Semiannual Report June 30, 2000
Oppenheimer
High Income Fund/VA
A Series of Oppenheimer Variable Account Funds
[logo]OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
Oppenheimer Variable Account Funds--Oppenheimer High Income Fund/VA
================================================================================
Objective
Oppenheimer High Income Fund/VA, a series of Oppenheimer Variable Account Funds,
seeks a high level of current income. It invests primarily in high-yield,
high-risk, fixed-income securities both in the U.S. and abroad, including
unrated securities and "junk" bonds that is 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 David Negri and Tom Reedy, Co-Portfolio Managers
During the six-month reporting period that ended June 30, 2000, Oppenheimer High
Income Fund/VA provided a cumulative total return of -0.62%(1) in a very
challenging investment environment. First, rising interest rates eroded the
prices of most bond market sectors, especially the riskier, higher income
sectors such as high-yield bonds. Second, high-yield bonds were adversely
affected by their own, unique influences, including a higher-than-usual default
rate. Finally, because high-yield bonds respond to changes in their issuers'
stock prices, the high-yield market was generally hurt by the decline of the
Nasdaq stock market during March and April, 2000.
For income-oriented investors who can tolerate short-term price
volatility, however, yields benefited from bonds' drop in prices, which was due
to the higher interest rates. What's more, the differences in yield between
high-yield bonds and U.S. Treasury securities recently reached very wide levels
compared to historical norms. This is the case because bonds rated below
"investment grade" are attempting to attract investors by paying unusually high
rates of interest relative to the safest bonds available.
Why do higher interest rates affect returns from high-yield bonds? This
is because higher interest rates tend to increase borrowing costs for companies
that finance their operations and growth though the bond market. Investors tend
to become concerned that higher interest rates might reduce earnings for these
companies. In the resulting environment, there is less demand for bonds.
Of course, interest rates have been rising because of concerns that the
U.S. economy may be growing too quickly, potentially re-igniting long-dormant
inflationary pressures. To ease these pressures, the Federal Reserve Board has
raised key short-term interest rates several times during this reporting period.
In addition, the high-yield bond market has been adversely affected by
more stringent loan requirements from many lenders, making credit scarce in both
the banking system and public markets. This development is bad for companies
that need to borrow in order to refinance maturing debt.
In addition, many high-yield bond issuers are in high-growth sectors of
the economy--such as telecommunications, technology and media--that need ongoing
access to credit in order to build the physical facilities required for their
business models. As a result, these companies are highly vulnerable to any
market forces that threaten to curtail their access to capital.
In this difficult environment, we have focused the portfolio primarily
on the market's high-growth sectors, including telecommunications, technology
and media companies. Within these areas, we've emphasized companies that have
relatively strong balance sheets. For example, many cellular communications
companies are at a stage in their life cycles where they're still growing, but
may have completed the bulk of their infrastructure investments. On the other
hand, some land-line telecommunications companies that are betting on new growth
in the Internet are in a much earlier stage of development, and they tend not to
have fully funded business plans. Our strategy of targeting companies with
strong balance sheets represents a relatively conservative shift within an
aggressive area of the market.(2)
1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this Fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
2 Oppenheimer High Income Fund/VA
<PAGE>
Oppenheimer Variable Account Funds--Oppenheimer High Income Fund/VA
================================================================================
In addition, we have generally avoided healthcare companies, especially
long-term care facilities such as nursing homes. Some of the companies in this
industry group have defaulted on their high-yield debt because of financial
problems caused by reduced Medicare reimbursements. We have also had less
exposure than the overall market to the basic manufacturing sector, such as
paper, chemical and steel companies. This relatively light position helped the
Fund's performance last year, when these companies' global operations were
feeling pressure generated by economic weakness in overseas markets. By the same
token, when these manufacturers' bond prices rebounded later in the reporting
period, the Fund's returns were hurt by the investments we did not own.
While we have been frustrated by the extent to which the high-yield
bond market has been out of favor, we are encouraged that historically wide
spreads may attract interest from investors who are no longer receiving
spectacular results in the stock market. Nonetheless, the economic environment
remains uncertain, and we do not expect any lasting recovery to take place until
the success of the Federal Reserve Board's inflation-fighting strategy becomes
clearer.
In the meantime, high-yield bonds have been providing attractive levels
of income, and, in our opinion, their prices are reflecting a worst-case
economic scenario. Having the patience and discipline to take advantage of
temporary market weaknesses is an important part of what makes OppenheimerFunds
The Right Way to Invest.
Oppenheimer High Income Fund/VA 3
<PAGE>
Statement of Investments June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal Market Value
Amount Note 1
================================================================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--1.8%
--------------------------------------------------------------------------------------------------------------------------------
AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg.
Pass-Through Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(1) $ 200,000 $ 148,969
--------------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(2) 167,000 126,398
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(2) 167,000 123,710
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(2) 166,000 111,246
--------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. E, 6.72%, 12/25/03(1)(2) 250,000 214,844
Series 1993-C1, Cl. F, 6.72%, 12/25/03(1)(2) 700,000 552,344
--------------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates:
Series 1997, Cl. D, 8.083%, 5/25/08(1)(2) 300,000 247,594
Series 1997, Cl. E, 8.083%, 2/25/11(1)(2) 1,500,000 1,096,875
--------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. E, 7.415%, 3/15/06(1)(2) 835,342 700,512
--------------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(1) 254,890 209,328
--------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C1, Cl. E, 8%, 6/25/26 610,345 586,122
Series 1994-C2, Cl. G, 8%, 4/25/25 653,405 621,960
Series 1995-C1, Cl. F, 6.90%, 2/25/27 393,927 357,182
--------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Commercial Mtg.
