2.57 2.17 2.66 (.27)
- ----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (.16) (.61) (.74) (.65) (.60)
Distributions from net realized gain (.93) (.58) (.35) (.37) (.10)
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (1.09) (1.19) (1.09) (1.02) (.70)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.05 $17.01 $15.63 $14.55 $12.91
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 6.66% 17.22% 15.50% 21.36% (1.95)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $622,333 $637,545 $484,285 $381,263 $292,067
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $640,131 $564,369 $428,277 $344,745 $279,949
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.05% 3.86% 4.89% 4.81% 4.90%
Expenses 0.76% 0.75% 0.77% 0.77% 0.56%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 42.5% 41.9% 40.3% 39.0% 31.4%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $235,924,766 and $252,937,156, respectively.
See accompanying Notes to Financial Statements.
125
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $21.37 $17.67 $15.00 $15.09 $16.30
- -----------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .24 .25 .15 .12 .04
Net realized and unrealized gain
(loss) 2.64 3.68 2.52 .19 (.96)
- -----------------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.88 3.93 2.67 .31 (.92)
- -----------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.46) (.23) -- -- (.04)
Distributions from net realized
gain (1.72) -- -- (.40) (.25)
- -----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (2.18) (.23) -- (.40) (.29)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 22.07 $ 21.37 $ 17.67 $ 15.00 $ 15.09
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 14.11% 22.42% 17.80% 2.24% (5.72)%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $1,135,029 $959,110 $582,080 $360,979 $297,842
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $1,055,123 $802,389 $466,750 $332,336 $214,545
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.22% 1.51% 1.09% 0.86% 0.54%
Expenses 0.74% 0.76% 0.81% 0.89% 0.91%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(2) 80.9% 67.1% 89.9% 131.3% 70.4%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $786,354,899 and $769,035,230, respectively.
See accompanying Notes to Financial Statements.
126
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER STRATEGIC BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $5.12 $5.09 $4.91 $4.60 $5.12
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .39 .39 .38 .38 .35
Net realized and unrealized gain (loss) (.24) .04 .19 .30 (.54)
- ----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations .15 .43 .57 .68 (.19)
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.09) (.39) (.39) (.37) (.32)
Distributions from net realized gain (.06) (.01) -- -- (.01)
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (.15) (.40) (.39) (.37) (.33)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.12 $5.12 $5.09 $4.91 $4.60
----- ----- ----- ----- -----
----- ----- ----- ----- -----
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 2.90% 8.71% 12.07% 15.33% (3.78)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $279,200 $207,839 $118,716 $60,098 $20,320
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $250,227 $159,934 $82,604 $37,698 $15,389
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.17% 8.23% 8.48% 9.32% 8.36%
Expenses 0.80% 0.83% 0.85% 0.85% 0.87%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 133.7% 149.7% 144.3% 87.0% 136.6%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $358,275,325 and $301,159,735, respectively.
See accompanying Notes to Financial Statements.
127
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of
period $20.58 $16.37 $12.51 $10.00
- -------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .13 .19 .14 .01
Net realized and unrealized
gain .92 4.91 3.91 2.52
- -------------------------------------------------------------------------------
Total income from investment
operations 1.05 5.10 4.05 2.53
- -------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.05) (.17) (.14) (.02)
Distributions from net
realized gain (1.10) (.72) (.05) --
- -------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (1.15) (.89) (.19) (.02)
- -------------------------------------------------------------------------------
Net asset value, end of period $20.48 $20.58 $16.37 $12.51
-------- -------- -------- --------
-------- -------- -------- --------
- -------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(2) 4.70% 32.48% 32.51% 25.25%
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $308,353 $155,368 $47,009 $4,288
- -------------------------------------------------------------------------------
Average net assets (in
thousands) $234,306 $94,906 $21,562 $1,809
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.74% 1.15% 1.41% 0.50%(3)
Expenses 0.79% 0.83% 1.00% 2.07%(3)
- -------------------------------------------------------------------------------
Portfolio turnover rate(4) 85.7% 78.5% 112.6% 23.7%
</TABLE>
1. For the period from July 5, 1995 (commencement of operations) to December 31,
1995.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $287,405,235 and $199,780,365, respectively.
See accompanying Notes to Financial Statements.
