Semiannual Report June 30, 1997
OPPENHEIMER
TOTAL RETURN
FUND, INC.
[GRAPHIC OMITTED]
[Oppenheimer Logo]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Report highlights
- --------------------------------------------------------------------------------
Contents
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Managers
10 Statement of
Investments
22 Statement of
Assets &
Liabilities
24 Statement of
Operations
25 Statements of
Changes in
Net Assets
26 Financial
Highlights
29 Notes to Financial
Statements
35 Officers & Directors
36 Information &
Services
o Non-banking financial services holdings, such as insurance, consumer lending
businesses and credit card companies, drove the Fund's performance over the past
six months.
o The stock market's advance was driven by healthy corporate earnings, low
inflation and rising consumer savings, especially in retirement plans.
o The value-oriented components of the portfolio helped provide a cushion
against the stock market's volatile movements and rising interest rates during
the period.
- -------------------------------
Total Returns
- -------------------------------
For the Period Ended 6/30/97(1)
Class A
6 months 1 year
- -------------------------------
13.25% 23.17%
- -------------------------------
Class B
6 months 1 year
- -------------------------------
12.71% 22.26%
- -------------------------------
Class C
6 months 1 year
- -------------------------------
12.79% 22.30%
- -------------------------------
Class Y
6 months 1 year
- -------------------------------
13.31% 23.46%
- -------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account. Total returns for the six-month period are cumulative and are not
annualized.
2 Oppenheimer Total Return Fund, Inc.
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
We would like to welcome you to the premier issue of our newly redesigned
shareholder reports. As you can see, we've changed the format to allow easier
access to the information you need to monitor your investments. Some notable
additions are "at-a-glance" report highlights and charts that let you quickly
assess how your Fund has performed. On the following pages, your portfolio team
discuss their current investment thinking, your Fund's strategies, and
performance. Before these commentaries, we'd like to share a few global
observations.
As we consider the world's financial markets over the past six months, some
global trends emerge. For example, inflation has hit its lowest level in three
decades worldwide, which has helped spur many bullish financial markets. The
United States has been a beneficiary of this low-inflation environment, as well
as of a strong dollar, robust corporate earnings and a healthy economy. However,
many financial analysts are now concerned that the United States has reached a
point in the business cycle where earnings could decline because companies are
unable to further reduce costs.
On the other hand, a wave of corporate restructuring throughout Europe has
resulted in some exciting changes and opportunities. Because a similar
restructuring took place in the United States ten years ago, European companies
have been able to enjoy the benefit of hindsight by following our footsteps.
Latin America, too, has begun to shift its economies more toward the U.S.
capitalist model and has reported positive earnings growth along the way.
With major changes occurring in today's economies around the globe, it's
more important than ever to maintain a diversified portfolio across different
countries and market sectors. Now is the time to speak to your financial adviser
to ensure that your assets are allocated properly, so you have the opportunity
to benefit from investments in both domestic and international funds. It's
important to remember that investing abroad can involve greater risk and
expenses--including political and economic uncertainties--and should be
undertaken with a long-term approach in mind.
To keep in touch with our views on the markets, visit our website,
www.oppenheimerfunds.com, where you can access your account information and fund
performance data, 24 hours a day. The site also features prospectuses, timely
market updates and insightful commentaries. Our new shareholder reports and
presence on the Internet are just two examples of our commitment to keeping you
well informed.
Thank you for your confidence in OppenheimerFunds, The Right Way to Invest.
We look forward to helping you reach your investment goals in the future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
July 22, 1997
[PHOTO]
James C. Swain
Chairman
Oppenheimer Total
Return Fund, Inc.
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer Total
Return Fund, Inc.
3 Oppenheimer Total Return Fund, Inc.
<PAGE>
Performance update
- --------------------------------------------------------------------------------
- -------------------------------
Avg Annual Total Returns
- -------------------------------
For the Period Ended 6/30/97(1)
Class A
1 year 5 year 10 Year
- -------------------------------
16.09% 16.83% 13.08%
- -------------------------------
Class B
Since
1 year 5 year Inception
- -------------------------------
17.26% N/A 14.81%
- -------------------------------
Class C
Since
1 year 5 year Inception
- -------------------------------
21.30% N/A 22.73%
- -------------------------------
Class Y
Since
1 year 5 year Inception
- -------------------------------
23.46% N/A 19.10%
- -------------------------------
Oppenheimer Total Return Fund, Inc. is designed to utilize both growth and value
styles of stock investing. By investing in income-generating securities, like
convertible bonds, the portfolio structure is able to help cushion the ups and
downs of the market.
Growth of $10,000
Over ten years
(without sales charge)(2)
[GRAPHIC OMITTED]
[The following table was depicted in the printed materials as a mountain chart]
Oppenheimer
Total Fund
Date Class A Shares S & P 500 Index
- --------------------------------------------------------------------------------
6/30/87 $10,000.00 $10,000.00
9/30/87 $10,824.80 $10,659.88
12/31/87 $ 9,208.92 $ 8,256.56
3/31/88 $ 9,760.91 $ 8,728.80
6/30/88 $10,407.54 $ 9,310.18
9/30/88 $10,139.07 $ 9,341.75
12/31/88 $10,437.96 $ 9,630.18
3/31/89 $10,932.15 $10,312.93
6/30/89 $11,444.28 $11,223.28
9/30/89 $12,381.78 $12,425.24
12/31/89 $12,448.90 $12,681.58
3/31/90 $12,409.62 $12,300.09
6/30/90 $12,890.27 $13,073.82
9/30/90 $11,416.44 $11,277.08
12/31/90 $11,966.53 $12,287.90
3/31/91 $13,901.84 $14,072.82
6/30/91 $13,584.09 $14,040.53
9/30/91 $15,152.64 $14,791.36
12/31/91 $16,305.05 $16,031.50
3/31/92 $16,653.54 $15,626.60
6/30/92 $15,701.74 $15,923.69
9/30/92 $16,300.47 $16,425.66
12/31/92 $18,396.44 $17,252.68
3/31/93 $19,584.89 $18,006.11
6/30/93 $20,387.96 $18,093.79
9/30/93 $21,840.87 $18,561.30
12/31/93 $22,304.27 $18,891.65
3/31/94 $21,554.28 $18,271.46
6/30/94 $20,367.81 $18,348.36
9/30/94 $21,303.64 $19,245.56
12/31/94 $20,551.57 $19,242.53
3/31/95 $22,027.76 $21,116.10
6/30/95 $23,590.61 $23,131.99
9/30/95 $26,457.42 $24,970.10
12/31/95 $26,742.37 $26,473.47
3/31/96 $28,287.34 $27,894.45
6/30/96 $29,438.38 $29,146.25
9/30/96 $30,276.95 $30,047.05
12/31/96 $32,018.01 $32,551.76
3/31/97 $32,143.24 $33,424.49
6/30/97 $36,260.19 $39,259.71
1. Total returns include changes in share price and reinvestment of
dividends and capital gains distributions in a hypothetical investment for the
periods shown. Class A returns include the current maximum initial sales charge
of 5.75%. Class A shares were first publicly offered on 10/2/47. The Fund's
maximum sales charge for Class A shares was higher prior to 4/1/91, so actual
performance may have been lower. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 2% (since inception on
5/1/93). Class C returns include the contingent deferred sales charge of 1% for
the 1-year result. Class C shares were first publicly offered on 8/29/95. Class
Y shares were first publicly offered on 6/1/94 and are not available for sale to
individual shareholders. An explanation of the different performance
calculations is in the Fund's prospectus. Class B and C shares are subject to an
annual 0.75% asset-based sales charge.
2. Results of a hypothetical $10,000 investment in Class A shares on June 30,
1987. The S&P 500 is a broad-based unmanaged stock index including daily
reinvestment of dividends and cannot be purchased directly by investors. Stocks
and bonds are subject to different risks, described in the prospectus. Past
performance does not guarantee future results.
4 Oppenheimer Total Return Fund, Inc.
<PAGE>
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Total Return Fund, Inc. is for investors looking for tomorrow's
growth and today's income.
