Semiannual Report June 30, 2000
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 established companies. The Fund's focus is on securities of large-cap
companies having a market capitalization of $11.5 billion or more with a history
of earnings and dividend growth.
================================================================================
Narrative by Jane Putnam, Portfolio Manager
Oppenheimer Capital Appreciation Fund/VA provided a cumulative total return of
9.42% for the six-month period that ended June 30, 2000.(1)
Equity markets demonstrated considerable strength during January and
February 2000, supported by continued expansion of the U.S. economy, low rates
of inflation, growing evidence of global economic recovery and diminishing fears
of Y2K-related problems. Technology-oriented stocks fared particularly well,
driven by excellent earnings reports from many companies in the sector and
growing demand for semiconductors and communications-related components.
However, as winter drew to a close, the threat of rising inflation took
a toll on market performance. High levels of consumer spending fueled an overall
rate of U.S. economic growth that many observers considered unsustainable.
Although measurable inflation remained low, the Federal Reserve Board raised
interest rates in an effort to slow the pace of economic growth and thereby head
off possible future inflation. The uncertainties associated with these issues
caused prices of many growth-oriented stocks to retreat in late March 2000, and
to remain volatile through the remainder of the reporting period.
Against this backdrop, Oppenheimer Capital Appreciation Fund/VA turned
in a solid performance. The Fund's performance during this period is
particularly notable in view of our sizable holdings in technology-related
stocks.(2) We attribute our performance largely to our timely decisions to
increase or decrease our technology holdings, based on what we perceived to be
the overinflated or undervalued status of specific stocks.
At the beginning of the reporting period, for instance, we cut back on
some technology stocks that we considered to be overvalued. We then selectively
increased our technology holdings within the portfolio, notably in the area of
semiconductor stocks. This strategy contributed substantially to the Fund's
strong performance during this time.
When technology-stock prices plunged in April, we were not immune to
the repercussions, as we had a large proportion of the Fund in this sector;
however, we finished the month relatively well. Also, during this month, we
increased our already large position in Microsoft, which had (unjustifiably, in
our view) dropped considerably in price.
As we move into the second half of 2000, we believe the Fund is well
positioned. We maintain a large position in semiconductor stocks, which we
believe will perform well over the coming months. In contrast to many investors,
who fear continuing erosion of semiconductor prices, we feel that the
semiconductor sector is currently in a long growth cycle that we expect to see
continue through the fall.
Because of ongoing market volatility, the Fund's performance may be subject to
substantial short-term fluctuations and current performance may be less than the
results shown.
1. Includes changes in net asset value per share and does not include the
charges associated with the separate account products which offer this Fund.
Such performance is not annualized and would have been lower if such charges
were taken into account.
2. The Fund's portfolio is subject to change.
2 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Oppenheimer Variable Account Funds--Oppenheimer Capital Appreciation Fund/VA
================================================================================
We believe that investors have become disillusioned with many tech
companies--particularly Internet-based "dot-coms"--that have not yet been able
to develop an economically sound business model. In terms of the overall market,
we believe this is a healthy long-term attitude. Investors have lowered their
previously unrealistic expectations and, as a result, many overinflated tech
stocks have adjusted to more-realistic valuations.
One significant action we've taken recently was to add to certain
consumer-staples stocks during the period. We feel that fundamentals are
improving and that growth is accelerating for this sector, especially regarding
certain beverage stocks.
As growth managers, our job is to pick good companies and keep a
sensitive eye on price. We do this by studying the companies in which we invest.
We see how they operate, how they use their cash flow to benefit shareholders
and how they respond to the people who buy their products. We then use these
factors to evaluate the stock.
The advantage to our shareholders is better than average performance
and--because we're sensitive to valuation--better risk statistics. Both of these
are very good reasons why Oppenheimer Capital Appreciation Fund/VA is part of
The Right Way to Invest.
