N-30D 1 g5298_oppglobalsec.txt SEMIANNUAL REPORT JUNE 30, 2002 -------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA A Series of Oppenheimer Variable Account Funds [LOGO OMITTED] OPPENHEIMERFUNDS[REGISTRATION MARK] The Right Way to Invest OPPENHEIMER GLOBAL SECURITIES FUND/VA ================================================================================ OBJECTIVE OPPENHEIMER GLOBAL SECURITIES FUND/VA, a series of Oppenheimer Variable Account Funds, seeks long-term capital appreciation by investing a substantial portion of assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. ================================================================================ NARRATIVE BY WILLIAM WILBY, PORTFOLIO MANAGER Over the six-month period ended June 30, 2002, the performance of Oppenheimer Global Securities Fund/VA reflected the volatile conditions of the overall global market. We attribute our long-term results to a disciplined investment approach, which focuses on individual companies that we believe stand to profit from one or more key worldwide growth trends. The four themes we've identified are mass affluence, new technology, restructuring and aging populations. Using these themes as a starting point, we then employ rigorous fundamental research to uncover companies with the potential to deliver earnings growth and stock price appreciation in nearly any type of market. During the past six months, the United States' economy slowly emerged from recession, helped along by the U.S. government's aggressive fiscal stimulus policy and the Federal Reserve Board's (the Fed) bias toward keeping interest rates low. Even as we saw signs of recovery, however, the markets remained mixed. Similar trends occurred in Europe, though the Central Bank there stands more prepared to raise interest rates. In addition, the European markets continue to be less volatile than the U.S., perhaps in part because they don't tend to display as much of a cause and effect relationship with otherwise disruptive political events, such as the strong showing of Jean-Marie Le Pen in the first round of France's presidential elections in April 2002. Conditions in Europe also improved thanks to currency stabilization and a rallying of the Euro versus the dollar. The amount of foreign capital coming into the U.S. continued to wane as investors redirected their money toward European companies, which have been showing better earnings, stronger earnings momentum and lower valuations than their U.S. counterparts. Meanwhile, Japan continued its attempts to restructure its ailing banking system. Though the Japanese markets were among the better performing industrial markets during the period, we remain cautious about how successful the government's restructuring efforts will be, and if they are successful, how long the process will take. As always, we remained focused on finding good companies in good businesses at good prices. By good companies, we mean those that, in our view, will benefit from one or more of the growth trends mentioned above. This approach has afforded us, over the past six months, numerous opportunities to purchase what we consider fundamentally sound companies at very reasonable prices. Of course we also pay close attention to the risks posed by individual companies, as well as those associated with investing in foreign securities in general, such as foreign currency fluctuations and higher expenses. 2 OPPENHEIMER GLOBAL SECURITIES FUND/VA Positive contributors to the Fund during this reporting period included German car manufacturer, Porsche AG. Despite a strike by plant workers, the stock performed well, helped in large part by the Euro's rally. Reckitt Benckiser plc, a leading European household products concern, also did well, aided by the fact that even during slower economic times consumers continue to need and purchase products such as theirs. On the other side of the equation, French drug company Sanofi-Synthelabo SA hurt the Fund's performance. In fact, the health care sector underperformed as a whole, hampered by the slower flow of new drugs through company pipelines and the pending expiration of patents for many of their "blockbuster" sellers of the last few years. Nintendo Co. Ltd, based in Japan, lost ground fighting a price war centered around their hardware and game console. The company remains a top holding in the Fund's portfolio because the fundamentals are still solid, and in our opinion, Nintendo's potential for growth lies with its software division. Looking forward, we continue to view the world as one stock market, seeking opportunities that offer our shareholders the best prospects for good performance over time. With valuations still attractive on a global basis and economies showing clear signs of recovery, we remain confident in the stock-by-stock approach of our highly experienced, collaborative management team that makes Oppenheimer Global Securities Fund/VA an important part of THE RIGHT WAY TO INVEST. IN REVIEWING PERFORMANCE, PLEASE REMEMBER THAT PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. BECAUSE OF ONGOING MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS AND CURRENT PERFORMANCE MAY BE LESS THAN THE RESULTS SHOWN. The Fund's portfolio is subject to change. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. 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. 3 OPPENHEIMER GLOBAL SECURITIES FUND/VA STATEMENT OF INVESTMENTS June 30, 2002 / Unaudited MARKET VALUE SHARES SEE NOTE 1 ---------------------------------------------------------------- COMMON STOCKS--97.1% ---------------------------------------------------------------- CONSUMER DISCRETIONARY--20.5% ---------------------------------------------------------------- AUTO COMPONENTS--0.6% Valeo SA(1) 249,764 $ 10,384,678 ---------------------------------------------------------------- AUTOMOBILES--3.0% Porsche AG, Preferred 82,116 39,129,670 Volkswagen AG 370,456 17,854,082 ------------- 56,983,752 ---------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--1.5% International Game Technology 151,600 8,595,720 Six Continents plc 2,006,950 20,389,528 ------------- 28,985,248 ---------------------------------------------------------------- HOUSEHOLD DURABLES--3.8% Koninklijke (Royal) Philips Electronics NV 324,900 9,071,030 Nintendo Co. Ltd. 147,272 21,686,557 Sharp Corp. 1,645,000 20,888,453 Sony Corp. 287,400 15,178,058 Thomson Multimedia SA(1) 283,729 6,711,048 ------------- 73,535,146 ---------------------------------------------------------------- MEDIA--8.6% Grupo Televisa SA, Sponsored GDR(1) 406,299 15,187,457 JC Decaux SA(1) 358,264 4,847,355 Liberty Media Corp., Cl. A(1) 759,500 7,595,000 Pearson plc 1,547,670 15,393,215 Reed Elsevier plc 4,152,982 39,469,985 Singapore Press Holdings Ltd. 1,744,033 19,643,568 Sirius Satellite Radio, Inc.(1) 879,500 3,314,836 Television Broadcasts Ltd. 4,640,832 19,753,285 Wolters Kluwer NV 1,044,649 19,829,185 XM Satellite Radio Holdings, Inc.(1) 1,109,000 8,040,250 Zee Telefilms Ltd. 4,768,900 12,371,225 ------------- 165,445,361 ---------------------------------------------------------------- SPECIALTY RETAIL--3.0% Best Buy Co., Inc.(1) 222,162 8,064,480 Circuit City Stores, Inc./ Circuit City Group 1,118,649 20,974,669 Gap, Inc. (The) 671,800 9,539,560 New Dixons Group plc 3,067,440 8,942,274 RadioShack Corp. 316,900 9,526,014 ------------- 57,046,997 ---------------------------------------------------------------- CONSUMER STAPLES--11.7% ---------------------------------------------------------------- BEVERAGES--2.4% Companhia de Bebidas das Americas, ADR 548,615 8,525,477 Diageo plc 1,425,700 18,515,617 MARKET VALUE SHARES SEE NOTE 1 ---------------------------------------------------------------- Fomento Economico Mexicano SA de CV, UBD 2,757,700 $ 10,803,418 Grupo Modelo SA de CV, Series C 3,708,000 8,724,706 ------------- 46,569,218 ---------------------------------------------------------------- FOOD & DRUG RETAILING--1.0% Boots Co. plc 986,490 9,781,612 Delhaize Group 209,300 9,818,472 ------------- 19,600,084 ---------------------------------------------------------------- FOOD PRODUCTS--2.1% Cadbury Schweppes plc 3,268,685 24,488,774 Koninklijke Numico NV 696,700 15,625,864 ------------- 40,114,638 ---------------------------------------------------------------- HOUSEHOLD PRODUCTS--4.3% Hindustan Lever Ltd.(2) 4,257,900 16,849,467 Reckitt Benckiser plc 3,594,853 64,495,298 ------------- 81,344,765 ---------------------------------------------------------------- PERSONAL PRODUCTS--1.9% Shiseido Co. Ltd. 706,000 9,412,548 Wella AG, Preference, Non-Vtg. 444,882 26,427,833 ------------- 35,840,381 ---------------------------------------------------------------- ENERGY--4.9% ---------------------------------------------------------------- OIL & GAS--4.9% BP plc, ADR 474,869 23,976,136 ChevronTexaco Corp. 230,572 20,405,622 Encana Corp. 343,417 10,544,792 Husky Energy, Inc. 1,629,315 17,847,582 Royal Dutch Petroleum Co., NY Shares 385,260 21,293,320 ------------- 94,067,452 ---------------------------------------------------------------- FINANCIALS--13.9% ---------------------------------------------------------------- BANKS--6.8% Australia & New Zealand Banking Group Ltd. 3,209,443 34,756,361 Bank One Corp. 926,039 35,633,981 ICICI Bank Ltd., Sponsored ADR 1,713,750 11,996,250 Royal Bank of Scotland Group plc (The) 897,727 25,452,338 Wachovia Corp. 586,829 22,405,131 ------------- 130,244,061 ---------------------------------------------------------------- DIVERSIFIED FINANCIALS--4.9% American Express Co. 524,900 19,064,368 Citigroup, Inc. 200,466 7,768,058 Credit Saison Co. Ltd. 646,500 15,345,340 Fannie Mae 529,800 39,072,750 Lehman Brothers Holdings, Inc. 148,800 9,302,976 MBNA Corp. 132,300 4,375,161 ------------- 94,928,653 4 OPPENHEIMER GLOBAL SECURITIES FUND/VA MARKET VALUE SHARES SEE NOTE 1 ---------------------------------------------------------------- INSURANCE--2.2% ACE Ltd. 485,571 $ 15,344,044 Berkshire Hathaway, Inc., Cl. B(1) 7,040 15,727,360 Manulife Financial Corp. 367,013 10,533,314 ------------- 41,604,718 ---------------------------------------------------------------- HEALTH CARE--18.3% ---------------------------------------------------------------- BIOTECHNOLOGY--4.2% Affymetrix, Inc.