What We Look For
o Growth stocks with superior earnings potential, and
earnings momentum.
o Value stocks that trade at attractive prices.
o Dividend-paying stocks of quality companies for income.
o Convertible bonds that can help generate income and take advantage of the
stock market's upside potential--while providing a hedge against uncertainties.
Top 10 Stock Holdings(3)
- --------------------------------------------------------------------------------
HEALTHSOUTH Corp. 2.1% Household International, Inc. 1.5%
- --------------------------------------------------------------------------------
Philip Morris Cos., Inc. 1.9 Intel Corp. 1.3
- --------------------------------------------------------------------------------
DuPont (E.I.) DeNemours & Co. 1.6 Service Corp. International 1.3
- --------------------------------------------------------------------------------
American Home Products Corp. 1.5 Travelers Group, Inc. 1.2
- --------------------------------------------------------------------------------
GTE Corp. 1.5 Tyco International Ltd. 1.2
- --------------------------------------------------------------------------------
3. The portfolio is subject to change. Percentages are based on total market
value of stock holdings as of 6/30/97.
5 Oppenheimer Total Return Fund, Inc.
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
How has the Fund performed during the first half of 1997?
Oppenheimer Total Return Fund, Inc. Class A shares have generated a 13.25%
cumulative return for the six-month period ended June 30, 1997.(1) The Fund's
emphasis on income-producing securities contributed positively to the
portfolio's rate of total return, providing a potential cushion against falling
markets. However, during the first half of 1997 the Fund's fixed-income holdings
constrained performance relative to stocks in an environment that favored growth
investing.
How did the stock and bond markets perform during the period?
The past six months were relatively volatile for stocks and bonds. The stock
market declined almost 10% between January 1 and mid-April, producing the
largest correction in several years. This sell-off was mainly the result of
investors' fears that an overheated economy might rekindle inflationary
pressures, which erode the value of financial assets over time. Inflation
concerns also prompted the nation's monetary policy makers at the Federal
Reserve Board to raise key short-term interest rates, which caused most bond
yields to rise. When the investment community later realized that inflationary
forces were likely to remain benign and that future interest rate increases
would probably be modest, the stock market recaptured all of its losses--and
then some--with the Dow Jones Industrial Average rising more than 1,000 points
between mid-April and the end of June.(2) Similarly, the bond market recovered
as yields declined and prices rose (bond prices and yields move in opposite
directions).
"...Our blend
of value-
and growth-
oriented
investment
styles has
provided solid
diversification."
6 Oppenheimer Total Return Fund, Inc.
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Diane Sobin(3)
Bruce Bartlett
(Fund Managers)
How was the Fund positioned to take advantage of these economic and market
conditions?
When the year began, we expected the rate of economic growth to slow and
interest rates to decline modestly. We positioned the Fund to take advantage of
that forecast by increasing our emphasis on companies expected to produce
above-average earnings growth in a slow economy. While this position helped the
Fund produce strong performance early in the year, economic growth subsequently
strengthened and interest rates rose. This negatively affected the stock market
in general and these stocks in particular.
However, as it was designed to do, the Fund's co-managed team structure
and blend of value- and growth-oriented investment styles provided the
diversification we needed to weather the storm and reposition the portfolio. The
value-oriented components of the portfolio helped provide a cushion against the
falling stock market and rising interest rates. In this area, we stressed
income-producing stocks, such as regional telecommunications companies, energy
companies, financial companies and electric utilities that pay above-average
dividends.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account. Past performance does not guarantee future
results.
2. The Dow Jones Industrial Stock Average is a price-weighted average
of 30 actively traded blue chip stocks. This widely recognized indicator of
stock market performance includes dividend reinvestments but does not take
capital gains distributions into consideration.
3. Effective July 18, 1997 the Fund's portfolio managers are Bruce Bartlett and
John Doney.
7 Oppenheimer Total Return Fund, Inc.
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
"...We positioned
the Fund to
take advantage
of companies..."
We also increased our exposure to the U.S. Treasury market during the
period, raising our allocation of fixed-income securities. This increase
primarily represented funds shifted from international and emerging market
fixed-income vehicles and from convertible bonds that matured or were redeemed
early by their issuers.
Which investments performed particularly well, and which ones were
disappointments?
One of our top ten holdings, Intel, was a stellar performer during the period.
This dominant designer and manufacturer of microprocessors fits both the growth
and value categories of the portfolio because its earnings are rising rapidly,
yet it is undervalued relative to other technology companies. In addition, we
saw excellent performance from Travelers Corp., a diversified financial services
company, and DuPont, the well-known chemical and energy company, did quite well
in the wake of a major restructuring. On the other hand, disappointments
included a medical products company, which saw diminished earnings growth after
completing a major acquisition, and a shoe manufacturer that experienced
problems related to an acquisition.(4)
In which industries have you found attractive opportunities this year?
One economic sector that has done quite well for the Fund is the financial
services industry. In 1996, we participated in the strong performance of banks
that prospered in a low-inflation environment. So far in 1997, we are finding
attractive investments in the nonbank financial companies such as insurance
firms, consumer lending businesses and credit card companies, and have increased
our exposure to these areas.
8 Oppenheimer Total Return Fund, Inc.
<PAGE>
"...that are
expected to
produce
above average
earnings
growth
in a slow
economy."
What is your outlook for stocks and bonds for the second half of the year?
We are optimistic about the stock market's prospects during the second half of
1997. On the positive side, the influences that have driven the stock market's
advance remain in place: healthy corporate earnings, low inflation and rising
consumer savings, especially in retirement plans. Indeed, it appears that the
high rate of economic growth that unsettled investors during March and April is
abating and a "Goldilocks" economy (not too hot, not too cold) should prevail
again.
On the other hand, experience tells us that no market rises forever, and
that corrections--and more severe downtrends--inevitably occur from time to
time. Therefore, while we believe that further stock market gains are quite
possible, we are prepared for the possibility they may not materialize. As for
bonds, we expect yields to fall modestly and prices to rise as economic growth
slows, producing the potential for above-average total returns in fixed-income
securities.