Pass-Through Certificates, Series 1996-B, Cl. 1, 6.79%, 4/25/26(1) 1,405,557 918,005
----------
Total Mortgage-Backed Obligations (Cost $6,421,310) 6,015,089
================================================================================================================================
U.S. Government Obligations--1.9%
--------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6.50%, 2/15/10 (Cost $6,173,906) 6,000,000 6,206,250
================================================================================================================================
Foreign Government Obligations--0.6%
--------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 2.807%, 4/1/07(2)ARP 1,320,019 909,679
--------------------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Interest Arrears Bonds, 7.063%, 7/28/11(2) 1,450,000 1,161,813
----------
Total Foreign Government Obligations (Cost $1,828,181) 2,071,492
================================================================================================================================
Loan Participations--1.5%
--------------------------------------------------------------------------------------------------------------------------------
Bank Rakyat Loan Participation Nts., Series 2 yr., 9.375%, 8/25/00(1)(2) 1,000,000 985,000
--------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 8.252%, 4/28/02 (representing a basket of
reference loans and a total return swap between Chase Manhattan Bank and the Trust)(1)(2) 5,360,000 4,121,361
----------
Total Loan Participations (Cost $6,418,474) 5,106,361
4 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
================================================================================================================================
Corporate Bonds and Notes--77.6%
--------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.4%
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 $ 900,000 $ 832,500
--------------------------------------------------------------------------------------------------------------------------------
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(1) 800,000 744,000
--------------------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts., Series B, 9/30/08 1,750,000 1,555,312
--------------------------------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 1,000,000 697,500
--------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 700,000 511,000
--------------------------------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust Sr. Nts., Series 1997-A, Cl. B, 11.76%, 6/15/04(1) 272,050 276,757
----------
4,617,069
--------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.5%
Avecia Group plc, 11% Sr. Unsec. Nts., 7/1/09 800,000 788,000
--------------------------------------------------------------------------------------------------------------------------------
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 250,000 63,750
--------------------------------------------------------------------------------------------------------------------------------
Georgia Gulf Corp., 10.375% Sr. Sub. Nts., 11/1/07(3) 500,000 522,500
--------------------------------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09 800,000 810,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09EUR 500,000 497,274
Zero Coupon Sr. Unsec. Disc. Nts., 13.09%, 12/31/09(4) 800,000 268,000
--------------------------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co.:
9.625% Sr. Sec. Nts., Series A, 5/1/07 500,000 493,750
9.875% Sec. Nts., Series B, 5/1/07 500,000 495,000
10.875% Sr. Sub. Nts., 5/1/09 300,000 299,250
--------------------------------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07(1) 500,000 312,500
--------------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 700,000 465,500
--------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc.:
8.75% Sr. Sub. Nts., 3/1/08 1,500,000 1,252,500
9% Sr. Sub. Nts., 7/1/07 250,000 213,750
--------------------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc., 10.25% First Mtg. Nts., 4/1/09 650,000 533,000
--------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06 800,000 660,000
12.375% Sr. Sec. Nts., Series B, 7/15/06 600,000 612,000
----------
8,286,774
--------------------------------------------------------------------------------------------------------------------------------
Consumer Durables--0.5%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 752,000 665,520
--------------------------------------------------------------------------------------------------------------------------------
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 425,000 299,625
--------------------------------------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(1) 500,000 287,500
--------------------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(1) 350,000 376,726
----------
1,629,371
Oppenheimer High Income Fund/VA 5
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.4%
AKI Holdings, Inc., 0%/13.50% Sr. Disc. Debs., 7/1/09(5) $ 1,080,000 $ 515,700
--------------------------------------------------------------------------------------------------------------------------------
AKI, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 1,000,000 795,000
--------------------------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 1,100,000 1,100,000
--------------------------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08(1) 900,000 103,500
--------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 100,000 51,000
9% Sr. Nts., 11/1/06 1,185,000 859,125
--------------------------------------------------------------------------------------------------------------------------------
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 1,200,000 1,188,000
--------------------------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 600,000 63,000
----------
4,675,325
--------------------------------------------------------------------------------------------------------------------------------
Energy--4.5%
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 1,000,000 940,000
9.625% Sr. Unsec. Nts., Series B, 5/1/05 1,000,000 975,000
--------------------------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 1,040,000 670,800
--------------------------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 800,000 732,000
--------------------------------------------------------------------------------------------------------------------------------
Empresa Electric del Norte Grande SA, 10.50% Sr. Debs., 6/15/05(1) 1,000,000 402,500
--------------------------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 800,000 804,000
--------------------------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(3) 2,400,000 2,250,000
--------------------------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08(1) 1,025,000 630,375
--------------------------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners LP/Leviathan Finance Corp.,
10.375% Sr. Unsec. Sub. Nts., Series B, 6/1/09(1) 500,000 507,500
--------------------------------------------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(6)(7) 500,000 267,500
--------------------------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 1,000,000 835,000
--------------------------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 800,000 760,000
--------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 1,000,000 1,095,000
--------------------------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08(1) 1,480,000 734,450
--------------------------------------------------------------------------------------------------------------------------------
RBF Finance Co.:
11% Sr. Sec. Nts., 3/15/06 1,000,000 1,076,250
11.375% Sr. Sec. Nts., 3/15/09 500,000 545,000
--------------------------------------------------------------------------------------------------------------------------------
Statia Terminals International NV/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., 9/15/07 735,000 701,925
--------------------------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(5) 1,325,000 960,625
----------
15,114,050
--------------------------------------------------------------------------------------------------------------------------------
Financial--1.7%
AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 900,000 459,000
--------------------------------------------------------------------------------------------------------------------------------
ASAT Finance LLC, Units (each unit consists of $1,000 principal amount
of 12.50% sr. nts., 11/1/06 and one warrant to purchase shares of common stock)(3)(8) 500,000 642,500
--------------------------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts., 3/26/1998(1)(6)(7)IDR 1,000,000,000 17,138
--------------------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 517,000 390,335
--------------------------------------------------------------------------------------------------------------------------------
LaBranche & Co., Inc., 12% Sr. Sub. Nts., 3/1/07(3) 600,000 600,750
--------------------------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(3) 800,000 806,000
--------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 450,000 240,750
6 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Financial (continued)
PT Polysindo Eka Perkasa, 24% Nts., 6/19/03(6)(7)IDR $657,200,000 $ 9,761
--------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 1,800,000 1,561,500
--------------------------------------------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(1)(6)(7) 240,000 112,800
--------------------------------------------------------------------------------------------------------------------------------
Sovereign Bancorp, Inc., 10.50% Sr. Unsec. Nts., 11/15/06 600,000 595,500
--------------------------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 550,000 171,875
----------
5,607,909
--------------------------------------------------------------------------------------------------------------------------------
Food & Drug--0.7%
Family Restaurants, Inc.:
9.75% Sr. Nts., 2/1/02 1,300,000 578,500
10.875% Sr. Sub. Disc. Nts., 2/1/04(1) 100,000 45,000
--------------------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,000,000 840,000