(1) 250,700 6,014,293 Amgen, Inc.(1) 535,500 22,426,740 Gilead Sciences, Inc.(1) 600,580 19,747,070 Human Genome Sciences, Inc.(1) 361,600 4,845,440 Oxford GlycoSciences plc(1) 426,612 1,739,512 Protein Design Labs, Inc.(1) 50,100 544,086 Qiagen NV(1) 188,993 2,236,061 Wyeth 448,192 22,947,430 ------------- 80,500,632 ---------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--1.3% Amersham plc 533,000 4,712,221 Applera Corp./Applied Biosystems Group 488,500 9,520,865 Essilor International SA 175,000 7,115,411 Smith & Nephew plc 776,000 4,305,599 ------------- 25,654,096 ---------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--4.1% Fresenius AG, Preference 413,671 22,061,240 Laboratory Corp. of America Holdings, Inc.(1) 245,600 11,211,640 Oxford Health Plans, Inc.(1) 173,000 8,037,580 Quest Diagnostics, Inc.(1) 266,400 22,923,720 Quintiles Transnational Corp.(1) 1,071,828 13,387,132 ------------- 77,621,312 ---------------------------------------------------------------- PHARMACEUTICALS--8.7% AstraZeneca plc 215,025 8,902,032 Eisai Co. Ltd. 430,000 11,049,558 Johnson & Johnson 587,780 30,717,383 Novartis AG 475,163 20,895,934 Pfizer, Inc. 514,419 18,004,665 Sanofi-Synthelabo SA 1,104,938 67,220,185 Takeda Chemical Industries Ltd. 233,000 10,225,096 ------------- 167,014,853 ---------------------------------------------------------------- INDUSTRIALS--6.8% ---------------------------------------------------------------- AEROSPACE & DEFENSE--4.1% Bombardier, Inc., Cl. B 2,179,200 18,053,731 Empresa Brasileira de Aeronautica SA (Embraer), ADR 918,334 19,652,348 Raytheon Co. 1,014,300 41,332,725 ------------- 79,038,804 MARKET VALUE SHARES SEE NOTE 1 ---------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--2.7% Amadeus Global Travel Distribution SA 821,601 $ 5,257,957 Rentokil Initial plc 5,579,767 22,708,988 Societe BIC SA 577,669 23,105,489 ------------- 51,072,434 ---------------------------------------------------------------- INFORMATION TECHNOLOGY--15.1% ---------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--2.9% Lucent Technologies, Inc.(1) 3,553,600 5,898,976 QUALCOMM, Inc.(1) 1,223,300 33,628,517 Scientific-Atlanta, Inc. 960,400 15,798,580 ------------- 55,326,073 ---------------------------------------------------------------- COMPUTERS & PERIPHERALS--0.6% International Business Machines Corp. 65,117 4,688,424 Toshiba Corp.(1) 1,647,000 6,705,623 ------------- 11,394,047 ---------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.1% Keyence Corp. 28,700 6,079,534 Kudelski SA(1) 159,800 5,599,389 Kyocera Corp. 114,800 8,380,611 ------------- 20,059,534 ---------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--0.1% SonicWALL, Inc.(1) 385,600 1,935,712 ---------------------------------------------------------------- IT CONSULTING & SERVICES--0.4% Infosys Technologies Ltd. 123,300 8,289,566 ---------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--2.0% Applied Materials, Inc.(1) 221,100 4,205,322 National Semiconductor Corp.(1) 1,066,600 31,112,722 Novellus Systems, Inc.(1) 110,800 3,767,200 ------------- 39,085,244 ---------------------------------------------------------------- SOFTWARE--8.0% Business Objects SA, Sponsored ADR(1) 127,400 3,579,940 Cadence Design Systems, Inc.(1) 4,151,370 66,920,084 Electronic Arts, Inc.(1) 595,969 39,363,752 Sybase, Inc.(1) 1,125,110 11,869,911 Symantec Corp. 224,900 7,387,965 Synopsys, Inc.(1) 375,643 20,588,993 Trend Micro, Inc.(1) 151,500 4,234,315 ------------- 153,944,960 ---------------------------------------------------------------- MATERIALS--2.0% ---------------------------------------------------------------- CHEMICALS--0.9% International Flavors & Fragrances, Inc. 512,130 16,639,104 5 OPPENHEIMER GLOBAL SECURITIES FUND/VA STATEMENT OF INVESTMENTS Unaudited / Continued MARKET VALUE SHARES SEE NOTE 1 ----------------------------------------------------------------- CONSTRUCTION MATERIALS--1.1% Hanson plc 2,949,710 $ 21,064,898 ----------------------------------------------------------------- TELECOMMUNICATION SERVICES--3.0% ----------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.5% BT Group plc(1) 3,898,110 14,973,560 Tele Norte Leste Participacoes SA (Telemar), Preference 1,329,455,753 13,278,234 -------------- 28,251,794 ----------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--1.5% AT&T Corp. 280,500 3,001,350 KDDI Corp. 5,377 16,598,448 Millicom International Cellular SA(1) 605 968 SK Telecom Co. Ltd. 43,540 9,753,974 -------------- 29,354,740 ----------------------------------------------------------------- UTILITIES--0.9% ----------------------------------------------------------------- GAS UTILITIES--0.4% Hong Kong & China Gas Co. Ltd. 6,467,000 8,581,212 ----------------------------------------------------------------- MULTI-UTILITIES--0.5% Suez SA 334,590 8,921,909 -------------- Total Common Stocks (Cost $1,829,155,577) 1,860,446,076 PRINCIPAL AMOUNT ================================================================= REPURCHASE AGREEMENTS--5.7% ----------------------------------------------------------------- Repurchase agreement with PaineWebber, Inc., 1.93%, dated 6/28/02, to be repurchased at $109,164,554 on 7/1/02, collateralized by Federal Home Loan Mortgage Corp., 6%--6.50%, 12/1/27--2/1/32, with a value of $35,477,023 and Federal National Mortgage Assn., 5.50%--6%, 5/1/32, with a value of $76,114,065 (Cost $109,147,000) $109,147,000 109,147,000 ----------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $1,938,302,577) 102.8% 1,969,593,076 ----------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (2.8) (53,850,544) ---------------------------- NET ASSETS 100.0% $1,915,742,532 ============================ FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Identifies issues considered to be illiquid or restricted--See Note 6 of Notes to Financial Statements. DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS: GEOGRAPHICAL DIVERSIFICATION MARKET VALUE PERCENT ------------------------------------------------------------- United States $ 857,021,285 43.5% Great Britain 329,311,587 16.7 Japan 145,784,141 7.4 France 131,886,015 6.7 Germany 105,472,825 5.4 The Netherlands 68,055,460 3.5 Canada 56,979,419 2.9 India 49,506,508 2.5 Brazil 41,456,059 2.1 Australia 34,756,361 1.8 Mexico 34,715,581 1.8 Hong Kong 28,334,497 1.4 Switzerland 26,495,323 1.2 Singapore 19,643,568 1.0 Bermuda 15,344,044 0.8 Belgium 9,818,472 0.5 Korea, Republic of South 9,753,974 0.5 Spain 5,257,957 0.3 ------------------------------ Total $1,969,593,076 100.0% ============================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 6 OPPENHEIMER GLOBAL SECURITIES FUND/VA STATEMENT OF ASSETS AND LIABILITIES Unaudited June 30, 2002
=============================================================================================== ASSETS ----------------------------------------------------------------------------------------------- Investments, at value (cost $1,938,302,577)-- see accompanying statement $1,969,593,076 ----------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 11,874 ----------------------------------------------------------------------------------------------- Receivables and other assets: Interest and dividends 3,352,949 Investments sold 3,193,616 Shares of beneficial interest sold 1,415,198 Other 8,176 --------------- Total assets 1,977,574,889 =============================================================================================== LIABILITIES ----------------------------------------------------------------------------------------------- Bank overdraft 418,733 ----------------------------------------------------------------------------------------------- Payables and other liabilities: Shares of beneficial interest redeemed 51,126,595 Investments purchased 10,144,365 Distribution and service plan fees 16,336 Transfer and shareholder servicing agent fees 2,095 Trustees' compensation 1,275 Other 122,958 --------------- Total liabilities 61,832,357 =============================================================================================== NET ASSETS $1,915,742,532 =============== =============================================================================================== COMPOSITION OF NET ASSETS ----------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 90,792 ----------------------------------------------------------------------------------------------- Additional paid-in capital 2,031,078,979 ----------------------------------------------------------------------------------------------- Undistributed net investment income 9,042,054 ----------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (155,993,015) ----------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 31,523,722 --------------- NET ASSETS $1,915,742,532 =============== =============================================================================================== NET ASSET VALUE PER SHARE ----------------------------------------------------------------------------------------------- Non-Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $1,881,655,671 and 89,171,228 shares of beneficial interest outstanding) $21.10 ----------------------------------------------------------------------------------------------- Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $34,086,861 and 1,620,309 shares of beneficial interest outstanding) $21.04
