<PAGE> 1
OPPENHEIMER TOTAL RETURN FUND, INC.
Annual Report December 31, 1994
[FIGURE NUMBER 1]
Photo of family sitting at table doing homework
"We want
our money
to grow
because we
have some
long-term
goals, but
we also have
needs today."
[LOGO]
<PAGE> 2
This Fund is for people who want growth over time. And because the Fund also
seeks to provide income, investors can meet todays needs too.
HOW YOUR FUND IS MANAGED
Oppenheimer Total Return Fund offers the best of both worlds: the potential for
high growth plus income. That's because the Fund invests in a strategic
combination of stocks, bonds and other income-producing securities.
Investing in stocks offers the best potential for long-term growth and
bonds offer income potential and the possibility of cushioning stock price
fluctuations. So shareholders get the potential for growth with less risk.
PERFORMANCE
Total return at net asset value for the 12-month period ended 12/31/94 for Class
A and B shares was -7.86% and -8.64%, respectively(4).
The financial markets had a difficult year and, like many mutual funds,
your Fund felt the effects. While difficult years are hard to accept, they're an
inevitable part of investing. That's why keeping a long-term perspective is
crucial to getting the most from your investment and helping you through
short-term market fluctuations.
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-, 5-, and 10-year periods ended 12/31/94 and since
inception of the Class on 10/2/47 were -13.16%, 9.25%, 14.28% and 10.36%,
respectively. For Class B shares, average annual total returns for the 1-year
period ended 12/31/94 and since inception of the Class on 5/1/93 were -13.12%
and 0.18%, respectively(5).
OUTLOOK
"Over the past year, interest rates have overshadowed corporate earnings as the
factor driving stock prices. In 1995, we think the market will focus more on
profits, and as that happens, stock prices should once again start to rise. In
our view, the Fund is well-positioned to benefit when the market resumes its
advance."
John Wallace, Portfolio Manager
December 31, 1994
NEWS
OUTPERFORMED AVERAGE
Cumulative Total Return for the
10-Year Period Ended 12/31/94:
Oppenheimer Total Return Fund
Class A(1)
280.06%
Lipper Growth & Income Funds
Average(2)
224.93%
THE FUNDS CLASS A SHARES
ARE RANKED ****
AMONG 1,132 EQUITY FUNDS.
-Morningstar Mutual Funds
12/31/94(3)
1. Based on total return for the period shown, after deducting the current
maximum sales charge of 5.75%.
2. Source: Lipper Analytical Services. The Lipper total return average for the
10-year period was for 109 growth and income funds. The average is shown for
comparative purposes only. Oppenheimer Total Return Fund is characterized by
Lipper as a growth and income fund. Lipper performance does not take sales
charges into consideration.
3. Source: Morningstar Mutual Funds, 12/31/94. Morningstar, Inc., an independent
mutual fund monitoring service, produces proprietary monthly rankings of funds
in broad investment categories (equity, taxable bond, tax-exempt bond, or
hybrid) based on risk-adjusted investment return, after considering sales
charges and expenses. Investment return measures a funds (or class's) 3-, 5-,
and 10-year (depending on the inception of the class or fund) average annual
total returns in excess of 90-day U.S. Treasury bill returns. Risk measures a
fund's (or class's) performance below 90-day U.S. Treasury bill returns. Risk
and returns are combined to produce star rankings, reflecting performance
relative to the average fund in a fund's category. Five stars is the "highest"
ranking (top 10%), 4 stars is "above average", and 1 star is the lowest (bottom
1%). The 4-star current ranking is a weighted average of the 3- and 5-year
rankings for the class, which were 3 and 4 stars, respectively, weighted
40%/60%. The Fund was ranked among 1,132 equity funds. Rankings are subject to
change. The Funds Class A, B, and Y shares have the same portfolio.
4. Based on the change in net asset value per share from 12/31/93 to 12/31/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
5. Average annual total returns are based on a hypothetical investment held
until 12/31/94, after deducting the current maximum initial sales charge of
5.75% for Class A shares and the contingent deferred sales charge of 5% (1-year)
and 4% (since inception) for Class B shares. The Fund's maximum sales charge
rate for Class A shares was higher during a portion of some of the periods
shown, and actual investment results will be different as a result of the
change. The Fund's advisor changed on 9/30/75. Class B and Class Y shares were
first publicly offered on 5/1/93 and 6/1/94, respectively.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investors shares,
when redeemed, may be worth more or less than the original cost.
2 Oppenheimer Total Return Fund, Inc.
<PAGE> 3
Dear OppenheimerFunds Shareholder,
The past year has been a difficult period for the stock market, one marked above
all by one of the most aggressive series of moves to raise interest rates in the
U.S. Federal Reserve's history. As interest rates moved up, bond prices fell and
the stock market followed, while investors looked everywhere for answers to
questions about directions in inflation, interest rates, and the economy. These
questions all concerned one basic issue: Is the bull market in stocks coming to
an end?
In our view, it is not. While we are not expecting major gains in stock prices
in the very near term, we believe that the uncertainties which held the market
back in 1994 will recede in 1995 as the fundamental positives in the economy are
recognized. The most important of these positives is our belief that the Fed's
attempt to preempt possible inflation, while temporarily disconcerting, will
likely have its desired effect in 1995. We believe that the economy will begin
to slow, and although short-term rates may move up modestly from their present
levels, long-term interest rates--the ones that most affect securities
prices--should stabilize in their current range. Long-term rates may even begin
to decline as overblown concerns about inflation abate.
Those concerns are, in fact, already fading. While the prices of some
commodities have risen over the past year and U.S. manufacturing capacity
utilization and employment rose to their highest levels in years, in today's
globally competitive environment, price increases are difficult to pass on to
either consumers or businesses. The inflation rate--as measured by the Consumer
Price Index--continues to run at less than 3% a year, and there's nothing on the
horizon to suggest to us that it will increase substantially anytime soon. Even
at their current levels, interest rates remain low relative to recent periods,
and in our view, pose no real threat to most companies' earnings or cash flows.
During the most recent recession, many businesses learned to operate much more
efficiently and took advantage of the extended decline in interest rates to work
down their debt loads and strengthen their financial positions. As a result,
corporate profits have soared despite higher interest rates. And we believe that
business earnings should grow even more as economies in Europe and elsewhere
emerge from their recessions, stimulating demand for U.S. companies' goods and
services. As profits rise, we expect stocks to become more valuable.
Finally, the changing political landscape reflected in results of the
mid-term election bodes well for the stock market over time. In addition to
limiting the expectation that Congress will pass potentially inflationary
government spending proposals, the realignment in Washington has raised the
possibility of tax relief in the form of an expanded deduction for individual
retirement savings or possibly a reduction in the capital gains tax rate. What
specific action, if any, Congress will take on these proposals remains to be
seen. But any action to reduce the federal deficit, cut spending, and reduce
taxes should be good news for the stock market overall.
In light of all these factors, we remain bullish on stocks. As we have
noted in previous reports, we're expecting moderate gains in the short-term, in
line with increasing corporate earnings. Over time, however, we expect stocks to
perform well in both the U.S. and foreign markets. Your portfolio manager
discusses the outlook for your Fund on the following pages. We appreciate your
confidence, and we look forward to helping you continue to reach your investment
goals.
James C. Swain Jon S. Fossel
- -------------- -------------
James C. Swain Jon S. Fossel
January 23, 1995
[FIGURE NUMBER 2]
Photo of James C. Swain
James C. Swain
Chairman
Oppenheimer
Total Return Fund, Inc.
