Annual Report December 31, 1999
================================================================================
Oppenheimer
Capital Appreciation
Fund/VA
A Series of Oppenheimer Variable Account Funds
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Variable Account Funds--Oppenheimer Capital Appreciation Fund/VA
- --------------------------------------------------------------------------------
================================================================================
Objective
Oppenheimer Capital Appreciation Fund/VA, a series of Oppenheimer Variable
Account Funds, seeks capital appreciation from investments in securities in
well-known and established companies. The Fund's current focus is in securities
of mid- and large-cap companies with a history of earnings growth. Prior to May
1, 1999, the Fund was named Oppenheimer Growth Fund/VA.
================================================================================
Narrative by Jane Putnam, Portfolio Manager
Oppenheimer Capital Appreciation Fund/VA provided an average annual total return
of 41.66% for the fiscal year that ended December 31, 1999.(1) The Fund seeks to
invest in high growth opportunities that are reasonably priced.
1999 was certainly a year of surprises--beginning with the prediction,
twelve months ago, that 1999 would have a weak economic environment--some even
expected recession--with flat or down earnings. Instead, the 1999 economy was
robust; and earnings were so strong, they became a key driver of the market. In
past years, even the strongest earnings growth took second place to events in
the bond market; when interest rates rose, earnings were affected by the cost of
borrowing and contraction in P/E multiples, and the stock market went down.
Conversely, when interest rates dropped, stock prices went up. 1999 was unusual
in that in spite of rising interest rates, the stock market rose another 15% and
earnings continued to be strong. However, a closer look shows that the gains
were not broad based. Other than the high flying technology sector, most stocks
were actually down in 1999. What this means is that even though there are
opportunities, in terms of good companies at reasonable prices, there are very
few buyers--because investors are focused on high growth. In this environment,
balancing growth and risk requires an enlightened eye and active management.
Fortunately, the Fund has always had a healthy weighting in technology,
currently between 36-40% of the portfolio.(2) In 1999, the value of these
holdings went up 90%. Due to our familiarity with the many industries
encompassed by the term "technology," we were able to make knowledgeable
investments in a number of the areas, including e-commerce, semiconductors and
wireless communications.
In e-commerce, the pioneer "dot-coms" are now facing the entrance of
many established old-line companies, from Merrill Lynch to Sears. However, we
believe the next wave of investment opportunity is not at the front end of the
transaction, where the customer clicks in the order, but at the back end, where
the database links up with suppliers. In this highly competitive industry, the
capability to actually deliver is what may determine the long-term survivors.
The semiconductor industry has been coming out of a three-year downturn, and the
cycle definitely turned in 1999. In addition to the cyclical upturn, we detected
a marked long-term change regarding outsourcing of communications
semiconductors. Similar to what occurred throughout the computer industry,
communications equipment manufacturers are faced with ever decreasing product
cycles and a greater focus on being quick to market--leading to greater
willingness to buy semiconductors from third parties rather than manufacture
them themselves. Therefore, we believe that cyclical as well as long-term forces
have spurred prices throughout the semiconductor industry and we are optimistic
about industry prospects throughout 2000.
In wireless telecommunications, Nokia Corp. has been a top performer.
And the good news is that the wireless industry may still have plenty of room
to grow.
1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products that offer this Fund.
Such performance would have been lower if such charges were taken into account.
This performance was achieved in part during periods of rapidly rising markets,
and there is no assurance that the Fund will continue to achieve those gains in
the future.
2. The Fund's portfolio is subject to change.
2 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Variable Account Funds--Oppenheimer Capital Appreciation Fund/VA
- --------------------------------------------------------------------------------
================================================================================
Another strong area, close to 15% of the portfolio, has been advertising. With
margins for corporate America at all-time highs, companies are now focused on
revenue growth. For many, the number one goal is "branding" which keeps the
company name visible on every product and service. In addition, the dot.com
companies that have recently come to market are spending as much as 50-60% of
their IPO money on marketing and advertising. As a result, our holdings in
radio, advertising, cable and networks have done very well.
The only area of weakness in the portfolio was energy. In spite of
rising crude oil prices, U.S. manufacturers have been very savvy, purchasing oil
futures and switching to alternative heating sources when necessary.