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 7 OPPENHEIMER GLOBAL SECURITIES FUND/VA STATEMENT OF OPERATIONS Unaudited For the Six Months Ended June 30, 2002 =============================================================================== INVESTMENT INCOME ------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $1,375,113) $ 15,127,581 ------------------------------------------------------------------------------- Interest 1,149,805 -------------- Total investment income 16,277,386 =============================================================================== EXPENSES ------------------------------------------------------------------------------- Management fees $ 6,262,012 ------------------------------------------------------------------------------- Custodian fees and expenses 118,535 ------------------------------------------------------------------------------- Distribution and service plan fees-- Service shares 25,125 ------------------------------------------------------------------------------- Trustees' compensation 21,653 ------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 11,957 ------------------------------------------------------------------------------- Other 11,722 -------------- Total expenses 6,451,004 Less reduction to custodian expenses (1,620) -------------- Net expenses 6,449,384 =============================================================================== NET INVESTMENT INCOME 9,828,002 =============================================================================== REALIZED AND UNREALIZED GAIN (LOSS) ------------------------------------------------------------------------------- Net realized loss on: Investments (74,066,498) Foreign currency transactions (12,186,397) -------------- Net realized loss (86,252,895) ------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (net of foreign capital gains tax of $100,090) (133,666,940) Translation of assets and liabilities denominated in foreign currencies 65,759,803 -------------- Net change (67,907,137) -------------- Net realized and unrealized loss (154,160,032) =============================================================================== NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(144,332,030) ============== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 8 OPPENHEIMER GLOBAL SECURITIES FUND/VA STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, (UNAUDITED) 2001 ======================================================================================= OPERATIONS --------------------------------------------------------------------------------------- Net investment income $ 9,828,002 $ 13,444,980 --------------------------------------------------------------------------------------- Net realized loss (86,252,895) (57,715,516) --------------------------------------------------------------------------------------- Net change in unrealized depreciation (67,907,137) (213,948,491) ------------------------------- Net decrease in net assets resulting from operations (144,332,030) (258,219,027) ======================================================================================= DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS --------------------------------------------------------------------------------------- Dividends from net investment income: Non-Service shares (9,494,638) (13,806,412) Service shares (108,690) (14,765) --------------------------------------------------------------------------------------- Distributions from net realized gain: Non-Service shares -- (255,967,620) Service shares -- (277,910) ======================================================================================= BENEFICIAL INTEREST TRANSACTIONS --------------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Non-Service shares 127,234,980 297,559,831 Service shares 16,085,747 19,680,174 ======================================================================================= NET ASSETS --------------------------------------------------------------------------------------- Total decrease (10,614,631) (211,045,729) --------------------------------------------------------------------------------------- Beginning of period 1,926,357,163 2,137,402,892 ------------------------------- End of period (including undistributed net investment income of $9,042,054 and $8,817,380, respectively) $1,915,742,532 $1,926,357,163 ===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 9 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, NON-SERVICE SHARES (UNAUDITED) 2001 2000 1999 1998 1997 =============================================================================================================================== PER SHARE OPERATING DATA ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $22.84 $30.33 $33.41 $22.07 $21.37 $17.67 ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .11 .17 .27 .14 .24 .25 Net realized and unrealized gain (loss) (1.74) (3.85) 1.82 12.21 2.64 3.68 ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (1.63) (3.68) 2.09 12.35 2.88 3.93 ------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.11) (.19) (.09) (.14) (.46) (.23) Dividends