[front cover]
Annual Report December 31, 1997
OPPENHEIMER
Total Return
Fund, Inc.
[photo of scale]
[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
20 Statement of
Assets &
Liabilities
22 Statement of
Operations
23 Statements of
Changes in
Net Assets
24 Financial Highlights
27 Notes to Financial
Statements
35 Independent
Auditors' Report
36 Federal Income
Tax Information
37 Officers &
Directors
40 Information &
Services
[bullet] Value-oriented holdings helped cushion the Fund against market
downturns, while the growth portion of the portfolio enabled the Fund to
participate in the stock market's strength.
[bullet] Robust corporate earnings and low inflation continue to drive the
market, but these conditions may not continue over the long term.
[bullet] The Fund is well positioned to benefit from a revision in historic
growth rates.
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.
Avg Annual Total Returns
For the 1-year period ended
12/31/97 (without sales charges)(1)
Class A
27.39%
Class B
26.17%
Class C
26.23%
Class Y
27.53%
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.
2 Oppenheimer Total Return Fund, Inc.
<PAGE>
| Dear shareholder,
- --------------------------------------------------------------------------------
[photo]
James C. Swain
Chairman
Oppenheimer Total
Return Fund, Inc.
[photo]
Bridget A. Macaskill
President
Oppenheimer Total
Return Fund, Inc.
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to
its lowest level in 30 years and inflation has also fallen to a record low. In
fact, long-term interest rates have fallen to their lowest level since the
government began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch further and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting
that if the rate of inflation falls any lower, it might actually trigger a
period of deflation, where we see the prices of American goods and services
decline. While lower prices may sound like positive news, in reality it isn't:
When prices fall too low, it erodes the value of those goods to the producer.
That is, when economic conditions force a decrease in the price of goods,
companies have to sell more of those items in order to make the same amount of
profit, which translates into greater difficulties for corporations to improve
their bottom lines.
At OppenheimerFunds, we do not believe we will see a period of deflation
in the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may continue to see investors favor the fixed, more secure
interest payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money
managers, we continue to keep a watchful eye on these situations and are
closely monitoring your fund's investments. In times like these, your financial
advisor can be of invaluable assistance to you in helping review your financial
plan and guide your investments accordingly.
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
January 23, 1998
3 Oppenheimer Total Return Fund, Inc.
<PAGE>
| Performance update
- --------------------------------------------------------------------------------
Oppenheimer Total Return Fund, Inc. combines growth and value styles of
investing. The disciplined pursuit of this strategy has enabled the Fund to
perform well in today's volatile investing environment. In fact, for the
one-year period ended 12/31/97, the Fund's Class A shares generated a 27.39%
average annual total return, without sales charges.(2)
Avg Annual Total Returns
For the Period Ended 12/31/97(1)
Class A
Since
1 year 5 year Inception
20.06% 15.88% 13.62%
Class B
Since
1 year 5 year Inception
21.17% N/A 15.92%
Class C
Since
1 year 5 year Inception
25.23% N/A 23.24%
Class Y
Since
1 year 5 year Inception
27.53% N/A 20.11%
Cumulative Total Return
For the Period Ended 12/31/97(1)
Class A
5 year
108.96% $20,896(3)
Growth of $10,000
Over five years
(without sales charges)(3)
[mountain chart]
Oppenheimer Total Return Fund, Inc.
Class A shares S&P 500 Index
12/31/92 10000 10000
10651 10436
11082 10487
11872 10758
12124 11007
11441 10590
11716 10635
11071 11155
11580 11153
11171 12239
11973 13407
12823 14473
13838 15344
14536 16168
15376 16893
16002 17415
16458 18292
17404 18867
17472 19373
19710 22755
21595 24460
12/31/97 22171 25162
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 for the one-year result include the contingent
deferred sales charge of 1%. Class C shares have an inception date of 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. 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.
4 Oppenheimer Total Return Fund, Inc.
<PAGE>
| Performance update
- --------------------------------------------------------------------------------
Asset Allocation(4)
[pie chart]
Stocks 82.3%
Bonds 13.1
Cash Equivalents 4.6
Oppenheimer Total Return Fund, Inc. is for investors looking for tomorrow's
growth and today's income.
What We Look For
[bullet] Growth stocks with superior earnings potential, and earnings momentum.
[bullet] Value stocks that trade at attractive prices.
[bullet] Dividend-paying stocks of quality companies for income.
[bullet] 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(4)
...............................................................................
Travelers Group, Inc. 2.1% American Express Co. 1.4%
...............................................................................
HEALTHSOUTH Corp. 2.0 Summit Bancorp 1.3
...............................................................................
Tyco International Ltd. 1.9 Home Depot, Inc. 1.3
...............................................................................
Philip Morris Cos., Inc. 1.5 Schlumberger Ltd. 1.3
...............................................................................
GTE Corp. 1.5 Household International, Inc. 1.2
...............................................................................
3. Results of a hypothetical $10,000 investment in Class A shares on December
31, 1992. The S&P 500 Index is a broad-based unmanaged stock index including
daily reinvestment of dividends, and cannot be purchased directly by investors.
4. Portfolio holdings and allocations are subject to change. Percentages are as
of December 31, 1997 and are based on total market value of investments.
5 Oppenheimer Total Return Fund, Inc.
<PAGE>
| An interview with your Fund's managers
- --------------------------------------------------------------------------------
How has the Fund performed during 1997?
Oppenheimer Total Return Fund, Inc. performed very well in a year of
considerable volatility. The markets declined almost 10% between the beginning
of the year and mid-April, rose strongly and then dropped sharply again in
November before recovering somewhat. Thanks to our collaborative team approach
to implementing a growth-and-value strategy, the Fund's Class A shares generated
a 27.39% average annual total return, without sales charges, for the one-year
period ended 12/31/97.(1)
How has the growth-and-value strategy contributed to the Fund's positive
performance?