Oppenheimer Capital Appreciation Fund/VA 3
<PAGE>
Statement of Investments June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Market Value
Shares Note 1
====================================================================================================================
<S> <C> <C>
Common Stocks--86.6%
--------------------------------------------------------------------------------------------------------------------
Basic Materials--0.7%
--------------------------------------------------------------------------------------------------------------------
Chemicals--0.5%
Lafarge Corp. 120,000 $ 2,520,000
--------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc. 110,000 4,874,375
--------------------------------------------------------------------------------------------------------------------
Union Carbide Corp. 50,000 2,475,000
-----------
9,869,375
--------------------------------------------------------------------------------------------------------------------
Metals--0.1%
Alcoa, Inc. 70,000 2,030,000
--------------------------------------------------------------------------------------------------------------------
Paper--0.1%
Boise Cascade Corp. 40,000 1,035,000
--------------------------------------------------------------------------------------------------------------------
Capital Goods--3.9%
--------------------------------------------------------------------------------------------------------------------
Electrical Equipment--0.9%
Vishay Intertechnology, Inc.(1) 450,000 17,071,875
--------------------------------------------------------------------------------------------------------------------
Industrial Services--0.6%
Coflexip SA, Sponsored ADR 49,200 2,976,600
--------------------------------------------------------------------------------------------------------------------
Republic Services, Inc.(1) 150,000 2,400,000
--------------------------------------------------------------------------------------------------------------------
Waste Management, Inc. 370,000 7,030,000
-----------
12,406,600
--------------------------------------------------------------------------------------------------------------------
Manufacturing--2.4%
Corning, Inc. 60,000 16,192,500
--------------------------------------------------------------------------------------------------------------------
Dover Corp. 200,000 8,112,500
--------------------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 120,000 4,042,500
--------------------------------------------------------------------------------------------------------------------
Pentair, Inc. 100,000 3,550,000
--------------------------------------------------------------------------------------------------------------------
Tyco International Ltd. 70,000 3,316,250
--------------------------------------------------------------------------------------------------------------------
United Technologies Corp. 99,000 5,828,625
--------------------------------------------------------------------------------------------------------------------
Veeco Instruments, Inc.(1) 100,000 7,325,000
-----------
48,367,375
--------------------------------------------------------------------------------------------------------------------
Communication Services--3.9%
--------------------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--1.0%
AT&T Corp. 130,000 4,111,250
--------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(1) 70,000 2,082,500
--------------------------------------------------------------------------------------------------------------------
WorldCom, Inc.(1) 320,000 14,680,000
-----------
20,873,750
--------------------------------------------------------------------------------------------------------------------
Telecommunications: Wireless--2.9%
Amdocs Ltd.(1) 99,400 7,628,950
--------------------------------------------------------------------------------------------------------------------
AT&T Wireless Group(1) 140,600 3,919,225
--------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A(1) 160,000 9,790,000
--------------------------------------------------------------------------------------------------------------------
Vodafone Group plc, Sponsored ADR 730,000 30,249,375
--------------------------------------------------------------------------------------------------------------------
Williams Communications Group, Inc.(1) 200,000 6,637,500
-----------
58,225,050
4 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
--------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--10.0%
--------------------------------------------------------------------------------------------------------------------
Autos & Housing--1.8%
Centex Corp. 175,000 $ 4,112,500
--------------------------------------------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 126,050 3,025,200
--------------------------------------------------------------------------------------------------------------------
Ford Motor Co. 320,000 13,760,000
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Gentex Corp.(1) 230,000 5,778,750
--------------------------------------------------------------------------------------------------------------------
Southdown, Inc. 50,000 2,887,500
--------------------------------------------------------------------------------------------------------------------
USG Corp. 176,000 5,346,000
--------------------------------------------------------------------------------------------------------------------
Visteon Corp.(1) 41,898 508,013
-----------
35,417,963
--------------------------------------------------------------------------------------------------------------------
Consumer Services--1.2%
Omnicom Group, Inc. 180,000 16,031,250
--------------------------------------------------------------------------------------------------------------------
Young & Rubicam, Inc. 120,000 6,862,500
-----------
22,893,750
--------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--1.1%
Carnival Corp. 670,000 13,065,000
