-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vzk0Us9hba+EbnQ6VHH0hRQDJ7LbZQJne8J7PcUFaMUDeyOX6aVKXzzXlG3lylSv lqyvDr5BTeEDE9fXPgIqHg== 0001086144-99-000045.txt : 19990820 0001086144-99-000045.hdr.sgml : 19990820 ACCESSION NUMBER: 0001086144-99-000045 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990819 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER VARIABLE ACCOUNT FUNDS CENTRAL INDEX KEY: 0000752737 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 840974272 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04108 FILM NUMBER: 99695739 BUSINESS ADDRESS: STREET 1: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 2: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER VARIABLE LIFE FUNDS DATE OF NAME CHANGE: 19860609 N-30D 1 SEMIANNUAL REPORT ------------------------------- Semiannual Report June 30, 1999 ------------------------------- O P P E N H E I M E R Small Cap Growth Fund/VA A Series of Oppenheimer Variable Account Funds [graphic of telescope] [OppenheimerFunds logo] OppenheimerFunds(R) THE RIGHT WAY TO INVEST - -------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- ================================================================================ Objective Oppenheimer Small Cap Growth Fund/VA, a series of Oppenheimer Variable Account Funds, seeks capital appreciation. In seeking its objective, the Fund emphasizes investments in securities of growth-type companies with market capitalizations less than $1 billion. ================================================================================ Narrative by Jay Tracey, Co-Portfolio Manager(1) The six-month period that ended June 30, 1999, may best be characterized as difficult for small-cap stocks, which underperformed most major stock averages. During the second quarter of 1999, small-cap stocks staged something of a rebound, led by economically-sensitive stocks, known as cyclicals. While small-cap growth stocks did not participate, signs of improvement have recently begun to emerge. However, the small-cap market underperformed in the first quarter of 1999, and therefore, the Fund's six-month performance was disappointing. The Fund's cumulative total return for the six-month period was - -3.02%.(2) During the first half of the year, investors maintained their preference for higher quality, more actively traded large-cap stocks, as they have for several years. One of the reasons is that, on average, earnings growth for small-cap stocks has lagged that of large caps. This was particularly true over the past two quarters. Among small caps, cyclicals outperformed growth stocks, especially in April, as economic growth appeared to accelerate and some commodities, notably oil, strengthened considerably. The strongest sectors in the small-cap market over the past six months were cyclicals: energy, capital goods and transportation. Because the objective of the Fund is to invest primarily in growth companies whose earnings are not necessarily tied to the economy, the Fund's exposure to cyclical sectors was low. Conversely, the most important market sectors for the Fund--technology, consumer cyclicals and healthcare--were weak performers during the first half of 1999. Healthcare stocks, in particular, suffered from the possibility of adverse Medicare reimbursement reform. Software stocks were hurt by Y2K matters. And, in the consumer area, education stocks were negatively affected by concerns regarding the ability of specialty schools to maintain the current level of enrollment growth. In our opinion, small-cap stocks in general, and small-cap growth stocks in particular, are now more attractively valued relative to large-cap stocks than they have been in over a decade. While there is no way to predict when--or even if--small caps will begin to outperform large caps for a sustained period of time, we believe compelling opportunities are available in well-managed small companies. The current situation fits well with our strategy of identifying emerging growth companies with the leadership characteristics and potential to become the established growth companies of the future. We will continue to invest the Fund's portfolio on a disciplined stock-by-stock basis, focusing on strong fundamentals and healthy growth prospects. This, we believe, is what makes Oppenheimer Small Cap Growth Fund/VA part of The Right Way to Invest. Because the stock market can be volatile, the Fund's performance may be subject to substantial short-term changes. For updates on the Fund's performance, please contact your financial advisor, call us at 1-800-525-7048 or visit our website, www.oppenheimerfunds.com. 1. Effective 8/30/99, Jay Tracey will become the sole portfolio manager of the Fund. 2. 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 Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- Statement of Investments June 30, 1999 (Unaudited) - --------------------------------------------------------------------------------
Market Value Shares Note 1 ================================================================================ Common Stocks--77.2% ================================================================================ Capital Goods--7.4% - -------------------------------------------------------------------------------- Industrial Services--6.2% Casella Waste Systems, Inc., Cl. A(1) 800 $ 20,800 - -------------------------------------------------------------------------------- Group Maintenance America Corp.(1) 1,000 12,937 - -------------------------------------------------------------------------------- Kendle International, Inc.(1) 800 12,800 - -------------------------------------------------------------------------------- Maximus, Inc.(1) 1,300 37,375 - -------------------------------------------------------------------------------- Metzler Group, Inc.(1) 900 24,862 - -------------------------------------------------------------------------------- Tetra Tech, Inc.