In terms of the future, we believe the Fund is very well positioned. As
growth managers, our job is to pick good companies and keep a sensitive eye on
price. We do it by studying the companies in which we invest. We see how they
operate, how they use their cashflow to benefit shareholders, and how they
respond to the people who buy their products--and then we triangulate that back
to the stock price.
The advantage to our shareholders is better than average performance,
and because we're sensitive to valuation--better risk statistics. Two very good
reasons why Oppenheimer Capital Appreciation Fund/VA is part of The Right Way to
Invest.
- --------------------------------------------------------------------------------
Management's discussion of performance. During the fiscal year that ended
December 31, 1999, Oppenheimer Capital Appreciation Fund/VA performed very well.
The Fund's healthy weighting in technology was a key driver of performance. In
addition, due to our familiarity with the many industries encompassed by the
term "technology," we were able to expand the Fund's investment universe to
include areas of e-commerce, semiconductors and wireless communications. Another
strong area has been advertising. With margins for corporate America at all-time
highs, companies have been focused on revenue growth. The only area of weakness
in the portfolio was energy. In spite of rising crude oil prices, U.S.
manufacturers have been very savvy, purchasing oil futures and switching to
alternative heating sources when necessary. In terms of the future, while we
expect volatility in the technology sector, we believe the Fund is very well
positioned for better-than-average performance, with an eye toward valuation.
The Fund's portfolio holdings, allocations and investment style are subject to
change.
Oppenheimer Capital Appreciation Fund/VA 3
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Variable Account Funds--Oppenheimer Capital Appreciation Fund/VA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Comparing the Fund's Performance to the Market. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1999. Performance information does not reflect charges that apply to
separate accounts investing in the Fund. If these charges were taken into
account, performance would be lower. The graph assumes that all dividends and
capital gains distributions were reinvested in additional shares.
The Fund's performance is compared to the performance of the S&P 500
Index, a broad-based index of equity securities widely regarded as a general
measurement of the performance of the U.S. equity securities market. Index
performance reflects the reinvestment of income but does not consider the effect
of transaction costs, and none of the data in the graph shows the effect of
taxes. The Fund's performance reflects the effects of the Fund's business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the investments in the index.
[Begin Line Chart]
Comparison of Change in Value of $10,000 Hypothetical Investments in:
OVAF/Oppenheimer Capital Appreciation Fund/VA and S&P 500 Index
<TABLE>
<CAPTION>
OVAF/Oppenheimer Capital
Appreciation Fund/VA S&P 500 Index
<S> <C> <C>
12.31.89 10000 10000
9179 9690
12.31.91 11523 12635
13197 13597
12.31.93 14154 14966
14291 15162
12.31.95 19529 20851
24451 25630
12.31.97 30976 34176
38410 43944
12.31.99 54409 53181
</TABLE>
Average Annual Total Return of the Fund at 12/31/99
1-Year 41.66% 5-Year 30.65% 10-Year 18.46%
[End Line Chart]
Because the stock market can be volatile, the Fund's performance may be subject
to substantial short-term changes. For updates on the Fund's performance, please
call us at 1.800.981.2871.
The performance information in the graph for the S&P 500 Index begins on
12/31/89. The inception date of the Fund is 4/3/85.
Total returns and the ending account value in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
Past performance is not predictive of future performance.