The value portion of the portfolio provides a cushion to protect performance
when a material correction occurs in the market. This year, the value portion of
the portfolio stressed income-producing stocks, such as regional
telecommunications companies, energy companies, financial companies and electric
utilities that pay above-average dividends. We also increased our exposure to
the U.S. Treasury market during the first half of the year, raising our
allocation of fixed-income securities. These instruments generated income even
when stock prices declined. As a result, the Fund's average performance was
cushioned during the year's market downturns.
Many of the Fund's value-oriented stocks underperformed the market when
equities began to rise. However, the growth portion of the portfolio enabled
the Fund to participate in the stock market's strength the second half of the
year.
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.
[callout]
"We stuck to
our objectives
and achieved
strong results,
despite a
challenging
market."
6 Oppenheimer Total Return Fund, Inc.
<PAGE>
[photo of Doney and Bartlett]
Portfolio Management
Team (l to r)
John Doney
Bruce Bartlett
While the Fund did not entirely keep pace with this year's sharp rise in
equities, our strategy is not structured to beat the market every year. Instead,
we strive to reduce risk through diversification. Driven by a disciplined
investment approach, the Fund may perform well in a wide variety of market
conditions. This year, as in years past, we stuck to our objectives and achieved
strong results, despite a challenging market.
What challenges do you see in today's market and how is the Fund responding?
The economy continues to experience a relatively benign inflationary environment
in which overall inflation remains at relatively low levels. This has allowed
interest rates to remain flat to modestly declining, while equity valuations
have risen. At the same time, corporate earnings continue to be strong, both in
absolute and historical terms. However, we believe that the current level of
corporate earnings is unsustainable from a long-term perspective.
We've been working to identify companies that may sustain their levels
of current earnings growth in a slower growth environment. One of our
approaches is to closely analyze a company's revenues for possible precursors
to earnings disappointment or continued earnings strength.
For example, Cardinal Health, a leading pharmaceutical distribution
company, performed well for the Fund during the period. With its history of
delivering strong earnings growth, this is the type of company that we seek to
invest in from a long-term perspective.
7 Oppenheimer Total Return Fund, Inc.
<PAGE>
| An interview with your Fund's managers
- --------------------------------------------------------------------------------
Another example of a company that showed relatively good revenue and earnings
growth during the period is Schlumberger, Ltd., the largest oil services company
in the world.
On the other hand, we are quicker to sell holdings that are showing a
decline in revenue quantity and quality. We have reduced our position in a
leading mortgage insurance underwriter because we believe its slowing revenue
growth could translate into a slowdown in earnings growth and a decline in the
company's stock price.
What other types of investments is the Fund currently focused on?
There are a number of diversified financial stocks that we believe are well
positioned to deliver stable earnings next year. A good example is Travelers
Group Inc., which just expanded by buying Salomon Brothers. The stock performed
very well in 1997, and we believe their earnings could be good next year. We
also hold a significant position in American Express, a leading provider of
credit card and financial advisor services, and another strong performer in
1997. We are optimistic that the company's earnings may grow, even in a slow
environment.
Home-related specialty retail is another area in which we continue to
find investment opportunities that meet our criteria for both value and growth.
People are using their homes for multiple functions--not only as a place to
sleep, but also to work, as well as for increased entertainment and exercise.
We are investing in several companies positioned to take advantage of that
trend.
[callout]
"We have a
great deal of
confidence in
our disciplined
strategy . . ."
8 Oppenheimer Total Return Fund, Inc.
<PAGE>
On the purely value side, we are gradually replacing some of our
underperforming electric utility stocks with Real Estate Investment Trusts
(REITs). A REIT is a company that buys and manages real estate and/or mortgages
on behalf of its shareholders. REITs have roughly the same dividend yield as
electric utilities; however, they have far stronger underlying growth
characteristics. Equally important, they generally offer dividend growth rates
which are higher than the average electric utility stock.
Convertible securities are another value strategy we employ.
Convertibles share some of the characteristics of an equity security and of a
fixed-income security. Generally less volatile than stocks, their prices are
linked both to interest rates and the value of an underlying company. They allow
us to gain exposure to companies with attractive fundamental characteristics
while reducing volatility and providing current income. That combination can
provide a significant cushion during market declines.
What is your outlook for the Fund?
We believe the Fund is well positioned to perform well in the slowing economy we
anticipate for 1998. But regardless of the direction the economy takes, we have
a great deal of confidence in our disciplined strategy of building the portfolio
one company and one investment at a time. We believe this is the right way to
participate in rising markets and outperform in declining markets . . . and part
of The Right Way to Invest.
[callout]
". . .of building
the portfolio
one company and
one investment
at a time."