[FIGURE NUMBER 3]
Photo of Jon S. Fossel
Jon S. Fossel
President
Oppenheimer
Total Return Fund, Inc.
3 Oppenheimer Total Return Fund, Inc.
<PAGE> 4
Q + A
An interview with your Fund's manager.
WHAT FACTORS WERE MOST IMPORTANT TO THE FUND'S 1994 PERFORMANCE?
The most important factor was the change in the investment environment. The
Federal Reserve's aggressive moves to raise interest rates took a toll on the
small to mid-size growth stocks in which this Fund invests; market sentiment
favored larger-company shares.
The Fed raised interest rates as a pre-emptive strike against the
possibility of higher inflation. The good news is that inflation is under
control and the economy is growing at a reasonable pace, which should benefit
the kinds of stocks this Fund invests in.
HAVE THESE DEVELOPMENTS CAUSED YOU TO CHANGE YOUR INVESTMENT APPROACH OR STYLE?
Not at all. If you look back over the longer term, our growth stock emphasis has
produced superior returns for our shareholders--returns reflected in our ****
Morningstar ranking as of December 31, 1994(1). We're slightly more aggressive
than most growth & income funds and as a result, the Fund's returns can
fluctuate more in any given period. But over time our approach has definitely
been rewarded.
WHERE ARE YOU FINDING SOME OF THE BEST GROWTH PROSPECTS TODAY?
One area is technology. We reduced our exposure to this sector last spring, as
share prices began to peak. Later in the year, we began adding to our positions
as prices declined, investing in companies like Compuware, a software developer
that should benefit from strong mainframe and personal computer sales. We also
own Cisco Systems and Bay Networks, network providers positioned for growth in
business-systems integration in the U.S. and abroad.
Were also investing in what I call "new age" utilities,
[FIGURE NUMBER 4]
Photo of John Wallace
[FIGURE NUMBER 5]
Photo of person at equity trading desk
[FIGURE NUMBER 6]
Photo of Mark Binning and Lawrence Apolito
Q Are you changing your growth stock emphasis because of 1994's difficult
markets?
1. See footnote 3, page 2.
4 Oppenheimer Total Return Fund, Inc.
<PAGE> 5
companies like Philip Morris and Bristol-Myers. These stocks are delivering
strong dividend yields, and in our view, are reasonably valued, and have an
improving earnings outlook.
We've also found some interesting special situations, including Federated
Department Stores, whose merger with Macy's creates a powerful combination of
marketing and merchandising savvy(2).
SEVERAL FOREIGN MARKETS NOW SEEM POISED TO OUTPERFORM THE U.S. MARKET. ARE YOU
DOING ANYTHING TO CAPITALIZE ON THESE OPPORTUNITIES?
We are, especially in Europe. Weve added to our holdings of European
auto-makers, including Fiat, Volvo, and Daimler Benz, which should benefit from
the recovery in Europe much as auto-makers benefited in the U.S. We also have
positions in several international telecommunication and technology firms that
will benefit from global growth. Of course, foreign investments may subject the
fund to greater expenses and risks, such as currency fluctuations. However,
because of the portfolio's diversification, we've been able to reduce those
risks while delivering excellent returns over the long term.
HOW ARE YOU MANAGING THE INCOME PORTION OF THE PORTFOLIO?
We believe that short-term interest rates will rise somewhat and that long-term
rates will stabilize or even come down. Given that view, were taking a "barbell"
approach to our U.S. Government bond investments, investing both in 5- and
10-year bonds, and long-term zero coupon bonds, which will benefit most from any
rally in long-term rates. We're also finding good opportunities in convertible
securities. In addition to income, these securities offer potential for capital
appreciation as well.
WHAT'S YOUR OUTLOOK FOR THE FUND?
The Fed's actions seem to have had their desired effect. Inflation is under
control, long-term interest rates may be close to peaking, and the economy is
growing at a solid pace. Over the past year, interest rates have overshadowed
corporate earnings as the factor driving stock prices. In 1995, we think the
market will focus more on profits, and as that happens, stock prices should once
again start to rise. In our view, the Fund is well-positioned to benefit as the
market resumes its advance.-
FACING PAGE
Top left: John Wallace,
Portfolio Manager
Top right: The equity trading desk
Bottom: Mark Binning, Securities
Coordinator, consults with
Lawrence Apolito, VP Equity Trading
THIS PAGE
Top: John Wallace
Bottom: Robert Doll, Director
of Equity Investments, with his
assistant, Pat Andrzejewski
[FIGURE NUMBER 7]
Photo of John Wallace
[FIGURE NUMBER 8]
Photo of Robert Doll and Pat Andrzejewski
A No.
While we're
slightly more
aggressive than
similar funds,
our approach
has been
rewarded
over time.
2. The Fund's portfolio is subject to change.
5 Oppenheimer Total Return Fund, Inc.
<PAGE> 6
STATEMENT OF INVESTMENTS December 31, 1994
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
--------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.2%
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $69,903,571 on 1/3/95, collateralized by
U.S. Treasury Nts., 3.875%--8.875%, 5/31/95--8/31/05, with a value of
$66,433,201 and U.S. Treasury Bonds, 10.75%--14.25%, 2/15/02--8/15/05,
with a value of $4,880,216 (Cost $69,857,000) $ 69,857,000 $69,857,000
U.S. GOVERNMENT OBLIGATIONS--1.3%
TREASURY--1.3% U.S. Treasury Nts., 7.50%, 12/31/96 1,670,000 1,664,258
U.S. Treasury Nts., 7.75%, 11/30/99 10,000,000 9,965,619
U.S. Treasury Nts., 7.75%, 12/31/99 3,200,000 3,190,000
U.S. Treasury STRIPS, 0%, 5/15/18 40,000,000 6,341,640
---------
Total U.S. Government Obligations (Cost $20,623,560) 21,161,517
FOREIGN GOVERNMENT Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
OBLIGATIONS--3.0% Series I, 5.625%, 4/1/01(3) (5) 6,981,426 4,472,113
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 3.17%, 4/1/01(3) (5) ARA 8,921,972 3,791,167
Argentina (Republic of) Par Bonds, 4.25%, 3/31/23(6) 5,000,000 2,116,406
Argentina (Republic of) Past Due Interest Bonds, 6.50%, 3/31/05(3) 8,000,000 5,115,000
Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds, 8%, 8/5/03 6,000,000 4,650,000
Brazil (Federal Republic of) Interest Due and Unpaid Bonds, 6.063%, 1/1/01(3) 9,800,000 8,186,063
Brazil (Federal Republic of) Par Bonds, 4%, 4/15/24(6) 13,000,000 5,239,000
Ecuador (Republic of) Bonds, 0%, 12/29/49(4) (7) 15,000,000 8,156,250
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
12.25%, 3/25/00ESP 500,000,000 3,852,654
United Mexican States, 7.25% Notes, 12/31/19(3) 5,000,000 3,662,500
---------
Total Foreign Government Obligations (Cost $56,303,066) 49,241,153
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
FINANCIAL--0.0% Calfed, Inc., 10% Nts., 1/3/03 (Cost $169,100) 169,100 158,109
CONVERTIBLE CORPORATE BONDS AND NOTES--6.2%
BASIC MATERIALS--0.5%
METALS--0.3% Coeur d'Alene Mines Corp., 6.375% Cv. Sub. Debs., 1/31/04 6,500,000 5,335,000
PAPER AND FOREST Stone Container Corp., 6.75% Cv. Debs., 2/15/07 5,000,000 3,762,500