4 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
=========================================================================================================
Common Stocks--92.1%
- ---------------------------------------------------------------------------------------------------------
Basic Materials--1.2%
- ---------------------------------------------------------------------------------------------------------
Chemicals--1.0%
Lafarge Corp. 115,000 $ 3,176,875
- ---------------------------------------------------------------------------------------------------------
PPG Industries, Inc. 110,000 6,881,875
- ---------------------------------------------------------------------------------------------------------
Union Carbide Corp. 55,000 3,671,250
-----------
13,730,000
- ---------------------------------------------------------------------------------------------------------
Paper--0.2%
Boise Cascade Corp. 40,000 1,620,000
- ---------------------------------------------------------------------------------------------------------
Rayonier, Inc. 27,000 1,304,437
-----------
2,924,437
- ---------------------------------------------------------------------------------------------------------
Capital Goods--4.8%
- ---------------------------------------------------------------------------------------------------------
Electrical Equipment--1.9%
Etec Systems, Inc.(1) 10,300 462,212
- ---------------------------------------------------------------------------------------------------------
Sanmina Corp.(1) 181,000 18,077,375
- ---------------------------------------------------------------------------------------------------------
Vishay Intertechnology, Inc.(1) 260,000 8,222,500
-----------
26,762,087
- ---------------------------------------------------------------------------------------------------------
Industrial Services--0.7%
Coflexip SA, Sponsored ADR 49,200 1,869,600
- ---------------------------------------------------------------------------------------------------------
Republic Services, Inc.(1) 150,000 2,156,250
- ---------------------------------------------------------------------------------------------------------
Waste Management, Inc. 330,000 5,671,875
-----------
9,697,725
- ---------------------------------------------------------------------------------------------------------
Manufacturing--2.2%
Corning, Inc. 70,000 9,025,625
- ---------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 160,000 9,230,000
- ---------------------------------------------------------------------------------------------------------
Pentair, Inc. 100,000 3,850,000
- ---------------------------------------------------------------------------------------------------------
Tyco International Ltd. 224,044 8,709,710
-----------
30,815,335
- ---------------------------------------------------------------------------------------------------------
Communication Services--3.5%
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--2.8%
Intermedia Communications, Inc.(1) 90,000 3,493,125
- ---------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(1) 262,200 13,912,987
- ---------------------------------------------------------------------------------------------------------
Nortel Networks Corp. 220,000 22,220,000
-----------
39,626,112
- ---------------------------------------------------------------------------------------------------------
Telephone Utilities--0.7%
CenturyTel, Inc. 110,000 5,211,250
- ---------------------------------------------------------------------------------------------------------
SBC Communications, Inc. 92,120 4,490,850
-----------
9,702,100
</TABLE>
Oppenheimer Capital Appreciation Fund/VA 5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Consumer Cyclicals--13.5%
- ---------------------------------------------------------------------------------------------------------
Autos & Housing--3.3%
Centex Corp. 170,000 $ 4,196,875
- ---------------------------------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 121,050 3,881,166
- ---------------------------------------------------------------------------------------------------------
Ford Motor Co. 270,000 14,428,125
- ---------------------------------------------------------------------------------------------------------
Gentex Corp.(1) 230,000 6,382,500
- ---------------------------------------------------------------------------------------------------------
Southdown, Inc. 145,000 7,485,625
- ---------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 130,000 2,421,250
- ---------------------------------------------------------------------------------------------------------
USG Corp. 170,000 8,011,250
-----------
46,806,791
- ---------------------------------------------------------------------------------------------------------
Consumer Services--2.3%
Budget Group, Inc., Cl. A(1) 260,000 2,356,250
- ---------------------------------------------------------------------------------------------------------
Hertz Corp., Cl. A 53,000 2,656,625
- ---------------------------------------------------------------------------------------------------------
Omnicom Group, Inc. 180,000 18,000,000
- ---------------------------------------------------------------------------------------------------------
Young & Rubicam, Inc. 144,500 10,223,375
-----------
33,236,250
- ---------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.3%
Callaway Golf Co. 210,000 3,714,375
- ---------------------------------------------------------------------------------------------------------
Carnival Corp. 395,000 18,885,937
- ---------------------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 75,000 4,804,687
- ---------------------------------------------------------------------------------------------------------
Mandalay Resort Group(1) 285,000 5,735,625
-----------
33,140,624
- ---------------------------------------------------------------------------------------------------------
Media--1.8%
News Corp. Ltd. (The), Sponsored ADR 250,000 9,562,500
- ---------------------------------------------------------------------------------------------------------
Time Warner, Inc. 220,000 15,936,250
-----------
25,498,750
- ---------------------------------------------------------------------------------------------------------
Retail: General--0.3%
Dayton Hudson Corp. 70,000 5,140,625
- ---------------------------------------------------------------------------------------------------------
Retail: Specialty--2.7%
Abercrombie & Fitch Co., Cl. A(1) 300,000 8,006,250