(1) 1,875 30,937 -------- 139,711 - -------------------------------------------------------------------------------- Manufacturing--1.2% SLI, Inc. 1,000 27,000 ================================================================================ Communication Services--0.8% - -------------------------------------------------------------------------------- Telecommunications: Long Distance--0.8% Inet Technologies, Inc.(1) 500 12,000 - -------------------------------------------------------------------------------- Latitude Communications, Inc.(1) 500 6,500 -------- 18,500 ================================================================================ Consumer Cyclicals--19.0% - -------------------------------------------------------------------------------- Autos & Housing--3.5% Fairfield Communities, Inc.(1) 5,000 80,625 - -------------------------------------------------------------------------------- Consumer Services--6.2% Core Laboratories NV(1) 800 11,150 - -------------------------------------------------------------------------------- Cornell Corrections, Inc.(1) 2,200 36,162 - -------------------------------------------------------------------------------- Getty Images, Inc.(1) 1,900 35,862 - -------------------------------------------------------------------------------- Rent-A-Center, Inc.(1) 1,100 26,400 - -------------------------------------------------------------------------------- Rent-Way, Inc.(1) 1,300 32,012 -------- 141,586 - -------------------------------------------------------------------------------- Leisure & Entertainment--2.3% Action Performance Cos., Inc.(1) 700 23,100 - -------------------------------------------------------------------------------- Handleman Co.(1) 2,500 29,531 -------- 52,631 - -------------------------------------------------------------------------------- Media--1.0% Penton Media, Inc. 900 21,825 - -------------------------------------------------------------------------------- Retail: Specialty--5.3% Chico's Fas, Inc.(1) 300 7,050 - -------------------------------------------------------------------------------- David's Bridal, Inc.(1) 1,900 29,569 - -------------------------------------------------------------------------------- O'Reilly Automotive, Inc.(1) 600 30,225 - -------------------------------------------------------------------------------- Pantry, Inc. (The)(1) 1,300 20,962 - -------------------------------------------------------------------------------- School Specialty, Inc.(1) 2,000 32,125 -------- 119,931 - -------------------------------------------------------------------------------- Textile/Apparel & Home Furnishings--0.7% Cutter & Buck, Inc.(1) 1,000 16,875
Oppenheimer Small Cap Growth Fund/VA 3 - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Market Value Shares Note 1 ================================================================================ Consumer Staples--7.5% - -------------------------------------------------------------------------------- Education--5.8% Career Education Corp.(1) 900 $ 30,431 - -------------------------------------------------------------------------------- Education Management Corp.(1) 1,900 39,425 - -------------------------------------------------------------------------------- ITT Educational Services, Inc.(1) 1,000 26,062 - -------------------------------------------------------------------------------- Strayer Education, Inc. 1,200 36,825 -------- 132,743 - -------------------------------------------------------------------------------- Entertainment--1.7% Cinar Films, Inc., Cl. B(1) 1,400 34,300 - -------------------------------------------------------------------------------- Rubio's Restaurants, Inc.(1) 300 4,631 -------- 38,931 ================================================================================ Financial--9.8% - -------------------------------------------------------------------------------- Banks--2.8% Investors Financial Services Corp. 1,600 64,000 - -------------------------------------------------------------------------------- Diversified Financial--1.6% First Sierra Financial, Inc.(1) 900 22,500 - -------------------------------------------------------------------------------- Resource America, Inc., Cl. A 900 13,050 -------- 35,550 - -------------------------------------------------------------------------------- Insurance--5.4% Advance Paradigm, Inc.(1) 800 48,800 - -------------------------------------------------------------------------------- Annuity & Life RE Holdings Ltd. 1,400 31,413 - -------------------------------------------------------------------------------- Medical Assurance, Inc. 1,500 42,375 -------- 122,588 ================================================================================ Healthcare--7.0% - -------------------------------------------------------------------------------- Healthcare/Drugs--1.5% Serologicals Corp.(1) 1,900 15,438 - -------------------------------------------------------------------------------- Ventana Medical Systems, Inc.(1) 1,000 19,125 -------- 34,563 - -------------------------------------------------------------------------------- Healthcare/Supplies & Services--5.5% - -------------------------------------------------------------------------------- Hanger Orthopedic Group, Inc.(1) 1,600 22,700 - -------------------------------------------------------------------------------- Pharmaceutical Product Development, Inc.(1) 800 21,900 - -------------------------------------------------------------------------------- Renal Care Group, Inc.(1) 1,000 25,875 - -------------------------------------------------------------------------------- Sabratek Corp.(1) 2,500 54,688 -------- 125,163 ================================================================================ Technology--25.7% - -------------------------------------------------------------------------------- Computer Hardware--1.5% Network Appliance, Inc.(1) 400 22,350 - -------------------------------------------------------------------------------- Redback Networks, Inc.(1) 100 12,556 -------- 34,906 - -------------------------------------------------------------------------------- Computer Services--10.1% @plan, Inc.(1) 700 10,500 - -------------------------------------------------------------------------------- Ariba, Inc.(1) 100 9,725 - -------------------------------------------------------------------------------- BackWeb Technologies Ltd.(1) 400 10,950 - -------------------------------------------------------------------------------- CAIS Internet, Inc.(1) 500 9,188