--------------------------------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 180,000 6,930,000
--------------------------------------------------------------------------------------------------------------------
Hasbro, Inc. 90,000 1,355,625
-----------
21,350,625
--------------------------------------------------------------------------------------------------------------------
Media--3.7%
News Corp. Ltd. (The), Sponsored ADR 570,000 31,065,000
--------------------------------------------------------------------------------------------------------------------
Time Warner, Inc. 560,000 42,560,000
-----------
73,625,000
--------------------------------------------------------------------------------------------------------------------
Retail: Specialty--2.0%
Abercrombie & Fitch Co., Cl. A(1) 310,000 3,778,125
--------------------------------------------------------------------------------------------------------------------
CSK Auto Corp.(1) 42,800 323,675
--------------------------------------------------------------------------------------------------------------------
Gap, Inc. 600,000 18,750,000
--------------------------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 250,000 9,953,125
--------------------------------------------------------------------------------------------------------------------
Zale Corp.(1) 180,000 6,570,000
-----------
39,374,925
--------------------------------------------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--0.2%
Too, Inc.(1) 140,000 3,561,250
--------------------------------------------------------------------------------------------------------------------
Consumer Staples--12.2%
--------------------------------------------------------------------------------------------------------------------
Beverages--2.3%
Adolph Coors Co., Cl. B 140,000 8,470,000
--------------------------------------------------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 130,000 9,709,375
--------------------------------------------------------------------------------------------------------------------
PepsiCo, Inc. 300,000 13,331,250
--------------------------------------------------------------------------------------------------------------------
Seagram Co. Ltd. (The) 260,000 15,080,000
-----------
46,590,625
Oppenheimer Capital Appreciation Fund/VA 5
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
--------------------------------------------------------------------------------------------------------------------
Broadcasting--5.2%
AMFM, Inc.(1) 270,000 $ 18,630,000
--------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., Cl. A(1) 150,000 10,181,250
--------------------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special(1) 790,000 31,995,000
--------------------------------------------------------------------------------------------------------------------
Fox Entertainment Group, Inc., A Shares(1) 180,000 5,467,500
--------------------------------------------------------------------------------------------------------------------
Hispanic Broadcasting Corp.(1) 205,000 6,790,625
--------------------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., Cl. A(1) 600,000 21,862,500
--------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., Cl. B(1) 276,300 7,822,626
------------
102,749,501
--------------------------------------------------------------------------------------------------------------------
Entertainment--2.1%
Royal Caribbean Cruises Ltd. 850,000 15,725,000
--------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1) 54,200 2,455,937
--------------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B(1) 340,000 23,183,750
------------
41,364,687
--------------------------------------------------------------------------------------------------------------------
Food--0.5%
IBP, Inc. 50,000 771,875
--------------------------------------------------------------------------------------------------------------------
Keebler Foods Co. 150,000 5,568,750
--------------------------------------------------------------------------------------------------------------------
Nabisco Holdings Corp., Cl. A 70,000 3,675,000
------------
10,015,625
--------------------------------------------------------------------------------------------------------------------
Food & Drug Retailers--1.4%
CVS Corp. 320,000 12,800,000
--------------------------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 355,000 16,019,375
------------
28,819,375
--------------------------------------------------------------------------------------------------------------------
Household Goods--0.7%
Avon Products, Inc. 310,000 13,795,000
--------------------------------------------------------------------------------------------------------------------
Energy--5.4%
--------------------------------------------------------------------------------------------------------------------
Energy Services--2.4%
Coastal Corp. 280,000 17,045,000
--------------------------------------------------------------------------------------------------------------------
ENSCO International, Inc. 35,000 1,253,437
--------------------------------------------------------------------------------------------------------------------
Halliburton Co. 230,000 10,853,125
--------------------------------------------------------------------------------------------------------------------
Nabors Industries, Inc.(1) 125,000 5,195,312
--------------------------------------------------------------------------------------------------------------------
Schlumberger Ltd. 100,000 7,462,500
--------------------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc. 95,000 5,076,562
------------
46,885,936
--------------------------------------------------------------------------------------------------------------------
Oil: Domestic--2.0%
Amerada Hess Corp. 180,000 11,115,000
--------------------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 290,000 22,765,000