4. The Fund's portfolio is subject to change.
9 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
=====================================================================================
<S> <C> <C>
Short-Term Notes--2.2%
- -------------------------------------------------------------------------------------
General Electric Capital Corp., 5.40%, 7/8/97(2) $ 50,000,000 $ 49,944,583
- -------------------------------------------------------------------------------------
The Hertz Corp., 5.53%, 7/3/97(2) 14,118,000 14,113,663
------------
Total Short-Term Notes (Cost $64,058,246) 64,058,246
=====================================================================================
U.S. Government Obligations--10.7%
- -------------------------------------------------------------------------------------
Government Agency-Sponsored--5.1%
Federal Home Loan Bank, 6%, 7/1/97 150,000,000 150,000,000
- -------------------------------------------------------------------------------------
Treasury--5.6%
U.S. Treasury Bonds:
6.625%, 2/15/27 51,350,000 50,242,789
STRIPS, Zero Coupon, 6.918%, 11/15/18(3) 108,000,000 24,667,295
- -------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5%, 1/31/98 4,000,000 3,985,004
6.25%, 3/31/99-2/15/07 41,200,000 40,564,773
6.625%, 3/31/02 30,050,000 30,331,746
7.75%, 11/30/99-12/31/99 15,000,000 15,529,699
------------
Total U.S. Government Obligations (Cost $314,019,815) 315,321,306
=====================================================================================
Foreign Government Obligations--0.4%
- -------------------------------------------------------------------------------------
Hong Kong & Shanghai Bank Banker's Acceptance
Bills, Zero Coupon, 7.094%, 9/19/97(3)(MYR) 1,962,000 764,736
- -------------------------------------------------------------------------------------
Hungarian Government Bonds,
Series 97AA, 23.50%, 11/6/97(HUF) 155,000,000 835,023
- -------------------------------------------------------------------------------------
Petroleos Mexicanos Debs., 14.50%, 3/31/06(GBP) 127,000 257,338
- -------------------------------------------------------------------------------------
Poland (Republic of) Bonds:
12%, 6/12/01(PLZ) 7,380,000 1,809,492
16%, 10/12/98(PLZ) 7,400,000 2,094,408
16%, 2/12/99(PLZ) 3,600,000 1,012,219
- -------------------------------------------------------------------------------------
South Africa (Republic of) Bonds,
Series 162, 12.50%, 1/15/02(ZAR) 17,852,000 3,705,760
- -------------------------------------------------------------------------------------
Telkom SA Ltd. Bonds, Series TK05, 12%, 3/31/98(ZAR) 2,710,000 583,732
- -------------------------------------------------------------------------------------
Venezuela Synthetic Sovereign Sec. Bonds,
11.50%, 12/28/07(DEM) 1,000,000 601,136
------------
Total Foreign Government Obligations (Cost $12,412,189) 11,663,844
=====================================================================================
Loan Participations--0.0%
- -------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.625%, 9/30/00 (Cost $1,436,027)(4)(5)(JPY) 175,144,933 1,423,444
</TABLE>
10 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
================================================================================================
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes--0.2%
- ------------------------------------------------------------------------------------------------
Consumer Cyclicals--0.0%
- ------------------------------------------------------------------------------------------------
Retail: Specialty--0.0%
Central Termica Guemes, 12% Bonds, 11/26/01(5) $ 1,200,000 $ 1,257,000
- ------------------------------------------------------------------------------------------------
Financial--0.2%
- ------------------------------------------------------------------------------------------------
Banks--0.1%
Bank Dagang Nasional Indonesia, Zero
Coupon Negotiable CD, 13.369%, 11/20/97(3)(IDR) 3,500,000,000 1,364,035
- ------------------------------------------------------------------------------------------------
Deutsche Bank Malaysia, Zero Coupon
Negotiable CD, 6.944%, 7/18/97(3)(MYR) 1,851,000 731,484
----------
2,095,519
- ------------------------------------------------------------------------------------------------
Diversified Financial--0.1%
Bakrie Investindo, Zero Coupon:
Indonesian Commercial Paper, 16.625%,
7/30/97(3)(IDR) 1,684,000,000 682,846
Promissory Nts., 17.252%, 3/16/98(3)(IDR) 2,680,000,000 979,231
- ------------------------------------------------------------------------------------------------
Dresdner Finance BV, 5.50% Gtd. Nts.,
4/30/04(DEM) 417,000 312,295
- ------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon
Promissory Nts., 16.466%, 3/16/98(3)(IDR) 600,000,000 219,779
----------
2,194,151
- ------------------------------------------------------------------------------------------------
Industrial--0.0%
- ------------------------------------------------------------------------------------------------
Manufacturing--0.0%
Cia Latino Americana de Infraestructura & Servicios SA -
CLISA, 11.625% Gtd. Sr. Nts., 6/1/04(6) 50,000 53,000
- ------------------------------------------------------------------------------------------------
Consorcio Ecuatoriano, 14% Nts., 5/1/02(5) 1,030,000 1,094,375
----------
1,147,375
----------
Total Non-Convertible Corporate Bonds and Notes (Cost $6,612,736) 6,694,045
================================================================================================
Convertible Corporate Bonds and Notes--2.7%
- ------------------------------------------------------------------------------------------------
Consumer Cyclicals--0.9%
- ------------------------------------------------------------------------------------------------
Autos & Housing--0.3%
IRSA Inversiones y Representaciones SA, 4.50% Puttable
& Redeemable Cv. Knockout Securities, 8/2/03(6) 7,758,000 8,863,515
- ------------------------------------------------------------------------------------------------
Media--0.1%
Scandinavian Broadcasting System SA, 7.25% Cv. Sub.
Debs., 8/1/05 3,000,000 3,011,250
- ------------------------------------------------------------------------------------------------
Retail: Specialty--0.5%
Home Depot, Inc., 3.25% Cv. Sub. Nts., 10/1/01 12,600,000 14,301,000
</TABLE>
11 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Non-Cyclicals--0.3%
- ------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.3%
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs.,
8/15/00(5)(7) $ 3,000,000 $ 30,000
- ------------------------------------------------------------------------------------------------
Sunrise Assisted Living, Inc., 5.50% Cv. Nts., 6/15/02(6) 6,818,000 7,567,980
-----------
7,597,980
- ------------------------------------------------------------------------------------------------
Energy--0.2%
- ------------------------------------------------------------------------------------------------
Energy Services & Producers--0.2%
Offshore Logistics, Inc., 6% Cv. Sub. Nts., 12/15/03(6) 5,000,000 5,375,000
- ------------------------------------------------------------------------------------------------
Industrial--1.0%
- ------------------------------------------------------------------------------------------------
Electrical Equipment--0.1%
Photronics, Inc., 6% Cv. Sub. Nts., 6/1/04 4,000,000 4,365,000
- ------------------------------------------------------------------------------------------------
Industrial Services--0.7%
Sanifill, Inc., 5% Cv. Sub. Debs., 3/1/06 2,000,000 2,902,500
- ------------------------------------------------------------------------------------------------
Thermo Electron Corp.:
4.25% Cv. Sub. Nts., 1/1/03(6) 4,000,000 4,350,000
5% Cv. Debs., 4/15/01 4,000,000 6,930,000
- ------------------------------------------------------------------------------------------------
United Waste Systems, Inc., 4.50% Cv. Sub. Nts., 6/1/01(6) 4,333,000 5,952,459
-----------
20,134,959
- ------------------------------------------------------------------------------------------------
Manufacturing--0.2%
U.S. Filter Corp.:
4.50% Cv. Sub. Nts., 12/15/01 3,000,000 2,928,750
6% Cv. Sub. Nts., 9/15/05 1,250,000 1,945,312
-----------
4,874,062
- ------------------------------------------------------------------------------------------------
Technology--0.3%
- ------------------------------------------------------------------------------------------------
Computer Hardware--0.2%
AST Research, Inc., Zero Coupon Cv. Sub. Nts., 5.351%,
12/14/13(3) 5,000,000 2,093,750
- ------------------------------------------------------------------------------------------------
EMC Corp., 3.25% Cv. Sub. Nts., 3/15/02(6) 5,000,000 5,493,750
-----------
7,587,500
- ------------------------------------------------------------------------------------------------
Computer Software--0.1%
Baan Co. NV, 4.50% Cv. Sub. Nts., 12/15/01(5) 2,000,000 3,185,000
-----------
Total Convertible Corporate Bonds and Notes (Cost $74,480,840) 79,295,266
</TABLE>
12 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
================================================================================================
<S> <C> <C>
Common Stocks--79.7%
- ------------------------------------------------------------------------------------------------
Basic Materials--5.0%
- ------------------------------------------------------------------------------------------------
Chemicals--3.5%
Betzdearborn, Inc. 390,000 $25,740,000
- ------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 765,600 48,137,100
- ------------------------------------------------------------------------------------------------
Goodrich (B.F.) Co. 267,500 11,586,094
- ------------------------------------------------------------------------------------------------
International Flavors & Fragrances, Inc. 250,000 12,625,000
- ------------------------------------------------------------------------------------------------
Morton International, Inc. 190,000 5,735,625
-----------
103,823,819
- ------------------------------------------------------------------------------------------------
Metals--1.0%
Aluminum Co. of America 250,000 18,843,750
- ------------------------------------------------------------------------------------------------
Nucor Corp. 205,900 11,633,350
-----------
30,477,100
- ------------------------------------------------------------------------------------------------
Paper--0.5%
Union Camp Corp. 310,000 15,500,000
- ------------------------------------------------------------------------------------------------
Consumer Cyclicals--12.3%
- ------------------------------------------------------------------------------------------------
Autos & Housing--0.4%
Lear Seating Corp.(8) 251,800 11,173,625
- ------------------------------------------------------------------------------------------------
Leisure & Entertainment--3.0%
Bob Evans Farms, Inc. 215,000 3,641,562
- ------------------------------------------------------------------------------------------------
Carnival Corp., Cl. A 305,000 12,581,250
- ------------------------------------------------------------------------------------------------