- ---------------------------------------------------------------------------------------------------------
CSK Auto Corp.(1) 49,000 857,500
- ---------------------------------------------------------------------------------------------------------
Gap, Inc. 300,000 13,800,000
- ---------------------------------------------------------------------------------------------------------
TJX Cos., Inc. 250,000 5,109,375
- ---------------------------------------------------------------------------------------------------------
Too, Inc.(1) 181,000 3,122,250
- ---------------------------------------------------------------------------------------------------------
Zale Corp.(1) 170,000 8,223,750
-----------
39,119,125
- ---------------------------------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--0.8%
Jones Apparel Group, Inc.(1) 185,000 5,018,125
- ---------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 260,000 6,061,250
-----------
11,079,375
</TABLE>
6 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Consumer Staples--10.6%
- ---------------------------------------------------------------------------------------------------------
Beverages--1.4%
Adolph Coors Co., Cl. B 110,000 $ 5,775,000
- ---------------------------------------------------------------------------------------------------------
Seagram Co. Ltd. (The) 320,000 14,380,000
-----------
20,155,000
- ---------------------------------------------------------------------------------------------------------
Broadcasting--4.5%
AMFM, Inc.(1) 150,000 11,737,500
- ---------------------------------------------------------------------------------------------------------
CBS Corp.(1) 220,000 14,066,250
- ---------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special 365,000 18,455,312
- ---------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., Cl. A(1) 350,000 12,665,625
- ---------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., Cl. B(1) 276,300 6,739,024
-----------
63,663,711
- ---------------------------------------------------------------------------------------------------------
Entertainment--1.6%
Outback Steakhouse, Inc.(1) 140,000 3,631,250
- ---------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 380,000 18,738,750
- ---------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 15,000 309,375
-----------
22,679,375
- ---------------------------------------------------------------------------------------------------------
Food--0.7%
IBP, Inc. 190,000 3,420,000
- ---------------------------------------------------------------------------------------------------------
Keebler Foods Co.(1) 140,000 3,937,500
- ---------------------------------------------------------------------------------------------------------
Nabisco Holdings Corp., Cl. A 80,000 2,530,000
-----------
9,887,500
- ---------------------------------------------------------------------------------------------------------
Food & Drug Retailers--1.7%
CVS Corp. 310,000 12,380,625
- ---------------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 350,000 12,446,875
-----------
24,827,500
- ---------------------------------------------------------------------------------------------------------
Household Goods--0.7%
Avon Products, Inc. 310,000 10,230,000
- ---------------------------------------------------------------------------------------------------------
Energy--5.0%
- ---------------------------------------------------------------------------------------------------------
Energy Services--1.9%
Coastal Corp. 220,000 7,796,250
- ---------------------------------------------------------------------------------------------------------
ENSCO International, Inc. 50,000 1,143,750
- ---------------------------------------------------------------------------------------------------------
Halliburton Co. 200,000 8,050,000
- ---------------------------------------------------------------------------------------------------------
Nabors Industries, Inc.(1) 150,000 4,640,625
- ---------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc. 95,000 3,200,313
- ---------------------------------------------------------------------------------------------------------
Varco International, Inc.(1) 240,000 2,445,000
-----------
27,275,938
- ---------------------------------------------------------------------------------------------------------
Oil: Domestic--2.5%
Amerada Hess Corp. 155,000 8,796,250
- ---------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 230,000 18,529,375
- ---------------------------------------------------------------------------------------------------------
Forest Oil Corp.(1) 170,000 2,241,875
- ---------------------------------------------------------------------------------------------------------
Texaco, Inc. 50,000 2,715,625
- ---------------------------------------------------------------------------------------------------------
Tosco Corp. 140,000 3,806,250
-----------
36,089,375
</TABLE>
Oppenheimer Capital Appreciation Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Oil: International--0.6%
Total Fina SA, Sponsored ADR 120,000 $ 8,310,000
- ---------------------------------------------------------------------------------------------------------
Financial--8.8%
- ---------------------------------------------------------------------------------------------------------
Banks--2.2%
Bank of America Corp. 150,000 7,528,125
- ---------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 180,000 13,983,750
- ---------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp. 272,908 9,500,610
-----------
31,012,485
- ---------------------------------------------------------------------------------------------------------
Diversified Financial--4.9%
C.I.T. Group, Inc., Cl. A 150,000 3,168,750
- ---------------------------------------------------------------------------------------------------------
Citigroup, Inc. 377,748 20,988,623
- ---------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 95,000 8,947,813
- ---------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 105,000 8,767,500
- ---------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 135,000 19,271,250
- ---------------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 70,000 2,585,625
- ---------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. 155,000 5,948,125
-----------
69,677,686
- ---------------------------------------------------------------------------------------------------------
Insurance--1.2%
American International Group, Inc. 27,500 2,973,438
