Semiannual Report June 30, 2000
Oppenheimer
Money Fund/VA
A Series of Oppenheimer Variable Account Funds
[logo]OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
Oppenheimer Variable Account Funds--Oppenheimer Money Fund/VA
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Objective
Oppenheimer Money Fund/VA, a series of Oppenheimer Variable Account Funds, seeks
maximum current income in "money market" securities consistent with low capital
risk and the maintenance of liquidity. Money market securities may include
short-term government securities, certificates of deposit (CDs), bankers'
acceptances and commercial paper.
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Narrative by Carol E. Wolf, Portfolio Manager
A series of three short-term interest-rate hikes initiated by the Federal
Reserve Board ("Fed") marked the six-month period that ended June 30, 2000.
Prompted by ongoing inflation concerns, Fed Chairman Alan Greenspan continued to
employ a gradual approach to slowing a domestic economy, identified as
overheated, by raising rates by a quarter point on two occasions, then
concluding with a more aggressive half-point increase. Although this measured
course of action, which followed three prior rate hikes in the second half of
1999, at first appeared to produce no tangible signs of cooling, reports toward
the end of the period suggested a slight moderation in economic growth.
Against this backdrop, Oppenheimer Money Fund/VA produced an annualized
yield of 5.43%, and an annualized yield including the effects of compounding of
5.53%, for the half-year period. The Fund's seven-day and compounded seven-day
yields on June 30, 2000 were 6.20% and 6.39%, respectively.(1) While the Fund is
managed to emphasize liquidity and safety, these returns were generally higher
than those reported six months ago, due primarily to higher short-term interest
rates during the period.
In anticipation of these higher rates, we kept our average maturity
short. This enabled us to respond more effectively to changing conditions
without incurring undue risk.
However, because rates were rising at fairly frequent intervals, there
was unprecedented demand for securities with shorter maturities. As supply came
under pressure, spreads or differences in yields within our investment universe
narrowed significantly. Whereas we had favored these variable-rate vehicles in
the past, they proved relatively unattractive throughout most of the period.
We were able to find attractive yields in asset-backed commercial
paper. The asset-backed programs purchased by our Fund are limited to
well-structured, highly liquid programs. These investments typically offered a
three- to five-basis-point advantage over comparable commercial paper issued by
corporations. All told, asset-backed securities comprised 18.6% of invested
assets at period end, constituting our largest area of concentration.(2) Other
investments focused on commercial paper issued by high quality
financial-services companies, insurers, banks and brokerage firms.
Going forward, it's unclear whether the Federal Reserve will need to
continue to pursue a tight monetary policy. In our view, investors have already
factored in an additional half-point rate increase. The Fed will probably
continue to keep a close eye on stock market performance and consumer
confidence. We have recently started to purchase securities with maturities in
excess of 90 days. We expect to maintain the average maturity of the Fund
between 35 and 45 days. Furthermore, we have a significant amount of securities
maturing in late June and early July; and, in the event of another rate hike,
this should position us to capitalize on the ensuing income opportunity.
In closing, we'd like thank you for your continued confidence and
participation in Oppenheimer Money Fund/VA. We look forward to helping you reach
your financial goals, while seeking to maintain the liquidity and safety of your
investment.
An investment in money market funds is neither insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
1. Compounded yields assume reinvestment of dividends, and do not include the
charges associated with the separate account products that offer this Fund. Past
performance is not indicative of future results.