Circus Circus Enterprises, Inc.(8) 200,000 4,925,000
- ------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc.(8) 580,000 13,340,000
- ------------------------------------------------------------------------------------------------
McDonald's Corp. 101,000 4,879,562
- ------------------------------------------------------------------------------------------------
Mirage Resorts, Inc.(8) 300,000 7,575,000
- ------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 136,300 11,434,761
- ------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.(8) 505,100 16,668,300
- ------------------------------------------------------------------------------------------------
Starbucks Corp.(8) 250,000 9,734,375
- ------------------------------------------------------------------------------------------------
West Marine, Inc.(8) 150,000 3,862,500
-----------
88,642,310
- ------------------------------------------------------------------------------------------------
Media--0.8%
Cox Communications, Inc., Cl. A(8) 62,800 1,507,200
- ------------------------------------------------------------------------------------------------
Dun & Bradstreet Corp. 400,000 10,500,000
- ------------------------------------------------------------------------------------------------
Reuters Holdings plc, Sponsored ADR 190,000 11,970,000
-----------
23,977,200
</TABLE>
13 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail: General--3.5%
Federated Department Stores, Inc.(8) 160,000 $ 5,560,000
- ------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(8) 374,500 17,882,375
- ------------------------------------------------------------------------------------------------
Kohl's Corp.(8) 395,000 20,910,312
- ------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 340,000 17,743,750
- ------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 395,000 13,355,937
- ------------------------------------------------------------------------------------------------
Walgreen Co. 280,000 15,015,000
- ------------------------------------------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A 62,700 1,998,562
- ------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 322,500 9,795,937
-----------
102,261,873
- ------------------------------------------------------------------------------------------------
Retail: Specialty--4.6%
CompUSA, Inc(8) 333,200 7,163,800
- ------------------------------------------------------------------------------------------------
Costco Cos., Inc.(8) 305,000 10,026,875
- ------------------------------------------------------------------------------------------------
CVS Corp. 365,682 18,741,202
- ------------------------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 176,300 10,049,100
- ------------------------------------------------------------------------------------------------
Gadzooks, Inc.(8) 110,000 2,145,000
- ------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(8) 435,000 12,180,000
- ------------------------------------------------------------------------------------------------
Home Depot, Inc. 129,000 8,892,937
- ------------------------------------------------------------------------------------------------
Intimate Brands, Inc., Cl. A 490,000 10,290,000
- ------------------------------------------------------------------------------------------------
Nine West Group, Inc.(8) 398,500 15,217,719
- ------------------------------------------------------------------------------------------------
Pacific Sunware of California, Inc.(8) 127,500 4,111,875
- ------------------------------------------------------------------------------------------------
Pier 1 Imports, Inc. 200,000 5,300,000
- ------------------------------------------------------------------------------------------------
Samsonite Corp.(8) 75,000 3,309,375
- ------------------------------------------------------------------------------------------------
Tiffany & Co. 150,000 6,928,125
- ------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc.(8) 300,000 10,500,000
- ------------------------------------------------------------------------------------------------
Wet Seal, Inc., Cl. A(8) 57,500 1,814,844
- ------------------------------------------------------------------------------------------------
Williams-Sonoma, Inc.(8) 188,500 8,058,375
-----------
134,729,227
- ------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--15.5%
- ------------------------------------------------------------------------------------------------
Beverages--1.2%
Anheuser-Busch Cos., Inc. 350,000 14,678,125
- ------------------------------------------------------------------------------------------------
Guinness plc 1,957,000 19,151,373
-----------
33,829,498
- ------------------------------------------------------------------------------------------------
Food--1.0%
Hormel Foods Corp. 315,000 8,465,625
- ------------------------------------------------------------------------------------------------
JP Foodservice, Inc.(8) 196,900 5,648,569
- ------------------------------------------------------------------------------------------------
Kroger Co.(8) 500,000 14,500,000
-----------
28,614,194
</TABLE>
14 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Healthcare/Drugs--3.9%
Abbott Laboratories 405,000 $27,033,750
- ------------------------------------------------------------------------------------------------
American Home Products Corp. 595,000 45,517,500
- ------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 110,000 8,910,000
- ------------------------------------------------------------------------------------------------
Johnson & Johnson 100,000 6,437,500
- ------------------------------------------------------------------------------------------------
Merck & Co., Inc. 80,000 8,280,000
- ------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 310,000 4,572,500
- ------------------------------------------------------------------------------------------------
SmithKline Beecham plc, ADR 150,000 13,743,750
-----------
114,495,000
- ------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--5.5%
Baxter International, Inc. 260,000 13,585,000
- ------------------------------------------------------------------------------------------------
Becton, Dickinson & Co. 340,000 17,212,500
- ------------------------------------------------------------------------------------------------
Cardinal Health, Inc. 531,600 30,434,100
- ------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(8) 2,525,248 62,973,372
- ------------------------------------------------------------------------------------------------
Lynx Therapeutics, Inc. (New)(5)(8) 15,390 184,680
- ------------------------------------------------------------------------------------------------
Omnicare, Inc. 160,000 5,020,000
- ------------------------------------------------------------------------------------------------
Orthodontic Centers of America, Inc.(8) 526,400 9,573,900
- ------------------------------------------------------------------------------------------------
Vencor, Inc.(8) 340,000 14,365,000
- ------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc.(8) 163,000 7,477,625
-----------
160,826,177
- ------------------------------------------------------------------------------------------------
Household Goods--1.6%
Avon Products, Inc. 200,000 14,112,500
- ------------------------------------------------------------------------------------------------
Kimberly-Clark Corp. 345,000 17,163,750
- ------------------------------------------------------------------------------------------------
Tupperware Corp. 425,000 15,512,500
-----------
46,788,750
- ------------------------------------------------------------------------------------------------
Tobacco--2.3%
Philip Morris Cos., Inc. 1,295,000 57,465,625
- ------------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 300,000 9,900,000
-----------
67,365,625
Energy--5.8%
- ------------------------------------------------------------------------------------------------
Energy Services & Producers--2.7%
Baker Hughes, Inc. 425,000 16,442,187
- ------------------------------------------------------------------------------------------------
ENSCO International, Inc.(8) 80,000 4,220,000
- ------------------------------------------------------------------------------------------------
Global Marine, Inc.(8) 250,000 5,812,500
- ------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co. 229,500 13,110,187
- ------------------------------------------------------------------------------------------------
Nabors Industries, Inc.(8) 250,000 6,250,000
- ------------------------------------------------------------------------------------------------
Schlumberger Ltd. 266,800 33,350,000
-----------
79,184,874
</TABLE>
15 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil-Integrated--3.1%
Amoco Corp. 130,000 $11,301,875
- ------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 90,000 6,345,000
- ------------------------------------------------------------------------------------------------
British Petroleum Co. plc, ADR 72,800 5,450,900
- ------------------------------------------------------------------------------------------------
Camco International, Inc. 50,000 2,737,500
- ------------------------------------------------------------------------------------------------
ENI SpA, Sponsored ADR(8) 125,000 7,109,375
- ------------------------------------------------------------------------------------------------
Mobil Corp. 210,000 14,673,750
- ------------------------------------------------------------------------------------------------
Tosco Corp. 167,000 4,999,562
- ------------------------------------------------------------------------------------------------
United Meridian Corp.(8) 130,000 3,900,000
- ------------------------------------------------------------------------------------------------
Unocal Corp. 380,000 14,748,750
- ------------------------------------------------------------------------------------------------
USX-Marathon Group 675,000 19,490,625
-----------
90,757,337
- ------------------------------------------------------------------------------------------------
Financial--16.0%
- ------------------------------------------------------------------------------------------------
Banks--6.0%
BankAmerica Corp. 410,000 26,470,625
- ------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 132,400 12,851,075
- ------------------------------------------------------------------------------------------------
Citicorp 100,000 12,056,250
- ------------------------------------------------------------------------------------------------
Dresdner Bank AG 131,500 4,610,900
- ------------------------------------------------------------------------------------------------
First America Bank Corp. 185,100 8,468,325
- ------------------------------------------------------------------------------------------------
First Bank System, Inc. 175,000 14,940,625
- ------------------------------------------------------------------------------------------------
First Tennessee National Corp. 108,500 5,208,000
- ------------------------------------------------------------------------------------------------