4 Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- Statement of Investments (Unaudited) (Continued) - --------------------------------------------------------------------------------
Market Value Shares Note 1 - -------------------------------------------------------------------------------- Computer Services (continued) E-LOAN, Inc.(1) 300 $ 11,569 - -------------------------------------------------------------------------------- GoTo.com, Inc.(1) 200 5,600 - -------------------------------------------------------------------------------- internet.com LLC(1) 100 1,256 - -------------------------------------------------------------------------------- Mail.com, Inc.(1) 700 13,169 - -------------------------------------------------------------------------------- Mpath Interactive, Inc.(1) 1,000 22,000 - -------------------------------------------------------------------------------- OneSource Information Services, Inc.(1) 600 5,250 - -------------------------------------------------------------------------------- Online Resources & Communications Corp.(1) 600 8,138 - -------------------------------------------------------------------------------- Ramp Networks, Inc.(1) 400 5,725 - -------------------------------------------------------------------------------- ShowCase Corp.(1) 1,000 8,625 - -------------------------------------------------------------------------------- Stamps.com, Inc.(1) 600 10,500 - -------------------------------------------------------------------------------- StarMedia Network, Inc.(1) 100 6,413 - -------------------------------------------------------------------------------- Student Advantage, Inc.(1) 1,100 10,450 - -------------------------------------------------------------------------------- Viant Corp.(1) 300 10,500 - -------------------------------------------------------------------------------- WebTrends Corp.(1) 1,500 69,188 ---------- 228,746 - -------------------------------------------------------------------------------- Computer Software--12.4% Advent Software, Inc.(1) 500 33,500 - -------------------------------------------------------------------------------- Aware, Inc.(1) 200 9,225 - -------------------------------------------------------------------------------- Concord Communications, Inc.(1) 500 22,500 - -------------------------------------------------------------------------------- CyberSource Corp.(1) 800 11,800 - -------------------------------------------------------------------------------- Maker Communications, Inc.(1) 100 3,100 - -------------------------------------------------------------------------------- New Era of Networks, Inc.(1) 600 26,363 - -------------------------------------------------------------------------------- Phone.com, Inc.(1) 200 11,200 - -------------------------------------------------------------------------------- Saga Systems, Inc.(1) 2,500 31,875 - -------------------------------------------------------------------------------- Software.com, Inc. 200 4,638 - -------------------------------------------------------------------------------- TenFold Corp.(1) 700 22,225 - -------------------------------------------------------------------------------- Veritas Software Corp.(1) 500 47,469 - -------------------------------------------------------------------------------- Visio Corp.(1) 1,500 57,094 ---------- 280,989 - -------------------------------------------------------------------------------- Communications Equipment--1.7% Pittway Corp., Cl. A 1,100 37,606 ---------- Total Common Stocks (Cost $1,615,741) 1,754,469 Principal Amount ================================================================================ Repurchase Agreements--17.6% - -------------------------------------------------------------------------------- Repurchase agreement with PaineWebber, Inc., 4.80%, dated 6/30/99, to be repurchased at $400,053 on 7/1/99, collateralized by U.S. Treasury Nts., 4.625%-9.25%, 11/30/00-2/15/16, with a value of $408,953 (Cost $400,000) $400,000 400,000 - -------------------------------------------------------------------------------- Total Investments, at Value (Cost $2,015,741) 94.8% 2,154,469 - -------------------------------------------------------------------------------- Other Assets Net of Liabilities 5.2 117,300 -------- ---------- Net Assets 100.0% $2,271,769 ======== ==========
1. Non-income producing security. See accompanying Notes to Financial Statements. Oppenheimer Small Cap Growth Fund/VA 5 - -------------------------------------------------------------------------------- Statement of Assets and Liabilities June 30, 1999 (Unaudited) - --------------------------------------------------------------------------------
================================================================================================ Assets Investments, at value (including repurchase agreement of $400,000) (cost $2,015,741)--see accompanying statement $2,154,469 - ------------------------------------------------------------------------------------------------ Cash 78,394 - ------------------------------------------------------------------------------------------------ Receivables and other assets: Investments sold 62,910 Shares of beneficial interest sold 22,636 Interest and dividends 113 Other 497 ---------- Total assets 2,319,019 ================================================================================================ Liabilities Payables and other liabilities: Investments purchased 40,900 Shareholder reports 2,807 Shares of beneficial interest redeemed 2,641 Other 902 ---------- Total liabilities 47,250 ================================================================================================ Net