128
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER SMALL CAP GROWTH
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1998(1)
<S> <C>
- ------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 10.00
- ------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.02)
Net realized and unrealized gain (loss) (.38)
- ------------------------------------------------------------------------------
Total loss from investment operations (.40)
- ------------------------------------------------------------------------------
Net asset value, end of period $ 9.60
------
------
- ------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) (4.00)%
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $994
- ------------------------------------------------------------------------------
Average net assets (in thousands) $441
- ------------------------------------------------------------------------------
Ratios to average net assets:
Net investment loss (0.79)%(3)
Expenses 0.87%(3)
- ------------------------------------------------------------------------------
Portfolio turnover rate(4) 61.4%
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
are not annualized for periods of less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998 were $1,023,289 and $242,621, respectively.
See accompanying Notes to Financial Statements.
129
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Money Fund (OMF), Oppenheimer High Income Fund (OHIF), Oppenheimer
Bond Fund (OBF), Oppenheimer Aggressive Growth Fund (OAGF) operated under the
name Oppenheimer Capital Appreciation Fund through April 30, 1998, Oppenheimer
Growth Fund (OGF), Oppenheimer Multiple Strategies Fund (OMSF), Oppenheimer
Global Securities Fund (OGSF), Oppenheimer Strategic Bond Fund (OSBF),
Oppenheimer Growth & Income Fund (OGIF) and Oppenheimer Small Cap Growth Fund
(OSCGF), (collectively, the Funds) are separate series of Oppenheimer Variable
Account Funds (the Trust), a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Trust's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Funds.
The Funds' objectives are as follows:
OPPENHEIMER MONEY FUND seeks the maximum current income from investments in
"money market" securities consistent with low capital risk and the maintenance
of liquidity.
OPPENHEIMER HIGH INCOME FUND seeks a high level of current income from
investment in high yield fixed-income securities. The Fund's investments include
unrated securities or high risk securities in the lower rating categories,
commonly known as "junk bonds", which are subject to a greater risk of loss of
principal and nonpayment of interest than higher-rated securities.
OPPENHEIMER BOND FUND primarily seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. The Fund will, under normal market conditions, invest at least 65% of
its total assets in investment grade debt securities.
OPPENHEIMER AGGRESSIVE GROWTH FUND seeks to achieve capital appreciation by
investing in "growth-type" companies.
OPPENHEIMER GROWTH FUND seeks to achieve capital appreciation by investing in
securities of well-known established companies.
OPPENHEIMER MULTIPLE STRATEGIES FUND seeks a total investment return (which
includes current income and capital appreciation in the value of its shares)
from investments in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.
OPPENHEIMER GLOBAL SECURITIES FUND seeks long-term capital appreciation by
investing a substantial portion of its assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special institutions which are
considered to have appreciation possibilities, but which may be considered to be
speculative.
OPPENHEIMER STRATEGIC BOND FUND seeks a high level of current income principally
derived from interest on debt securities and to enhance such income by writing
covered call options on debt securities.
OPPENHEIMER GROWTH & INCOME FUND seeks a high total return (which includes
growth in the value of its shares as well as current income) from equity and
debt securities. From time to time this Fund may focus on small to medium
capitalization common stocks, bonds and convertible securities.
OPPENHEIMER SMALL CAP GROWTH FUND seeks investments in securities of
"growth-type" companies with market capitalization less than $1 billion,
including common stocks, preferred stocks, convertible securities, rights,
warrants and options.
130
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION. Portfolio securities of OMF are valued on the basis of
amortized cost, which approximates market value. Portfolio securities of OHIF,
OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Forward foreign currency exchange contracts are valued
based on the closing prices of the forward currency contract rates in the London
foreign exchange markets on a daily basis as provided by a reliable bank or
dealer. Options are valued based upon the last sale price on the principal
exchange on which the option is traded or, in the absence of any transactions
that day, the value is based upon the last sale on the prior trading date if it
is within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Funds may invest in commodity and foreign currency-linked
structured notes whereby the market value and redemption price are linked to
commodity indices and foreign currency exchange rates. The structured notes may
be leveraged, which increase the notes' volatility relative to the face value of
the security. Fluctuations in values of the securities are recorded as
unrealized gains and losses in the accompanying financial statements. During the
year ended December 31, 1998, the market value of these securities comprised an
average of 8% and 5%, respectively, of the net assets of OHIF and OSBF, and
resulted in realized and unrealized gains of $4,745,329 and $3,012,491,
respectively.