Firstar Corp. 335,000 10,217,500
- ------------------------------------------------------------------------------------------------
National City Corp. 180,000 9,450,000
- ------------------------------------------------------------------------------------------------
PNC Bank Corp. 270,000 11,238,750
- ------------------------------------------------------------------------------------------------
Societe Generale 74,500 8,324,397
- ------------------------------------------------------------------------------------------------
Summit Bancorp 540,000 27,067,500
- ------------------------------------------------------------------------------------------------
Washington Mutual, Inc. 450,000 26,887,500
-----------
177,791,447
- ------------------------------------------------------------------------------------------------
Diversified Financial--7.4%
American Express Co. 305,000 22,722,500
- ------------------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 259,000 14,374,500
- ------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 830,000 28,531,250
- ------------------------------------------------------------------------------------------------
Household International, Inc. 369,500 43,393,156
- ------------------------------------------------------------------------------------------------
MBNA Corp. 814,750 29,840,219
- ------------------------------------------------------------------------------------------------
MGIC Investment Corp. 431,000 20,661,062
- ------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 345,000 14,856,562
- ------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. 245,000 9,968,437
- ------------------------------------------------------------------------------------------------
Travelers Group, Inc. 556,667 35,104,813
-----------
219,452,499
</TABLE>
16 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Insurance--2.6%
Allstate Corp. 215,000 $15,695,000
- ------------------------------------------------------------------------------------------------
Chubb Corp. 60,000 4,012,500
- ------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 200,000 16,550,000
- ------------------------------------------------------------------------------------------------
Hartford Life, Inc., Cl. A(8) 42,250 1,584,375
- ------------------------------------------------------------------------------------------------
NAC Re Corp. 161,700 7,822,238
- ------------------------------------------------------------------------------------------------
St. Paul Cos., Inc. 209,900 16,004,875
- ------------------------------------------------------------------------------------------------
SunAmerica, Inc. 305,000 14,868,750
-----------
76,537,738
- ------------------------------------------------------------------------------------------------
Industrial--7.3%
- ------------------------------------------------------------------------------------------------
Electrical Equipment--1.5%
AMP, Inc. 425,000 17,743,750
- ------------------------------------------------------------------------------------------------
Honeywell, Inc. 355,500 26,973,563
-----------
44,717,313
- ------------------------------------------------------------------------------------------------
Industrial Materials--0.4%
Sherwin-Williams Co. 402,200 12,417,925
- ------------------------------------------------------------------------------------------------
Industrial Services--2.6%
Corrections Corp. of America(8) 200,000 7,950,000
- ------------------------------------------------------------------------------------------------
Donnelley (R.R.) & Sons Co. 350,000 12,818,750
- ------------------------------------------------------------------------------------------------
Service Corp. International 1,148,000 37,740,500
- ------------------------------------------------------------------------------------------------
United Waste Systems, Inc.(8) 190,000 7,790,000
- ------------------------------------------------------------------------------------------------
USA Waste Services, Inc.(8) 295,000 11,394,375
-----------
77,693,625
- ------------------------------------------------------------------------------------------------
Manufacturing--2.2%
American Standard Cos., Inc.(8) 285,300 12,767,175
- ------------------------------------------------------------------------------------------------
New Holland NV 387,000 10,594,125
- ------------------------------------------------------------------------------------------------
Tenneco, Inc. 120,000 5,422,500
- ------------------------------------------------------------------------------------------------
Tyco International Ltd. 500,000 34,781,250
- ------------------------------------------------------------------------------------------------
U.S. Filter Corp.(8) 100,000 2,725,000
-----------
66,290,050
- ------------------------------------------------------------------------------------------------
Transportation--0.6%
Canadian Pacific Ltd. (New) 550,000 15,640,625
- ------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc. 50,000 3,225,000
-----------
18,865,625
</TABLE>
17 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Technology--10.1%
- ------------------------------------------------------------------------------------------------
Aerospace/Defense--0.8%
Precision Castparts Corp. 411,300 $24,523,763
- ------------------------------------------------------------------------------------------------
Computer Hardware--3.9%
Compaq Computer Corp.(8) 80,000 7,940,000
- ------------------------------------------------------------------------------------------------
Dell Computer Corp.(8) 140,000 16,441,250
- ------------------------------------------------------------------------------------------------
EMC Corp.(8) 120,000 4,680,000
- ------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(8) 855,000 27,734,063
- ------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 100,000 5,600,000
- ------------------------------------------------------------------------------------------------
International Business Machines Corp.(9) 240,000 21,645,000
- ------------------------------------------------------------------------------------------------
Seagate Technology(8) 605,000 21,288,438
- ------------------------------------------------------------------------------------------------
Storage Technology Corp. (New)(8) 100,000 4,450,000
- ------------------------------------------------------------------------------------------------
Sun Microsystems, Inc.(8) 150,000 5,582,813
-----------
115,361,564
- ------------------------------------------------------------------------------------------------
Computer Software--1.8%
Baan Co. NV(8) 144,000 9,918,000
- ------------------------------------------------------------------------------------------------
BMC Software, Inc.(8) 300,000 16,612,500
- ------------------------------------------------------------------------------------------------
CBT Group plc, ADR(8) 172,500 10,889,063
- ------------------------------------------------------------------------------------------------
IONA Technologies plc, ADR(8) 50,000 987,500
- ------------------------------------------------------------------------------------------------
Microsoft Corp.(8)(9) 115,000 14,533,125
-----------
52,940,188
- ------------------------------------------------------------------------------------------------
Electronics--2.1%
Input/Output, Inc.(8) 200,000 3,625,000
- ------------------------------------------------------------------------------------------------
Intel Corp. 270,000 38,289,375
- ------------------------------------------------------------------------------------------------
LSI Logic Corp.(8) 430,000 13,760,000
- ------------------------------------------------------------------------------------------------
Photronics, Inc.(8) 157,200 7,506,300
-----------
63,180,675
- ------------------------------------------------------------------------------------------------
Telecommunications-Technology--1.5%
Airtouch Communications, Inc.(8) 325,000 8,896,875
- ------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(8) 85,000 5,705,625
- ------------------------------------------------------------------------------------------------
LCI International, Inc.(8) 280,000 6,125,000
- ------------------------------------------------------------------------------------------------
Millicom, Inc.(8) 400,000 --
- ------------------------------------------------------------------------------------------------
Uniphase Corp.(8) 200,000 11,650,000
- ------------------------------------------------------------------------------------------------
WorldCom, Inc. 412,800 13,209,600
-----------
45,587,100
</TABLE>
18 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities--7.7%
- ------------------------------------------------------------------------------------------------
Electric Utilities--3.5%
Allegheny Power System, Inc. 495,000 $13,210,313
- ------------------------------------------------------------------------------------------------
American Electric Power Co., Inc. 100,000 4,200,000
- ------------------------------------------------------------------------------------------------
Boston Edison Co. 225,000 5,934,375
- ------------------------------------------------------------------------------------------------
Carolina Power & Light Co. 280,000 10,045,000
- ------------------------------------------------------------------------------------------------
CINergy Corp. 364,000 12,671,750
- ------------------------------------------------------------------------------------------------
CMS Energy Corp. 135,000 4,758,750
- ------------------------------------------------------------------------------------------------
Edison International 625,000 15,546,875
- ------------------------------------------------------------------------------------------------
FPL Group, Inc. 110,000 5,066,875
- ------------------------------------------------------------------------------------------------
Public Service Co. of Colorado 310,000 12,865,000
- ------------------------------------------------------------------------------------------------
SCANA Corp. 165,000 4,094,063
- ------------------------------------------------------------------------------------------------
Southern Co. 348,500 7,623,438
- ------------------------------------------------------------------------------------------------
Unicom Corp. 300,000 6,675,000
-----------
102,691,439
- ------------------------------------------------------------------------------------------------
Gas Utilities--1.3%
Columbia Gas System, Inc. 205,000 13,376,250
- ------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 75,000 4,125,000
- ------------------------------------------------------------------------------------------------
Sonat, Inc. 385,000 19,731,250
-----------
37,232,500
- ------------------------------------------------------------------------------------------------
Telephone Utilities--2.9%
Bell Atlantic Corp. 318,400 24,158,600
- ------------------------------------------------------------------------------------------------
GTE Corp. 1,025,000 44,971,875
