UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4108
Oppenheimer Value Fund/VA
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: December 31
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Date of reporting period: January 1, 2004 - June 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
STATEMENT OF INVESTMENTS June 30, 2004 / Unaudited
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MARKET VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--98.7%
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CONSUMER DISCRETIONARY--11.1%
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HOTELS, RESTAURANTS & LEISURE--2.2%
McDonald's Corp. 2,630 $ 68,380
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MEDIA--8.9%
Liberty Media Corp., Cl. A 13,020 117,050
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Liberty Media International, Inc.,
A Shares 1 652 24,189
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UnitedGlobalCom, Inc., Cl. A 1 19,250 139,755
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280,994
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CONSUMER STAPLES--6.1%
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FOOD & STAPLES RETAILING--2.0%
Costco Wholesale Corp. 1,530 62,837
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TOBACCO--4.1%
Altria Group, Inc. 2,630 131,632
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ENERGY--8.6%
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ENERGY EQUIPMENT & SERVICES--1.0%
Halliburton Co. 1,040 31,470
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OIL & GAS--7.6%
BP plc, ADR 2,900 155,353
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Kinder Morgan, Inc. 640 37,946
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LUKOIL, Sponsored ADR 370 38,850
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YUKOS, ADR 270 8,573
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240,722
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FINANCIALS--27.9%
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COMMERCIAL BANKS--8.6%
Bank of America Corp. 2,034 172,117
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Wells Fargo & Co. 1,730 99,008
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271,125
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DIVERSIFIED FINANCIAL SERVICES--10.3%
Citigroup, Inc. 2,000 93,000
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Franklin Resources, Inc. 890 44,571
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Merrill Lynch & Co., Inc. 530 28,609
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Morgan Stanley 1,690 89,181
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SLM Corp. 1,690 68,361
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323,722
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INSURANCE--7.0%
Genworth Financial, Inc., Cl. A 1 1,450 33,278
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Platinum Underwriters Holdings Ltd. 1,170 35,603
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Prudential Financial, Inc. 2,360 109,669
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UnumProvident Corp. 2,700 42,930
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221,480
MARKET VALUE
SHARES SEE NOTE 1
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THRIFTS & MORTGAGE FINANCE--2.0%
Fannie Mae 270 $ 19,267
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Freddie Mac 710 44,943
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64,210
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HEALTH CARE--3.2%
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BIOTECHNOLOGY--3.2%
MedImmune, Inc. 1 2,900 67,860
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Wyeth 900 32,544
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100,404
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INDUSTRIALS--18.5%
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AEROSPACE & DEFENSE--8.5%
Boeing Co. 820 41,894
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Empresa Brasileira de Aeronautica
SA, ADR 1,720 49,175
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Raytheon Co. 4,980 178,135
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269,204
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COMMERCIAL SERVICES & SUPPLIES--3.0%
Cendant Corp. 3,900 95,472
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INDUSTRIAL CONGLOMERATES--7.0%
General Electric Co. 4,540 147,096
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Tyco International Ltd. 2,180 72,245
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219,341
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INFORMATION TECHNOLOGY--11.5%
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COMPUTERS & PERIPHERALS--6.0%
Hewlett-Packard Co. 2,890 60,979
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International Business Machines Corp. 1,470 129,581
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190,560
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IT SERVICES--1.0%
Unisys Corp. 1 2,350 32,618
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SOFTWARE--4.5%
Compuware Corp. 1 4,800 31,680
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Take-Two Interactive Software, Inc. 1 3,560 109,078
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140,758
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MATERIALS--3.7%
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CHEMICALS--2.6%
Dow Chemical Co. 360 14,652
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Praxair, Inc. 1,730 69,044
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83,696
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METALS & MINING--1.1%
Inco Ltd. 1 1,000 34,560
4 | OPPENHEIMER VALUE FUND/VA
MARKET VALUE
SHARES SEE NOTE 1
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TELECOMMUNICATION SERVICES--3.6%
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DIVERSIFIED TELECOMMUNICATION SERVICES--2.6%
IDT Corp., Cl. B 1 4,480 $ 82,611
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WIRELESS TELECOMMUNICATION SERVICES--1.0%
Vodafone Group plc,
Sponsored ADR 1,450 32,045
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UTILITIES--4.5%
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ELECTRIC UTILITIES--3.4%
AES Corp. (The) 1 7,690 76,362
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PG&E Corp. 1 1,090 30,455
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106,817
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GAS UTILITIES--1.1%
Sempra Energy 1,000 34,429
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Total Common Stocks (Cost $2,651,682) $ 3,119,087
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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JOINT REPURCHASE AGREEMENTS--1.4%
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Undivided interest of 0.003% in joint repurchase
agreement (Principal Amount/Market Value
$1,249,774,000, with a maturity value of
$1,249,822,255) with UBS Warburg LLC, 1.39%,
dated 6/30/04, to be repurchased at $43,002
on 7/1/04, collateralized by Federal Home
Loan Mortgage Corp., 4.50%, 6/1/19, with
a value of $340,921,875 and Federal National
Mortgage Assn., 4.50%--5%, 4/1/19--3/1/34,
with a value of $937,433,252
(Cost $43,000) $ 43,000 $ 43,000
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TOTAL INVESTMENTS, AT VALUE
(COST $2,694,682) 100.1% 3,162,087
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LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (2,433)