PRODUCTS--0.2%
</TABLE>
6 Oppenheimer Total Return Fund, Inc.
<PAGE> 7
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
--------- ------------
<S> <C> <C> <C>
CONSUMER CYCLICALS--1.1%
MEDIA--0.7% Comcast Corp., 1.125% Cv. Sub. Disc. Debs., 4/15/07 $15,000,000 $6,056,250
Time Warner, Inc., 8.75% Cv. Sr. Nts., 1/10/15 6,000,000 5,655,000
----------
11,711,250
OTHER--0.2% Titan Wheel International, Inc., 4.75% Cv. Sub. Nts., 12/1/00 3,500,000 3,727,500
RETAIL--0.2% Food Lion, Inc., 5% Cv. Sub. Debs., 6/1/03(4) 4,000,000 3,540,000
CONSUMER NON-CYCLICALS--0.8%
HEALTHCARE--0.8% Healthsouth Rehabilitation Corp., 5% Cv. Sub. Debs., 4/1/01 3,000,000 3,330,000
Novacare, Inc., 5.50% Cv. Sub. Debs., 1/15/00 4,500,000 3,408,750
Pharmaceutical Marketing Services, Inc., 6.25% Cv. Sub. Debs., 2/1/03(4) 3,500,000 2,380,000
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs., 8/15/00(4) (9) 4,000,000 3,795,000
----------
12,913,750
ENERGY--0.5% Cross Timbers Oil Co., 5.25% Cv. Sub. Nts., 11/1/03 3,500,000 2,856,875
Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 3,000,000 3,135,000
Kelly Oil & Gas Partners Ltd., 7.875% Cv. Sub. Nts., 12/15/99 2,500,000 1,934,375
----------
7,926,250
FINANCIAL--0.7% Banco de Galicia y Buenos Aires SA,
7% Cv. Negotiable Obligation Bonds, 8/1/02 6,250,000 4,875,000
First Financial Management Corp., 5% Cv. Debs., 12/15/99 5,000,000 5,187,500
Employee Benefit Plans, Inc., 6.75% Cv. Sub. Debs., 7/31/06 3,000,000 2,017,500
----------
12,080,000
INDUSTRIAL--2.0%
TRANSPORTATION--2.0% Air Express International Corp., 6% Cv. Sub. Debs., 1/15/03 3,500,000 3,465,000
Interpool, Inc., 5.25% Cv. Exch. Sub. Nts., 12/15/18 3,500,000 2,677,500
AMR Corp., 6.125% Cv. Sub. Debs., 11/1/24 20,000,000 16,100,000
Delta Airlines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 15,000,000 10,462,500
----------
32,705,000
</TABLE>
7 Oppenheimer Total Return Fund, Inc.
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
--------- ------------
<S> <C> <C> <C>
TECHNOLOGY--0.6% Seagate Technology, 6.75% Cv. Sub. Debs., 5/1/12 $6,000,000 $4,957,500