- ------------------------------------------------------------------------------------------------
SBC Communications, Inc. 288,300 17,838,563
-----------
86,969,038
-----------
Total Common Stocks (Cost $1,764,649,263) 2,354,699,098
================================================================================================
Preferred Stocks--1.2%
- ------------------------------------------------------------------------------------------------
Airtouch Communications, Inc., 4.25% Cv. Cum.,
Series C, Non-Vtg 110,000 5,280,000
- ------------------------------------------------------------------------------------------------
Daimler Benz AG, 5.75% Cv. Preferred(8) 45,787 3,857,555
- ------------------------------------------------------------------------------------------------
Microsoft Corp., $2.196 Cv., Series A 185,000 16,095,000
- ------------------------------------------------------------------------------------------------
TCI Communications, Inc., $2.125 Cum. Cv., Series A 100,000 4,325,000
- ------------------------------------------------------------------------------------------------
TCI Pacific Communications, Inc., 5% Cv. Preferred 50,000 5,150,000
-----------
Total Preferred Stocks (Cost $32,443,947) 34,707,555
</TABLE>
19 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
================================================================================================
<S> <C> <C>
Other Securities--0.9%
- ------------------------------------------------------------------------------------------------
Cooper Industries, Inc., 6% Debt Exchangeable Nts. for
Common Stock of Wyman-Gordon Co., 1/1/99 365,000 $ 8,395,000
- ------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.25% Structured Yield Product Exchangeable for Stock
of IMC Global, Inc. 90,900 3,408,750
6.50% Cv. Structured Yield Product Exchangeable for
Common Stock of MGIC Investment Corp. 110,000 9,075,000
7.25% Structured Yield Product Exchangeable for
Common Stock of SunAmerica, Inc., 6/15/99 75,000 5,137,500
-----------
Total Other Securities (Cost $18,805,616) 26,016,250
Units
================================================================================================
Rights, Warrants and Certificates--0.0%
- ------------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 100,000 --
- ------------------------------------------------------------------------------------------------
Venezuela Oil Linked Certificates Wts., Exp. 4/20 14,280 --
-----------
Total Rights, Warrants and Certificates (Cost $0) --
Face
Amount(1)
================================================================================================
Structured Instruments--0.3%
- ------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Deutsche Mark Currency Protected Yield Curve CD,
6.28%, 7/25/97 $ 1,000,000 1,042,550
- ------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce (New York
Branch) CD, 11.25%, 9/4/97 (indexed to the Russian
Federation GKO, Zero Coupon, 8/27/97)(5) 2,850,000 2,842,875
- ------------------------------------------------------------------------------------------------
ING (U.S.) Financial Holdings Corp. U.S. Dollar
Denominated Pass-Through Nts. Linked to Malaysian
Ringgit, Zero Coupon, 7%, 10/14/97(3) 500,000 486,095
- ------------------------------------------------------------------------------------------------
Salomon, Inc. Russian S-Account Credit Linked Nts.,
Zero Coupon:
11.502%, 8/7/97(3) 630,000 621,722
13.866%, 5/22/98(3) 950,000 833,786
9.919%, 8/8/97(3) 2,000,000 1,973,720
- ------------------------------------------------------------------------------------------------
Standard Chartered Bank, Korean Wong Principal &
Interest Linked Deposit, 8.04%, 12/17/97 600,000 596,700
-----------
Total Structured Instruments (Cost $8,379,740) 8,397,448
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
================================================================================================
<S> <C> <C> <C> <C>
Put Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali, 9.50%,
2/1/06 Put Opt. (Cost $109,879) 7/97 99.96%(ITL) 3,203 --
</TABLE>
20 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
================================================================================================
<S> <C> <C>
Repurchase Agreements--1.0%
- ------------------------------------------------------------------------------------------------
Repurchase agreement with J.P. Morgan
Securities, Inc., 5.95%, dated 6/30/97, to
be repurchased at $29,904,943 on 7/1/97,
collateralized by U.S. Treasury Bonds,
8.875%-12%, 8/15/13-2/15/19, with a value
of $28,056,664 and U.S. Treasury Nts.,
7.875%, 11/15/04, with a value of
$2,558,393 (Cost $29,900,000) $29,900,000 $ 29,900,000
- ------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $2,327,308,298) 99.3% 2,932,176,502
- ------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.7 21,675,389
----------- --------------
Net Assets 100.0% $2,953,851,891
=========== ==============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
DEM -- German Deutsche Mark MYR -- Malaysian Ringgit
GBP -- British Pound Sterling PLZ -- Polish Zloty
HUF -- Hungarian Forint ZAR -- South African Rand
IDR -- Indonesian Rupiah
2. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate received by the Fund at the time of purchase.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. Represents the current interest rate for a variable rate security.
5. Identifies issues considered to be illiquid or restricted -- See Note 6 of
Notes to Financial Statements.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Directors. These securities amount to $37,655,704 or 1.27% of the Fund's net
assets, at June 30, 1997.
7. Non-income producing--issuer is in default of interest payment.
8. Non-income producing security.
9. A sufficient amount of securities has been designated to cover outstanding
written 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>
International Business Machines 1,200 7/97 $ 85 $185,694 $810,000
Microsoft Corp. 500 7/97 135 148,745 56,250
Microsoft Corp. 250 7/97 140 38,311 125
-------- --------
$372,750 $866,375
======== ========
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================================
<S> <C>
Assets
Investments, at value (cost $2,327,308,298)--see accompanying statement $ 2,932,176,502
- ------------------------------------------------------------------------------------------------
Cash 1,006,676
- ------------------------------------------------------------------------------------------------
Receivables:
Investments sold 66,142,614
Interest, dividends and principal paydowns 7,949,651
Shares of capital stock sold 3,500,236
Closed forward foreign currency exchange contracts 136,919
- ------------------------------------------------------------------------------------------------
Other 32,382
--------------
Total assets 3,010,944,980
================================================================================================
Liabilities
Options written, at value (premiums received $372,750)--
see accompanying statement--Note 5 866,375
- ------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 46,610,742
Shares of capital stock redeemed 6,280,937
Distribution and service plan fees 1,388,818
Dividends 979,707
Shareholder reports 416,293
Transfer and shareholder servicing agent fees 168,029
Custodian fees 136,761
Other 245,427
--------------
Total liabilities 57,093,089
================================================================================================
Net Assets $ 2,953,851,891
===============
================================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 2,926,960,552
- ------------------------------------------------------------------------------------------------
Additional paid-in capital 2,146,370,509
- ------------------------------------------------------------------------------------------------
Overdistributed net investment income (51,736)
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions 176,232,560
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 604,340,006
--------------
Net assets $ 2,953,851,891
===============
</TABLE>
22 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $2,032,030,700 and 184,997,242 shares of capital stock outstanding) $10.98
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $11.65
- ------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (less applicable contingent deferred sales
charge) and offering price per share (based on net assets of $873,428,453 and
80,187,082 shares of capital stock outstanding) $10.89
- ------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (less applicable contingent deferred sales
charge) and offering price per share (based on net assets of $26,765,449 and
2,451,870 shares of capital stock outstanding) $10.92
- ------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $21,627,289 and 1,969,323 shares of capital stock outstanding) $10.98
- ------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
23 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================================
<S> <C>
Investment Income
Dividends $ 18,430,574
- -------------------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $29,242) 15,747,696
---------------
Total income 34,178,270
================================================================================================
Expenses
Management fees--Note 4 7,240,734
- ------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,763,348
Class B 3,998,356
Class C 111,692
- ------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,650,653
- ------------------------------------------------------------------------------------------------
Shareholder reports 409,248
- ------------------------------------------------------------------------------------------------
Custodian fees and expenses 129,780
- ------------------------------------------------------------------------------------------------
Directors' fees and expenses 46,884
- ------------------------------------------------------------------------------------------------
Insurance expenses 46,061
Legal and auditing fees 44,556
- ------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 5,117
Class B 7,163
Class C 1,934
Class Y 437
- ------------------------------------------------------------------------------------------------
Other 144,082
---------------
Total expenses 15,600,045
================================================================================================
Net Investment Income 18,578,225
================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 172,102,700
Closing of options written 679,710
Foreign currency transactions (4,814,905)
---------------
Net realized gain 167,967,505
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 160,399,563
Translation of assets and liabilities denominated in foreign currencies (4,181,615)
---------------
Net change 156,217,948
---------------
Net realized and unrealized gain 324,185,453
================================================================================================
Net Increase in Net Assets Resulting From Operations $ 342,763,678
===============
</TABLE>
See accompanying Notes to Financial Statements.