Assets $2,271,769 ========== ================================================================================================ Composition of Net Assets Paid-in capital $2,205,728 - ------------------------------------------------------------------------------------------------ Accumulated net investment loss (5,593) - ------------------------------------------------------------------------------------------------ Accumulated net realized loss on investment transactions (67,094) - ------------------------------------------------------------------------------------------------ Net unrealized appreciation on investments--Note 3 138,728 ---------- Net assets--applicable to 244,031 shares of beneficial interest outstanding $2,271,769 ========== ================================================================================================ Net Asset Value, Redemption Price Per Share and Offering Price Per Share $9.31
See accompanying Notes to Financial Statements. 6 Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- Statement of Operations For the Six Months Ended June 30, 1999 (Unaudited) - --------------------------------------------------------------------------------
================================================================================ Investment Income Interest $ 4,841 - -------------------------------------------------------------------------------- Dividends 352 -------- Total income 5,193 ================================================================================ Expenses Legal, auditing and other professional fees 5,917 - -------------------------------------------------------------------------------- Management fees--Note 4 5,846 - -------------------------------------------------------------------------------- Shareholder reports 3,850 - -------------------------------------------------------------------------------- Trustees' compensation 647 - -------------------------------------------------------------------------------- Insurance expenses 419 - -------------------------------------------------------------------------------- Registration and filing fees 353 - -------------------------------------------------------------------------------- Custodian fees and expenses 11 - -------------------------------------------------------------------------------- Other 154 -------- Total expenses 17,197 Less reimbursement of expenses by OppenheimerFunds, Inc.--Note 4 (6,400) Less expenses paid indirectly--Note 1 (11) -------- Net expenses 10,786 ================================================================================ Net Investment Loss (5,593) ================================================================================ Realized and Unrealized Gain (Loss) Net realized loss on investments (21,793) - -------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on investments 33,757 -------- Net realized and unrealized gain 11,964 ================================================================================ Net Increase in Net Assets Resulting from Operations $ 6,371 ========
See accompanying Notes to Financial Statements. Oppenheimer Small Cap Growth Fund/VA 7 - -------------------------------------------------------------------------------- Statements of Changes in Net Assets - --------------------------------------------------------------------------------
Six Months Ended Period Ended June 30, 1999 December 31, (Unaudited) 1998(1) ============================================================================================= Operations Net investment loss $ (5,593) $ (2,339) - --------------------------------------------------------------------------------------------- Net realized loss (21,793) (45,301) - --------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 33,757 104,971 ---------- -------- Net increase in net assets resulting from operations 6,371 57,331 ============================================================================================= Beneficial Interest Transactions Net increase in net assets resulting from beneficial interest transactions--Note 2 1,271,094 936,973 ============================================================================================= Net Assets Total increase 1,277,465 994,304 - --------------------------------------------------------------------------------------------- Beginning of period 994,304 -- ---------- -------- End of period (including accumulated net investment loss of $5,593 for the period ended June 30, 1999) $2,271,769 $994,304 ========== ========
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. See accompanying Notes to Financial Statements. 8 Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- Financial Highlights - --------------------------------------------------------------------------------
Six Months Period Ended Ended June 30, 1999 December 31, (Unaudited) 1998(1) ==================================================================================================================== Per Share Operating Data Net asset value, beginning of period $9.60 $10.00 - -------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.02) (.02) Net realized and unrealized loss (.27) (.38) - -------------------------------------------------------------------------------------------------------------------- Total loss from investment operations (.29) (.40) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.31 $ 9.60 ===== ====== ==================================================================================================================== Total Return, at Net Asset Value(2) (3.02)% (4.00)% ==================================================================================================================== Ratios/Supplemental Data Net assets, end of period (in thousands) $2,272 $994 - -------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,579 $441 - -------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment loss (0.71)% (0.79)% Expenses, before reimbursement and voluntary assumption by the Manager(4) 2.20% 0.87% Expenses, net of reimbursement and voluntary assumption by the Manager 1.38% N/A - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 87% 61%