- ---------------------------------------------------------------------------------------------------------
AXA Financial, Inc. 250,000 8,468,750
- ---------------------------------------------------------------------------------------------------------
Progressive Corp. 80,000 5,850,000
-----------
17,292,188
- ---------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--0.5%
Boston Properties, Inc. 245,000 7,625,625
- ---------------------------------------------------------------------------------------------------------
Healthcare--4.9%
- ---------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.4%
Amgen, Inc.(1) 400,000 24,025,000
- ---------------------------------------------------------------------------------------------------------
Elan Corp. plc, ADR(1) 400,000 11,800,000
- ---------------------------------------------------------------------------------------------------------
IDEC Pharmaceuticals Corp. 108,400 10,650,300
- ---------------------------------------------------------------------------------------------------------
Pfizer, Inc. 90,000 2,919,375
- ---------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 120,000 5,062,500
- ---------------------------------------------------------------------------------------------------------
Warner Lambert Co. 100,000 8,193,750
-----------
62,650,925
- ---------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.5%
Baxter International, Inc. 90,000 5,653,125
- ---------------------------------------------------------------------------------------------------------
Medtronic, Inc. 60,000 2,186,250
-----------
7,839,375
</TABLE>
8 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Technology--38.0%
- ---------------------------------------------------------------------------------------------------------
Computer Hardware--2.0%
Compaq Computer Corp. 65,000 $ 1,759,063
- ---------------------------------------------------------------------------------------------------------
EMC Corp.(1) 15,000 1,638,750
- ---------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 65,000 7,405,938
- ---------------------------------------------------------------------------------------------------------
MMC Networks, Inc.(1) 60,000 2,062,500
- ---------------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 350,000 16,296,875
------------
29,163,126
- ---------------------------------------------------------------------------------------------------------
Computer Services--0.9%
Applied Micro Circuits Corp.(1) 75,500 9,607,375
- ---------------------------------------------------------------------------------------------------------
CGI Group, Inc.(1) 70,700 3,016,462
------------
12,623,837
- ---------------------------------------------------------------------------------------------------------
Computer Software--13.8%
BEA Systems, Inc.(1) 112,400 7,860,975
- ---------------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 300,000 23,981,250
- ---------------------------------------------------------------------------------------------------------
I2 Technologies, Inc.(1) 120,000 23,400,000
- ---------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 530,000 61,877,500
- ---------------------------------------------------------------------------------------------------------
Novell, Inc.(1) 650,000 25,959,375
- ---------------------------------------------------------------------------------------------------------
Oracle Corp.(1) 230,000 25,774,375
- ---------------------------------------------------------------------------------------------------------
Sybase, Inc.(1) 180,000 3,060,000
- ---------------------------------------------------------------------------------------------------------
Veritas Software Corp.(1) 170,000 24,331,250
------------
196,244,725
- ---------------------------------------------------------------------------------------------------------
Communications Equipment--11.4%
Antec Corp.(1) 50,000 1,825,000
- ---------------------------------------------------------------------------------------------------------
CIENA Corp.(1) 150,000 8,625,000
- ---------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 450,000 48,206,250
- ---------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc. 130,000 9,725,625
- ---------------------------------------------------------------------------------------------------------
Nokia Corp., A Shares, Sponsored ADR(1) 335,000 63,650,000
- ---------------------------------------------------------------------------------------------------------
QUALCOMM, Inc.(1) 84,000 14,794,500
- ---------------------------------------------------------------------------------------------------------
Tellabs, Inc.(1) 150,000 9,628,125
- ---------------------------------------------------------------------------------------------------------
Williams Communications Group, Inc.(1) 190,000 5,498,125
------------
161,952,625
</TABLE>
Oppenheimer Capital Appreciation Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Electronics--9.9%
Analog Devices, Inc.(1) 80,000 $ 7,440,000
- ---------------------------------------------------------------------------------------------------------
Atmel Corp.(1) 320,000 9,460,000
- ---------------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 230,000 7,446,250
- ---------------------------------------------------------------------------------------------------------
Flextronics International Ltd.(1) 260,000 11,960,000
- ---------------------------------------------------------------------------------------------------------
LSI Logic Corp.(1) 115,000 7,762,500
- ---------------------------------------------------------------------------------------------------------
Micron Technology, Inc.(1) 180,000 13,995,000
- ---------------------------------------------------------------------------------------------------------
National Semiconductor Corp.(1) 310,000 13,271,875
- ---------------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 60,000 7,351,875
- ---------------------------------------------------------------------------------------------------------
PMC-Sierra, Inc.(1) 7,000 1,122,188
- ---------------------------------------------------------------------------------------------------------
RF Micro Devices, Inc.(1) 170,000 11,634,375
- ---------------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 150,000 14,531,250
- ---------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 510,000 26,743,125
- ---------------------------------------------------------------------------------------------------------