--------------------------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 325,000 308,750
--------------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(6)(7) 250,000 16,250
11.625% Sub. Nts., 6/15/02(6)(7) 800,000 204,000
12.625% Sub. Nts., 6/15/02(6)(7) 900,000 229,500
----------
2,222,000
--------------------------------------------------------------------------------------------------------------------------------
Food/Tobacco--1.6%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 520,000 293,800
--------------------------------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(5) 501,000 374,497
--------------------------------------------------------------------------------------------------------------------------------
New World Pasta Co., 9.25% Sr. Nts., 2/15/09(1) 1,200,000 720,000
--------------------------------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 1,600,000 1,336,000
--------------------------------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(1)(6)(7) 400,000 118,000
--------------------------------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 832,500
--------------------------------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07(1) 1,175,000 934,125
--------------------------------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09 750,000 729,375
----------
5,338,297
--------------------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--2.3%
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(6)(7) 200,000 15,000
--------------------------------------------------------------------------------------------------------------------------------
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 700,000 661,500
8.25% Sr. Unsec. Sub. Nts., 8/1/08 800,000 756,000
--------------------------------------------------------------------------------------------------------------------------------
Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04 1,000,000 780,000
--------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 500,000 397,500
--------------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 748,125
--------------------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc.:
9% First Priority Sr. Sec. Nts., 6/1/04 250,000 238,750
10.625% Second Priority Sr. Sec. Nts., 4/15/05 750,000 663,750
11.50% Sr. Sec. Nts., 6/1/04 500,000 505,000
--------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 1,130,000 1,101,750
10.875% Sr. Sub. Nts., 4/1/08 500,000 442,500
--------------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Unsec. Nts., 12/15/06(9) 1,158,749 1,286,211
----------
7,596,086
Oppenheimer High Income Fund/VA 7
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--4.3%
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995(6)(7) $ 9,500 $ --
--------------------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 840,000 768,600
--------------------------------------------------------------------------------------------------------------------------------
Coast Hotel & Casinos, Inc., 9.50% Sr. Unsec. Sub. Nts., 4/1/09 500,000 477,500
--------------------------------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 800,000 754,000
--------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 500,000 513,750
--------------------------------------------------------------------------------------------------------------------------------
Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 1,000,000 1,000,000
--------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,300,000 1,287,000
--------------------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 1,500,000 1,492,500
--------------------------------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 900,000 837,000
--------------------------------------------------------------------------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06(1) 1,000,000 937,500
--------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 1,500,000 1,432,500
--------------------------------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(5) 1,200,000 820,500
9.25% Sr. Nts., 4/1/06 600,000 567,000
9.75% Sr. Nts., 6/15/07 300,000 291,375
--------------------------------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,000,000 960,000
--------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07 800,000 804,000
9.875% Sr. Sub. Nts., 7/1/10(3) 500,000 500,265
10.125% Sr. Sub. Nts., 3/15/06 800,000 814,000
-----------
14,257,490
--------------------------------------------------------------------------------------------------------------------------------
Healthcare--2.3%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08(1) 2,525,000 2,253,562
--------------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc.:
8.75% Sr. Nts., 11/15/08(3) 300,000 297,000
9.75% Sr. Nts., 11/15/08(3) 1,065,000 1,054,350
--------------------------------------------------------------------------------------------------------------------------------
King Pharmaceuticals, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09(1) 1,250,000 1,293,750
--------------------------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 1,000,000 510,000
--------------------------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 450,000 468,000
--------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 250,000 230,000
8.625% Sr. Sub. Nts., 1/15/07 300,000 288,000
9.25% Sr. Nts., 9/1/10(3) 850,000 860,625
--------------------------------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09 250,000 258,750
-----------
7,514,037
--------------------------------------------------------------------------------------------------------------------------------
Housing--1.1%
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 500,000 437,500
--------------------------------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 600,000 523,500
--------------------------------------------------------------------------------------------------------------------------------
Formica Corp., 10.875% Sr. Unsec. Sub. Nts., Series B, 3/1/09 1,000,000 785,000
--------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 1,400,000 1,302,000
9.25% Sr. Nts., Series B, 3/15/07 625,000 587,500
-----------
3,635,500
8 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Information Technology--1.7%
Amkor Technologies, Inc.:
9.25% Sr. Unsec. Nts., 5/1/06 $ 800,000 $ 793,000
10.50% Sr. Unsec. Sub. Nts., 5/1/09 500,000 503,125
--------------------------------------------------------------------------------------------------------------------------------
Cherokee International LLC, 10.50% Sr. Unsec. Sub. Nts., Series B, 5/1/09 1,000,000 867,500
--------------------------------------------------------------------------------------------------------------------------------
Chippac International Ltd., 12.75% Sr. Unsec. Sub. Nts., Series B, 8/1/09 250,000 272,500
--------------------------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 500,000 472,500
--------------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 850,000 869,125
--------------------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc.:
9% Sr. Unsec. Sub. Nts., 2/1/08 1,115,000 1,025,800
--------------------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd., 9.875% Sr. Sub. Nts., 7/1/10(3) 900,000 911,250
----------
5,714,800
--------------------------------------------------------------------------------------------------------------------------------
Manufacturing--1.7%
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 350,000 364,000
--------------------------------------------------------------------------------------------------------------------------------
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 250,000 196,250
--------------------------------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 500,000 512,500
--------------------------------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07(1) 400,000 143,000
--------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08(1) 850,000 726,750
--------------------------------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 500,000 192,500
--------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 250,000 192,500
--------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 1,200,000 1,192,500
--------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 505,000
--------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 700,000 644,000
--------------------------------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 560,000 100,800
--------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 560,000 515,200
--------------------------------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08(1) 400,000 362,000
----------
5,647,000
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--1.7%
AMFM Operating, Inc., 12.625% Sr. Sub. Debs., Series E, 10/31/06(9) 148,500 174,116
--------------------------------------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 975,000 982,312
9% Sr. Unsec. Sub. Nts., 10/1/08 1,700,000 1,755,250
--------------------------------------------------------------------------------------------------------------------------------
Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08 650,000 552,500
--------------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 1,000,000 917,500
--------------------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 12% Sr. Sub. Nts., Series B, 5/15/04(2) 400,000 434,000
--------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 600,000 600,000
--------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 200,000 185,000
----------
5,600,678
Oppenheimer High Income Fund/VA 9
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--8.3%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 $ 360,000 $ 305,100
8.125% Sr. Nts., Series B, 7/15/03 1,000,000 947,500
8.375% Sr. Nts., Series B, 2/1/08 1,000,000 888,750
9.25% Sr. Nts., 10/1/02 390,000 386,587
9.875% Sr. Nts., Series B, 3/1/07 140,000 134,750
10.50% Sr. Unsec. Nts., Series B, 7/15/04 340,000 341,700
--------------------------------------------------------------------------------------------------------------------------------
Charter Communications Holdings LLC/Charter Communications
Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(5) 2,250,000 1,282,500
8.25% Sr. Unsec. Nts., 4/1/07 350,000 310,625
8.625% Sr. Unsec. Nts., 4/1/09 250,000 220,937
--------------------------------------------------------------------------------------------------------------------------------
Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10 750,000 695,625
--------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
7.875% Sr. Unsec. Debs., 2/15/18 1,000,000 921,909
9.875% Sr. Sub. Nts., 5/15/06 350,000 358,750
10.50% Sr. Sub. Debs., 5/15/16 250,000 266,875
--------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(5) 2,350,000 2,241,313
--------------------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 400,000 372,000
--------------------------------------------------------------------------------------------------------------------------------
Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(5) 500,000 267,500
--------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 3,000,000 2,895,000
--------------------------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09 700,000 689,500
--------------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp.:
0%/9.78% Sr. Nts., 11/15/09(3)(5)EUR 500,000 260,020
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(5) 1,000,000 640,000
9.875% Sr. Nts., 11/15/09(3)EUR 600,000 514,768
11.50% Sr. Unsec. Nts., Series B, 10/1/08 1,600,000 1,600,000
--------------------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(5) 350,000 219,625
0%/9.75% Sr. Nts., Series B, 4/15/09(5)GBP 3,225,000 2,587,634
10% Sr. Nts., Series B, 2/15/07 1,055,000 1,002,250
--------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07CAD 500,000 336,607
--------------------------------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/9.25% Sr. Disc. Nts., 4/15/09(5) 1,500,000 813,750
0%/9.875% Sr. Nts., 4/15/09(3)(5)GBP 1,300,000 1,072,598
0%/11% Sr. Disc. Debs., 10/1/07(5) 990,000 942,975
11.25% Sr. Nts., 11/1/08 1,990,000 1,999,950
--------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(5) 1,040,000 733,200
--------------------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, 10.875% Sr. Unsec. Nts., Series B, 8/1/09 1,400,000 1,225,000
-----------
27,475,298
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--2.9%
Ackerley Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 1/15/09 1,250,000 1,153,125
--------------------------------------------------------------------------------------------------------------------------------
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(5) 2,800,000 1,526,000
--------------------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 800,000 364,000
--------------------------------------------------------------------------------------------------------------------------------
GSP I Corp., 10.15% First Mtg. Bonds, 6/24/10(3) 427,457 392,526
--------------------------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(5)GBP 1,200,000 1,080,925
--------------------------------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 815,000 823,150
10 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media (continued)
Regal Cinemas, Inc., 8.875% Sr. Unsec. Sub. Nts., 12/15/10 $ 250,000 $ 61,250
--------------------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 900,000 909,000
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 1,800,000 1,818,000
--------------------------------------------------------------------------------------------------------------------------------
TV Guide, Inc., 8.125% Sr. Unsec. Sub. Nts., 3/1/09 250,000 250,625
--------------------------------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09 500,000 463,613
--------------------------------------------------------------------------------------------------------------------------------
WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp,
12.75% Sr. Sub. Nts., 11/15/09(3) 1,000,000 925,000
----------
9,767,214
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--15.4%
360networks, Inc.:
12% Sr. Unsec. Sub. Nts., 8/1/09 200,000 190,000
13% Sr. Unsec. Nts., 5/1/08(3) 800,000 804,000
13% Sr. Unsec. Nts., 5/1/08(3)EUR 1,200,000 1,133,065
--------------------------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc., 12% Sr. Sub. Nts., 11/1/07 1,200,000 1,134,000
--------------------------------------------------------------------------------------------------------------------------------
Colo.com, Units (each unit consists of $1,000 principal amount of 13.875% sr. nts.,
3/15/10 and one warrant to purchase 19.9718 shares of common stock at $.01 per share)(3)(8) 600,000 648,000
--------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
7.625% Bonds, 7/31/08DEM 1,675,000 757,334
8.875% Sr. Nts., 11/30/07DEM 250,000 120,080
10.125% Sr. Nts., 11/30/07GBP 400,000 611,616
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)(5)(8) 1,775,000 2,260,906
--------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 800,000 848,000
--------------------------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(5) 600,000 297,000
--------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc., 13% Sr. Nts., 12/1/07(3) 1,000,000 953,750
--------------------------------------------------------------------------------------------------------------------------------
ESAT Telecom Group plc, 11.875% Sr. Unsec. Unsub. Nts., 11/1/09EUR 500,000 597,400
--------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
10.75% Sr. Nts., 12/15/09(3)EUR 1,000,000 920,256
10.75% Sr. Unsec. Sub. Nts., 12/15/09 250,000 242,500
11.25% Sr. Nts., 7/1/08 1,900,000 1,890,500
--------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(5) 250,000 113,750
--------------------------------------------------------------------------------------------------------------------------------
FLAG Telecom Holdings Ltd.:
11.625% Sr. Nts., 3/30/10(3) 250,000 243,750
11.625% Sr. Nts., 3/30/10(1)EUR 250,000 220,478
--------------------------------------------------------------------------------------------------------------------------------
Focal Communications Corp.:
0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(5) 500,000 340,000
11.875% Sr. Nts., 1/15/10(3) 800,000 808,000
--------------------------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08 950,000 926,250
--------------------------------------------------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(3)EUR 350,000 269,666
--------------------------------------------------------------------------------------------------------------------------------
Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10 800,000 660,000
--------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/12.75% Sr. Sub. Nts., 11/15/07(1)(5)(6)(7) 1,250,000 181,250
--------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(5) 115,000 95,738
--------------------------------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(5) 1,220,000 640,500
Oppenheimer High Income Fund/VA 11
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(5) $1,200,000 $ 729,000
8.50% Sr. Nts., Series B, 1/15/08 800,000 740,000
8.60% Sr. Unsec. Nts., Series B, 6/1/08 100,000 93,000
8.875% Sr. Nts., 11/1/07 460,000 432,400
--------------------------------------------------------------------------------------------------------------------------------
Jazztel plc, 13.25% Sr. Nts., 12/15/09(3)EUR 2,000,000 1,720,687
--------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(5) 1,250,000 593,750
13.50% Sr. Unsec. Nts., 5/15/09 200,000 177,000
--------------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(5) 500,000 306,250
9.125% Sr. Unsec. Nts., 5/1/08 700,000 631,750
11% Sr. Nts., 3/15/08(3) 1,000,000 995,000
11.25% Sr. Nts., 3/15/10(3) 500,000 495,000
--------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 8.125% Sr. Unsec. Nts., 2/15/09 300,000 271,500
--------------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 750,000 742,500
10% Sr. Nts., 12/15/09EUR 500,000 468,971
10% Sr. Unsec. Nts., Series B, 11/15/08 1,600,000 1,584,000
--------------------------------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc., 0%/10.50% Sr. Unsec. Disc. Nts., 9/30/07(5) 214,074 108,107
--------------------------------------------------------------------------------------------------------------------------------
MGC Communications, Inc./Mpower Communications Corp., 13% Sr. Nts., 4/1/10(3) 1,200,000 1,134,000
--------------------------------------------------------------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(1)(5)DEM 500,000 175,832
--------------------------------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.125% Sr. Nts., Series B, 6/15/09 1,350,000 1,289,250
--------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 800,000 736,000
9.625% Sr. Nts., 10/1/07 1,210,000 1,146,475
10.75% Sr. Unsec. Nts., 11/15/08 1,200,000 1,188,000
10.75% Sr. Unsec. Nts., 6/1/09 200,000 198,000
--------------------------------------------------------------------------------------------------------------------------------
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10(3) 650,000 471,250
--------------------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(6)(7) 750,000 566,250
--------------------------------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05 750,000 693,750
10.50% Sr. Nts., 12/1/06(3)EUR 1,250,000 1,117,368
--------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts., 10/15/07(5) 1,000,000 841,554
--------------------------------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 1,050,000 879,375
--------------------------------------------------------------------------------------------------------------------------------
Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts., 2/15/10(3) 800,000 584,000
--------------------------------------------------------------------------------------------------------------------------------
RSL Communications plc:
10.50% Sr. Unsec. Nts., 11/5/08 1,450,000 1,007,750
12.875% Sr. Unsec. Nts., 3/1/10(3) 1,000,000 755,000
--------------------------------------------------------------------------------------------------------------------------------
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09(3)EUR 1,200,000 1,130,189