- --------------------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities
that have been purchased by OHIF, OBF, OMSF, OSBF and OGIF on a forward
commitment or when-issued basis can take place a month or more after the
transaction date. During this period, such securities do not earn interest, are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The Funds maintain, in segregated accounts with the custodian,
assets with a market value equal to the amount of their purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Funds' net asset values to the extent the Funds
make such purchases while remaining substantially fully invested. As of December
31, 1998, OBF had entered into outstanding when-issued or forward commitments of
$47,434,432.
In connection with their ability to purchase securities on a when-issued or
forward commitment basis, OHIF, OBF and OSBF may enter into mortgage
dollar-rolls in which the Funds sell securities for delivery in the current
month and simultaneously contract with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Funds record each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. OHIF, OMSF and OSBF invest in high yield securities, which
may be subject to a greater degree of credit risk, greater market fluctuations
and risk of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Funds
may acquire securities in default, and are not obligated to dispose of
securities whose issuers subsequently default. The aggregate market value of
securities in default as of December 31, 1998 for OHIF and OSBF are shown below:
<TABLE>
<CAPTION>
PERCENTAGE
OF
AMOUNT NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund $ 493,580 0.15%
Oppenheimer Strategic Bond Fund 666,711 0.24
</TABLE>
131
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are maintained
in U.S. dollars. Prices of securities purchased by OHIF, OBF, OAGF, OGF, OMSF,
OGSF, OSBF and OGIF that are denominated in foreign currencies are translated
into U.S. dollars at the closing rates of exchange. Amounts related to the
purchase and sale of foreign securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
For OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF and OGIF, the effect of changes in
foreign currency exchange rates on investments is separately identified from the
fluctuations arising from changes in market values of securities held and
reported with all other foreign currency gains and losses in the Funds'
Statements of Operations.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Funds require the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Funds may be delayed or limited.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Trust intends for each Fund to continue to comply with
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments not offset by loss carryovers, to shareholders. As
of December 31, 1998, OHIF, OAGF, OSBF, OSCGF had available for federal income
tax purposes an approximate unused capital loss carryover, which expires in
2006, as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER
<S> <C>
- -------------------------------------------------
Oppenheimer High Income Fund $ 3,402,000
Oppenheimer Aggressive Growth Fund 66,771,000
Oppenheimer Strategic Bond Fund 1,014,000
Oppenheimer Small Capital Growth
Fund 33,000
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders of
OHIF, OBF, OAGF, OGF, OMSF, OGSF, OSBF, OGIF and OSCGF are recorded on the
ex-dividend date. OMF intends to declare dividends from net investment income
each day the New York Stock Exchange is open for business and pay such dividends
monthly. To effect its policy of maintaining a net asset value of $1.00 per
share, OMF may withhold dividends or make distributions of net realized gains.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Funds.
132
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. The Funds adjusted the
classification of distributions to shareholders to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Changes in classification during the year ended
December 31, 1998 are shown below:
<TABLE>
<CAPTION>
ADJUSTMENTS FOR THE YEAR ENDED DECEMBER
31, 1998
------------------------------------------
INCREASE
INCREASE (DECREASE)
(DECREASE) IN
IN ACCUMULATED
UNDISTRIBUTED NET REALIZED INCREASE
NET GAIN (DECREASE)
INVESTMENT ON IN PAID-IN
INCOME INVESTMENTS CAPITAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Oppenheimer Money Fund $ 11,314 $ (11,314) $ --
Oppenheimer High Income
Fund 34,624 18,470 (16,154)
Oppenheimer Bond Fund 231,189 (231,189) --
Oppenheimer Aggressive
Growth Fund 1,194,015 32,432 (1,226,447)
Oppenheimer Growth Fund (34,690) 34,690 --
Oppenheimer Multiple
Strategies Fund (463,747) 463,747 --