Waters Corp.(1) 160,000 8,480,000
--------------
141,198,438
- ---------------------------------------------------------------------------------------------------------
Transportation--1.1%
- ---------------------------------------------------------------------------------------------------------
Railroads & Truckers--1.1%
Canadian Pacific Ltd. 180,000 3,881,250
- ---------------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc. 160,000 11,940,000
--------------
15,821,250
- ---------------------------------------------------------------------------------------------------------
Utilities--0.7%
- ---------------------------------------------------------------------------------------------------------
Electric Utilities--0.3%
Potomac Electric Power Co. 180,000 4,128,750
- ---------------------------------------------------------------------------------------------------------
Gas Utilities--0.4%
Williams Cos., Inc. (The) 180,000 5,501,250
--------------
Total Common Stocks (Cost $846,317,127) 1,313,130,020
Principal
Amount
=========================================================================================================
Repurchase Agreements--8.0%
- ---------------------------------------------------------------------------------------------------------
Repurchase agreement with Deutsche Bank Securities Inc., 3.20%, dated
12/31/99, to be repurchased at $114,130,427 on 1/3/00, collateralized
by U.S. Treasury Bonds, 6.375%, 8/15/27, with a value of $31,418,622
and U.S. Treasury Nts., 6.125%, 12/31/01, with a value of $85,361,063
(Cost $114,100,000) $114,100,000 114,100,000
- ---------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $960,417,127) 100.1% 1,427,230,020
- ---------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.1) (2,032,604)
------------ --------------
Net Assets 100.0% $1,425,197,416
============ ==============
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements
10 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
=======================================================================================================
<S> <C>
Assets
Investments, at value (cost $960,417,127)--see accompanying statement $1,427,230,020
- -------------------------------------------------------------------------------------------------------
Cash 735,078
- -------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 2,665,747
Shares of beneficial interest sold 1,431,324
Interest and dividends 540,095
Other 10,113
--------------
Total assets 1,432,612,377
=======================================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 6,076,984
Shares of beneficial interest redeemed 1,213,744
Trustees' compensation 484
Transfer and shareholder servicing agent fees 186
Other 123,563
--------------
Total liabilities 7,414,961
=======================================================================================================
Net Assets $1,425,197,416
==============
=======================================================================================================
Composition of Net Assets
Paid-in capital $ 847,994,816
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 2,056,707
- -------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 108,335,322
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 466,810,571
--------------
Net assets--applicable to 28,592,995 shares of beneficial interest outstanding $1,425,197,416
==============
=======================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $49.84
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
=======================================================================================================
<S> <C>
Investment Income
Dividends $ 5,736,352
- -------------------------------------------------------------------------------------------------------
Interest 3,289,528
------------
Total income 9,025,880
=======================================================================================================
Expenses
Management fees 6,845,473
- -------------------------------------------------------------------------------------------------------
Custodian fees and expenses 17,921
- -------------------------------------------------------------------------------------------------------
Trustees' compensation 4,059
- -------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,107
- -------------------------------------------------------------------------------------------------------
Other 105,419
------------
Total expenses 6,974,979
Less expenses paid indirectly (10,397)
------------
Net expenses 6,964,582
=======================================================================================================
Net Investment Income 2,061,298
=======================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 109,110,788
Foreign currency transactions (385,246)
------------
Net realized gain 108,725,542
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 275,400,704
Translation of assets and liabilities denominated in foreign currencies 226,469
------------
Net change 275,627,173
------------
Net realized and unrealized gain 384,352,715
=======================================================================================================
Net Increase in Net Assets Resulting from Operations $386,414,013
============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 2,061,298 $ 3,036,249
- ----------------------------------------------------------------------------------------------------------------
Net realized gain 108,725,542 32,507,950
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 275,627,173 99,933,565
-------------- ------------
Net increase in net assets resulting from operations 386,414,013 135,477,764
================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (2,974,252) (3,939,379)
- ----------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (32,671,363) (47,530,889)
================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 305,879,322 190,636,226
================================================================================================================
Net Assets
Total increase 656,647,720 274,643,722
- ----------------------------------------------------------------------------------------------------------------
Beginning of period 768,549,696 493,905,974
-------------- ------------
End of period (including undistributed net investment
income of $2,056,707 and $2,959,139, respectively) $1,425,197,416 $768,549,696
============== ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