Thermo Electron Corp., 5% Cv. Debs., 4/15/01 5,000,000 5,306,250
-----------
10,263,750
-----------
Total Convertible Corporate Bonds and Notes (Cost $112,871,142) 103,965,000
Shares
COMMON STOCKS--79.1%
BASIC MATERIALS--4.1%
CHEMICALS--2.0% Eastman Chemical Co. 200,000 10,100,000
Great Lakes Chemical Corp. 275,000 15,675,000
Imperial Chemical Industries PLC, ADS 150,000 6,975,000
-----------
32,750,000
GOLD--0.9% Cyprus Amax Minerals Co. 410,000 10,711,250
Santa Fe Pacific Gold Corp.(2) 302,953 3,900,520
------- -----------
14,611,770
METAL: MISCELLANEOUS--0.5% Material Sciences Corp.(2) 530,000 8,413,750
STEEL--0.7% Birmingham Steel Corp. 300,000 6,000,000
Oregon Steel Mills, Inc. 400,000 6,250,000
-----------
12,250,000
CONSUMER CYCLICALS--13.9%
AIRLINES--0.7% Atlantic Southeast Airlines, Inc. 550,000 8,525,000
Continental Airlines, Inc., Cl. B(2) 375,000 3,468,750
-----------
11,993,750
AUTOMOBILES--2.0% Chrysler Corp. 200,000 9,800,000
Daimler-Benz AKT 245,000 12,066,250
Volvo AB, Series B Free 650,000 12,240,943
-----------
34,107,193
BROADCAST MEDIA--0.6% TeleCommunications, Inc., Cl. A(2) 500,000 10,875,000
ENTERTAINMENT--0.2% Iwerks Entertainment, Inc.(2) (9) 540,000 2,565,000
LEISURE TIME--3.1% Brunswick Corp. 500,000 9,437,500
Caesar's World, Inc.(2) 200,000 13,350,000
Eastman Kodak Co. 300,000 14,325,000
Harley-Davidson, Inc. 500,000 14,000,000
-----------
51,112,500
</TABLE>
8 Oppenheimer Total Return Fund, Inc.
<PAGE> 9
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
PUBLISHING--0.7% American Greetings Corp., Cl. A 425,000 $11,475,000
RETAIL STORES: Federated Department Stores, Inc. 525,000 10,106,250
DEPARTMENT STORES--0.6%
RETAIL STORES: GENERAL Meyer (Fred), Inc.(2) 550,000 16,912,500
MERCHANDISE CHAINS--1.0%
RETAIL: SPECIALTY--3.6% Alco Standard Corp. 275,000 17,256,250
Intelligent Electronics, Inc. 750,000 6,000,000
Regis Corp. of Minnesota(2) (9) 700,000 10,500,000
Rite Aid Corp. 1,022,000 23,889,250
Tandy Corp. 57,700 2,892,213
-----------
60,537,713
RETAIL: SPECIALTY APPAREL--0.4% Gap, Inc. (The)(8) 225,000 6,862,500
SHOES--1.0% Nike, Inc., Cl. B 225,000 16,790,625
CONSUMER NON-CYCLICALS--9.0%
DRUGS--1.3% Astra AB Free, Series A 350,000 9,039,465
Lilly (Eli) & Co. 200,000 13,125,000
-----------
22,164,465
FOOD PROCESSING--0.7% Archer-Daniels-Midland Co. 575,000 11,859,375
HEALTHCARE: DIVERSIFIED--0.7% Bristol-Myers Squibb Co. 200,000 11,575,000
HEALTHCARE: MISCELLANEOUS--1.6% COR Therapeutics, Inc.(2) 500,000 5,500,000
Healthsource, Inc.(2) 300,000 12,262,500
PCI Services, Inc.(2) 185,000 1,202,500
United Healthcare Corp. 175,000 7,896,875
-----------
26,861,875
HOSPITAL MANAGEMENT--0.7% Living Centers of America, Inc.(2) 175,000 5,840,625
Sun Healthcare Group, Inc.(2) 200,000 5,075,000
-----------
10,915,625
MEDICAL PRODUCTS--1.6% Angeion Corp.(2) (9) 500,000 1,500,000
Lynx Therapeutics, Inc.(2) (4) 153,900 30,780
Medtronic, Inc. 300,000 16,687,500
Sybron Corp. of Delaware(2) 226,500 7,814,250
-----------
26,032,530
</TABLE>
9 Oppenheimer Total Return Fund, Inc.
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
RETAIL STORES: Penn Traffic Co.(2) 225,800 $8,580,400
FOOD CHAINS--0.5%
TOBACCO--1.9% Philip Morris Cos., Inc. 550,000 31,625,000
ENERGY--5.5%
OIL AND GAS DRILLING--0.1% Noble Drilling Corp.(2) 350,000 2,056,250
OIL WELL SERVICES AND Dresser Industries, Inc. 500,000 9,437,500
EQUIPMENT--1.7% Halliburton Co. 300,000 9,937,500
Western Atlas, Inc.(2) 250,000 9,406,250
----------
28,781,250
OIL: INTEGRATED DOMESTIC--2.5% Atlantic Richfield Co. 200,000 20,350,000
Occidental Petroleum Corp. 700,000 13,475,000
Sun Co., Inc. 275,000 7,906,250
----------
41,731,250
OIL: INTEGRATED INTERNATIONAL--1.2% Amerada Hess Corp. 300,000 13,687,500
Shell Transport & Trading Co., PLC, New York Shares 100,000 6,537,500
----------
20,225,000
INDUSTRIAL--9.1%
BUILDING MATERIALS GROUP--1.1% Centex Construction Products, Inc.(2) 400,000 4,950,000