Oppenheimer Global
Securities Fund 1,863,648 (1,863,648) --
Oppenheimer Strategic
Bond Fund (1,792,174) 1,817,242 (25,068)
Oppenheimer Growth &
Income Fund 432 (432) --
Oppenheimer Small Cap
Growth Fund 2,339 -- (2,339)
</TABLE>
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased by OHIF, OBF, OMSF, OGSF,
OSBF and OGIF is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate, and a market
adjustment is made on the ex-date.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Funds have authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------- -------------------------------
OPPENHEIMER MONEY FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 318,160,993 $ 318,160,993 390,437,217 $ 390,437,217
Dividends and distributions
reinvested 7,008,382 7,008,382 6,901,000 6,901,000
Redeemed (300,162,058) (300,162,058) (400,273,601) (400,273,601)
-------------- -------------- -------------- --------------
Net increase (decrease) 25,007,317 $ 25,007,317 (2,935,384) $ (2,935,384)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
133
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------- -------------------------------
OPPENHEIMER HIGH INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 15,303,847 $171,699,925 14,372,458 $163,481,515
Dividends and distributions reinvested 1,300,031 14,807,349 1,658,451 18,684,961
Redeemed (12,094,532) (135,374,607) (7,919,351) (89,671,819)
----------- ------------ ----------- ------------
Net increase 4,509,346 $ 51,132,667 8,111,558 $ 92,494,657
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER BOND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 24,245,723 $293,126,941 12,079,029 $142,326,116
Dividends and distributions reinvested 1,463,254 17,163,972 2,509,897 29,264,275
Redeemed (16,150,244) (195,000,147) (7,613,095) (89,294,128)
----------- ------------ ----------- ------------
Net increase 9,558,733 $115,290,766 6,975,831 $ 82,296,263
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER AGGRESSIVE GROWTH FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 13,376,589 $556,408,810 9,511,150 $368,762,665
Dividends and distributions reinvested 580,166 25,556,280 952,236 32,014,171
Redeemed (11,344,620) (471,453,144) (4,981,695) (193,507,968)
----------- ------------ ----------- ------------
Net increase 2,612,135 $110,511,946 5,481,691 $207,268,868
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 8,866,513 $293,095,063 10,437,357 $318,824,006
Dividends and distributions reinvested 1,565,397 51,470,268 720,274 18,842,365
Redeemed (4,699,071) (153,929,105) (6,429,313) (191,417,975)
----------- ------------ ----------- ------------
Net increase 5,732,839 $190,636,226 4,728,318 $141,248,396
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 3,352,415 $ 56,547,384 6,728,904 $110,124,465
Dividends and distributions reinvested 2,387,019 40,555,451 2,517,354 39,597,113
Redeemed (6,714,957) (111,314,362) (2,765,980) (45,296,683)
----------- ------------ ----------- ------------
Net increase (decrease) (975,523) $(14,211,527) 6,480,278 $104,424,895
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GLOBAL SECURITIES FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 11,735,029 $248,354,528 17,881,768 $354,780,849
Dividends and distributions reinvested 4,877,993 101,511,033 446,370 8,181,958
Redeemed (10,067,775) (208,745,766) (6,390,329) (127,270,051)
----------- ------------ ----------- ------------
Net increase 6,545,247 $141,119,795 11,937,809 $235,692,756
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 21,445,910 $109,659,739 18,907,314 $ 96,727,423
Dividends and distributions reinvested 1,279,028 6,535,835 2,528,920 12,861,470
Redeemed (8,759,684) (44,577,039) (4,147,991) (21,213,934)
----------- ------------ ----------- ------------
Net increase 13,965,254 $ 71,618,535 17,288,243 $ 88,374,959
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sold 9,181,075 $189,060,690 5,209,743 $ 95,997,604
Dividends and distributions reinvested 468,325 10,340,604 216,162 3,646,792
Redeemed (2,145,877) (42,198,296) (745,544) (13,620,674)
----------- ------------ ----------- ------------
Net increase 7,503,523 $157,202,998 4,680,361 $ 86,023,722
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
134
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1998(1)
-------------------------
OPPENHEIMER SMALL CAP GROWTH FUND SHARES AMOUNT
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Sold 114,434 $ 1,030,883
Redeemed (10,903) (93,910)
----------- ------------
Net increase 103,531 $ 936,973
----------- ------------
----------- ------------
</TABLE>
1. For the period from May 1, 1998 (commencement of operations) to December 31,
1998.