--------------------------------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 400,000 312,000
--------------------------------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 700,000 680,750
--------------------------------------------------------------------------------------------------------------------------------
Tritel PCS, Inc., 0%/12.75% Sr. Unsec. Sub. Disc. Nts., 5/15/09(5) 200,000 133,500
--------------------------------------------------------------------------------------------------------------------------------
Triton PCS, Inc., 0%/11% Sr. Unsec. Sub. Disc. Nts., 5/1/08(5) 300,000 219,000
12 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
United Pan-Europe Communications NV:
0%/13.375% Sr. Unsec. Disc. Nts., Series B, 11/1/09(5) $1,000,000 $ 490,000
10.875% Sr. Nts., 8/1/09EUR 250,000 209,694
11.25% Sr. Nts., 11/1/09(3)EUR 500,000 424,780
--------------------------------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 1,480,000 1,561,400
10.625% Sr. Nts., 11/15/09(3) 250,000 278,438
11.25% Sr. Unsec. Nts., 12/1/08 700,000 789,250
13.50% Sr. Unsec. Nts., 6/15/04 385,000 436,494
--------------------------------------------------------------------------------------------------------------------------------
Versatel Telecom International NV:
11.25% Sr. Nts., 3/30/10(3)EUR 600,000 537,056
11.875% Sr. Nts., 7/15/09 800,000 792,000
--------------------------------------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 830,000 618,350
--------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(5) 1,750,000 990,938
--------------------------------------------------------------------------------------------------------------------------------
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(3) 1,000,000 937,500
-----------
51,321,897
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--9.5%
AirGate PCS, Inc., 0%/13.50% Sr. Sub. Disc. Nts., 10/1/09(5) 200,000 115,500
--------------------------------------------------------------------------------------------------------------------------------
Alamosa PCS Holdings, Inc., 0%/12.875% Sr. Unsec. Disc. Nts., 2/15/10(5) 200,000 105,000
--------------------------------------------------------------------------------------------------------------------------------
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 200,000 154,000
--------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts., 10/1/07(6)(7) 1,834,000 144,428
--------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08 800,000 781,000
--------------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(5) 700,000 431,375
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(5) 940,000 700,300
9% Sr. Nts., 5/15/11 750,000 695,625
10.75% Sr. Nts., 8/1/11 700,000 713,125
--------------------------------------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(5) 1,000,000 577,500
--------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc., 11.25% Sr. Nts., 7/15/10(3) 2,500,000 2,503,125
--------------------------------------------------------------------------------------------------------------------------------
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)(6)(7)(8) 700,000 409,500
--------------------------------------------------------------------------------------------------------------------------------
IPCS, Inc., Units (each unit consists of $1,000 principal amount of 0%/14% sr.
disc. nts., 7/15/10 and one warrant to purchase 2,971,830 shares of common stock)(3)(5)(8)(10) 750,000 393,750
--------------------------------------------------------------------------------------------------------------------------------
Leap Wireless International, Inc., Units (each unit consists of 12.50% sr. nts., 4/15/10
and one warrant to purchase 5.146 shares of common stock)(3)(8) 550,000 486,750
--------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/12% Sr. Unsec. Disc. Nts., 6/1/09(5) 1,000,000 662,500
0%/14% Sr. Disc. Nts., Series B, 6/1/06(5) 700,000 649,250
--------------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(1)(5) 300,000 256,500
--------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(5) 250,000 186,875
0%/10.65% Sr. Disc. Nts., 9/15/07(5) 1,000,000 790,000
9.375% Sr. Unsec. Nts., 11/15/09 1,000,000 960,000
--------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(3) 2,200,000 2,365,000
11.625% Sr. Nts., 8/15/06 1,000,000 1,085,000
11.625% Sr. Nts., Series A, 8/15/06 1,900,000 2,061,500
Oppenheimer High Income Fund/VA 13
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications (continued)
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(1) $ 600,000 $ 471,000
--------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(1)(5) 1,150,000 477,250
--------------------------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(5) 2,400,000 1,668,000
--------------------------------------------------------------------------------------------------------------------------------
Polska Telefoniz Cyfrowa International Financial II SA, 11.25% Sr. Sub. Nts., 12/1/09(1)EUR 400,000 392,547
--------------------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 800,000 812,000
11.75% Sr. Sub. Nts., 7/15/07 425,000 459,000
--------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 13% Disc. Nts., 5/31/09(3)(9) 394,554 387,874
--------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 1,900,000 1,852,500
--------------------------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(5) 2,720,000 1,931,200
--------------------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc.:
0%/11.25% Sr. Unsec. Disc. Nts., 4/15/09(5) 675,000 398,250
0%/12% Sr. Disc. Nts., 7/15/08(5) 1,640,000 1,148,000
10.75% Sr. Nts., 3/15/10(3) 500,000 501,250
--------------------------------------------------------------------------------------------------------------------------------
Telecorp PCS, Inc., 0%/11.625% Sr. Unsec. Sub. Disc. Nts., 4/15/09(5) 200,000 131,500
--------------------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp., 10.375% Sr. Nts., 11/15/09(3) 3,500,000 3,640,000
-----------
31,497,974
--------------------------------------------------------------------------------------------------------------------------------
Metals/Minerals--1.9%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(3) 750,000 78,750
--------------------------------------------------------------------------------------------------------------------------------
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 500,000 446,250
9.125% Sr. Nts., 12/15/06 1,200,000 1,158,000
--------------------------------------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 500,000 460,000
--------------------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 1,500,000 1,312,500
--------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 400,000 330,000
--------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 410,000 375,150
--------------------------------------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(5) 2,000,000 520,000
--------------------------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 540,000 429,300
--------------------------------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 600,000 504,000
--------------------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 800,000 746,000
--------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International LLC/RTI Capital Corp., 13.75% Sr. Sec. Nts., 7/15/09 500,000 90,625
-----------
6,450,575
--------------------------------------------------------------------------------------------------------------------------------
Retail--0.4%
Finlay Enterprises, Inc., 9% Debs., 5/1/08 900,000 796,500
--------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 600,000 537,000
-----------
1,333,500
--------------------------------------------------------------------------------------------------------------------------------
Service--3.5%
Allied Waste North America, Inc.:
7.625% Sr. Nts., Series B, 1/1/06 500,000 440,000
7.875% Sr. Unsec. Nts., Series B, 1/1/09 500,000 428,750
10% Sr. Unsec. Sub. Nts., Series B, 8/1/09 1,100,000 924,000
--------------------------------------------------------------------------------------------------------------------------------
American Plumbing & Mechanical, Inc., 11.625% Gtd. Sr. Sub. Nts., Series B, 10/15/08 500,000 468,750
--------------------------------------------------------------------------------------------------------------------------------
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(5) 450,000 47,250
--------------------------------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 940,000 334,875
--------------------------------------------------------------------------------------------------------------------------------
Charles River Laboratories, Inc., 13.50% Sr. Sub. Nts., 10/1/09(3) 1,100,000 1,141,250
14 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Service (continued)
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 $ 350,000 $ 176,750
--------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 625,000 478,125
--------------------------------------------------------------------------------------------------------------------------------
Integrated Electric Services, Inc., 9.375% Sr. Sub. Nts., Series B, 2/1/09 600,000 489,000
--------------------------------------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 650,000 585,000
--------------------------------------------------------------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(1) 1,500,000 1,141,875
--------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 1,800,000 1,350,000
--------------------------------------------------------------------------------------------------------------------------------
Stericycle, Inc., 12.375% Sr. Unsec. Sub. Nts., Series B, 11/15/09 700,000 718,375
--------------------------------------------------------------------------------------------------------------------------------
United Rentals, Inc.:
9% Sr. Unsec. Sub. Nts., Series B, 4/1/09 350,000 311,500
9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 1,700,000 1,542,750
--------------------------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B, 11/1/09(5) 2,100,000 1,149,750