Vulcan Materials Co. 265,000 13,415,625
----------
18,365,625
COMMERCIAL SERVICES--1.0%
Reynolds & Reynolds Co., Cl. A 315,000 7,875,000
Sensormatic Electronics Corp. 250,000 9,000,000
----------
16,875,000
CONGLOMERATES--2.9% Hanson PLC, ADR 1,000,000 18,000,000
Litton Industries, Inc.(2) 400,000 14,800,000
Tenneco, Inc. 375,000 15,937,500
----------
48,737,500
ELECTRICAL EQUIPMENT--1.7% General Electric Co. 550,000 28,050,000
MANUFACTURING: Parker-Hannifin Corp. 275,000 12,512,500
DIVERSIFIED INDUSTRIALS--1.6% Tyco Laboratories, Inc. 300,000 14,250,000
----------
26,762,500
</TABLE>
10 Oppenheimer Total Return Fund, Inc.
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
RAILROADS--0.7% Southern Pacific Rail Corp.(2) 600,000 $10,875,000
TRANSPORTATION: Stolt Comex Seaway SA(2) 200,000 1,400,000
MISCELLANEOUS--0.1%
FINANCIAL--6.5%
FINANCIAL SERVICES: H & R Block, Inc. 485,000 18,005,625
MISCELLANEOUS--1.6% Travelers, Inc. 270,000 8,775,000
-----------
26,780,625
INSURANCE: LIFE--0.5% Bankers Life Holding Corp. 400,000 7,600,000
MAJOR BANKS: REGIONAL--1.7% CoreStates Financial Corp. 650,000 16,900,000
First Interstate Bancorp 160,000 10,820,000
-----------
27,720,000
MONEY CENTER BANKS--2.1% Citicorp 440,000 18,205,000
First Chicago Corp. 365,000 17,428,750
-----------
35,633,750
SAVINGS AND LOANS/ TCF Financial Corp. 250,000 10,312,500
HOLDING COS.--0.6%
TECHNOLOGY--16.0%
AEROSPACE/DEFENSE--0.9% Martin Marietta Corp. 350,000 15,531,250
COMPUTER SOFTWARE Adobe Systems, Inc. 292,500 8,701,875
AND SERVICES--3.8% Bay Networks, Inc.(2) 405,001 11,947,530
Compuware Corp.(2) 420,000 15,120,000
Intersolv, Inc.(2) 160,000 2,900,000
Lotus Development Corp.(2) 250,000 10,250,000
Microsoft Corp.(2) 250,000 15,281,250
-----------
64,200,655
COMPUTER SYSTEMS--1.5% Adaptec, Inc.(2) 195,000 4,606,875
Apple Computer, Inc. 80,000 3,120,000
Auspex Systems, Inc.(2) 400,000 2,700,000
Cisco Systems, Inc.(2) 400,000 14,050,000
----------
24,476,875
ELECTRONICS: ADT Ltd.(2) 604,100 6,494,075
INSTRUMENTATION--0.9% Belden, Inc. 350,000 7,787,500
----------
14,281,575
</TABLE>
11 Oppenheimer Total Return Fund, Inc.
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
ELECTRONICS: Actel Corp.(2) 250,000 $2,062,500
SEMICONDUCTORS--3.5% Applied Materials, Inc.(2) 300,000 12,675,000
Dallas Semiconductor Corp.(2) 145,000 2,410,625
Intel Corp. 100,000 6,387,500
Motorola, Inc. 300,000 17,362,500
Texas Instruments, Inc. 225,000 16,846,875
----------
57,745,000
OFFICE EQUIPMENT AND Moore Corp. Ltd. 912,200 17,217,775
SUPPLIES--1.0%
TELECOMMUNICATIONS--4.4% Airtouch Communications, Inc.(2) 500,000 14,562,500
AT & T Corp. 325,000 16,331,250
IDB Communications Group, Inc.(2) 700,000 6,431,250
LCI International, Inc.(2) 625,000 16,250,000
LDDS Communications, Inc.(2) 100,000 1,943,750
Millicom International Cellular SA(2) 150,000 4,518,750
PT Indosat, ADR(2) 149,000 5,326,750
Tele Danmark AS, ADR(2) 325,000 8,287,500
---------
73,651,750
UTILITIES--15.0%
ELECTRIC COMPANIES--12.3% Allegheny Power System, Inc. 450,000 9,787,500
American Electric Power Co., Inc. 350,000 11,506,250
Baltimore Gas & Electric Co. 450,000 9,956,250
Detroit Edison Co. 750,000 19,593,750
Dominion Resources, Inc. 250,000 8,937,500
Florida Progress Corp. 275,000 8,250,000
FPL Group, Inc. 350,000 12,293,750
Houston Industries, Inc. 625,000 22,265,625
Ohio Edison Co. 350,000 6,475,000
Pacific Gas & Electric Co. 800,000 19,500,000
Pennsylvania Power & Light Co. 400,000 7,600,000
Public Service Enterprise Group, Inc. 1,025,000 27,162,500
Texas Utilities Co. 1,000,000 32,000,000
Union Electric Co. 250,000 8,843,750
204,171,875
TELEPHONE--2.7% GTE Corp. 600,000 18,225,000
Pacific Telesis Group 600,000 17,100,000
Telecom Italia SpA 3,500,000 9,104,637
44,429,637
Total Common Stocks (Cost $1,246,440,057) 1,318,590,463
</TABLE>
12 Oppenheimer Total Return Fund, Inc.
<PAGE> 13
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ -------------
<S> <C> <C> <C>
PREFERRED STOCKS--7.2%
Atlantic Richfield Co., 9% Exchangeable Notes for Common Stock of
Lyondell Petrochemical Co., 9/15/97 600,000 $15,675,000
Boise Cascade Corp., $1.58 Cum. Cv., Series G 390,000 9,311,250
Catellus Development Corp., $3.625 Cv., Series B(2) (4) 240,000 9,240,000
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%,3/3/98(4) 150,000 7,575,000
Fiat SpA(2) 4,500,000 10,346,739
Freeport-McMoRan Copper & Gold, Inc., Cv. Depositary Shares 320,000 6,640,000
General Motors Corp., $3.25 Cv., Series C 150,000 8,606,250
James River Corp. of Virginia, Dividend Enhanced Convertible Stock,
9% Cv. Exch. Depositary Shares, Series P 600,000 12,150,000
Noble Drilling Corp., $1.50 Cv. Exch. 150,000 3,150,000
Noble Drilling Corp., $2.25 Cv. Exch., Series A 130,000 4,257,500
Occidental Petroleum Corp., $3.00 Cum. Cv. Canadian Occidental
Petroleum Ltd.--Indexed 175,000 8,356,250
Olympic Financial Ltd., $2.00 Cum. Cv. Exch. 100,000 2,975,000
Reynolds Metals Co., 7% Preferred Redeemable Increased
Dividend Equity Securities, $3.31 Cv., 12/31/97 112,500 5,442,186
Transco Energy Co., $3.50 Cum. Cv., Series E(4) 100,000 4,550,000
Unisys Corp., $3.75 Cv., Series A 150,000 4,762,500
WHX Corp., $3.75 Cv., Series B 150,000 6,412,500
-----------
Total Preferred Stocks (Cost $121,452,540) 119,450,175
</TABLE>
<TABLE>
<CAPTION>
UNITS
-----
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
Angeion Corp. Wts., Exp. 3/96(9) 500,000 125,000
Morgan Stanley Group Inc., Japanese Index Call Wts., Exp. 5/96 60,000 187,500
-------
Total Rights, Warrants and Certificates (Cost $360,340) 312,500
</TABLE>
<TABLE>
<CAPTION>
SHARES SUBJECT
DATE/PRICE TO PUT
---------- --------------
<S> <C> <C> <C>
PUT OPTIONS PURCHASED--0.0%
Lowe's Cos., Inc. Jan./$35 600 56,250
Promus Cos., Inc. Jan./$25 500 3,125
Promus Cos., Inc. Jan./$30 750 60,938
Promus Cos., Inc. Feb./$30 700 91,875
-------
Total Put Options Purchased (Cost $288,088) 212,188
</TABLE>
13 Oppenheimer Total Return Fund, Inc.
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C>
TOTAL INVESTMENTS, AT VALUE (COST $1,628,364,892) 101.0% $1,682,948,105
LIABILITIES IN EXCESS OF OTHER ASSETS (1.0) (16,809,945)
----- --------------
NET ASSETS 100.0% $1,666,138,160
===== ==============
</TABLE>
1. Face amount is reported in local currency. Foreign
currency abbreviations are as follows:
ARA--Argentine Austral
ESP--Spanish Peseta
2. Non-income producing security.
3. Represents the current interest rate for a variable
rate security.
4. Restricted security--See Note 6 of Notes to Financial
Statements.
5. Interest or dividend is paid in kind.
6. Represents the current interest rate for an
increasing rate security.
7. When-issued security to be delivered and settled
after December 31, 1994.
8. Securities with an aggregate market value of
$1,525,000 are held in escrow to cover outstanding call
options, as follows:
<TABLE>
<CAPTION>
SHARES EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 1
--------------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Gap. Inc. (The) 50,000 1/95 $30.00 $36,499 $75,000
</TABLE>
9. Affiliated company. Represents ownership of at least
5% of the voting securities of the issuer and is or was
an affiliate, as defined in the Investment Company Act
of 1940, at or during the period ended December 31,
1994. The aggregate fair value of all securities of
affiliated companies as of December 31, 1994 amounted to
$18,485,000. Transactions during the period in which the
issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE
DECEMBER 31, 1993 GROSS ADDITIONS
----------------- ---------------
SHARES/FACE COST SHARES/FACE COST
<S> <C> <C> <C> <C>
Angeion Corp. -- $ -- 500,000 $1,187,500
Angeion Corp. Wts. -- -- 500,000 --
Baldwin Piano & Organ Co.(10) 256,000 4,418,500 -- --
INTERLINQ Software Corp.(10) 300,000 2,332,500 -- --
Iwerks Entertainment, Inc. 465,000 14,569,045 145,000 3,267,500
Physician's Clinical Laboratory, Inc.,
7.50% Cv. Sub. Debs., 8/15/00 4,000,000 4,000,000 -- --
Regis Corp. of Minnesota 650,000 6,964,363 50,000 706,250
----------- ----------
$32,284,408 $5,161,250
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
BALANCE
GROSS REDUCTIONS DECEMBER 31, 1994 INTEREST
SHARES/FACE COST SHARES/FACE COST INCOME
----------- ---- ----------- ---- --------
<S> <C> <C> <C> <C> <C>
Angeion Corp. -- $ -- 500,000 $ 1,187,500 $ --
Angeion Corp. Wts. -- -- 500,000 -- --
Baldwin Piano & Organ Co.(10) 256,000 4,418,500 -- -- --
INTERLINQ Software Corp.(10) 300,000 2,332,500 -- -- --
Iwerks Entertainment, Inc. 70,000 2,359,965 540,000 15,476,580 --
Physician's Clinical Laboratory, Inc.,
7.50% Cv. Sub. Debs., 8/15/00 -- -- 4,000,000 4,000,000 299,958
Regis Corp. of Minnesota -- -- 700,000 7,670,613 --
---------- ----------- --------
$9,110,965 $28,334,693 $299,958
========== =========== ========
</TABLE>
10. Not an affiliate as of December 31, 1994.
See accompanying Notes to Financial Statements.
14 Oppenheimer Total Return Fund, Inc.
<PAGE> 15
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
<S> <C> <C>
ASSETS Investments, at value (cost $1,628,364,892)--see accompanying statement $1,682,948,105
Cash 596,761
Receivables:
Interest and dividends 10,500,854
Investments sold 5,853,180
Shares of capital stock sold 3,031,040
Other 134,895
--------------
Total assets 1,703,064,835
LIABILITIES Options written, at value (premiums received $36,499)--see accompanying
statement--Note 4 75,000
Payables and other liabilities:
Investments purchased 29,258,939
Shares of capital stock redeemed 4,826,944
Distribution and service plan fees--Note 5 891,853
Dividends and distributions 619,022
Other 1,254,917
--------------
Total liabilities 36,926,675
NET ASSETS $1,666,138,160
==============
COMPOSITION OF Par value of shares of capital stock $21,392,839
NET ASSETS Additional paid-in capital 1,617,136,104
Undistributed (overdistributed) net investment income 1,960,766
Accumulated net realized gain (loss) from investment,
written option and foreign currency transactions (28,896,123)
Net unrealized appreciation (depreciation) on investments and translation of assets
and liabilities denominated in foreign currencies 54,544,574
--------------
Net assets $1,666,138,160
==============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of $1,235,636,724
and 158,416,599 shares of capital stock outstanding) $7.80
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $8.28
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $429,427,171 and 55,374,013 shares of capital stock outstanding) $7.76
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,074,265 and 137,776 shares of capital stock outstanding) $7.80
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Total Return Fund, Inc.
<PAGE> 16
STATEMENT OF OPERATIONS For the Year Ended
December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME Interest:
Unaffiliated companies $14,804,215
Affiliated companies 299,958
Dividends (net of withholding taxes of $300,721) 48,337,266
-----------
Total income 63,441,439
EXPENSES Management fees-Note 5 8,860,284
Distribution and service plan fees:
Class A--Note 5 2,274,087
Class B--Note 5 3,604,784
Transfer and shareholder servicing agent fees--Note 5 2,768,911
Shareholder reports 863,738
Custodian fees and expenses 212,676
Legal and auditing fees 102,872
Directors' fees and expenses 81,296
Registration and filing fees:
Class A 119,368
Class B 201,613
Class Y 439
Other 417,432
-----------
Total expenses 19,507,500
NET INVESTMENT INCOME (LOSS) 43,933,939
REALIZED AND UNREALIZED Net realized gain (loss) on:
GAIN (LOSS) ON INVESTMENTS, Investments (24,167,951)
OPTIONS WRITTEN Closing and expiration of options written--Note 4 449,883
AND FOREIGN CURRENCY Foreign currency transactions 774,143
TRANSACTIONS -----------
Net realized gain (loss) (22,943,925)
Net change in unrealized appreciation or depreciation on:
Investments (161,615,681)
Translation of assets and liabilities denominated in foreign currencies 1,957,256
------------
Net change (159,658,425)
------------
Net realized and unrealized gain (loss) on investments, options written and foreign
currency transactions (182,602,350)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(138,668,411)
=============
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Total Return Fund, Inc.