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of December 31, 1998, net unrealized appreciation or depreciation on
investments and options written consisted of the following:
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER OPPENHEIMER MULTIPLE
HIGH INCOME OPPENHEIMER AGGRESSIVE OPPENHEIMER STRATEGIES
FUND BOND FUND GROWTH FUND GROWTH FUND FUND
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Gross appreciation $ 8,629,297 $ 13,200,055 $355,515,405 $235,480,248 $121,405,881
Gross depreciation 22,128,011 6,999,293 5,290,500 44,296,850 39,917,220
------------- ------------- ------------- ------------- -------------
Net unrealized
appreciation
(depreciation) $(13,498,714) $ 6,200,762 $350,224,905 $191,183,398 $ 81,488,661
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER
GLOBAL OPPENHEIMER OPPENHEIMER OPPENHEIMER
SECURITIES STRATEGIC GROWTH & SMALL CAP
FUND BOND FUND INCOME FUND GROWTH FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
Gross appreciation $255,177,315 $ 8,361,107 $ 55,571,813 $ 134,186
Gross depreciation 52,100,686 17,283,663 30,983,707 29,215
------------- ------------- ------------- -------------
Net unrealized
appreciation
(depreciation) $203,076,629 $ (8,922,556) $ 24,588,106 $ 104,971
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreements with the Trust. For OAGF, OGF, OMSF, OGSF, OGIF and OSCGF,
the annual fees are 0.75% of the first $200 million of average annual net
assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of
the next $200 million and 0.60% of average annual net assets over $800 million.
For OHIF, OBF and OSBF, the annual fees are 0.75% of the first $200 million of
average annual net assets, 0.72% of the next $200 million, 0.69% of the next
$200 million, 0.66% of the next $200 million and 0.60% of average annual net
assets over $200 million. In addition, management fees for OHIF, OBF and OSBF
are 0.50% of average annual net assets in excess of $1 billion. Management fees
for OMF are 0.45% of the first $500 million of average annual net assets, 0.425%
of the next $500 million, 0.40% of the next $500 million and 0.375% of average
annual net assets over $1.5 billion.
135
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The management fee for the year ended December 31, 1998 (computed on an
annualized basis as a percentage of the average annual net assets of each of the
Funds) were as follows:
<TABLE>
<CAPTION>
FUND MANAGEMENT FEES
<S> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer Money Fund 0.45%
Oppenheimer High Income Fund 0.74
Oppenheimer Bond Fund 0.72
Oppenheimer Aggressive Growth Fund 0.69
Oppenheimer Growth Fund 0.72
Oppenheimer Multiple Strategies Fund 0.72
Oppenheimer Global Securities Fund 0.68
Oppenheimer Strategic Bond Fund 0.74
Oppenheimer Growth & Income Fund 0.74
Oppenheimer Small Cap Growth Fund 0.75
</TABLE>
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Funds (except OMF) use forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Funds generally enter into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Funds may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Funds will realize a gain or loss
upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statements of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statements of Assets and Liabilities. Realized gains and losses are reported
with all other foreign currency gains and losses in the Funds' Statements of
Operations.
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
136
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS (CONTINUED)
As of December 31, 1998, outstanding forward contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS OF
EXPIRATION CONTRACT DECEMBER 31, UNREALIZED UNREALIZED
OPPENHEIMER HIGH INCOME FUND DATES AMOUNT (000'S) 1998 APPRECIATION DEPRECIATION
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
British Pound Sterling (GBP) 3/15/99 1,680 GBP $2,779,282 $ 50,410 $ --
Canadian Dollar (CAD) 3/15/99 540 CAD 352,663 -- 2,014
------- ------------
Total Unrealized Appreciation and Depreciation $ 50,410 $ 2,014
------- ------------
------- ------------
OPPENHEIMER BOND FUND
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
Canadian Dollar (CAD) 3/15/99 4,000 CAD $2,612,319 $ 14,916 $ --
OPPENHEIMER GLOBAL SECURITIES FUND
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
German Mark (DEM) 1/4/99-1/5/99 8,837 DEM $5,306,742 $ 12,154 $ --
Italian Lira (ITL) 1/7/99-1/8/99 5,005,679 ITL 3,034,123 13,901 --
------- ------------
26,055 --
------- ------------
CONTRACTS TO SELL
Finnish Markka (FIM) 1/4/99-1/5/99 1,161 FIM 229,251 -- 1,403
------- ------------
Total Unrealized Appreciation and Depreciation $ 26,055 $ 1,403
------- ------------
------- ------------
OPPENHEIMER STRATEGIC BOND FUND
- ------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Canadian Dollar (CAD) 1/27/99 650 CAD $ 424,445 $ 1,764 $ --
------- ------------
CONTRACTS TO SELL
Australian Dollar (AUD) 2/22/99 1,620 AUD 993,532 14,756 --
British Pound Sterling (GBP) 2/22/99-3/9/99 1,290 GBP 2,134,521 7,058 13,431
Canadian Dollar (CAD) 1/11/99-1/27/99 1,950 CAD 1,273,327 397 6,753
German Mark (DEM) 2/8/99 2,550 DEM 1,534,924 -- 11,672
Japanese Yen (JPY) 2/8/99 40,000 JPY 355,206 -- 15,705
New Zealand Dollar (NZD) 1/26/99 210 NZD 110,553 2,364 --
------- ------------
24,575 47,561
------- ------------
Total Unrealized Appreciation and Depreciation $ 26,339 $ 47,561
------- ------------
------- ------------
</TABLE>
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
The Funds (except OMF) may buy and sell interest rate futures contracts in order
to gain exposure to or protect against changes in interest rates. The Funds may
also buy or write put or call options on these futures contracts.