9 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Investments December 31, 1997
Market Value
Shares See Note 1
====================================================================
Common Stocks--79.4%
- --------------------------------------------------------------------
Basic Materials--3.0%
- --------------------------------------------------------------------
Chemicals--2.1%
Betzdearborn, Inc. 340,000 $20,761,250
- --------------------------------------------------------------------
Dow Chemical Co. 100,000 10,150,000
- --------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 100,000 6,006,250
- --------------------------------------------------------------------
Goodrich (B.F.) Co. 267,500 11,084,531
- --------------------------------------------------------------------
International Flavors & Fragrances, Inc. 260,000 13,390,000
- --------------------------------------------------------------------
Morton International, Inc. 190,000 6,531,250
-----------
67,923,281
- --------------------------------------------------------------------
Metals--0.2%
Aluminum Co. of America 100,000 7,037,500
- --------------------------------------------------------------------
Paper--0.7%
Sonoco Products Co. 215,000 7,457,812
- -------------------------------------------- --------- -----------
Union Camp Corp. 310,000 16,643,125
-----------
24,100,937
- --------------------------------------------------------------------
Consumer Cyclicals--16.2%
- --------------------------------------------------------------------
Autos & Housing--1.7%
AMB Property Corp. 216,100 5,429,512
- --------------------------------------------------------------------
Bay Apartment Communities, Inc. 50,000 1,950,000
- --------------------------------------------------------------------
General Motors Corp. 200,000 12,125,000
- --------------------------------------------------------------------
INMC Mortgage Holdings, Inc. 190,000 4,453,125
- --------------------------------------------------------------------
Kilroy Realty Corp. 204,400 5,876,500
- --------------------------------------------------------------------
Lear Corp.(1) 271,800 12,910,500
- --------------------------------------------------------------------
Maytag Corp. 220,000 8,208,750
- --------------------------------------------------------------------
Security Capital Group, Inc., Cl. B(1) 136,000 4,420,000
-----------
55,373,387
- --------------------------------------------------------------------
Leisure & Entertainment--3.4%
Bob Evans Farms, Inc. 215,000 4,756,875
- --------------------------------------------------------------------
Carnival Corp., Cl. A 305,000 16,889,375
- --------------------------------------------------------------------
Circus Circus Enterprises, Inc.(1) 200,000 4,100,000
- --------------------------------------------------------------------
Landry's Seafood Restaurants, Inc.(1) 530,000 12,720,000
- --------------------------------------------------------------------
Mattel, Inc. 590,000 21,977,500
- --------------------------------------------------------------------
McDonald's Corp. 101,000 4,822,750
- --------------------------------------------------------------------
Mirage Resorts, Inc.(1) 300,000 6,825,000
- --------------------------------------------------------------------
Nintendo Co. Ltd. 136,300 13,418,131
- --------------------------------------------------------------------
Regal Cinemas, Inc.(1) 505,100 14,079,662
- --------------------------------------------------------------------
Starbucks Corp.(1) 300,000 11,512,500
-----------
111,101,793
10 Oppenheimer Total Return Fund, Inc.
<PAGE>
Market Value
Shares See Note 1
- -----------------------------------------------------------------
Media--0.4%
Dun & Bradstreet Corp. 420,000 $12,993,750
- -----------------------------------------------------------------
Retail: General--5.8%
CVS Corp. 564,682 36,174,941
- -----------------------------------------------------------------
Federated Department Stores, Inc.(1) 300,000 12,918,750
- -----------------------------------------------------------------
Jones Apparel Group, Inc.(1) 594,200 25,550,600
- -----------------------------------------------------------------
Kohl's Corp.(1) 495,000 33,721,875
- -----------------------------------------------------------------
Penney (J.C.) Co., Inc. 350,000 21,109,375
- -----------------------------------------------------------------
Wal-Mart Stores, Inc. 695,000 27,409,062
- -----------------------------------------------------------------
Walgreen Co. 385,000 12,079,375
- -----------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A 334,200 10,485,525
- -----------------------------------------------------------------
Wolverine World Wide, Inc. 437,500 9,898,437
-----------
189,347,940
- -----------------------------------------------------------------
Retail: Specialty--4.9%
Cendant Corp.(1) 91,000 3,128,125
- -----------------------------------------------------------------
CompUSA, Inc.(1) 618,200 19,164,200
- -----------------------------------------------------------------
Costco Cos., Inc.(1) 275,000 12,271,875
- -----------------------------------------------------------------
Ethan Allen Interiors, Inc. 391,600 15,101,075
- -----------------------------------------------------------------
General Nutrition Cos., Inc. 900,000 30,600,000
- -----------------------------------------------------------------
Home Depot, Inc. 728,500 42,890,437
- -----------------------------------------------------------------
Intimate Brands, Inc., Cl. A 510,000 12,271,875
- -----------------------------------------------------------------
Pier 1 Imports, Inc. 680,000 15,385,000
- -----------------------------------------------------------------
Tiffany & Co. 245,000 8,835,312
-----------
159,647,899
- -----------------------------------------------------------------
Consumer Non-Cyclicals--12.8%
- -----------------------------------------------------------------
Beverages--0.9%
Anheuser-Busch Cos., Inc. 300,000 13,200,000
- -----------------------------------------------------------------
Diageo plc 1,957,000 17,983,995
-----------
31,183,995
- -----------------------------------------------------------------
Food--0.8%
Hormel Foods Corp. 315,000 10,316,250
- -----------------------------------------------------------------
JP Foodservice, Inc.(1) 196,900 7,272,994
- -----------------------------------------------------------------
Kroger Co.(1) 200,000 7,387,500
-----------
24,976,744
11 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- --------------------------------------------------------------------
Healthcare/Drugs--3.9%
Abbott Laboratories 187,500 $12,292,969
- --------------------------------------------------------------------
American Home Products Corp. 480,000 36,720,000
- --------------------------------------------------------------------
Bristol-Myers Squibb Co. 225,000 21,290,625
- --------------------------------------------------------------------
Kos Pharmaceuticals, Inc.(1) 100,000 1,543,750
- --------------------------------------------------------------------
Merck & Co., Inc. 380,000 40,375,000
- --------------------------------------------------------------------
Mylan Laboratories, Inc. 410,000 8,584,375
- --------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 250,000 9,156,250
-----------
129,962,969
- --------------------------------------------------------------------
Healthcare/Supplies & Services--4.7%
Baxter International, Inc. 100,000 5,043,750
- --------------------------------------------------------------------
Cardinal Health, Inc. 531,600 39,936,450
- --------------------------------------------------------------------
Guidant Corp. 244,200 15,201,450
- --------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 2,375,248 65,913,132