in excess of net investment income -- -- -- (.13) -- -- Distributions from net realized gain -- (3.62) (5.08) (.74) (1.72) -- -------------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.11) (3.81) (5.17) (1.01) (2.18) (.23) ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $21.10 $22.84 $30.33 $33.41 $22.07 $21.37 ====================================================================================== =============================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) (7.18)% (12.04)% 5.09% 58.48% 14.11% 22.42% ------------------------------------------------------------------------------------------------------------------------------- =============================================================================================================================== RATIOS/SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,881,656 $1,905,890 $2,136,420 $1,762,366 $1,135,029 $959,110 ------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,937,943 $1,918,335 $2,116,100 $1,251,190 $1,055,123 $802,389 ------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 1.01% 0.70% 0.83% 0.57% 1.22% 1.51% Expenses 0.66% 0.70% 0.68% 0.69% 0.74%(3) 0.76%(3) ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 15% 39% 50% 64% 81% 67% 1. Assumes an 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 been calculated without adjustment for the reduction to custodian expenses.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 10 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA
SIX MONTHS YEAR ENDED ENDED JUNE 30, 2002 DECEMBER 31, SERVICE SHARES (UNAUDITED) 2001 2000(1) ============================================================================================ PER SHARE OPERATING DATA -------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 22.78 $ 30.30 $ 32.65 -------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .10 .21 .03 Net realized and unrealized loss (1.74) (3.92) (2.38) -------------------------------------------------------------------------------------------- Total from investment operations (1.64) (3.71) (2.35) -------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.10) (.19) -- Distributions from net realized gain -- (3.62) -- ------------------------------------------ Total dividends and/or distributions to shareholders (.10) (3.81) -- -------------------------------------------------------------------------------------------- Net asset value, end of period $21.04 $22.78 $30.30 ========================================== ============================================================================================ TOTAL RETURN, AT NET ASSET VALUE(2) (7.24)% (12.17)% (7.20)% -------------------------------------------------------------------------------------------- ============================================================================================ RATIOS/SUPPLEMENTAL DATA -------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $34,087 $20,467 $983 -------------------------------------------------------------------------------------------- Average net assets (in thousands) $26,765 $ 8,502 $325 -------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 0.88% 0.44% 0.60% Expenses 0.85% 0.85% 0.83% -------------------------------------------------------------------------------------------- Portfolio turnover rate 15% 39% 50% 1. For the period from July 13, 2000 (inception of offering) to December 31, 2000. 2. Assumes an investment on the business day before the first day of the fiscal period (or inception of offering), 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. 3. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 11 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Global Securities 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 long-term capital appreciation by investing a substantial portion of assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. 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. -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. The Fund, along with other affiliated entities managed by OFI, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. 12 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. -------------------------------------------------------------------------------- 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 capital loss carryforwards, if any, to shareholders. As of June 30, 2002, the Fund had available for federal income tax purposes an estimated unused capital loss carryforward of $150,678,318. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. -------------------------------------------------------------------------------- As of December 31, 2001, the Fund had available for federal income tax purposes an unused capital loss carryforward as follows: EXPIRING -------------------------------- 2009 $47,254,011 -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. -------------------------------------------------------------------------------- CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of 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 their 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 net realized gain was recorded by the Fund. -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. 