The Funds generally sell futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Funds may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Funds are required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Funds each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Funds recognize a realized gain or loss when the contract is closed
or expires.
137
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS (CONTINUED)
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statements of Investments. The
Statements of Assets and Liabilities reflect a receivable or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of December 31, 1998, outstanding futures contracts were as follows:
<TABLE>
<CAPTION>
VALUATION AS OF UNREALIZED
EXPIRATION NUMBER OF DECEMBER 31, APPRECIATION
OPPENHEIMER HIGH INCOME FUND DATE CONTRACTS 1998 (DEPRECIATION)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Standard & Poors 500 Index 3/99 9 $2,802,375 $ 15,700
OPPENHEIMER BOND FUND
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Treasury Nts., 5 yr. 3/99 335 $37,970,156 $ 147,016
U.S. Treasury Bonds, 20 yr. 3/99 127 16,228,219 10,031
--------------
157,047
--------------
CONTRACTS TO SELL
U.S. Treasury Nts., 10 yr. 3/99 37 4,408,781 (4,781)
--------------
$ 152,266
--------------
--------------
OPPENHEIMER STRATEGIC BOND FUND
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
United Kingdom Long Gilt 3/99 5 $ 987,174 $ 4,410
--------------
CONTRACTS TO SELL
Canadian Government Bonds 3/99 5 420,633 1,828
U.S. Treasury Nts., 10 yr. 3/99 11 1,310,719 1,852
--------------
3,680
--------------
$ 8,090
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Funds (except OMF) may buy and sell put and call options, or write put and
covered call options on portfolio securities in order to produce incremental
earnings or protect against changes in the value of portfolio securities.
The Funds generally purchase put options or write covered call options to hedge
against adverse movements in the value of portfolio holdings. When an option is
written, the Funds receive a premium and become obligated to sell or purchase
the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Funds will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
138
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY (CONTINUED)
Securities designated to cover outstanding call options are noted in the
Statements of Investments where applicable. Options written are reported as a
liability in the Statements of Assets and Liabilities. Gains and losses are
reported in the Statements of Operations.
The risk in writing a call option is that the Funds give up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Funds may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not the
option is exercised. The Funds also have the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not exist.
The Funds may also write over-the-counter options where the completion of the
obligation is dependent upon the credit standing of the counterparty.