- --------------------------------------------------------------------
Lynx Therapeutics, Inc. (New)(1)(2) 15,390 250,087
- --------------------------------------------------------------------
McKesson Corp. 100,000 10,818,750
- --------------------------------------------------------------------
Omnicare, Inc. 160,000 4,960,000
- --------------------------------------------------------------------
Orthodontic Centers of America, Inc.(1) 526,400 8,751,400
- --------------------------------------------------------------------
Sunrise Assisted Living, Inc.(1) 59,500 2,565,937
-----------
153,440,956
- --------------------------------------------------------------------
Household Goods--0.7%
Avon Products, Inc. 250,000 15,343,750
- --------------------------------------------------------------------
Newell Co. 100,000 4,250,000
- --------------------------------------------------------------------
Tupperware Corp. 125,000 3,484,375
-----------
23,078,125
- --------------------------------------------------------------------
Tobacco--1.8%
Philip Morris Cos., Inc. 1,085,000 49,164,062
- --------------------------------------------------------------------
RJR Nabisco Holdings Corp. 300,000 11,250,000
-----------
60,414,062
12 Oppenheimer Total Return Fund, Inc.
<PAGE>
Market Value
Shares See Note 1
- -------------------------------------------------------------
Energy--4.8%
- -------------------------------------------------------------
Energy Services & Producers--2.2%
Baker Hughes, Inc. 250,000 $10,906,250
- -------------------------------------------------------------
ENSCO International, Inc. 140,000 4,690,000
- -------------------------------------------------------------
Global Marine, Inc.(1) 250,000 6,125,000
- -------------------------------------------------------------
Nabors Industries, Inc.(1) 100,000 3,143,750
- -------------------------------------------------------------
Schlumberger Ltd. 523,600 42,149,800
- -------------------------------------------------------------
Stolt Comex Seaway SA(1) 76,800 3,840,000
-----------
70,854,800
- -------------------------------------------------------------
Oil-Integrated--2.6%
Amoco Corp. 130,000 11,066,250
- -------------------------------------------------------------
British Petroleum Co. plc, ADR 72,800 5,801,250
- -------------------------------------------------------------
Camco International, Inc. 140,000 8,916,250
- -------------------------------------------------------------
Exxon Corp. 175,000 10,707,813
- -------------------------------------------------------------
Mobil Corp. 220,000 15,881,250
- -------------------------------------------------------------
United Meridian Corp.(1) 130,000 3,656,250
- -------------------------------------------------------------
Unocal Corp. 180,000 6,986,250
- -------------------------------------------------------------
USX-Marathon Group 675,000 22,781,250
-----------
85,796,563
- -------------------------------------------------------------
Financial--21.9%
- -------------------------------------------------------------
Banks--9.3%
Banc One Corp. 300,000 16,293,750
- -------------------------------------------------------------
BankAmerica Corp. 450,000 32,850,000
- -------------------------------------------------------------
Barnett Banks, Inc. 250,000 17,968,750
- -------------------------------------------------------------
Chase Manhattan Corp. (New) 175,000 19,162,500
- -------------------------------------------------------------
Citicorp 100,000 12,643,750
- -------------------------------------------------------------
First of America Bank Corp. 355,100 27,387,088
- -------------------------------------------------------------
First Tennessee National Corp. 138,500 9,244,875
- -------------------------------------------------------------
First Union Corp. 613,000 31,416,250
- -------------------------------------------------------------
Fleet Financial Group, Inc. 160,000 11,990,000
- -------------------------------------------------------------
Local Financial Corp.(1) 400,000 4,700,000
- -------------------------------------------------------------
National City Corp. 180,000 11,835,000
- -------------------------------------------------------------
PNC Bank Corp. 270,000 15,406,875
- -------------------------------------------------------------
Summit Bancorp 810,000 43,132,500
- -------------------------------------------------------------
U.S. Bancorp 175,000 19,589,063
- -------------------------------------------------------------
Washington Mutual, Inc. 500,000 31,906,250
-----------
305,526,651
13 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Diversified Financial--9.7%
American Express Co. 510,000 $45,517,500
- --------------------------------------------------------------------------------
American General Corp. 300,000 16,218,750
- --------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 259,000 18,421,375
- --------------------------------------------------------------------------------
C.I.T. Group, Inc., Cl. A(1) 403,000 12,996,750
- --------------------------------------------------------------------------------
Freddie Mac 780,000 32,711,250
- --------------------------------------------------------------------------------
Health Care Property Investors, Inc. 81,000 3,062,813
- --------------------------------------------------------------------------------
Household International, Inc. 318,500 40,628,656
- --------------------------------------------------------------------------------
Imperial Credit Commercial Mortgage Investment Corp. 500,000 7,312,500
- --------------------------------------------------------------------------------
MBNA Corp. 1,184,625 32,355,070
- --------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 450,000 26,606,250
- --------------------------------------------------------------------------------
Schwab (Charles) Corp. 318,800 13,369,675
- --------------------------------------------------------------------------------
Travelers Group, Inc. 1,273,750 68,623,308
-----------
317,823,897
- --------------------------------------------------------------------------------
Insurance--2.9%
Allstate Corp. 215,000 19,538,125
- --------------------------------------------------------------------------------
Chubb Corp. 190,000 14,368,750
- --------------------------------------------------------------------------------
ESG Re Ltd.(1) 41,000 963,500
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 200,000 18,712,500
- --------------------------------------------------------------------------------
NAC Re Corp. 161,700 7,892,981
- --------------------------------------------------------------------------------
St. Paul Cos., Inc. 134,900 11,070,231
- --------------------------------------------------------------------------------
SunAmerica, Inc. 532,500 22,764,375
-----------
95,310,462
- --------------------------------------------------------------------------------
Industrial--5.9%
- --------------------------------------------------------------------------------
Electrical Equipment--0.7%
AMP, Inc. 425,000 17,850,000
- --------------------------------------------------------------------------------
Honeywell, Inc. 100,000 6,850,000
-----------
24,700,000
- --------------------------------------------------------------------------------
Industrial Materials--0.3%
Sherwin-Williams Co. 402,200 11,161,050
- --------------------------------------------------------------------------------
Industrial Services--1.7%
Allied Waste Industries, Inc.(1) 540,000 12,588,750
- --------------------------------------------------------------------------------
American Disposal Services, Inc.(1) 91,200 3,328,800
- --------------------------------------------------------------------------------
Corrections Corp. of America(1) 200,000 7,412,500
- --------------------------------------------------------------------------------
Donnelley (R.R.) & Sons Co. 375,000 13,968,750
- --------------------------------------------------------------------------------