2. Based on total market value of net assets.
2 Oppenheimer Money Fund/VA
<PAGE>
Statement of Investments June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount Note 1
=======================================================================================================================
<S> <C> <C>
Direct Bank Obligations--2.6%
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Canadian Imperial Bank of Commerce:
6.26%, 7/14/00 $5,000,000 $ 5,000,000
=======================================================================================================================
Letters of Credit--14.5%
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ABN Amro Bank NV, guaranteeing commercial paper of LaSalle Bank NA:
6.78%, 8/30/00 5,000,000 5,000,000
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Barclays Bank plc, guaranteeing commercial paper of Banco Bradesco SA-Grand
Cayman Branch, Series B:
6.61%, 9/19/00 4,000,000 3,941,244
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Credit Local de France, guaranteeing commercial paper of Dexia CLF Finance Co.:
6.59%, 9/13/00(1) 2,000,000 1,972,908
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Deutsche Bank AG, guaranteeing commercial paper of Deutsche Bank Financial,
Inc.:
6.19%, 7/26/00 5,000,000 4,978,507
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First Union Corp., guaranteeing commercial paper of First Union National Bank:
6.94%, 5/17/01(2) 5,000,000 5,000,000
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Keycorp, guaranteeing commercial paper of Key Bank NA:
6.94%, 5/11/01(2) 5,000,000 4,999,140
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Societe Generale, guaranteeing commercial paper of Societe Generale North America:
6.60%, 9/8/00 2,000,000 1,974,700
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Total Letters of Credit 27,866,499
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Short-Term Notes--85.3%
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Asset-Backed--19.0%
AriesOne Metafolio Corp.:
6.56%, 7/6/00(1) 3,000,000 2,997,267
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Asset Backed Capital Finance, Inc.:
6.63%, 9/11/00(1) 3,000,000 2,960,220
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Barton Capital Corp.:
6.60%, 7/13/00(1) 4,300,000 4,290,540
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Breeds Hill Capital Co. LLC, Series A:
6.57%, 7/19/00(1) 3,000,000 2,990,145
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Corporate Receivables Corp.:
6.57%, 8/11/00(1) 3,000,000 2,977,552
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Lexington Parker Capital Co. LLC:
6.60%, 7/25/00(1) 4,000,000 3,982,400
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Moriarty Ltd.:
6.40%, 7/5/00(1) 5,000,000 4,996,444
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New Center Asset Trust:
6.24%, 7/17/00 5,000,000 4,986,133
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Scaldis Capital LLC:
6.62%, 9/14/00(1) 3,000,000 2,958,625
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Sigma Finance, Inc.:
6.39%, 7/3/00(1) 3,500,000 3,498,758
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36,638,084
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Beverages--2.6%
Coca-Cola Enterprises, Inc.:
6.07%, 7/12/00(1) 5,000,000 4,990,711
Oppenheimer Money Fund/VA 3
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Value
Amount Note 1
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Broker/Dealers--10.0%
Banc of America Securities LLC:
7.325%, 8/5/28(2) $5,000,000 $ 5,000,000
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Bear Stearns Cos., Inc.:
6.699%, 2/14/01(2) 4,000,000 4,000,000
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Goldman Sachs Group LP, Promissory Nt.:
6.78%, 9/13/00(3) 4,500,000 4,500,000
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Morgan Stanley, Dean Witter & Co.:
7.125%, 6/8/01(2) 2,800,000 2,800,000
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Salomon Smith Barney Holdings, Inc.:
6.50%, 8/3/00 3,000,000 2,982,125
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19,282,125
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Commercial Finance--5.2%
Countrywide Home Loans, Series H:
6.717%, 5/21/01(2) 5,000,000 4,999,566
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Homeside Lending, Inc.:
6.55%, 7/7/00 5,000,000 4,994,542
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9,994,108
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Consumer Services--1.6%
Block Financial Corp.:
6.63%, 7/27/00(1) 3,000,000 2,985,635
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Diversified Financial--12.8%
Associates Corp. of North America:
6.94%, 7/3/00 5,330,000 5,327,957
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General Electric Capital Corp.:
6.68%, 8/30/00 5,000,000 4,944,333
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Household International, Inc.:
6.61%, 8/18/00(1) 4,900,000 4,856,815
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National Rural Utilities Cooperative Finance Corp.:
6.18%, 7/18/00 5,000,000 4,985,408
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Textron Financial Corp.:
6.61%, 8/23/00 4,500,000 4,456,209
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24,570,722
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Diversified Media--2.3%
Omnicom Finance, Inc.:
6.67%, 7/26/00(1) 4,500,000 4,479,156
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Electric Utilities--2.1%
Edison International:
6.60%, 7/5/00(1) 4,098,000 4,094,995
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Insurance--14.8%
Aegon Funding Corp.:
6.59%, 9/8/00(1) 2,000,000 1,974,700
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AIG Life Insurance Co.:
6.13%, 5/31/01(2)(3) 3,000,000 3,000,000
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American General Corp.:
6.50%, 7/14/00 5,000,000 4,988,264
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Cooperative Assn. of Tractor Dealers, Inc., Series A:
6.63%, 9/15/00 3,000,000 2,958,010
4 Oppenheimer Money Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Value
Amount Note 1
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Insurance (continued)
Cooperative Assn. of Tractor Dealers, Inc., Series B:
6.67%, 7/25/00 $3,000,000 $ 2,986,660
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Metropolitan Life Insurance Co.:
6.86%, 12/31/22(2) 3,500,000 3,500,000
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Pacific Life Insurance Co.:
6.661%, 2/14/03(2)(3) 4,000,000 4,000,000
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Teachers Insurance & Annuity Assn. of America:
6.62%, 8/1/00(1) 3,000,000 2,982,898
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Travelers Insurance Co.:
6.615%, 9/16/00(2)(3) 2,000,000 2,000,000
------------
28,390,532
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Leasing & Factoring--2.6%
American Honda Finance Corp.:
6.17%, 7/19/00 5,000,000 4,984,575
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Manufacturing--2.3%
Eaton Corp.:
6.70%, 11/8/00(1) 4,500,000 4,391,125
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Publishing--2.6%
Tribune Co.:
6.18%, 7/17/00(1) 5,000,000 4,986,267
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Special Purpose Financial--1.8%
Forrestal Funding Master Trust, Series 2000-A:
6.63%, 7/28/00(4) 3,500,000 3,482,596
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Telecommunications: Technology--5.6%
Alcatel SA:
6.60%, 9/7/00(1) 2,000,000 1,975,067
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GTE Corp.:
6.60%, 7/19/00(1) 2,000,000 1,993,400
6.64%, 7/28/00(1) 1,850,000 1,840,787
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SBC Communications, Inc.:
6.17%, 7/17/00(1) 5,000,000 4,986,289
------------
10,795,543
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Total Short-Term Notes 164,066,174
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Total Investments, at Value 102.4% 196,932,673
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Liabilities in Excess of Other Assets (2.4) (4,528,708)
---------- ------------
Net Assets 100.0% $192,403,965
========== ============
</TABLE>
Short-term notes, direct bank obligations and letters of credit are generally
traded on a discount basis; the interest rate is the discount rate received by
the Fund at the time of purchase. Other securities normally bear interest at the
rates shown.
1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $80,162,704, or 41.66% of the
Fund's net assets, and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.
2. Represents the current interest rate for a variable or increasing rate
security.
3. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or contractual
restrictions on resale. Such securities amount to $13,500,000, or 7.02% of the
Fund's net assets. The Fund may not invest more than 10% of its net assets
(determined at the time of purchase) in illiquid securities.
4. Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended. These securities have been
determined to be liquid under guidelines established by the Board of Trustees.
These securities amount to $3,482,596 or 1.81% of the Fund's net assets as of
June 30, 2000.
See accompanying Notes to Financial Statements.
Oppenheimer Money Fund/VA 5
<PAGE>
Statement of Assets and Liabilities June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
==============================================================================================
Assets
Investments, at value--see accompanying statement $196,932,673
----------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 545,454
Interest 334,345
Other 35,725
------------
Total assets 197,848,197
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Liabilities
Bank overdraft 70,469
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Payables and other liabilities:
Shares of beneficial interest redeemed 4,970,528
Dividends 397,916
Transfer and shareholder servicing agent fees 972
Trustees' compensation 513
Other 3,834
------------
Total liabilities 5,444,232
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Net Assets $192,403,965
============
==============================================================================================
Composition of Net Assets
Paid-in capital $192,418,588
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Accumulated net realized loss on investment transactions (14,623)
------------
Net assets--applicable to 192,418,609 shares of beneficial interest outstanding $192,403,965
============
==============================================================================================
Net Asset Value, Redemption Price and Offering Price Per Share $1.00
</TABLE>
See accompanying Notes to Financial Statements.