Written option activity for the year ended December 31, 1998 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
--------------------------- --------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPPENHEIMER HIGH INCOME FUND OPTIONS PREMIUMS OPTIONS PREMIUMS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Options outstanding as of December
31, 1997 -- $ -- -- $ --
Options written 200 45,875 6 50,220
Options closed or expired (200) (45,875) (6) (50,220)
------------ ------------ ------------- ----------
Options outstanding as of December
31, 1998 -- $ -- -- $ --
------------ ------------ ------------- ----------
------------ ------------ ------------- ----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER MULTIPLE STRATEGIES FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1997 6,056 $1,797,849 -- $ --
Options written 14,157 4,642,269 -- --
Options closed or expired (9,606) (3,358,067) -- --
Options exercised (4,736) (1,395,664) -- --
---------- ---------- ----------- -----------
Options outstanding as of December 31, 1998 5,871 $1,686,387 -- $ --
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER STRATEGIC BOND FUND
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Options outstanding as of December
31, 1997 400 $ 3,679 224,820,000 $ 31,046
Options written 150,816,100 50,369 565,183,580 237,481
Options closed or expired (3,210,400) (28,813) (420,932,320) (145,971)
Options exercised -- -- (369,071,260) (122,556)
------------ ------------ ------------- ---------
Options outstanding as of December
31, 1998 147,606,100 $ 25,235 -- $ --
------------ ------------ ------------- ---------
------------ ------------ ------------- ---------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER GROWTH & INCOME FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1997 880 $ 61,758 -- $ --
Options written 11,965 2,578,629 200 74,397
Options closed or expired (9,495) (1,306,303) -- --
Options exercised (2,025) (763,924) (100) (32,824)
---------- ---------- ----------- -----------
Options outstanding as of December 31, 1998 1,325 $ 570,160 100 $ 41,573
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER AGGRESSIVE GROWTH FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1997 -- $ -- -- $ --
Options written 638 53,343 -- --
Options closed or expired (500) (18,579) -- --
---------- ---------- ----------- -----------
Options outstanding as of December 31, 1998 138 $ 34,764 -- $ --
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
139
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES
As of December 31, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Funds intend to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid and restricted securities
subject to this 10% limitation as of December 31, 1998 are shown below:
Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
PERCENTAGE
OF
NET
AMOUNT ASSETS
<S> <C> <C>
- ---------------------------------------------
Oppenheimer Money Fund $13,000,000 8.56%
- ---------------------------------------------
Oppenheimer High Income
Fund 19,677,807 5.99
- ---------------------------------------------
Oppenheimer Bond Fund 47,819,400 7.29
- ---------------------------------------------
Oppenheimer Multiple
Strategies Fund 2,293,795 0.37
- ---------------------------------------------
Oppenheimer Global
Securities Fund 3,769,145 0.33
- ---------------------------------------------
Oppenheimer Strategic
Bond Fund 11,110,683 3.98
- ---------------------------------------------
Oppenheimer Growth &
Income Fund 4,030 0.01
OPPENHEIMER MONEY FUND
The aggregate value of
restricted securities is
$2,000,000.
</TABLE>
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT DECEMBER 31, 1998
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
SHORT-TERM NOTES
Travelers Insurance Co., 5.034%, 1/4/99 9/16/98 100.00% 100.00%
OPPENHEIMER HIGH INCOME FUND
The aggregate value of restricted
securities is $3,362,687.
BONDS
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.00% 100.25%
- ----------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub.
Nts., 12/15/05 12/8/95-8/13/96 100.00-105.75 116.10
- ----------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14%
Equipment Trust, 7/2/08 3/19/98 101.00 99.00
STOCKS AND WARRANTS
ECM Fund, L.P.I. 4/14/92 $ 1,000.00 $ 885.00
- ----------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred 6/17/97-9/28/98 25.00 25.00
- ----------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .30
- ----------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 9.31
OPPENHEIMER BOND FUND
The aggregate value of restricted
securities is $1,130,000.
Merrill Lynch & Co., Inc., Units, 9.75%,
6/15/99 5/15/95 110.05% $ 113.00
OPPENHEIMER MULTIPLE STRATEGIES FUND
The aggregate value of restricted
securities is $2,293,795.
STOCKS
Intermedia Communications, Inc. 9/29/98 $ 21.69 $ 13.80
</TABLE>
140
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPPENHEIMER STRATEGIC BOND FUND
The aggregate value of restricted
securities is $598,651.
BONDS
TAG Heuer International SA, 12% Sr. Sub.
Nts., 12/15/05 12/8/95 100.00% 116.10%
STOCKS AND WARRANTS
CGA Group Ltd., Preferred 6/17/97 $ 25.00 $ 25.00
- ----------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .30
OPPENHEIMER GROWTH & INCOME FUND
The aggregate value of restricted
securities is $4,030.