USA Waste Services, Inc.(1) 499,250 19,595,563
-----------
56,894,363
14 Oppenheimer Total Return Fund, Inc.
<PAGE>
Market Value
Shares See Note 1
- ------------------------------------------------------------------
Manufacturing--2.8%
American Standard Cos., Inc.(1) 285,300 $10,930,556
- ------------------------------------------------------------------
Tenneco, Inc. 300,000 11,850,000
- ------------------------------------------------------------------
Tyco International Ltd. 1,410,000 63,538,125
- ------------------------------------------------------------------
U.S. Filter Corp.(1) 175,000 5,239,063
-----------
91,557,744
- ------------------------------------------------------------------
Transportation--0.4%
Canadian Pacific Ltd. (New) 300,000 8,175,000
- ------------------------------------------------------------------
Kansas City Southern Industries, Inc. 150,000 4,762,500
-----------
12,937,500
- ------------------------------------------------------------------
Technology--8.8%
- ------------------------------------------------------------------
Aerospace/Defense--0.8%
Precision Castparts Corp. 436,300 26,314,344
- ------------------------------------------------------------------
Raytheon Co., Cl. A 12,754 628,932
-----------
26,943,276
- ------------------------------------------------------------------
Computer Hardware--2.7%
Adaptec, Inc.(1) 115,000 4,269,375
- ------------------------------------------------------------------
Compaq Computer Corp. 300,000 16,931,250
- ------------------------------------------------------------------
Dell Computer Corp.(1) 280,000 23,520,000
- ------------------------------------------------------------------
EMC Corp.(1) 360,000 9,877,500
- ------------------------------------------------------------------
Hewlett-Packard Co. 110,000 6,875,000
- ------------------------------------------------------------------
International Business Machines Corp. 195,000 20,389,688
- ------------------------------------------------------------------
Sun Microsystems, Inc.(1) 165,000 6,579,375
-----------
88,442,188
- ------------------------------------------------------------------
Computer Software/Services--2.7%
BMC Software, Inc.(1) 350,000 22,968,750
- ------------------------------------------------------------------
CBT Group plc, ADR(1) 192,500 15,809,063
- ------------------------------------------------------------------
Compuware Corp.(1) 390,000 12,480,000
- ------------------------------------------------------------------
HBO & Co. 125,000 6,000,000
- ------------------------------------------------------------------
Hypercom Corp.(1) 666,800 9,418,550
- ------------------------------------------------------------------
J.D. Edwards & Co.(1) 130,500 3,849,750
- ------------------------------------------------------------------
Microsoft Corp.(1) 74,600 9,642,050
- ------------------------------------------------------------------
Peoplesoft, Inc.(1) 180,000 7,020,000
- ------------------------------------------------------------------
Visio Corp.(1) 50,000 1,918,750
-----------
89,106,913
15 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- ---------------------------------------------------------------------
Electronics--0.7%
Intel Corp. 50,000 $ 3,512,500
- ---------------------------------------------------------------------
Photronics, Inc.(1) 314,400 7,624,200
- ---------------------------------------------------------------------
SCI Systems, Inc.(1) 90,000 3,920,625
- ---------------------------------------------------------------------
Thermo Electron Corp.(1) 190,476 8,476,182
-------------
23,533,507
- ---------------------------------------------------------------------
Telecommunications-Technology--1.9%
Airtouch Communications, Inc.(1) 325,000 13,507,813
- ---------------------------------------------------------------------
CIENA Corp.(1) 50,000 3,056,250
- ---------------------------------------------------------------------
Cisco Systems, Inc.(1) 270,000 15,052,500
- ---------------------------------------------------------------------
Uniphase Corp.(1) 450,000 18,618,750
- ---------------------------------------------------------------------
WorldCom, Inc. 412,800 12,487,200
-------------
62,722,513
- ---------------------------------------------------------------------
Utilities--6.0%
- ---------------------------------------------------------------------
Electric Utilities--2.7%
Allegheny Energy, Inc. 210,000 6,825,000
- ---------------------------------------------------------------------
Boston Edison Co. 225,000 8,521,875
- ---------------------------------------------------------------------
Carolina Power & Light Co. 110,000 4,668,125
- ---------------------------------------------------------------------
CINergy Corp. 364,000 13,945,750
- ---------------------------------------------------------------------
Edison International 625,000 16,992,188
- ---------------------------------------------------------------------
FPL Group, Inc. 110,000 6,510,625
- ---------------------------------------------------------------------
New Century Energies, Inc. 310,000 14,860,625
- ---------------------------------------------------------------------
Southern Co. 298,500 7,723,688
- ---------------------------------------------------------------------
Unicom Corp. 300,000 9,225,000
-------------
89,272,876
- ---------------------------------------------------------------------
Telephone Utilities--3.3%
Bell Atlantic Corp. 348,400 31,704,400
- ---------------------------------------------------------------------
GTE Corp. 925,000 48,331,250
- ---------------------------------------------------------------------
LCI International, Inc.(1) 230,000 7,072,500
- ---------------------------------------------------------------------
SBC Communications, Inc. 288,145 21,106,621
-------------
108,214,771
-------------
Total Common Stocks (Cost $1,885,500,216) 2,611,382,412
16 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
===============================================================================================
<S> <C> <C>
Preferred Stocks--1.5%
- -----------------------------------------------------------------------------------------------
Airtouch Communications, Inc., 4.25% Cv. Cum., Series C,
Non-Vtg. 110,000 $ 6,854,375
- -----------------------------------------------------------------------------------------------