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or commencement of operations), 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 of 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 less than one full year. 4. The expense ratio reflects the effect of expenses paid indirectly by the Fund. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended June 30, 1999, were $1,526,217 and $628,569, respectively. See accompanying Notes to Financial Statements. Oppenheimer Small Cap Growth Fund/VA 9 - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) - -------------------------------------------------------------------------------- ================================================================================ 1. Significant Accounting Policies Oppenheimer Small Cap Growth Fund/VA (the Fund) is a separate series of Oppenheimer Variable Account Funds (the Trust), a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund operated under the name Oppenheimer Small Cap Growth Fund through April 30, 1999. The Fund's investment objective is to seek capital appreciation. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- Securities Valuation. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. - -------------------------------------------------------------------------------- Repurchase Agreements. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. As of December 31, 1998, the Fund had available for federal income tax purposes an unused capital loss carryover of approximately $33,000, which expires in 2006. - -------------------------------------------------------------------------------- Distributions to Shareholders. 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. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. - -------------------------------------------------------------------------------- Expense Offset Arrangements. Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Fund. - -------------------------------------------------------------------------------- Other. Investment transactions are accounted for as of trade date and dividend income is recorded on the ex-dividend date. Foreign dividend income is often recorded on the payable 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. 10 Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited)(Continued) - -------------------------------------------------------------------------------- ================================================================================ 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
Six Months Ended June 30, 1999 Period Ended December 31, 1998(1) ------------------------------ --------------------------------- Shares Amount Shares Amount - ----------------------------------------------------------------------------------------------------------------- Sold 191,685 $1,736,596 114,434 $1,030,883 Redeemed (51,185) (465,502) (10,903) (93,910) ------- ---------- ------- ---------- Net increase 140,500 $1,271,094 103,531 $ 936,973 ======= ========== ======= ==========
1. For the period from May 1, 1998 (commencement of operations) to December 31, 1998. ================================================================================ 3. Unrealized Gains and Losses on Securities As of June 30, 1999, net unrealized appreciation on investments of $138,728, was composed of gross appreciation of $262,104, and gross depreciation of $123,376. ================================================================================ 4. Management Fees and Other Transactions with Affiliates Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million and 0.60% of average annual net assets over $800 million. The Manager has voluntarily undertaken to assume Fund expenses to the level needed to maintain a consistent expense ratio. The Fund's management fee for the six months ended June 30, 1999 was 0.75% of average annual net assets. 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 at cost. Oppenheimer Small Cap Growth Fund/VA 11 - -------------------------------------------------------------------------------- Oppenheimer Small Cap Growth Fund/VA - -------------------------------------------------------------------------------- A Series of Oppenheimer Variable Account Funds =============================================================================================== Officers and Trustees James C. Swain, Chairman and Chief Executive Officer Bridget A. Macaskill, President Robert G. Avis, Trustee William A. Baker, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Alan Gilston, Vice President Jay W. Tracey, III, Vice President Andrew J. Donohue, Vice President and Secretary Brian W. Wixted, Vice President and Treasurer Robert G. Zack, Assistant Secretary Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer =============================================================================================== Investment Advisor OppenheimerFunds, Inc. =============================================================================================== Transfer Agent OppenheimerFunds Services =============================================================================================== Custodian of Portfolio Securities The Bank of New York =============================================================================================== Independent Auditors Deloitte & Touche LLP =============================================================================================== Legal Counsel Myer, Swanson, Adams & Wolf, P.C. The financial statements included herein have been taken from the records of the Fund without examination of the independent auditors. This is a copy of a report to shareholders of Oppenheimer Small Cap Growth Fund/VA. This report must be preceded or accompanied by a Prospectus of Oppenheimer Small Cap Growth Fund/VA. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
12 Oppenheimer Small Cap Growth Fund/VA -----END PRIVACY-ENHANCED MESSAGE-----