STOCKS
Intermedia Communications, Inc. 9/29/98 $ 21.54 $ 13.80
</TABLE>
141
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of Oppenheimer Money Fund, Oppenheimer High
Income Fund, Oppenheimer Bond Fund, Oppenheimer Aggressive Growth Fund (formerly
Oppenheimer Capital Appreciation Fund), Oppenheimer Growth Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer Global Securities Fund, Oppenheimer
Strategic Bond Fund, Oppenheimer Growth & Income Fund and Oppenheimer Small Cap
Growth Fund (all of which are series of Oppenheimer Variable Account Funds) as
of December 31, 1998, the related statements of operations for the year then
ended, the statements of changes in net assets for the years ended December 31,
1998 and 1997, and the financial highlights for the applicable periods ended
December 31, 1998, 1997, 1996, 1995 and 1994. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Money
Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer
Aggressive Growth Fund, Oppenheimer Growth Fund, Oppenheimer Multiple Strategies
Fund, Oppenheimer Global Securities Fund, Oppenheimer Strategic Bond Fund,
Oppenheimer Growth & Income Fund and Oppenheimer Small Cap Growth Fund as of
December 31, 1998, the results of its operations, the changes in its net assets,
and the financial highlights for the respective stated periods, in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 25, 1999
142
<PAGE>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
In early 1999, shareholders will receive information regarding all dividends and
distributions paid to them by the Funds during calendar year 1998. Regulations
of the U.S. Treasury Department require the Funds to report this information to
the Internal Revenue Service.
Certain distributions paid on March 23, 1998, were designated as a capital gain
distribution for federal income tax purposes as shown in the table below.
Whether received in stock or cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of capital assets.
Dividends paid by the Funds during the fiscal year ended December 31, 1998 which
are not designated as capital gain distributions should be multiplied by the
percentages listed below to arrive at the net amount eligible for the corporate
dividend-received deduction.
<TABLE>
<CAPTION>
LONG-TERM CAPITAL CORPORATE DIVIDEND-
GAIN DISTRIBUTION RECEIVED DEDUCTION
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Oppenheimer Money Fund N/A N/A
- ------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund $ 0.1780 7.11 %
- ------------------------------------------------------------------------------------------------------
Oppenheimer Bond Fund 0.0520 0.76
- ------------------------------------------------------------------------------------------------------
Oppenheimer Aggressive Growth Fund 1.0680 N/A
- ------------------------------------------------------------------------------------------------------
Oppenheimer Growth Fund 2.0050 30.34
- ------------------------------------------------------------------------------------------------------
Oppenheimer Multiple Strategies Fund 0.7840 14.98
- ------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund 1.6660 6.82
- ------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund 0.0160 2.58
- ------------------------------------------------------------------------------------------------------
Oppenheimer Growth & Income Fund 0.1400 100.00
- ------------------------------------------------------------------------------------------------------
Oppenheimer Small Cap Growth Fund N/A N/A
</TABLE>
The foregoing information is presented to assist shareholders in reporting
distributions received from the Funds to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in the state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
143
<PAGE>
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
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Bruce L. Bartlett, Vice President
George Evans, Vice President
Alan Gilston, Vice President
John Kowalik, Vice President
Michael S. Levine, Vice President
David P. Negri, Vice President
Jane Putnam, Vice President
Thomas P. Reedy, Vice President
Richard H. Rubinstein, Vice President
Arthur P. Steinmetz, Vice President
Jay W. Tracey III, Vice President
William L. Wilby, Vice President
Carol Wolf, Vice President
Arthur J. Zimmer, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- ------------------------------------------------------------------------------------------------------
INVESTMENT ADVISOR OppenheimerFunds, Inc.
- ------------------------------------------------------------------------------------------------------
TRANSFER AGENT OppenheimerFunds Services
- ------------------------------------------------------------------------------------------------------
CUSTODIAN OF PORTFOLIO The Bank of New York
SECURITIES
- ------------------------------------------------------------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche LLP
- ------------------------------------------------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer Variable Account
Funds. This report must be preceded or accompanied by a Prospectus of
Oppenheimer Variable Account Funds. For material information concerning the
Funds, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank,
are not guaranteed by any bank, and are not insured by the FDIC or any
other agency, and involve investment risks, including possible loss of the
principal amount invested.
</TABLE>
144
<PAGE>
[LOGO] OPPENHEIMERFUNDS-Registered Trademark-
THE RIGHT WAY TO INVEST
VA0000.006.1298 March 1, 1999