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NET ASSETS 100.0% $ 3,159,654
=========================
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5 | OPPENHEIMER VALUE FUND/VA
STATEMENT OF ASSETS AND LIABILITIES Unaudited
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June 30, 2004
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ASSETS
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Investments, at value (cost $2,694,682)--see accompanying
statement of investments $ 3,162,087
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Cash 846
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Receivables and other assets:
Investments sold 33,624
Interest and dividends 4,246
Other 2,454
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Total assets 3,203,257
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LIABILITIES
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Payables and other liabilities:
Investments purchased 24,634
Legal, auditing and other professional fees 9,014
Shareholder communications 7,759
Trustees' compensation 2,000
Other 196
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Total liabilities 43,603
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NET ASSETS $ 3,159,654
============
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COMPOSITION OF NET ASSETS
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Par value of shares of beneficial interest $ 250
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Additional paid-in capital 2,384,840
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Accumulated net investment loss (5,766)
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Accumulated net realized gain on investments 312,925
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Net unrealized appreciation on investments 467,405
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NET ASSETS--applicable to 249,799 shares of beneficial
interest outstanding $ 3,159,654
============
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NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING
PRICE PER SHARE $ 12.65
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6 | OPPENHEIMER VALUE FUND/VA
STATEMENT OF OPERATIONS Unaudited
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For the Six Months Ended June 30, 2004
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INVESTMENT INCOME
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Dividends (net of foreign withholding taxes of $339) $ 30,889
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Interest 337
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Total investment income 31,226
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EXPENSES
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Management fees 14,031
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Legal, auditing and other professional fees 10,887
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Shareholder communications 6,976
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Trustees' compensation 2,287
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Custodian fees and expenses 5
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Other 1,512
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Total expenses 35,698
Less reduction to custodian expenses (5)
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Net expenses 35,693
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NET INVESTMENT LOSS (4,467)
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REALIZED AND UNREALIZED GAIN (LOSS)
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Net realized gain on investments 314,924
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Net change in unrealized appreciation on investments (271,609)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 38,848
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7 | OPPENHEIMER VALUE FUND/VA
STATEMENTS OF CHANGES IN NET ASSETS
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SIX MONTHS PERIOD
ENDED ENDED
JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003 1
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OPERATIONS
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Net investment income (loss) $ (4,467) $ 8,769
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Net realized gain 314,924 123,023
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Net change in unrealized appreciation (271,609) 739,014
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Net increase in net assets resulting from operations 38,848 870,806
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
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Dividends from net investment income (10,068) --
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Distributions from net realized gain (125,022) --
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BENEFICIAL INTEREST TRANSACTIONS
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Net increase (decrease) in net assets resulting from beneficial interest transactions (614,910) 3,000,000
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NET ASSETS
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Total increase (decrease) (711,152) 3,870,806
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Beginning of period 3,870,806 --
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End of period (including accumulated net investment income (loss) of $(5,766) and
$8,769, respectively) $ 3,159,654 $ 3,870,806
===========================
1. For the period from January 2, 2003 (commencement of operations) to December
31, 2003.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8 | OPPENHEIMER VALUE FUND/VA
FINANCIAL HIGHLIGHTS
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SIX MONTHS PERIOD
ENDED ENDED
JUNE 30, 2004 DECEMBER 31,
NON-SERVICE SHARES (UNAUDITED) 2003 1
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PER SHARE OPERATING DATA
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Net asset value, beginning of period $ 12.90 $ 10.00
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Income (loss) from investment operations:
Net investment income (loss) (.02) .03
Net realized and unrealized gain .22 2.87
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Total from investment operations .20 2.90
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Dividends and/or distributions to shareholders:
Dividends from net investment income (.03) --
Distributions from net realized gain (.42) --
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Total dividends and/or distributions to shareholders (.45) --
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Net asset value, end of period $ 12.65 $ 12.90
=========================
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TOTAL RETURN, AT NET ASSET VALUE 2 1.55% 29.00%
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RATIOS/SUPPLEMENTAL DATA
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Net assets, end of period (in thousands) $ 3,160 $ 3,871
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Average net assets (in thousands) $ 3,758 $ 3,205
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Ratios to average net assets: 3
Net investment income (loss) (0.24)% 0.27%
Total expenses 1.91% 4 1.39% 4
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Portfolio turnover rate 53% 120%
1. For the period from January 2, 2003 (commencement of operations) to December
31, 2003.