Big Flower Press Holdings, Inc., $3.00 Cv. Preferred Stock(1)(2) 100,000 5,037,500
- -----------------------------------------------------------------------------------------------
Mattel, Inc., $.4125 Preferred Redeemable Increased Dividend
Equity Securities, Series C 258,800 4,140,800
- -----------------------------------------------------------------------------------------------
Microsoft Corp., $2.196 Cv., Series A 205,000 18,424,375
- -----------------------------------------------------------------------------------------------
TCI Communications, Inc., $2.125 Cum. Cv., Series A 100,000 6,412,500
- -----------------------------------------------------------------------------------------------
TCI Pacific Communications, Inc., 5% Cum. Cv. Sr. Preferred, Cl. A 50,000 8,250,000
------------
Total Preferred Stocks (Cost $39,505,901) 49,119,550
===============================================================================================
Other Securities--1.2%
- -----------------------------------------------------------------------------------------------
Cooper Industries, Inc., 6% Debt Exchangeable Nts. for
Common Stock of Wyman-Gordon Co., 1/1/99 365,000 6,661,250
- -----------------------------------------------------------------------------------------------
Houston Industries, Inc., 7% Automatic Common Exchange
Securities, Exchangeable for Common Stock
of Time Warner, Inc., 7/1/00 211,000 12,040,187
- -----------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25% Structured Yield Product
Exchangeable for Common Stock of IMC Global, Inc. 90,900 3,136,050
- -----------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 7.25% Structured Yield Product
Exchangeable for Common Stock of Sun America, Inc., 6/15/99 75,000 5,287,500
- -----------------------------------------------------------------------------------------------
Newell Financial Trust I, 5.25% Cv. Preferred Stock(1)(3) 163,000 8,516,750
- -----------------------------------------------------------------------------------------------
Ralston Purina Co., 7% Cv. Preferred Stock Appreciation Income
Linked Securities 61,800 4,302,825
------------
Total Other Securities (Cost $35,089,210) 39,944,562
Units
===============================================================================================
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 (Cost $0) 100,000 --
Face
Amount(4)
===============================================================================================
U.S. Government Obligations--9.1%
- -----------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6.625%, 2/15/27 $ 51,350,000 55,746,895
STRIPS, 6.918%, 11/15/18(5) 108,000,000 30,822,876
STRIPS, 6.166%, 2/15/20(5) 110,000,000 29,054,960
STRIPS, 6.505%, 8/15/19(5) 336,000,000 91,462,560
- -----------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5%, 1/31/98 2,000,000 1,999,376
6.25%, 3/31/99-2/15/07 41,200,000 42,289,041
6.625%, 3/31/02 30,050,000 31,036,031
7.75%, 11/30/99-12/31/99 15,000,000 15,568,760
----------
Total U.S. Government Obligations (Cost $275,907,130) 297,980,499
</TABLE>
17 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(4) See Note 1
==============================================================================================
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes--0.0%
- ----------------------------------------------------------------------------------------------
Dresdner Finance BV, 5.50% Gtd. Nts., 4/30/04
(Cost $279,377)DEM 417,000 $ 369,911
==============================================================================================
Convertible Corporate Bonds and Notes--4.0%
- ----------------------------------------------------------------------------------------------
American Retirement Corp., 5.75% Cv. Sub. Debs., 10/1/02 4,220,000 4,251,650
- ----------------------------------------------------------------------------------------------
Assisted Living Concepts, Inc., 6% Cv. Sub. Debs., 11/1/02 6,000,000 6,510,000
- ----------------------------------------------------------------------------------------------
Atria Communities, Inc., 5% Cv. Sub. Nts., 10/15/02(3) 5,200,000 5,278,000
- ----------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The), 3% MCAF Equity Linked Participation
Securities, 9/17/02(2) 5,000,000 4,820,000
- ----------------------------------------------------------------------------------------------
Corestaff, Inc., 2.94% Cv. Sub. Nts., 8/15/04 5,000,000 4,168,750
- ----------------------------------------------------------------------------------------------
EMC Corp., 3.25% Cv. Sub. Nts., 3/15/02(3) 5,000,000 6,793,750
- ----------------------------------------------------------------------------------------------
Home Depot, Inc., 3.25% Cv. Sub. Nts., 10/1/01 18,600,000 24,993,750
- ----------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA, 4.50% Puttable &
Redeemable Cv. Knockout Securities, 8/2/03(3) 7,758,000 8,495,010
- ----------------------------------------------------------------------------------------------
Key Energy Group, Inc., 5% Cv. Sub. Nts., 9/15/04(3) 2,700,000 2,278,125
- ----------------------------------------------------------------------------------------------
Level One Communications, Inc., 4% Cv. Sub. Nts., 9/1/04(3) 3,500,000 3,443,125
- ----------------------------------------------------------------------------------------------
Loews Corp., 3.125% Cv. Sub. Nts., 9/15/07 6,453,000 6,420,735
- ----------------------------------------------------------------------------------------------
Offshore Logistics, Inc., 6% Cv. Sub. Nts., 12/15/03(3) 5,000,000 5,762,500
- ----------------------------------------------------------------------------------------------
Photronics, Inc., 6% Cv. Sub. Nts., 6/1/04 3,000,000 3,446,250
- ----------------------------------------------------------------------------------------------
Physicians Clinical Laboratory, Inc.,
7.50% Cv. Sub. Debs., 8/15/00(2)(6) 3,000,000 30,000
- ----------------------------------------------------------------------------------------------
Pier 1 Imports, Inc., 5.75% Cv. Sub. Nts., 10/1/03 3,300,000 6,278,250
- ----------------------------------------------------------------------------------------------
Sanifill, Inc., 5% Cv. Sub. Debs., 3/1/06 2,000,000 3,007,500
- ----------------------------------------------------------------------------------------------
Scandinavian Broadcasting System SA, 7.25% Cv. Sub.