<PAGE> 17
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993
---- ----
<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ 43,933,939 $ 22,572,620
Net realized gain (loss) on investments, options written
and foreign currency transactions (22,943,925) 82,466,024
Net change in unrealized appreciation or depreciation
on investments and translation of assets and
liabilities denominated in foreign currencies (159,658,425) 93,114,925
------------- ------------
Net increase (decrease) in net assets resulting from operations (138,668,411) 198,153,569
EQUALIZATION Net change -- 3,854,582
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.2122 and $.20 per share, respectively) (32,935,100) (23,576,552)
SHAREHOLDERS Class B ($.1563 and $.1091 per share, respectively) (7,410,674) (1,142,362)
Class Y ($.1719 per share) (9,979) --
Distributions from net realized gain on investments, options written
and foreign currency transactions:
Class A ($.5834 per share) -- (76,215,894)
Class B ($.5834 per share) -- (13,016,692)
CAPITAL STOCK Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS capital stock transactions--Note 2 150,027,163 335,283,270
Net increase (decrease) in net assets resulting from Class B
capital stock transactions--Note 2 251,910,438 223,296,915
Net increase (decrease) in net assets resulting from Class Y
capital stock transactions--Note 2 1,113,774 --
NET ASSETS Total increase (decrease) 224,027,211 646,636,836
Beginning of period 1,442,110,949 795,474,113
------------- ------------
End of period [including undistributed (overdistributed) net
investment income of $1,960,766 and $(750,275), respectively] $1,666,138,160 $1,442,110,949
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Total Return Fund, Inc.
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $8.69 $7.84 $7.49 $6.13 $6.68 $6.35 $5.95
Income (loss) from
investment operations:
Net investment income .23 .18 .17 .24 .24 .27 .26
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions (.91) 1.45 .75 1.91 (.49) .93 .53
Total income (loss)
from investment operations (.68) 1.63 .92 2.15 (.25) 1.20 .79
Dividends and distributions
to shareholders:
Dividends from net
investment income (.21) (.20) (.20) (.23) (.24) (.28) (.27)
Distributions from net
realized gain on investments,
options written and foreign
currency transactions -- (.58) (.37) (.56) (.06) (.59) (.12)
Total dividends and
distributions to shareholders (.21) (.78) (.57) (.79) (.30) (.87) (.39)
Net asset value,
end of period $7.80 $8.69 $7.84 $7.49 $6.13 $6.68 $6.35
========== ========== ======== ======== ======== ======== ========
TOTAL RETURN,
AT NET ASSET VALUE(3) (7.86)% 21.24% 12.83% 36.26% (3.86)% 19.25% 13.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,235,637 $1,223,395 $795,474 $555,865 $396,240 $389,413 $314,039
Average net assets
(in thousands) $1,261,729 $992,381 $662,917 $475,741 $394,903 $356,994 $298,509
Number of shares
outstanding at end of period
(in thousands) 158,417 140,711 101,433 74,245 64,644 58,333 49,464
Ratios to average net assets:
Net investment income 2.88% 2.21% 2.68% 3.26% 3.87% 3.96% 4.22%
Expenses 1.01% .93% .96% .95% .98% .98% .94%
Portfolio turnover rate(5) 117.2% 143.9% 143.5% 161.5% 114.1% 151.6% 127.3%
</TABLE>
<TABLE>
<CAPTION>
CLASS A Class B Class Y
-------------------------------- ---------------------- --------
YEAR PERIOD
ENDED ENDED
DEC. 31, DEC 31
1987 1986 1985 1994 1993(2) 1994(1)
---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $6.76 $6.81 $5.40 $8.66 $8.23 $8.23
Income (loss) from
investment operations:
Net investment income .25 .35 .25 .17 .09 .15
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions .63 1.00 1.58 (.91) 1.03 (.41)
Total income (loss)
from investment operations .88 1.35 1.83 (.74) 1.12 (.26)
Dividends and distributions
to shareholders:
Dividends from net
investment income (.32) (.37) (.21) (.16) (.11) (.17)
Distributions from net
realized gain on investments,
options written and foreign
currency transactions (1.37) (1.03) (.21) -- (.58) --
Total dividends and
distributions to shareholders (1.69) (1.40) (.42) (.16) (.69) (.17)
Net asset value,
end of period $5.95 $6.76 $6.81 $7.76 $8.66 $7.80
======== ======== ======== ======== ======== ======
TOTAL RETURN,
AT NET ASSET VALUE(3) 12.35% 19.70% 34.36% (8.64)% 13.91% (3.15)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $274,068 $234,674 $229,783 $429,427 $218,716 $1,074
Average net assets
(in thousands) $277,877 $246,530 $213,803 $360,773 $90,952 $320
Number of shares
outstanding at end of period
(in thousands) 46,080 34,703 33,720 55,374 25,261 138
Ratios to average net assets:
Net investment income 3.42% 4.37% 3.81% 2.11% 1.09%(4) 4.07%(4)
Expenses .88% .85% .89% 1.87% 1.87%(4) .96%(4)
Portfolio turnover rate(5) 173.4% 88.3% 143.9% 117.2% 143.9% 117.2%
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to December 31,
1994.
2. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns.
4. Annualized.
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 year
ended December 31, 1994 were $2,221,635,120 and $1,847,495,076, respectively.
See accompanying Notes to Financial Statements.
18 Oppenheimer Total Return Fund, Inc.
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT Oppenheimer Total Return Fund, Inc. (the Fund) is
ACCOUNTING registered under the Investment Company Act of 1940, as
POLICIES amended, as a diversified, open-end management investment
company. The Fund's investment advisor is Oppenheimer
Management Corporation (the Manager). The Fund offers
Class A, Class B and Class Y shares. Class A shares are
sold with a front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge. All three
classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has
its own expenses directly attributable to a particular
class and exclusive voting rights with respect to matters
affecting a single class. Classes A and B have separate
distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after
the date of purchase. The following is a summary of
significant accounting policies consistently followed by
the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at
4:00 p.m. (New York time) 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 asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Directors. Long-term debt securities which
cannot be valued by the 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 under consistently applied
procedures established by the Board of Directors to
determine fair value in good faith. Short-term 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. Options are valued based upon the last sale
price on the principal exchange on which the option is
traded or, in the absence of any transactions that day,
the value is based upon the last sale on the prior
trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is
outside the spread, the closing bid or asked price
closest to the last reported sale price is used.
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
securities and investment income are translated at the
rate of exchange prevailing on the respective dates of
such transactions.
The Fund generally enters into forward currency
exchange contracts as a hedge, upon the purchase or sale
of a security denominated in a foreign currency. Risks
may arise from the potential inability of the
counterparty to meet the terms of the contract and from
unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
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 results of
operations.
REPURCHASE AGREEMENTS. The Fund requires the custodian to
take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value of
the underlying securities is required to be at least 102%
of the resale price at the time of purchase. If the
seller of the agreement defaults and the value of the
collateral declines, or if the seller enters an
insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and 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 INCOME 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. Therefore, no federal income
tax provision is required. At December 31, 1994, the Fund
had available for federal income tax purposes an unused
capital loss carryover of approximately $3,800,000 which
will expire in 2002.