--------------------------------------------------------------------------------------------------------------------
Forest Oil Corp.(1) 145,000 2,310,938
--------------------------------------------------------------------------------------------------------------------
Tosco Corp. 140,000 3,963,750
------------
40,154,688
--------------------------------------------------------------------------------------------------------------------
Oil: International--1.0%
Total Fina Elf SA, Sponsored ADR 220,000 16,898,750
--------------------------------------------------------------------------------------------------------------------
Varco International, Inc.(1) 150,000 3,487,500
--------------------------------------------------------------------------------------------------------------------
20,386,250
6 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
--------------------------------------------------------------------------------------------------------------------
Financial--7.8%
--------------------------------------------------------------------------------------------------------------------
Banks--1.8%
Bank of America Corp. 190,000 $ 8,170,000
--------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 450,000 20,728,125
--------------------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp. 200,000 6,800,000
-----------
35,698,125
--------------------------------------------------------------------------------------------------------------------
Diversified Financial--4.3%
Associates First Capital Corp., Cl. A 400,000 8,925,000
--------------------------------------------------------------------------------------------------------------------
C.I.T. Group, Inc., Cl. A 240,000 3,900,000
--------------------------------------------------------------------------------------------------------------------
Citigroup, Inc. 400,000 24,100,000
--------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 125,000 14,375,000
--------------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 270,000 22,477,500
--------------------------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 70,000 2,975,000
--------------------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. 232,500 7,817,813
-----------
84,570,313
--------------------------------------------------------------------------------------------------------------------
Insurance--1.1%
American International Group, Inc. 47,500 5,581,250
--------------------------------------------------------------------------------------------------------------------
AXA Financial, Inc. 420,000 14,280,000
--------------------------------------------------------------------------------------------------------------------
Everest Re Group Ltd. 80,000 2,630,000
-----------
22,491,250
--------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--0.6%
Boston Properties, Inc. 250,000 9,656,250
--------------------------------------------------------------------------------------------------------------------
Equity Office Properties Trust 90,000 2,480,625
-----------
12,136,875
--------------------------------------------------------------------------------------------------------------------
Healthcare--5.7%
--------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.7%
Amgen, Inc.(1) 270,000 18,967,500
--------------------------------------------------------------------------------------------------------------------
Elan Corp. plc, ADR(1) 360,000 17,437,500
--------------------------------------------------------------------------------------------------------------------
Forest Laboratories, Inc.(1) 59,000 5,959,000
--------------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 722,500 34,680,000
--------------------------------------------------------------------------------------------------------------------
Pharmacia Corp. 330,000 17,056,875
-----------
94,100,875
--------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.0%
Baxter International, Inc. 100,000 7,031,250
--------------------------------------------------------------------------------------------------------------------
Becton, Dickinson & Co. 240,000 6,885,000
--------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 140,000 6,973,750
-----------
20,890,000
--------------------------------------------------------------------------------------------------------------------
Technology--34.0%
--------------------------------------------------------------------------------------------------------------------
Computer Hardware--2.7%
Compaq Computer Corp. 210,000 5,368,125
--------------------------------------------------------------------------------------------------------------------
Dell Computer Corp.(1) 120,000 5,917,500
--------------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 80,000 9,990,000
--------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc.(1) 157,300 12,662,650
--------------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 360,000 19,800,000
--------------------------------------------------------------------------------------------------------------------
53,738,275
Oppenheimer Capital Appreciation Fund/VA 7
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
--------------------------------------------------------------------------------------------------------------------
Computer Services--0.1%
CGI Group, Inc.(1) 141,400 $ 1,154,714
--------------------------------------------------------------------------------------------------------------------
Computer Software--8.0%
America Online, Inc.(1) 255,000 13,451,250
--------------------------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 480,000 17,512,500
--------------------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 710,000 56,800,000
--------------------------------------------------------------------------------------------------------------------
Novell, Inc.(1) 700,000 6,475,000
--------------------------------------------------------------------------------------------------------------------
Oracle Corp.(1) 357,000 30,010,313