Debs., 8/1/05 3,000,000 3,015,000
- ----------------------------------------------------------------------------------------------
SmarTalk Teleservices, Inc., 5.75% Cv. Sub. Nts., 9/15/04(3) 6,000,000 6,412,500
- ----------------------------------------------------------------------------------------------
Sunrise Assisted Living, Inc., 5.50% Cv. Nts., 6/15/02(3) 6,818,000 8,965,670
- ----------------------------------------------------------------------------------------------
Thermo Electron Corp., 4.25% Cv. Sub. Nts., 1/1/03(3) 4,000,000 4,985,000
- ----------------------------------------------------------------------------------------------
Tower Automotive, Inc., 5% Cv. Sub. Nts., 8/1/04(3) 3,340,000 3,473,600
- ----------------------------------------------------------------------------------------------
U.S. Filter Corp., 6% Cv. Sub. Nts., 9/15/05 1,250,000 2,140,625
- ----------------------------------------------------------------------------------------------
United Waste Systems, Inc., 4.50% Cv. Sub. Nts., 6/1/01(3) 4,333,000 6,012,038
------------
Total Convertible Corporate Bonds and Notes (Cost $121,162,464) 130,981,828
</TABLE>
18 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(4) See Note 1
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Notes--4.5%
- --------------------------------------------------------------------------------------------
Associates Corp. of North America, 6.75%, 1/2/98(7) $ 50,000,000 $ 49,990,625
- --------------------------------------------------------------------------------------------
General Electric Capital Corp., 6.75%, 1/2/98(7) 100,000,000 99,981,250
--------------
Total Short-Term Notes (Cost $149,971,875) 149,971,875
Repurchase Agreements--0.1%
- --------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
6.60%, dated 12/31/97, to be repurchased at $2,250,825 on
1/2/98, collateralized by U.S. Treasury Bonds, 8%-10.625%,
8/15/15-11/15/21, with a value of $1,667,705, and U.S.
Treasury Nts., 5.875%-7.50%, 9/30/01-12/31/01, with a value
of $628,509 (Cost $2,250,000) 2,250,000 2,250,000
- --------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $2,509,666,173) 99.8% 3,282,000,637
- --------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.2 5,519,117
----- --------------
Net Assets 100.0% $3,287,519,754
===== ==============
</TABLE>
1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
3. 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 $70,416,068 or 2.14% of the Fund's net
assets as of December 31, 1997.
4. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency:
DEM--German Mark
5. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
6. Non-income producing--issuer is in default of interest payment.
7. 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.
See accompanying Notes to Financial Statements.
19 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Assets and Liabilities December 31, 1997
<TABLE>
<S> <C>
===========================================================================================
Assets
Investments, at value (cost $2,509,666,173)-- see accompanying statement $3,282,000,637
- -------------------------------------------------------------------------------------------
Cash 206,203
- -------------------------------------------------------------------------------------------
Receivables:
Shares of capital stock sold 12,490,148
Interest, dividends and principal paydowns 7,876,404
Investments sold 1,360,000
Closed forward foreign currency exchange contracts 5,870
- -------------------------------------------------------------------------------------------
Other 71,251
--------------
Total assets 3,304,010,513
===========================================================================================
Liabilities
Payables and other liabilities:
Shares of capital stock redeemed 10,798,091
Investments purchased 2,854,300
Distribution and service plan fees 1,628,784
Transfer and shareholder servicing agent fees 682,853
Shareholder reports 372,106
Custodian fees 84,679
Other 69,946
--------------
Total liabilities 16,490,759
===========================================================================================
Net Assets $3,287,519,754
==============
===========================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 29,978,873
- -------------------------------------------------------------------------- --------------
Additional paid-in capital 2,470,885,264
- -------------------------------------------------------------------------- --------------
Undistributed net investment income 460,757
- -------------------------------------------------------------------------- --------------
Accumulated net realized gain on investment transactions 13,860,671
- -------------------------------------------------------------------------- --------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 772,334,189
--------------
Net assets $3,287,519,754
==============
</TABLE>
20 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<S> <C>
=============================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$2,237,603,344 and 203,450,000 shares of capital stock outstanding) $ 11.00
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $ 11.67
- ---------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $986,712,621
and 90,568,219 shares of capital stock outstanding) $ 10.89
- ---------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $36,657,441
and 3,357,305 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 $26,546,348 and 2,413,203 shares of capital stock outstanding) $ 11.00
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statement of Operations For the Year Ended December 31, 1997
<TABLE>
<S> <C>
=======================================================================================
Investment Income
Interest (net of foreign withholding taxes of $29,243) $ 32,079,858
- ---------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $61,855) 37,110,245
------------
Total income 69,190,103
=======================================================================================
Expenses
Management fees--Note 4 15,602,793
- ---------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 3,794,600
Class B 8,762,520
Class C 272,683
- ---------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 3,855,593
- ---------------------------------------------------------------------------------------
Shareholder reports 1,006,280
- ---------------------------------------------------------------------------------------
Custodian fees and expenses 212,104
- ---------------------------------------------------------------------------------------
Registration and filing fees:
Class A 51,642
Class B 41,722
Class C 4,944
Class Y 2,076
- ---------------------------------------------------------------------------------------
Legal and auditing fees 94,368
- ---------------------------------------------------------------------------------------
Directors' fees and expenses 88,780
- ---------------------------------------------------------------------------------------
Insurance expenses 59,592
- ---------------------------------------------------------------------------------------
Other 66,117
------------
Total expenses 33,915,814
=======================================================================================
Net Investment Income 35,274,289
=======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 351,153,470
Closing and expiration of options written--Note 5 977,288
Foreign currency transactions (7,241,348)
------------
Net realized gain 344,889,410
Net change in unrealized appreciation or depreciation on:
Investments 324,094,564
Translation of assets and liabilities denominated in foreign currencies 117,567
------------
Net change 324,212,131
------------
Net realized and unrealized gain 669,101,541
=======================================================================================
Net Increase in Net Assets Resulting from Operations $704,375,830
============
</TABLE>
See accompanying Notes to Financial Statements.