=========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $36.67 $32.44 $27.24 $23.55 $17.68
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .06 .13 .25 .15 .25
Net realized and unrealized gain 14.68 7.28 6.62 5.46 6.10
- -------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 14.74 7.41 6.87 5.61 6.35
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) (.24) (.15) (.25) (.22)
Distributions from net realized gain (1.44) (2.94) (1.52) (1.67) (.26)
- -------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.57) (3.18) (1.67) (1.92) (.48)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $49.84 $36.67 $32.44 $27.24 $23.55
====== ====== ====== ====== ======
=========================================================================================================================
Total Return, at Net Asset Value(1) 41.66% 24.00% 26.68% 25.20% 36.65%
=========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,425 $769 $494 $286 $118
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,003 $609 $390 $152 $ 89
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.21% 0.50% 1.02% 1.08% 1.46%
Expenses 0.70% 0.75%(3) 0.75%(3) 0.81%(3)(4) 0.79%(3)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 56% 56% 66% 65% 58%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Total
returns are not annualized for periods less than one full year. Total return
information does not reflect expenses that apply at the separate account level
or to related insurance products. Inclusion of these charges would reduce the
total return figures for all periods shown.
2. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. The expense ratio was 0.79% net of the voluntary reimbursement by
the Manager.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $751,087,611 and $525,369,517, respectively.
See accompanying Notes to Financial Statements.
14 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Capital Appreciation Fund/VA (the Fund), formerly known as
Oppenheimer Growth Fund, is a separate series of Oppenheimer Variable Account
Funds (the Trust), a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek capital appreciation by investing in securities
of well-known established companies. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The following is a summary of significant
accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
Oppenheimer Capital Appreciation Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of distributions made
during the year from net investment income or net realized gains may differ from
its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect an
increase in undistributed net investment income of $10,522. Accumulated net
realized gain on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
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. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. Realized gains
and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 Year Ended December 31, 1998
--------------------------------- --------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Sold 13,631,886 $ 546,735,927 8,866,513 $293,095,063
Dividends and/or distributions reinvested 958,989 35,645,615 1,565,397 51,470,268
Redeemed (6,954,081) (276,502,220) (4,699,071) (153,929,105)
---------- ------------- ---------- ------------
Net increase 7,636,794 $ 305,879,322 5,732,839 $190,636,226
========== ============= ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of
$466,812,893 was composed of gross appreciation of $520,306,180, and gross
depreciation of $53,493,287.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund, which provides for a fee of 0.75%
of the first $200 million of average annual net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200 million and
0.60% of average annual net assets over $800 million. The Fund's management fee
for the year ended December 31, 1999 was 0.68% of average annual net assets.
- --------------------------------------------------------------------------------
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.
16 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
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.
Oppenheimer Capital Appreciation Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Capital
Appreciation Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Capital Appreciation Fund/VA (which
is a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period January 1, 1995 to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Capital Appreciation Fund/VA as of December 31, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Denver, Colorado
January 24, 2000
18 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $1.5700 per share were paid to shareholders on March
22, 1999, of which $1.0850 was designated as a "capital gain distribution" for
federal income tax purposes. Whether received in stock or in cash, the capital
gain distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended December 31,
1999, which are not designated as capital gain distributions, should be
multiplied by 5.47% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations, which may affect your
individual tax return, and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
Oppenheimer Capital Appreciation Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Capital Appreciation 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, President
William H. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, 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
Jane Putnam, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
===========================================================================================
Investment Advisor OppenheimerFunds, Inc.
===========================================================================================
Transfer Agent OppenheimerFunds Services
===========================================================================================
Custodian of Portfolio Securities The Bank of New York
===========================================================================================
Independent Auditors Deloitte & Touche LLP
===========================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of
Oppenheimer Capital Appreciation Fund/VA. This
report must be preceded or accompanied by a
Prospectus of Oppenheimer Capital Appreciation
Fund/VA. For material information concerning
the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount invested.
</TABLE>
20 Oppenheimer Capital Appreciation Fund/VA