2. 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. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9 | OPPENHEIMER VALUE FUND/VA
NOTES TO FINANCIAL STATEMENTS Unaudited
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1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Value 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 growth of capital by investing
primarily in common stocks with low price-earnings ratios and
better-than-anticipated earnings. The Trust's investment advisor is
OppenheimerFunds, Inc. (the Manager). As of June 30, 2004, the majority of the
Non-Service shares were owned by the Manager.
The Fund currently offers Non-Service shares only. The class is sold at
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 following is a summary of significant accounting policies consistently
followed by the Fund.
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SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. 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. Securities traded on NASDAQ
are valued based on the closing price provided by NASDAQ 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 may be valued primarily using dealer-supplied valuations or a
portfolio pricing service authorized by the Board of Trustees. Securities
(including restricted securities) for which market quotations are not readily
available are valued at their fair value. Foreign and domestic securities whose
values have been materially affected by what the Manager identifies as a
significant event occurring before the Fund's assets are valued but after the
close of their respective exchanges will be fair valued. Fair value is
determined in good faith using 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).
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FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars as of the close of The New York Stock 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. Foreign exchange rates may be valued primarily using
dealer supplied valuations or a portfolio pricing service authorized by the
Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
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.
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JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. 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. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
10 | OPPENHEIMER VALUE FUND/VA
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FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders. Therefore, no federal income or excise tax provisions are
required, however, during the six months ended June 30, 2004, the Fund paid
federal excise tax of $1,754.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and 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.
As of December 31, 2003, the Fund had no estimated capital loss
carryforward.
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TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund does purchase shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
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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. Income and capital gain distributions, if
any, are declared and paid annually.
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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.
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EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
represents earnings on cash balances maintained by the Fund.
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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.
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OTHER. The preparation of financial statements in conformity with U.S. 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.
11 | OPPENHEIMER VALUE FUND/VA
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
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2. SHARES OF BENEFICIAL INTEREST
The Trust 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, 2004 PERIOD ENDED DECEMBER 31, 2003 1
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------
NON-SERVICE SHARES
Sold -- $ -- 300,000 $ 3,000,000
Dividends and/or distributions reinvested 10,679 135,090 -- --
Redeemed (60,880) (750,000) -- --
-----------------------------------------------------------------
Net increase (decrease) (50,201) $ (614,910) 300,000 $ 3,000,000
=================================================================
1. For the period from January 2, 2003 (commencement of operations) to December
31, 2003.
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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, 2004, were
$1,943,139 and $2,668,745, respectively.
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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 Fund which provides for a fee at an
annual rate 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.
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ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
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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 per account fee.
Additionally, funds offered in variable annuity separate accounts are
subject to minimum fees of $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.
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PAYMENTS AND WAIVERS OF EXPENSES. OFS has voluntarily agreed to limit transfer
and shareholder servicing agent fees for all classes to 0.35% of average annual
net assets of the Fund. This undertaking may be amended or withdrawn at any
time.
12 | OPPENHEIMER VALUE FUND/VA
ITEM 2. CODE OF ETHICS
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to semiannual reports.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Board is responsible for approving nominees for election as
trustees. To assist in this task, the Board has designated the Audit Committee
as the nominating committee for the Board. It reviews and recommends nominees to
the Board. The Committee is comprised entirely of disinterested trustees as
defined in Section 2(a)(19) of the Investment Company Act of 1940.
The Audit Committee charter describes the responsibilities of the Committee in
nominating candidates for election as independent Trustees of the Registrant.
The Registrant's Board has adopted a written charter for the Committee. A
current copy of the Audit Committee charter is available to shareholders on the
OppenheimerFunds website at www.oppenheimerfunds.com.
Under the current policy, if the Board determines that a vacancy exists or is
likely to exist on the Board, the Audit Committee of the Board will consider
candidates for Board membership including recommended by Registrant
shareholders. The Audit Committee will consider nominees recommended by
independent Board members or recommended by any other Board members including
Board members affiliated with the Registrant's investment advisors. The
Committee may, upon Board approval, retain an executive search firm to assist in
screening potential candidates. Upon Board approval, the Audit Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their submission
to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO
80112, to the attention of the Board of Trustees of the named Registrant, c/o
the Secretary of the Registrant.
The Committee's process for identifying and evaluating nominees for trustees
includes a number of factors. In screening candidates for board membership,
whether the candidate is suggested by Board members, shareholders or others, the
Committee considers the candidate's professional experience, soundness of
judgment, integrity, ability to make independent, analytical inquiries,
collegiality, willingness and ability to devote the time required to perform
Board activities adequately, ability to represent the interests of all
shareholders of the Registrant, and diversity relative to the board's
composition. Candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of
shareholders.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(c)) as of June 30, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and
communicated to registrant's management, including its principal
executive officer and principal financial officer, to allow timely
decisions regarding required disclosure, and (b) is recorded,
processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities
and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)