-----------
11,728,000
--------------------------------------------------------------------------------------------------------------------------------
Transportation--5.5%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 1,000,000 962,500
--------------------------------------------------------------------------------------------------------------------------------
Amtran, Inc.:
9.625% Nts., 12/15/05(1) 800,000 702,000
10.50% Sr. Nts., 8/1/04 1,200,000 1,113,000
--------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 1,325,000 1,265,375
9.375% Sr. Unsec. Nts., 11/15/06 1,000,000 965,000
10.75% Sr. Nts., 8/1/05 700,000 714,875
--------------------------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 1,200,000 774,000
--------------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp.:
9% Sr. Sub. Nts., Series B, 5/1/09 1,300,000 1,137,500
9% Sr. Sub. Nts., Series B, 5/1/09EUR 300,000 276,077
--------------------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 915,000 918,431
--------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 600,000 592,500
--------------------------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(1) 500,000 337,500
--------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount
of 11.65% first priority ship mtg. sr. sec. nts., 7/15/05 and one warrant to purchase
five shares of common stock)(1)(2)(8) 700,000 367,500
--------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(3) 1,000,000 405,000
--------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 2,125,000 1,859,375
--------------------------------------------------------------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc., 10.50% Sec. Nts., 12/31/07(1) 273,437 170,898
--------------------------------------------------------------------------------------------------------------------------------
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 1,500,000 952,500
--------------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Unsec. Sub. Nts., Series B, 10/15/09 1,000,000 895,000
--------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(1) 797,732 662,118
--------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 950,000 698,250
--------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts., Series B, 12/15/03 2,600,000 2,590,250
-----------
18,359,649
Oppenheimer High Income Fund/VA 15
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Utility--0.8%
Azurix Corp., 10.75% Sr. Nts., 2/15/10(3) $ 600,000 $ 580,500
--------------------------------------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07 545,000 532,056
--------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(11) 555,000 583,717
--------------------------------------------------------------------------------------------------------------------------------
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 1,000,000 887,224
------------
2,583,497
------------
Total Corporate Bonds and Notes (Cost $291,524,656) 257,973,990
Shares
================================================================================================================================
Preferred Stocks--5.4%
--------------------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(1)(9) 10,325 85,181
--------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(1)(9) 93,809 2,345,225
--------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cv., Non-Vtg.(6) 20,000 1,280,000
--------------------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable, Non-Vtg.(9) 507 102,667
--------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable, Series B, Non-Vtg.(9) 649 641,699
--------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(9) 1,312 1,269,360
13% Sr. Exchangeable, Non-Vtg.(9) 1,136 1,178,600
--------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(9) 453 88,901
--------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(1)(6) 8,000 202,000
--------------------------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, l2% Non-Cum. Exchangeable, Series A(1) 20 300
--------------------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 10.50% Sr. Exchangeable(9) 7,500 725,625
--------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(9) 330 287,100
--------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(9) 967 935,573
--------------------------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable, Non-Vtg.(9) 7,274 909
--------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(9) 1,356 1,318,710
--------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(9) 34,424 1,781,442
--------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(9) 51 490,875
--------------------------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 10,000 862,500
9.20% Exchangeable, Series F, Non-Vtg. 2,500 226,875
--------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 13.875% Cum., Non-Vtg.(9) 1,379 1,561,718
--------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(9) 1,646 1,551,355
--------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, Non-Vtg.(9) 196 828,100
13.75% Exchangeable(3) 53 223,925
--------------------------------------------------------------------------------------------------------------------------------
Star Gas Partners LP 517 7,949
------------
Total Preferred Stocks (Cost $21,191,050) 17,996,589
16 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
================================================================================================================================
Common Stocks--0.5%
--------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(3)(6) 121,950 $ 106,706
--------------------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI(1)(6) 150 131,437
--------------------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(1)(6) 3,723 3,723
--------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc.(1)(6) 30,000 603,750
--------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc.(1)(6) 226 119,780
--------------------------------------------------------------------------------------------------------------------------------
Globix Corp.(6) 5,000 146,563
--------------------------------------------------------------------------------------------------------------------------------
Gulfstream Holding, Inc.(6) 56 --
--------------------------------------------------------------------------------------------------------------------------------
Optel, Inc.(1)(6) 945 9
--------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(1)(6) 7,252 73
--------------------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp.(6) 5,000 581,484
--------------------------------------------------------------------------------------------------------------------------------
WRC Media Corp.(1)(6) 1,353 14
----------
Total Common Stocks (Cost $910,228) 1,693,539
Units
================================================================================================================================
Rights, Warrants and Certificates--0.5%
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(3) 1,434 896
--------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07(1) 62,000 18,600
--------------------------------------------------------------------------------------------------------------------------------
Charles River Laboratories, Inc. Wts., Exp. 10/1/09(1) 1,100 11,000
--------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 660 12,305
--------------------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08(1) 2,000 45,000
--------------------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 1,750 --
--------------------------------------------------------------------------------------------------------------------------------
Diva Systems Corp. Wts., Exp. 3/1/08(1) 1,500 39,000
--------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/1/05(1) 475 4,863
--------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc. Wts., Exp. 12/1/07 1,000 100,000
--------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/15/05(1) 52,500 525
--------------------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 15,626 17,579
--------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/23/03 8,351 --
Exp. 1/23/03(1) 4,766 48
Exp. 9/1/04(1) 14,000 --
--------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 5,940 83,780
--------------------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 950 --
--------------------------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(1) 765 --
--------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(1) 2,455 7,520
--------------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(1) 800 80
--------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(1) 800 9,500
--------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(3) 3,200 257,600
--------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(1) 1,500 375
--------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts., Exp. 12/15/07(1) 750 352,594
--------------------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc. Wts., Exp. 3/31/03(1) 170 9
--------------------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc. Wts.:
Exp. 11/1/03(1) 28,000 49,000
Exp. 6/30/05(1) 1,600 160
Oppenheimer High Income Fund/VA 17
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Units Note 1
================================================================================================================================
Rights, Warrants and Certificates (continued)
--------------------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp. Wts., Exp. 5/1/09(3) 1,200 $ 598,800
--------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04(1) 121,440 1,214
--------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International LLC Wts., Exp. 7/15/09(1) 500 5
--------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(1) 5,250 61,031
------------
Total Rights, Warrants and Certificates (Cost $194,136) 1,671,484
Principal
Amount
================================================================================================================================
Structured Instruments--1.3%
--------------------------------------------------------------------------------------------------------------------------------