19 Oppenheimer Total Return Fund, Inc.
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT EQUALIZATION. Prior to September 24, 1993, the Fund
ACCOUNTING followed the accounting practice of equalization, by
POLICIES which a portion of the proceeds from sales and costs of
(CONTINUED) redemption of Fund shares equivalent on a per share basis
to the amount of undistributed net investment income were
credited or charged to undistributed income. The
cumulative effect of the change in accounting practice
resulted in a reclassification of $3,804,345 from
undistributed net investment income to paid-in capital.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
CHANGE IN ACCOUNTING CLASSIFICATION OF DISTRIBUTIONS TO
SHAREHOLDERS. Net investment income (loss) and net
realized gain (loss) may differ for financial statement
and tax purposes primarily because of the recognition of
certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes. The character of the
distributions made during the 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 dividend distributions,
the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain
(loss) was recorded by the Fund. Effective January 1,
1994, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of
distributions to shareholders to better disclose the
differences between financial statement amounts and
distributions determined in accordance with income tax
regulations. Accordingly, subsequent to December 31,
1993, amounts have been reclassified to reflect a
decrease in paid-in capital of $45,349, a decrease in
undistributed net investment income of $301,605, and an
increase in accumulated net realized gain on investments
of $346,954. During the year ended December 31, 1994, in
accordance with Statement of Position 93-2, undistributed
net investment income was decreased by $ 614,718, and
accumulated net realized gain on investments was
increased by the same amount.
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date)
and dividend income is recorded on the ex-dividend date.
Discount on securities purchased is amortized over the
life of the respective securities, in accordance with
federal income tax requirements. Realized gains and
losses on investments and options written and unrealized
appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for
federal income tax purposes.
2. SHARES OF The Fund has authorized 450,000,000, 200,000,000, and
CAPITAL STOCK 50,000,000 shares of $.10 par value Class A, Class B and
Class Y capital stock, respectively. Transactions in
shares of capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994(1) YEAR ENDED DECEMBER 31, 1993(2)
------------------------------ --------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A:
Sold 36,009,865 $302,062,255 40,537,799 $349,550,087
Dividends and distributions reinvested 3,725,296 30,098,615 10,935,488 90,416,322
Redeemed (22,029,323) (182,133,707) (12,195,290) (104,683,139)
----------- ------------ ----------- ------------
Net increase 17,705,838 $150,027,163 39,277,997 $335,283,270
=========== ============ =========== ============
Class B:
Sold 35,786,510 $297,977,920 24,707,937 $219,055,169
Dividends and distributions reinvested 864,830 6,912,262 1,561,693 13,222,296
Redeemed (6,537,842) (52,979,744) (1,009,115) (8,980,550)
----------- ------------ ----------- ------------
Net increase 30,113,498 $251,910,438 25,260,515 $223,296,915
=========== ============ =========== ============
Class Y:
Sold 144,607 $1,168,840
Dividends and distributions reinvested 1,275 9,979
Redeemed (8,106) (65,045)
----------- ------------
Net increase 137,776 $1,113,774
=========== ============
</TABLE>
1. For the year ended December 31, 1994 for Class A and
Class B shares and for the period from June 1, 1994
(inception of offering) to December 31, 1994 for Class Y
shares.
2. For the year ended December 31, 1993 for Class A
shares and for the period from May 1, 1993 (inception of
offering) to December 31, 1993 for Class B shares.
20 Oppenheimer Total Return Fund, Inc.
<PAGE> 21
3. UNREALIZED GAINS At December 31, 1994, net unrealized appreciation on
AND LOSSES investments of $54,544,712 was composed of gross
ON INVESTMENTS appreciation of $141,457,423, and gross depreciation of
$86,912,711.
4. OPTION ACTIVITY The Fund may buy and sell put and call options, or write
covered call options on portfolio securities in order to
produce incremental earnings or protect against changes
in the value of portfolio securities.
The Fund generally purchases put options or writes
covered call options to hedge against adverse movements
in the value of portfolio holdings. When an option is
written, the Fund receives a premium and becomes
obligated to sell or purchase the underlying security at
a fixed price, upon exercise of the option. The Fund
segregates assets to cover its obligations under option
contracts.
Options are valued daily based upon the last sale
price on the principal exchange on which the option is
traded and unrealized appreciation or depreciation is
recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an
option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option,
or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or
paid.
In this report, securities segregated to cover
outstanding call options are noted in the Statement of
Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments.
Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund
gives up the opportunity for profit if the market price
of the security increases and the option is exercised.
The risk in writing a put option is that the Fund may
incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying
an option is that the Fund pays a premium whether or not
the option is exercised. The Fund also has the additional
risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Call option activity for the year ended December 31, 1994
was as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
--------- ----------
<S> <C> <C>
Options outstanding at December 31, 1993 -- $ --
Options written 6,400 1,229,866
Options canceled in closing purchase transactions (3,400) (724,845)
Options exercised (1,250) (254,079)
Options lapsed (1,250) (214,443)
------ ----------
Options outstanding at December 31, 1994 500 $ 36,499
====== ==========
</TABLE>
5. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS which provides for an annual fee of .75% on the first
WITH AFFILIATES $100 million of net assets with a reduction of .05% on
each $100 million thereafter, to .50% on net assets in
excess of $500 million. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent applicable
regulatory limit on Fund expenses.
For the year ended December 31, 1994, commissions
(sales charges paid by investors) on sales of Class A
shares totaled $8,832,144, of which $2,726,018 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by
an affiliated broker/dealer. During the year ended
December 31, 1994, OFDI received contingent deferred
sales charges of $731,799 upon redemption of Class B
shares.
Oppenheimer Shareholder Services (OSS), a division
of the Manager, is the transfer and shareholder servicing
agent for the Fund, and for other registered investment
companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans, Class A and Class B
may expend up to .25% of net assets annually to reimburse
OFDI for costs incurred in distributing shares of the
Fund (prior to July 1, 1994, reimbursements were made
with respect to shares sold subsequent to March 31, 1988
for Class A), including amounts paid to brokers, dealers,
banks and other financial institutions. In addition,
Class B shares are subject to an asset-based sales charge
of .75% of net assets annually, to reimburse OFDI for
sales commissions paid from its own resources at the time
of sale and associated financing costs. In the event of
termination or discontinuance of the Class B plan, the
Board of Directors may allow the Fund to continue payment
of the asset-based sales charge to OFDI for distribution
expenses incurred on Class B shares prior to termination
or discontinuance of the plan.
21 Oppenheimer Total Return Fund, Inc.
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (Continued)
5. MANAGEMENT FEES During the year ended December 31, 1994, OFDI paid
AND OTHER $144,910 and $7,941, respectively, to an affiliated
TRANSACTIONS broker/dealer as reimbursement for Class A and Class B
WITH AFFILIATES personal service and maintenance expenses and retained
(CONTINUED) $3,465,766 as reimbursement for Class B sales commissions
and service fee advances, as well as financing costs.
6. RESTRICTED The Fund owns securities purchased in private placement
SECURITIES transactions, without registration under the Securities
Act of 1933 (the Act). The securities are valued under
methods approved by the Board of Directors as reflecting
fair value. The Fund intends to invest no more than 10%
of its net assets (determined at the time of purchase) in
restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Directors or
by the Manager under Board-approved guidelines.
Restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act,
amount to $30,780 or less than .01% of the Fund's net
assets at December 31, 1994. Illiquid and/or restricted
securities, including those restricted securities that
are transferable under Rule 144A of the Act, are listed
below.