--------------------------------------------------------------------------------------------------------------------
StorageNetworks, Inc.(1) 14,200 1,281,550
--------------------------------------------------------------------------------------------------------------------
Sybase, Inc.(1) 230,000 5,290,000
--------------------------------------------------------------------------------------------------------------------
Symantec Corp.(1) 40,000 2,157,500
--------------------------------------------------------------------------------------------------------------------
Veritas Software Corp.(1) 135,000 15,257,109
--------------------------------------------------------------------------------------------------------------------
Yahoo!, Inc.(1) 80,000 9,910,000
------------
158,145,222
--------------------------------------------------------------------------------------------------------------------
Communications Equipment--10.6%
ADC Telecommunications, Inc.(1) 45,000 3,774,375
--------------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc. 910,000 57,841,875
--------------------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc. 420,000 24,885,000
--------------------------------------------------------------------------------------------------------------------
Nokia Corp., A Shares, Sponsored ADR 1,600,000 79,900,000
--------------------------------------------------------------------------------------------------------------------
Nortel Networks Corp. 520,000 35,490,000
--------------------------------------------------------------------------------------------------------------------
Tellabs, Inc.(1) 122,000 8,349,375
------------
210,240,625
--------------------------------------------------------------------------------------------------------------------
Electronics--12.6%
Analog Devices, Inc.(1) 150,000 11,400,000
--------------------------------------------------------------------------------------------------------------------
Applied Materials, Inc.(1) 59,708 5,411,038
--------------------------------------------------------------------------------------------------------------------
Atmel Corp.(1) 520,000 19,175,000
--------------------------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 230,000 9,717,500
--------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd.(1) 295,000 20,262,813
--------------------------------------------------------------------------------------------------------------------
International Rectifier Corp.(1) 200,000 11,200,000
--------------------------------------------------------------------------------------------------------------------
Micron Technology, Inc.(1) 180,000 15,851,250
--------------------------------------------------------------------------------------------------------------------
MMC Networks, Inc.(1) 30,000 1,603,125
--------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp.(1) 310,000 17,592,500
--------------------------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 160,000 9,050,000
--------------------------------------------------------------------------------------------------------------------
RF Micro Devices, Inc.(1) 200,000 17,525,000
--------------------------------------------------------------------------------------------------------------------
Sanmina Corp.(1) 520,000 44,460,000
--------------------------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 300,000 20,606,250
--------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 320,000 23,540,000
--------------------------------------------------------------------------------------------------------------------
Waters Corp.(1) 180,000 22,466,250
------------
249,860,726
--------------------------------------------------------------------------------------------------------------------
Transportation--1.5%
--------------------------------------------------------------------------------------------------------------------
Railroads & Truckers--1.2%
Canadian Pacific Ltd. 400,000 10,475,000
--------------------------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc. 160,000 14,190,000
------------
24,665,000
8 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
--------------------------------------------------------------------------------------------------------------------
Shipping--0.3%
FedEx Corp.(1) 160,000 $ 6,080,000
--------------------------------------------------------------------------------------------------------------------
Utilities--1.5%
--------------------------------------------------------------------------------------------------------------------
Electric Utilities--1.0%
Calpine Corp.(1) 229,400 15,083,050
--------------------------------------------------------------------------------------------------------------------
Potomac Electric Power Co. 180,000 4,500,000
--------------
19,583,050
--------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.5%
Williams Cos., Inc. (The) 260,000 10,838,750
--------------
Total Common Stocks (Cost $1,244,004,549) 1,721,058,025
Principal
Amount
====================================================================================================================
U.S. Government Obligations--0.5%
--------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 6.375%, 4/30/02 (Cost $9,928,196) $ 10,000,000 9,990,630
====================================================================================================================
Repurchase Agreements--13.1%
--------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 6.55%,
dated 6/30/00, to be repurchased at $260,496,110 on 7/3/00, collateralized
by U.S. Treasury Nts., 5%-7.50%, 8/31/00-5/15/08, with a value of $196,400,167
and U.S. Treasury Bonds, 5.25%-12%, 8/15/03-11/15/28, with a value of $69,379,306
(Cost $260,354,000) 260,354,000 260,354,000
--------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,514,286,745) 100.2% 1,991,402,655
--------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.2) (3,297,821)