Bear Stearns, Inc., High Yield Bond Index Linked Nts.:
10%, 2/16/01 $ 3,000,000 2,928,600
10%, 3/14/01 1,500,000 1,492,950
--------------------------------------------------------------------------------------------------------------------------------
Total Structured Instruments (Cost $4,500,000) 4,421,550
================================================================================================================================
Repurchase Agreements--8.0%
--------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 6.55%, dated 6/30/00,
to be repurchased at $26,617,521 on 7/3/00, collateralized by U.S. Treasury Nts.,
5%-7.50%, 8/31/00-5/15/08, with a value of $20,068,190 and U.S. Treasury Bonds,
5.25%-12%, 8/15/03-11/15/28, with a value of $7,089,185 (Cost $26,603,000) 26,603,000 26,603,000
--------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $365,764,941) 99.1% 329,759,344
--------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.9 2,934,263
----------- ------------
Net Assets 100.0% $332,693,607
=========== ============
</TABLE>
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP -- Argentine Peso EUR -- Euro
CAD -- Canadian Dollar GBP -- British Pound Sterling
DEM -- German Mark IDR -- Indonesian Rupiah
1. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
2. Represents the current interest rate for a variable or increasing rate
security.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $41,642,084 or 12.52% of the Fund's net
assets as of June 30, 2000.
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
6. Non-income-producing security.
7. 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, principal amount disclosed represents total
underlying principal.
9. Interest or dividend is paid in kind.
10. When-issued security to be delivered and settled after June 30, 2000.
11. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
18 Oppenheimer High Income Fund/VA
<PAGE>
Statement of Assets and Liabilities June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
================================================================================================
Assets
Investments, at value (cost $365,764,941)--see accompanying statement $329,759,344
------------------------------------------------------------------------------------------------
Cash 55,323
------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 13,793
------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 6,649,154
Shares of beneficial interest sold 282,803
Investments sold 249,323
Closed foreign currency contracts 31,356
Other 2,233
------------
Total assets 337,043,329
================================================================================================
Liabilities
Unrealized depreciation on foreign currency contracts 67,522
------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $380,775 purchased on a when-issued basis) 3,786,342
Shares of beneficial interest redeemed 486,482
Trustees' compensation 805
Transfer and shareholder servicing agent fees 565
Other 8,006
------------
Total liabilities 4,349,722
================================================================================================
Net Assets $332,693,607
============
================================================================================================
Composition of Net Assets
Paid-in capital $371,495,369
------------------------------------------------------------------------------------------------
Undistributed net investment income 15,930,580
------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (18,675,811)
------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (36,056,531)
------------
Net assets--applicable to 34,773,077 shares of beneficial interest outstanding $332,693,607
============
================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $9.57
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer High Income Fund/VA 19
<PAGE>
Statement of Operations For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
=====================================================================================
Investment Income
Interest (net of foreign withholding taxes of $5,087) $ 16,270,513
-------------------------------------------------------------------------------------
Dividends 1,270,317
------------
Total income 17,540,830
=====================================================================================
Expenses
Management fees 1,203,564
-------------------------------------------------------------------------------------
Custodian fees and expenses 8,020
-------------------------------------------------------------------------------------
Trustees' compensation 1,845
-------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 1,431
-------------------------------------------------------------------------------------
Other 25,952
------------
Total expenses 1,240,812
Less expenses paid indirectly (5,304)
------------
Net expenses 1,235,508
=====================================================================================
Net Investment Income 16,305,322
=====================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (8,189,968)
Closing of futures contracts 99,491
Foreign currency transactions 96,220
------------
Net realized loss (7,994,257)
-------------------------------------------------------------------------------------
Net change in unrealized depreciation on:
Investments (9,773,043)
Translation of assets and liabilities denominated in foreign currencies (710,796)
------------
Net change (10,483,839)
------------
Net realized and unrealized loss (18,478,096)
=====================================================================================
Net Decrease in Net Assets Resulting from Operations $ (2,172,774)
============
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer High Income Fund/VA
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31,
(Unaudited) 1999
==================================================================================================
<S> <C> <C>
Operations
Net investment income $ 16,305,322 $ 32,738,738
--------------------------------------------------------------------------------------------------
Net realized loss (7,994,257) (5,996,441)
--------------------------------------------------------------------------------------------------
Net change in unrealized depreciation (10,483,839) (12,106,097)
------------ ------------
Net increase (decrease) in net assets resulting from operations (2,172,774) 14,636,200
==================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (33,307,606) (23,246,834)
==================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions 27,345,389 20,876,575
==================================================================================================
Net Assets
Total increase (decrease) (8,134,991) 12,265,941
--------------------------------------------------------------------------------------------------
Beginning of period 340,828,598 328,562,657
------------ ------------
End of period (including undistributed net investment
income of $15,930,580 and $32,932,864, respectively) $332,693,607 $340,828,598
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer High Income Fund/VA 21
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, December 31,
2000 (Unaudited) 1999 1998 1997 1996 1995
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.72 $11.02 $11.52 $11.13 $10.63 $ 9.79
------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .51 1.01 .95 .94 .97 .98
Net realized and unrealized gain (loss) (.57) (.55) (.90) .37 .58 .94
------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations (.06) .46 .05 1.31 1.55 1.92
------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (1.09) (.76) (.25) (.91) (1.05) (1.08)
Distributions from net realized gain -- -- (.30) (.01) -- --
------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (1.09) (.76) (.55) (.92) (1.05) (1.08)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.57 $10.72 $11.02 $11.52 $11.13 $10.63
====== ====== ====== ====== ====== ======
==============================================================================================================================
Total Return, at Net Asset Value(1) (0.62)% 4.29% 0.31% 12.21% 15.26% 20.37%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $332,694 $340,829 $328,563 $291,323 $191,293 $133,451
------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $327,781 $340,519 $322,748 $223,617 $157,203 $115,600
------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 10.00% 9.61% 8.65% 8.88% 9.18% 9.81%
Expenses 0.76% 0.75% 0.78%(3) 0.82%(3) 0.81%(3) 0.81%(3)
------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 33% 161% 168% 125% 107%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods less than one full year. Total
return information does not reflect expenses that apply at the separate account
level or to related insurance products. Inclusion of these charges would reduce
the total return figures for all periods shown.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
22 Oppenheimer High Income Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited)
================================================================================
1. Significant Accounting Policies
Oppenheimer High Income Fund/VA (the Fund) is a separate series of Oppenheimer
Variable Account Funds (the Trust), an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek a high level of current income from investment
in high-yield fixed income securities. The Trust's investment advisor is
OppenheimerFunds, Inc. (the Manager). The following is a summary of significant
accounting policies consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
Structured Notes. The Fund invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes are leveraged, which increases the notes' volatility
relative to the principal of the security. Fluctuations in value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of June 30, 2000, the market value of these securities
comprised 2.86% of the Fund's net assets and resulted in realized and unrealized
losses in the current period of $1,474,015. The Fund also hedges a portion of
the foreign currency exposure generated by these securities, as discussed in
Note 5.