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE COST PER UNIT
-------- ---------------- -------------
<S> <C> <C>
Catellus Development Corp., $3.625 Cv., Series B(1) 10/28/93--6/17/94 $ 49.35
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(1) 3/3/94--6/28/94 $ 65.47
Ecuador (Republic of) Bonds, 0%, 12/29/49(1) 10/25/94 $ 60.38
Food Lion, Inc., 5% Cv. Sub. Debs., 6/1/03(1) 3/21/94--6/3/94 $ 99.34
Lynx Therapeutics, Inc. 10/19/92 $ .67
Pharmaceutical Marketing Services, Inc.,
6.25% Cv. Sub. Debs., 2/1/03(1) 1/27/93--12/6/94 $ 91.14
Physicians Clinical Laboratory,
Inc., 7.50% Cv. Sub. Debs., 8/15/00(1) 8/17/93 $ 100.00
Transco Energy Co., $3.50 Cum. Cv., Series E(1) 10/27/93--1/20/94 $ 49.81
</TABLE>
<TABLE>
<CAPTION>
VALUATION PER UNIT AS
SECURITY OF DECEMBER 31, 1994
-------- ---------------------
<S> <C>
Catellus Development Corp., $3.625 Cv., Series B(1) $38.50
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(1) $50.50
Ecuador (Republic of) Bonds, 0%, 12/29/49(1) $54.38
Food Lion, Inc., 5% Cv. Sub. Debs., 6/1/03(1) $88.50
Lynx Therapeutics, Inc. $ .20
Pharmaceutical Marketing Services, Inc.,
6.25% Cv. Sub. Debs., 2/1/03(1) $68.00
Physicians Clinical Laboratory,
Inc., 7.50% Cv. Sub. Debs., 8/15/00(1) $94.88
Transco Energy Co., $3.50 Cum. Cv., Series E(1) $45.50
</TABLE>
1. Transferable under Rule 144A of the Act.
22 Oppenheimer Total Return Fund, Inc.
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Oppenheimer
Total Return Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the statement of investments, of
Oppenheimer Total Return Fund, Inc. as of December 31,
1994, the related statement of operations for the year
then ended, the statements of changes in net assets for
the years ended December 31, 1994 and 1993, and the
financial highlights for the period January 1, 1985 to
December 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included
confirmation of securities owned at December 31, 1994 by
correspondence with the custodian and brokers; where
replies were not received from brokers, we performed
other auditing procedures. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and
financial highlights present fairly, in all material
respects, the financial position of Oppenheimer Total
Return Fund, Inc. at December 31, 1994, the results of
its operations, the changes in its net assets, and the
financial highlights for the respective stated periods,
in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 23, 1995
23 Oppenheimer Total Return Fund, Inc.
<PAGE> 24
FEDERAL INCOME TAX INFORMATION (Unaudited)
In early 1995, shareholders will receive information
regarding all dividends and distributions paid to them by
the Fund during calendar year 1994. Regulations of the
U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
Dividends paid by the Fund during the fiscal year
ended December 31, 1994 which are not designated as
capital gain distributions should be multiplied by 100%
to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist
shareholders in reporting distributions received from the
Fund to the Internal Revenue Service. Because of the
complexity of the federal regulations which may affect
your individual tax return and the many variations in
state and local tax regulations, we recommend that you
consult your tax advisor for specific guidance.
24 Oppenheimer Total Return Fund, Inc.
<PAGE> 25
OPPENHEIMER TOTAL RETURN FUND, INC.
OFFICERS AND James C. Swain, Chairman and Chief
DIRECTORS
Executive Officer
Robert G. Avis, Director
William A. Baker, Director
Charles Conrad, Jr., Director
Jon S. Fossel, Director and President
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
Andrew J. Donohue, Vice President
John L. Wallace, Vice President
George C. Bowen, Vice President, Secretary and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR Oppenheimer Management Corporation
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
INDEPENDENT AUDITORS Deloitte & Touche LLP
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer
Total Return Fund, Inc. This report must be preceded or
accompanied by a Prospectus of Oppenheimer Total Return
Fund, Inc. For material information concerning the Fund,
see the Prospectus.
25 Oppenheimer Total Return Fund, Inc.
<PAGE> 26
OPPENHEIMERFUNDS FAMILY
OppenheimerFunds offers over 35 funds designed to fit
virtually every investment goal. Whether you're investing
for retirement, your children's education or tax-free
income, we have the funds to help you seek your
objective.
When you invest with OppenheimerFunds, you can feel
comfortable knowing that you are investing with a
respected financial institution with over 30 years of
experience in helping people just like you reach their
financial goals. And youre investing with a leader in
global, growth stock and flexible fixed income
investments--with over 1.8 million shareholder accounts
and more than $29 billion under Oppenheimer's management
and that of our affiliates.
As an OppenheimerFunds shareholder, you can easily
exchange shares of eligible funds of the same class by
mail or by telephone for a small administrative fee(1).
For more information on OppenheimerFunds, please contact
your financial advisor or call us at 1-800-525-7048 for a
prospectus. You may also write us at the address shown on
the back cover. As always, please read the prospectus
carefully before you invest.
<TABLE>
<S> <C> <C>
STOCK FUNDS Discovery Fund Global Fund
Global Emerging Growth Fund(2) Oppenheimer Fund
Time Fund Value Stock Fund
Target Fund Gold & Special Minerals Fund
Growth Fund(3)
STOCK & BOND FUNDS Main Street Income & Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
BOND FUNDS High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund Investment Grade Bond Fund
Strategic Income & Growth Fund Mortgage Income Fund
Strategic Income Fund U.S. Government Trust
Strategic Diversified Income Fund Limited-Term Government Fund
Strategic Investment Grade Bond Fund
TAX-EXEMPT FUNDS New York Tax-Exempt Fund(4) New Jersey Tax-Exempt Fund(4)
California Tax-Exempt Fund(4) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(4) Insured Tax-Exempt Bond Fund
Florida Tax-Exempt Fund(4) Intermediate Tax-Exempt Bond Fund
MONEY MARKET FUNDS Money Market Fund Cash Reserves
</TABLE>
1. The fee is waived for PhoneLink exchanges between
existing accounts. Exchange privileges are subject to
change or termination.
2. Formerly Oppenheimer Global Bio-Tech Fund and
Oppenheimer Global Environment Fund.
3. Formerly Special Fund.
4. Available only to residents of those states.
OppenheimerFunds are distributed by Oppenheimer Funds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
(C)Copyright 1995 Oppenheimer Management Corporation. All
rights reserved.
26 Oppenheimer Total Return Fund, Inc.
<PAGE> 27
[FIGURE NUMBER 9]
Vision of mother and daughter
<PAGE> 28
"How may I help you?"
As an OppenheimerFunds shareholder, some special privileges are available to
you. Whether its automatic investment plans, informative newsletters and
hotlines, or ready account access, you can benefit from services designed to
make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. It also gives you the ability to make transactions using your
touch-tone phone. Of course, you can always speak with a Customer Service
Representative during business hours.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, non-profit
organization made up of over 3,200 customer service management professionals
from around the country, hon-ored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today, we're here to help.
INFORMATION
GENERAL INFORMATION
Monday--Friday 8:30 a.m.--8 p.m. ET
Saturday 10 a.m.2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday--Friday 8:30 a.m.--8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday--Friday 8:30 a.m.--8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RA0420.001.0295
[FIGURE NUMBER 10]
Photo of Jennifer Leonard
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
Bulk Rate
[LOGO] U.S. Postage
Oppenheimer Funds Distributor, Inc. PAID
P.O. Box 5270 Permit No. 469
Denver, CO 80217-5270 Denver, CO