24 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30,1997 December 31,
(Unaudited) 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 18,578,225 $ 41,055,080
- -------------------------------------------------------------------------------------------------
Net realized gain 167,967,505 303,370,659
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 156,217,948 78,795,923
----------------- --------------
Net increase in net assets resulting from operations 342,763,678 423,221,662
================================================================================================
Dividends and Distributions To Shareholders
Dividends from net investment income:
Class A (14,844,202) (33,143,640)
Class B (3,164,667) (7,780,831)
Class C (90,839) (120,797)
Class Y (165,764) (290,763)
- ------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (201,096,072)
Class B -- (83,631,438)
Class C -- (1,874,710)
Class Y -- (1,947,759)
================================================================================================
Capital Stock Transactions
Net increase (decrease) in net assets resulting from
capital stock transactions - Note 2:
Class A (19,469,996) 206,458,102
Class B 23,829,243 140,890,490
Class C 6,607,324 16,404,454
Class Y 1,065,547 11,355,744
================================================================================================
Net Assets
Total increase 336,530,324 468,444,442
- ------------------------------------------------------------------------------------------------
Beginning of period 2,617,321,567 2,148,877,125
----------------- --------------
End of period (including overdistributed net investment
income of $51,736 and $364,489, respectively) $ 2,953,851,891 $2,617,321,567
================= ==============
</TABLE>
See accompanying Notes to Financial Statements.
25 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------
Six
Months
Ended
June 30,
1997 Year Ended December 31,
(Unaudited) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning
of period $9.77 $9.35 $7.80 $8.69 $7.84 $7.49
- ------------------------------------------------------------------------------------------------------------------------
Income (loss)from investment operations:
Net investment income .08 .20 .23 .23 .18 .17
Net realized and unrealized
gain (loss) 1.21 1.63 2.09 (.91) 1.45 .75
----- ----- ----- ----- ----- ------
Total income (loss) from
investment operations 1.29 1.83 2.32 (.68) 1.63 .92
- ------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.08) (.20) (.22) (.21) (.20) (.20)
Distributions from net
realized gain -- (1.21) (.55) -- (.58) (.37)
----- ----- ----- ------ ------ ------
Total dividends and distributions
to shareholders (.08) (1.41) (.77) (.21) (.78) (.57)
----- ----- ----- ----- ----- ------
Net asset value, end of period $10.98 $9.77 $9.35 $7.80 $8.69 $7.84
====== ===== ===== ===== ===== =====
========================================================================================================================
Total Return, at Net Asset Value(4) 13.25% 19.73% 30.12% (7.86)% 21.24% 12.83%
========================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $2,032,031 $1,826,599 $1,550,710 $1,235,637 $1,223,395 $795,474
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,920,863 $1,684,726 $1,394,245 $1,261,729 $ 992,381 $662,917
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.61%(5) 1.96% 2.53% 2.88% 2.21% 2.68%
Expenses 0.89%(5) 0.90% 0.92% 1.01% 0.93% 0.96%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 57.6% 117.5% 84.8% 117.2% 143.9% 143.5%
Average brokerage
commission rate(7) $0.0579 $0.0591 $0.0532 -- -- --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to December 31,
1994.
2. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
3. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
5. Annualized.
26 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------
Six
Months
Ended
June 30,
1997 Year Ended December 31,
(Unaudited) 1996 1995 1994 1993 (3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning
of period $9.70 $9.29 $7.76 $8.66 $8.23
- -----------------------------------------------------------------------------------------------------------
Income (loss)from investment operations:
Net investment income .04 .12 .15 .17 .09
Net realized and unrealized
gain (loss) 1.19 1.62 2.08 (.91) 1.03
----- ----- ----- ----- -----
Total income (loss) from
investment operations 1.23 1.74 2.23 (.74) 1.12
- -----------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.04) (.12) (.15) (.16) (.11)
Distributions from net
realized gain -- (1.21) (.55) -- (.58)
----- ----- ----- ------ ------
Total dividends and distributions
to shareholders (.04) (1.33) (.70) (.16) (.69)
----- ----- ----- ----- -----
Net asset value, end of period $10.89 $9.70 $9.29 $7.76 $8.66
====== ===== ===== ===== =====
===========================================================================================================
Total Return, at Net Asset Value(4) 12.71% 18.78% 29.03% (8.64)% 13.91%
===========================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $873,428 $754,918 $589,804 $429,427 $218,716
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $809,008 $671,593 $510,744 $360,773 $ 90,952
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.80%(5) 1.15% 1.70% 2.11% 1.09%(5)
Expenses 1.70%(5) 1.71% 1.75% 1.87% 1.87%(5)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 57.6% 117.5% 84.8% 117.2% 143.9%
Average brokerage
commission rate(7) $0.0579 $0.0591 $0.0532 -- --
<CAPTION>
Class C
-------------------------------------------
Six
Months
Ended
June 30,
1997 Year Ended December 31,
(Unaudited) 1996 1995(2)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning
of period $9.72 $9.33 $9.19
- -------------------------------------------------------------------------------------
Income (loss)from investment operations:
Net investment income .04 .16 .07
Net realized and unrealized
gain (loss) 1.20 1.57 .73
----- ----- -----
Total income (loss) from
investment operations 1.24 1.73 .80
- -------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.04) (.13) (.11)
Distributions from net
realized gain -- (1.21) (.55)
----- ----- -----
Total dividends and distributions
to shareholders (.04) (1.34) (.66)
----- ----- -----
Net asset value, end of period $10.92 $9.72 $9.33
====== ===== =====
====================================================================================
Total Return, at Net Asset Value(4) 12.79% 18.67% 8.82%
====================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $ 26,765 $ 17,554 $1,655
- -------------------------------------------------------------------------------------
Average net assets (in thousands) $ 22,633 $ 8,277 $ 784
- -------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.78%(5) 1.05% 1.42%(5)
Expenses 1.73%(5) 1.76% 1.77%(5)
- -------------------------------------------------------------------------------------
Portfolio turnover rate(6) 57.6% 117.5% 84.8%
Average brokerage
commission rate(7) $0.0579 $0.0591 $0.0532
</TABLE>
6. 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-securities) for the period ended
June 30, 1997 were $1,465,143,881 and $1,474,649,785, respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
27 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Y
-----------------------------------------------------
Six
Months
Ended
June 30,
1997 Year Ended December 31,
(Unaudited) 1996 1995 1994 (1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning
of period $9.77 $9.35 $7.80 $8.23
- ----------------------------------------------------------------------------------------------
Income (loss)from investment operations:
Net investment income .09 .23 .20 .15
Net realized and unrealized
gain (loss) 1.21 1.61 2.13 (.41)
----- ----- ----- -----
Total income (loss) from
investment operations 1.30 1.84 2.33 (.26)
- ----------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.09) (.21) (.23) (.17)
Distributions from net
realized gain -- (1.21) (.55) --
----- ----- ----- ------
Total dividends and distributions
to shareholders (.09) (1.42) (.78) (.17)
----- ----- ----- ------
Net asset value, end of period $10.98 $9.77 $9.35 $7.80
====== ===== ===== =====
==============================================================================================
Total Return, at Net Asset Value(4) 13.31% 19.88% 30.23% (3.15)%
==============================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $ 21,627 $18,252 $ 6,709 $ 1,074
- ----------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 19,653 $13,083 $ 3,944 $ 320
- ----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.75%(5) 2.08% 2.51% 4.07%(5)
Expenses 0.76%(5) 0.77% 0.87% 0.96%(5)
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 57.6% 117.5% 84.8% 117.2%
Average brokerage
commission rate(7) $0.0579 $0.0591 $0.0532 --
</TABLE>
See accompanying Notes to Financial Statements.