--------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a when-issued basis can take place a
month or more after the trade date. Normally the settlement date occurs within
six months after the trade date; however, the Fund may, from time to time,
purchase securities whose settlement date extends beyond six months and possibly
as long as two years or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
segregated assets with a market value equal to or greater than the amount of its
purchase commitments. The purchase of securities on a when-issued or forward
commitment basis may increase the volatility of the Fund's net asset value to
the extent the Fund makes such purchases while remaining substantially fully
invested. As of June 30, 2000, the Fund had entered into outstanding net
when-issued or forward commitments of $380,775.
In connection with its ability to purchase securities on a when-issued,
the Fund may enter into mortgage dollar-rolls in which the Fund sells securities
for delivery in the current month and simultaneously contracts with the same
counterparty to repurchase similar (same type, coupon and maturity) but not
identical securities on a specified future date. The Fund records each
dollar-roll as a sale and a new purchase transaction.
--------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of June 30, 2000, securities with an
aggregate market value of $2,291,377, representing 0.69% of the Fund's net
assets, were in default.
Oppenheimer High Income Fund/VA 23
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant Accounting Policies (continued)
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments
is separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
--------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
--------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. As of December 31,
1999, the Fund had available for federal income tax purposes an unused capital
loss carryover of approximately $8,335,000, which expires between 2006 and 2007.
--------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
--------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was
recorded by the Fund.
--------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
-------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
accreted over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
24 Oppenheimer High Income Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
------------------------------ ----------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 7,371,117 $ 73,356,349 13,810,332 $ 149,141,858
Dividends and/or distributions reinvested 3,447,992 33,307,606 2,201,405 23,246,834
Redeemed (7,827,598) (79,318,566) (14,037,090) (151,512,117)
---------- ------------ ----------- -------------
Net increase 2,991,511 $ 27,345,389 1,974,647 $ 20,876,575
========== ============ =========== =============
</TABLE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended June 30, 2000, were
$43,347,794 and $38,851,096, respectively.
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. The annual fees are 0.75% of the
first $200 million of average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the
next $200 million and 0.50% of average annual net assets over $1 billion. The
Fund's management fee for the six months ended June 30, 2000 was an annualized
rate of 0.74%, before any waiver by the Manager.
--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of June 30, 2000, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Date Amount (000s) June 30, 2000 Appreciation Depreciation
------------------------------------------------------------------------------------------------------------------------------
Contracts to Sell
<S> <C> <C> <C> <C> <C>
British Pound Sterling (GBP) 9/5/00 3,545 GBP $5,373,568 $ -- $63,098
Canadian Dollar (CAD) 11/1/00 540 CAD 365,628 -- 4,424
Euro (EUR) 10/6/00 3,470 EUR 3,346,505 13,793 --
------- -------
Total Unrealized Appreciation and Depreciation $13,793 $67,522
======= =======
</TABLE>
Oppenheimer High Income Fund/VA 25
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
6. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Fund may buy and sell futures contracts that relate to
broadly-based securities indices "financial futures" or debt securities
"interest rate futures" in order to gain exposure to or to seek to protect
against changes in market value of stock and bonds or interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and decreases in market value of portfolio securities. The
Fund may also purchase futures contracts to gain exposure to changes in interest
rates as it may be more efficient or cost effective than actually buying fixed
income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
================================================================================
7. Illiquid or Restricted Securities
As of June 30, 2000, investments in securities included issues that are illiquid
or restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of June 30, 2000 was $30,883,029, which
represents 9.28% of the Fund's net assets, of which $4,258,850 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Per Unit as of
Security Dates Unit June 30, 2000
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
-----
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95-8/13/96 100.00%-105.75% 107.64%
---------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08 3/19/98 101.00 83.00
Stocks and Warrants
-------------------
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 $ -- $ 0.30
---------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A 6/17/97-6/28/00 24.97-25.03 25.00
---------------------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI 4/14/92 1,000.00 876.25
---------------------------------------------------------------------------------------------------------------------------------
Real Time Data Wts., Exp. 5/31/04 6/30/99 0.01 0.01
---------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc. 4/18/00 15.25 20.13
---------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. 4/6/00 530.00 530.00
</TABLE>
26 Oppenheimer High Income Fund/VA
<PAGE>
Oppenheimer High Income Fund/VA
A Series of Oppenheimer Variable Account Funds
<TABLE>
====================================================================================================================================
<S> <C>
Officers and Trustees James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, Trustee and President
William L. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Edward L. Cameron, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
David P. Negri, Vice President
Thomas P. Reedy, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
====================================================================================================================================
Investment Advisor OppenheimerFunds, Inc.
====================================================================================================================================
Transfer Agent OppenheimerFunds Services
====================================================================================================================================
Custodian of Portfolio Securities The Bank of New York
====================================================================================================================================
Independent Auditors Deloitte & Touche LLP
====================================================================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken from the records of the Fund
without examination of those records by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer High Income Fund/VA. For other
material information concerning the Fund, see its prospectus. This report must be
preceded or accompanied by the Fund's prospectus, the separate account prospectus, and
current standardized average annual total returns for the separate account being offered.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency, and involve
investment risks, including the possible loss of the principal amount invested.
</TABLE>
(C)Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
Oppenheimer High Income Fund/VA 27