6 Oppenheimer Money Fund/VA
<PAGE>
Statement of Operations For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
=========================================================================
<S> <C>
Investment Income
Interest $6,171,973
=========================================================================
Expenses
Management fees 447,236
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Custodian fees and expenses 4,801
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Transfer and shareholder servicing agent fees 1,835
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Trustees' compensation 1,059
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Other 20,004
----------
Total expenses 474,935
Less expenses paid indirectly (4,508)
----------
Net expenses 470,427
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Net Investment Income 5,701,546
=========================================================================
Net Realized Gain on Investments 2,185
=========================================================================
Net Increase in Net Assets Resulting from Operations $5,703,731
==========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Money Fund/VA 7
<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 $ 5,701,546 $ 8,116,875
----------------------------------------------------------------------------------------------
Net realized gain 2,185 1,540
------------ ------------
Net increase in net assets resulting from operations 5,703,731 8,118,415
==============================================================================================
Dividends and/or Distributions to Shareholders (5,701,546) (8,128,189)
==============================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions (8,663,877) 49,276,631
==============================================================================================
Net Assets
Total increase (decrease) (8,661,692) 49,266,857
----------------------------------------------------------------------------------------------
Beginning of period 201,065,657 151,798,800
------------ ------------
End of period $192,403,965 $201,065,657
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Money Fund/VA
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended June 30,
2000 Year Ended December 31,
(Unaudited) 1999 1998 1997 1996 1995
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations--net
investment income and net realized gain .03 .05 .05 .05 .05 .06
Dividends and/or distributions
to shareholders (.03) (.05) (.05) (.05) (.05) (.06)
-------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
=========================================================================================================================
Total Return(1) 3.04% 4.96% 5.25% 5.31% 5.13% 5.62%
=========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $192,404 $201,066 $151,799 $126,782 $129,719 $65,386
-------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $199,842 $166,727 $137,633 $133,707 $ 99,263 $75,136
-------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 5.74% 4.87% 5.12% 5.19% 5.01% 5.52%
Expenses 0.47% 0.48% 0.50%(3) 0.48%(3) 0.49%(3) 0.51%(3)
</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 reflect changes in net investment income only. 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.
Oppenheimer Money Fund/VA 9
<PAGE>
Notes to Financial Statements (Unaudited)
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1. Significant Accounting Policies
Oppenheimer Money 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 maximum current income from investments in
"money market" securities consistent with low capital risk and the maintenance
of liquidity. The Trust's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
--------------------------------------------------------------------------------
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 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.
--------------------------------------------------------------------------------
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. Realized
gains and losses on investments 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>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
------------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 372,522,720 $ 372,522,720 381,258,296 $ 381,258,296
Dividends and/or distributions reinvested 5,760,940 5,760,940 7,983,593 7,983,593
Redeemed (386,947,537) (386,947,537) (339,965,258) (339,965,258)
------------ ------------- ------------ -------------
Net increase (decrease) (8,663,877) $ (8,663,877) 49,276,631 $ 49,276,631
============ ============= ============ =============
</TABLE>
10 Oppenheimer Money Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
3. 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 0.45% of the
first $500 million of average annual net assets, 0.425% of the next $500
million, 0.40% of the next $500 million and 0.375% of average annual net assets
in excess of $1.5 billion. The Fund's management fee for the six months ended
June 30, 2000, was an annualized rate of 0.45%, 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.
Oppenheimer Money Fund/VA 11
<PAGE>
Oppenheimer Money 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
Carol E. Wolf, 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 Money 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.
12 Oppenheimer Money Fund/VA