28 Oppenheimer Total Return Fund, Inc.
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- -------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Total Return Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund intends to seek its investment objective
through investment in securities which it believes will provide a high return,
including investments which are expected to provide opportunities for growth or
to produce income, or both. The Fund's investment adviser is OppenheimerFunds,
Inc. (the Manager). The Fund offers Class A, Class B, Class C and Class Y
shares. Class A shares are sold with a front-end sales charge. Class B and Class
C shares may be subject to a contingent deferred sales charge. All classes of
shares have identical rights to earnings, assets and voting privileges, except
that each class has its own expenses directly attributable to that class and
exclusive voting rights with respect to matters affecting that class. Class A,
Class B and Class C have separate distribution and/or service plans. No such
plan has been adopted for Class Y shares. 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 the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Directors. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Directors to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. 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 price 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 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 foreign securities and investment income are
translated at the rate of exchange prevailing on the respective dates of such
transactions.
29 Oppenheimer Total Return Fund, Inc.
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- -------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- -------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- -------------------------------------------------------------------------------
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 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 carry-overs, to shareholders. Therefore, no
federal income or excise tax provision is required.
- -------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- -------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
- -------------------------------------------------------------------------------
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.
30 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
================================================================================
2. Capital Stock
The Fund has authorized 450 million, 200 million, 200 million and 10 million
shares of $.10 par value Class A, Class B, Class C and Class Y capital stock,
respectively. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997 Year Ended December 31, 1996
------------------------------ ----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Class A:
Sold 10,644,876 $ 109,251,321 20,733,025 $208,977,166
Dividends and distributions
reinvested 1,313,990 13,688,267 22,428,454 219,649,555
Redeemed (13,850,930) (142,409,584) (22,110,493) (222,168,619)
----------- ------------- ----------- ------------
Net increase (decrease) (1,892,064) $ (19,469,996) 21,050,986 $206,458,102
=========== ============= =========== ============
- ---------------------------------------------------------------------------------------------------
Class B:
Sold 6,946,212 $ 70,665,665 14,539,920 $145,115,033
Dividends and distributions
reinvested 294,573 3,009,508 8,941,258 86,830,460
Redeemed (4,905,930) (49,845,930) (9,142,775) (91,055,003)
----------- ------------- ----------- ------------
Net increase 2,334,855 $ 23,829,243 14,338,403 $140,890,490
=========== ============= =========== ============
- ---------------------------------------------------------------------------------------------------
Class C:
Sold 869,257 $ 8,872,794 1,529,403 $ 15,491,645
Dividends and distributions
reinvested 8,548 87,422 198,823 1,933,848
Redeemed (231,857) (2,352,892) (99,731) (1,021,039)
----------- ------------- ----------- ------------
Net increase 645,948 $ 6,607,324 1,628,495 $ 16,404,454
=========== ============= =========== ============
- ---------------------------------------------------------------------------------------------------
Class Y:
Sold 623,743 $ 6,425,495 1,481,212 $ 14,899,947
Dividends and distributions
reinvested 15,888 165,764 228,630 2,238,523
Redeemed (538,512) (5,525,712) (559,150) (5,782,726)
----------- ------------- ----------- ------------
Net increase 101,119 $ 1,065,547 1,150,692 $ 11,355,744
=========== ============= =========== ============
</TABLE>
31 Oppenheimer Total Return Fund, Inc.
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- -------------------------------------------------------------------------------
================================================================================
3. Unrealized Gains and Losses on Investments
At June 30, 1997, net unrealized appreciation on investments and options written
of $604,374,579 was composed of gross appreciation of $621,197,793, and gross
depreciation of $16,823,214.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% of the first
$100 million of net assets, 0.70% of the next $100 million, 0.65% of the next
$100 million, 0.60% of the next $100 million, 0.55% of the next $100 million,
and 0.50% of net assets in excess of $500 million.
For the six months ended June 30, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $2,228,642, of which
$794,430 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $2,397,371 and $82,792, of which $230,146 and $4,682,
respectively, was paid to an affiliated broker/dealer. During the six months
ended June 30, 1997, OFDI received contingent deferred sales charges of $560,021
and $5,003, respectively, upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at the time of sale of such
shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the six months ended June 30, 1997, OFDI paid
$139,920 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
32 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its services and costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B and Class C shares,
as compensation for sales commissions paid from its own resources at the time of
sale and associated financing costs. OFDI also receives a service fee of 0.25%
per year as compensation for costs incurred in connection with the personal
service and maintenance of accounts that hold shares of the Fund, including
amounts paid to brokers, dealers, banks and other financial institutions. Both
fees are computed on the average annual net assets of Class B and Class C
shares, determined as of the close of each regular business day. During the six
months ended June 30, 1997, OFDI paid $57,775 to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and retained
$3,161,898 and $83,066, respectively, as compensation for Class B and Class C
sales commissions and service fee advances, as well as financing costs. If
either Plan is terminated by the Fund, the Board of Directors may allow the Fund
to continue payments of the asset-based sales charge to OFDI distributing shares
before the Plan was terminated. At June 30, 1997, OFDI had incurred unreimbursed
expenses of $17,680,285 for Class B and $268,087 for Class C.
================================================================================
5. Option Activity
The Fund may buy and sell put and call options, or write put and 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.
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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. 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.
33 Oppenheimer Total Return Fund, Inc.
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- -------------------------------------------------------------------------------
================================================================================
5. Option Activity (continued)
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. Written
option activity for the six months ended June 30, 1997 was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
------------------------- ------------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Options outstanding at
December 31, 1996 9,618,075 $ 183,309 -- $ --
Options written 151,851,112 2,562,597 17,683,914 133,098
- --------------------------------------------------------------------------------------------------
Options closed or expired (158,599,387) (2,147,244) (17,683,914) (133,098)
- --------------------------------------------------------------------------------------------------
Options exercised (2,867,850) (225,912) -- --
------------ ----------- ----------- -----------
Options outstanding at
June 30, 1997 1,950 $ 372,750 -- $ --
=========== =========== =========== ===========
</TABLE>
================================================================================
6. Illiquid and Restricted Securities
At June 30, 1997, investments in securities included issues that are illiquid or
restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Directors as reflecting fair value. A security may be considered
illiquid if it lacks a readily-available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed from
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at June 30, 1997 was $10,017,374, which represents
0.34% of the Fund's net assets.
34 Oppenheimer Total Return Fund, Inc.
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Total Return Fund, Inc.
- --------------------------------------------------------------------------------
================================================================================
Officers and Directors James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Director and President
Robert G. Avis, Director
William A. Baker, Director
Charles Conrad, Jr., Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
George C. Bowen, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Bruce Bartlett, Vice President
Diane Sobin, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Adviser OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been
taken from the records of the Fund without examination
by the independent auditors.
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.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
35 Oppenheimer Total Return Fund, Inc.
<PAGE>
Information and services
- -------------------------------------------------------------------------------
Internet
24-hr access to account
information
- ------------------------
www.oppenheimerfunds.com
- ------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- ------------------------
1-800-525-7048
- ------------------------
Account Transactions
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- ------------------------
1-800-852-8457
- ------------------------
PhoneLink
24-hr automated information
and automated transactions
- ------------------------
1-800-533-3310
- ------------------------
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm 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
- ------------------------
As an Oppenheimer fund shareholder, you have some special privileges.
Whether it's 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 Oppenheimer funds 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. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[LOGO] OppenheimerFunds(SM)
Distributor, Inc.
RS0420.001.0697 August 30, 1997