------------ --------------
Net Assets 100.0% $1,988,104,834
============ ==============
</TABLE>
1. Non-income-producing security.
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 9
<PAGE>
Statement of Assets and Liabilities June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
===================================================================================================
Assets
Investments, at value (including repurchase agreement of $260,354,000)
(cost $1,514,286,745)--see accompanying statement $1,991,402,655
---------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 5,835,947
Shares of beneficial interest sold 2,117,181
Interest and dividends 1,096,470
Other 7,336
--------------
Total assets 2,000,459,589
===================================================================================================
Liabilities
Bank overdraft 134
---------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 9,645,227
Shares of beneficial interest redeemed 2,550,842
Trustees' compensation 1,139
Transfer and shareholder servicing agent fees 370
Other 157,043
--------------
Total liabilities 12,354,755
===================================================================================================
Net Assets $1,988,104,834
==============
===================================================================================================
Composition of Net Assets
Paid-in capital $1,373,954,976
---------------------------------------------------------------------------------------------------
Undistributed net investment income 4,192,548
---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 132,841,400
---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 477,115,910
--------------
Net assets--applicable to 38,878,387 shares of beneficial interest outstanding $1,988,104,834
==============
===================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $51.14
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Statement of Operations For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
===========================================================================================
Investment Income
Interest $ 5,409,885
-------------------------------------------------------------------------------------------
Dividends 4,577,085
------------
Total income 9,986,970
===========================================================================================
Expenses
Management fees 5,607,663
-------------------------------------------------------------------------------------------
Custodian fees and expenses 18,595
-------------------------------------------------------------------------------------------
Trustees' compensation 1,905
-------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 1,234
-------------------------------------------------------------------------------------------
Other 151,742
------------
Total expenses 5,781,139
Less expenses paid indirectly (7,077)
------------
Net expenses 5,774,062
===========================================================================================
Net Investment Income 4,212,908
===========================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 135,352,875
Foreign currency transactions (4,321)
------------
Net realized gain 135,348,554
-------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 10,505,309
Translation of assets and liabilities denominated in foreign currencies (199,970)
------------
Net change 10,305,339
------------
Net realized and unrealized gain 145,653,893
===========================================================================================
Net Increase in Net Assets Resulting from Operations $149,866,801
============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 11
<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 $ 4,212,908 $ 2,061,298
---------------------------------------------------------------------------------------------------------------
Net realized gain 135,348,554 108,725,542
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 10,305,339 275,627,173
-------------- --------------
Net increase in net assets resulting from operations 149,866,801 386,414,013
===============================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (2,077,067) (2,974,252)
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (110,842,476) (32,671,363)
===============================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 525,960,160 305,879,322
===============================================================================================================
Net Assets
Total increase 562,907,418 656,647,720
---------------------------------------------------------------------------------------------------------------
Beginning of period 1,425,197,416 768,549,696
-------------- --------------
End of period (including undistributed net investment
income of $4,192,548 and $2,056,707, respectively) $1,988,104,834 $1,425,197,416
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
2000 (Unaudited) 1999 1998 1997 1996 1995
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $49.84 $36.67 $32.44 $27.24 $23.55 $17.68
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .10 .06 .13 .25 .15 .25
Net realized and unrealized gain 4.70 14.68 7.28 6.62 5.46 6.10
--------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 4.80 14.74 7.41 6.87 5.61 6.35
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.06) (.13) (.24) (.15) (.25) (.22)
Distributions from net realized gain (3.44) (1.44) (2.94) (1.52) (1.67) (.26)
--------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (3.50) (1.57) (3.18) (1.67) (1.92) (.48)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $51.14 $49.84 $36.67 $32.44 $27.24 $23.55
====== ====== ====== ====== ====== ======
==========================================================================================================================
Total Return, at Net Asset Value(1) 9.42% 41.66% 24.00% 26.68% 25.20% 36.65%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,988 $1,425 $769 $494 $286 $118
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,743 $1,003 $609 $390 $152 $ 89
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.49% 0.21% 0.50% 1.02% 1.08% 1.46%
Expenses 0.67% 0.70% 0.75%(3) 0.75%(3) 0.81%(3)(4) 0.79%(3)
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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 of 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.
See accompanying Notes to Financial Statements.
Oppenheimer Capital Appreciation Fund/VA 13
<PAGE>
Notes to Financial Statements (Unaudited)
================================================================================
1. Significant Accounting Policies
Oppenheimer Capital Appreciation 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 capital appreciation by
investing in securities of well-known established companies. The Trust's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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 dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from its ultimate characterization for federal income
tax purposes. Also, due to timing of dividends and distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.
--------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
14 Oppenheimer Capital Appreciation Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant Accounting Policies (continued)
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>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
---------------------------------- -------------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 11,774,028 $ 597,502,317 13,631,886 $ 546,735,927
Dividends and/or distributions reinvested 2,140,655 112,919,543 958,989 35,645,615
Redeemed (3,629,291) (184,461,700) (6,954,081) (276,502,220)
---------- ------------- ---------- -------------
Net increase 10,285,392 $ 525,960,160 7,636,794 $ 305,879,322
========== ============= ========== =============
</TABLE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended June 30, 2000, were
$630,913,854 and $358,656,109, respectively.
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. The annual fees are 0.75% of the
first $200 million of average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million and 0.60% of
average annual net assets over $800 million. The Fund's management fee for the
six months ended June 30, 2000 was an annualized rate of 0.65%, before any
waiver by the Manager.
--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
Oppenheimer Capital Appreciation Fund/VA 15
<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, 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
Jane Putnam, 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 Capital Appreciation 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.
16 Oppenheimer Capital Appreciation Fund/VA