13 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA NOTES TO FINANCIAL STATEMENTS Unaudited / Continued ================================================================================ 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED JUNE 30, 2002 YEAR ENDED DECEMBER 31, 2001 SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- NON-SERVICE SHARES Sold 54,715,237 $ 1,218,999,558 71,467,613 $ 1,685,381,975 Dividends and/or distributions reinvested 405,580 9,494,637 11,900,045 269,774,032 Redeemed (49,409,360) (1,101,259,215) (70,355,513) (1,657,596,176) ------------------------------------------------------------------ Net increase 5,711,457 $ 127,234,980 13,012,145 $ 297,559,831 ================================================================== -------------------------------------------------------------------------------------------------------------------------- SERVICE SHARES Sold 1,335,611 $ 29,652,276 1,048,232 $ 23,626,500 Dividends and/or distributions reinvested 4,652 108,689 12,927 292,675 Redeemed (618,471) (13,675,218) (195,068) (4,239,001) ------------------------------------------------------------------ Net increase 721,792 $ 16,085,747 866,091 $ 19,680,174 ==================================================================
================================================================================ 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, 2002, were $451,639,802 and $274,195,784, 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, 2002 was an annualized rate of 0.64%. -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $19.75 per account fee. Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Fund is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.25% of average net assets of the fund. This undertaking may be amended or withdrawn at any time. 14 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FOR SERVICE SHARES. The Fund has adopted a Distribution and Service Plan for Service shares to pay OppenheimerFunds Distributor, Inc., the Distributor, for distribution-related services for the Fund's Service shares. Under the Plan, payments are made quarterly at an annual rate of up to 0.25% of the average annual net assets of the Service shares of the Fund. ================================================================================ 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 as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of June 30, 2002, the Fund had outstanding foreign currency contracts as ollows: EXPIRATION CONTRACT VALUATION AS OF UNREALIZED CONTRACT DESCRIPTION DATE AMOUNT (000S) JUNE 30, 2002 APPRECIATION -------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Euro [EUR] 7/1/02 6,250EUR $6,172,168 $11,874 ================================================================================ 6. ILLIQUID OR RESTRICTED SECURITIES As of June 30, 2002, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of June 30, 2002 was $16,849,467, which represents 0.88% of the Fund's net assets, all of which is considered restricted. 15 OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA OPPENHEIMER GLOBAL SECURITIES FUND/VA A SERIES OF OPPENHEIMER VARIABLE ACCOUNT FUNDS ================================================================================ TRUSTEES AND OFFICERS James C. Swain, Trustee, CEO and Chairman of the Board John V. Murphy, President and Trustee William L. Armstrong, Trustee Robert G. Avis, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Beverly L. Hamilton, Trustee Robert J. Malone, Trustee F. William Marshall, Jr., Trustee William L. Wilby, Vice President Robert G. Zack, Vice President and Secretary Brian W. Wixted, Treasurer Katherine P. Feld, Assistant Secretary Kathleen T. Ives, Assistant Secretary Denis R. Molleur, Assistant Secretary ================================================================================ INVESTMENT ADVISOR OppenheimerFunds, Inc. ================================================================================ DISTRIBUTOR OppenheimerFunds Distributor, Inc. ================================================================================ TRANSFER AGENT OppenheimerFunds Services ================================================================================ 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. For more complete information on Oppenheimer Global Securities Fund/VA, please refer to the Prospectus. To obtain a copy or for information on how to obtain a separate account prospectus, call OppenheimerFunds, Inc. at 1.800.981.2871. [LOGO OMITTED] OPPENHEIMERFUNDS [REGISTRATION MARK] Distributor, Inc. [COPYRIGHT] Copyright 2002 OppenheimerFunds, Inc. All rights reserved.