22 Oppenheimer Total Return Fund, Inc.
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
================================================================================================
<S> <C> <C>
Operations
Net investment income $ 35,274,289 $ 41,055,080
- ------------------------------------------------------------------------------------------------
Net realized gain 344,889,410 303,370,659
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 324,212,131 78,795,923
-------------- --------------
Net increase in net assets resulting from operations 704,375,830 423,221,662
================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (25,899,439) (33,143,640)
Class B (4,145,345) (7,780,831)
Class C (125,521) (120,797)
Class Y (304,885) (290,763)
- ------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (233,156,326) (201,096,072)
Class B (103,661,283) (83,631,438)
Class C (3,743,308) (1,874,710)
Class Y (2,706,730) (1,947,759)
================================================================================================
Capital Stock Transactions
Net increase in net assets resulting from capital stock
transactions--Note 2:
Class A 179,892,536 206,458,102
Class B 136,818,203 140,890,490
Class C 16,813,077 16,404,454
Class Y 6,041,378 11,355,744
================================================================================================
Net Assets
Total increase 670,198,187 468,444,442
- ------------------------------------------------------------------------------------------------
Beginning of period 2,617,321,567 2,148,877,125
-------------- --------------
End of period [including undistributed (overdistributed) net
investment income of $460,757 and $(364,489), respectively] $3,287,519,754 $2,617,321,567
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
23 Oppenheimer Total Return Fund, Inc.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------
Year Ended December 31,
1997 1996 1995 1994 1993
================================================================================================================
<S> <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
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .20 .23 .23 .18
Net realized and unrealized
gain (loss) 2.49 1.63 2.09 (.91) 1.45
---- ---- ---- ---- ----
Total income (loss) from
investment operations 2.65 1.83 2.32 (.68) 1.63
- ----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.14) (.20) (.22) (.21) (.20)
Distributions from net realized gain (1.28) (1.21) (.55) -- (.58)
----- ----- ---- ----
Total dividends and
distributions to shareholders (1.42) (1.41) (.77) (.21) (.78)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.00 $ 9.77 $ 9.35 $ 7.80 $ 8.69
====== ====== ====== ====== ======
================================================================================================================
Total Return, at Net Asset Value(4) 27.39% 19.73% 30.12% (7.86)% 21.24%
================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $2,237,603 $1,826,599 $1,550,710 $1,235,637 $1,223,395
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,045,166 $1,684,726 $1,394,245 $1,261,729 $ 992,381
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.43% 1.96% 2.53% 2.88% 2.21%
Expenses 0.89% 0.90% 0.92% 1.01% 0.93%
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 91.7% 117.5% 84.8% 117.2% 143.9%
Average brokerage
commission rate(7) $0.0591 $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.
24 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- ------------------------------------------------------------- -------------------------------
Year Ended December 31, Year Ended December 31,
1997 1996 1995 1994 1993(3) 1997 1996 1995(2)
====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$9.70 $9.29 $7.76 $8.66 $8.23 $9.72 $9.33 $9.19
- ----------------------------------------------------------------------------------------------------
.07 .12 .15 .17 .09 .07 .16 .07
2.45 1.62 2.08 (.91) 1.03 2.46 1.57 .73
---- ---- ---- ---- ---- ---- ---- ---
2.52 1.74 2.23 (.74) 1.12 2.53 1.73 .80
- ----------------------------------------------------------------------------------------------------
(.05) (.12) (.15) (.16) (.11) (.05) (.13) (.11)
(1.28) (1.21) (.55) -- (.58) (1.28) (1.21) (.55)
----- ----- ---- ---- ---- ----- ----- ----
(1.33) (1.33) (.70) (.16) (.69) (1.33) (1.34) (.66)
- ----------------------------------------------------------------------------------------------------
$10.89 $9.70 $9.29 $7.76 $8.66 $10.92 $9.72 $9.33
====== ===== ===== ===== ===== ====== ===== =====
====================================================================================================
26.17% 18.78% 29.03% (8.64)% 13.91% 26.23% 18.67% 8.82%
====================================================================================================
$986,713 $754,918 $589,804 $429,427 $218,716 $36,657 $17,554 $1,655
- ----------------------------------------------------------------------------------------------------
$877,911 $671,593 $510,744 $360,773 $90,952 $27,349 $8,277 $784
- ----------------------------------------------------------------------------------------------------
0.62% 1.15% 1.70% 2.11% 1.09%(5) 0.63% 1.05% 1.42%(5)
1.71% 1.71% 1.75% 1.87% 1.87%(5) 1.72% 1.76% 1.77%(5)
- ----------------------------------------------------------------------------------------------------
91.7% 117.5% 84.8% 117.2% 143.9% 91.7% 117.5% 84.8%
$0.0591 $0.0591 $0.0532 -- -- $0.0591 $0.0591 $0.0532
</TABLE>
5. Annualized.
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-term securities)
for the period ended December 31, 1997 were $2,644,367,065 and $2,524,134,323,
respectively.
25 Oppenheimer Total Return Fund, Inc.
<PAGE>
Financial Highlights (Continued)
<TABLE>
<CAPTION>
Class Y
---------------------------------------------------------
Year Ended December 31,
1997 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 .18 .23 .20 .15
Net realized and unrealized gain (loss) 2.48 1.61 2.13 (.41)
---- ---- ---- ----
Total income (loss) from investment operations 2.66 1.84 2.33 (.26)
- ------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.15) (.21) (.23) (.17)
Distributions from net realized gain (1.28) (1.21) (.55) --
----- ----- ---- ----
Total dividends and distributions to shareholders (1.43) (1.42) (.78) (.17)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.00 $9.77 $9.35 $7.80
====== ===== ===== =====
==================================================================================================================
Total Return, at Net Asset Value(4) 27.53% 19.88% 30.23% (3.15)%
==================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $26,546 $18,252 $6,709 $1,074
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,977 $13,083 $3,944 $320
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.60% 2.08% 2.51% 4.07%(5)
Expenses 0.74% 0.77% 0.87% 0.96%(5)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 91.7% 117.5% 84.8% 117.2%
Average brokerage commission rate(7) $0.0591 $0.0591 $0.0532 --
</TABLE>
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. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
26 Oppenheimer Total Return Fund, Inc.
<PAGE>
Notes to Financial Statements
================================================================================
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's investment objective is to seek high
total return. The Fund's investment advisor 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.
Forward foreign currency exchange contracts are valued based on the closing
prices of the forward currency contract rates in the London foreign exchange
markets on a daily basis as provided by a reliable bank or dealer.
27 Oppenheimer Total Return Fund, Inc.
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
1. Significant Accounting Policies (continued)
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.
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 carryovers, 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.
28 Oppenheimer Total Return Fund, Inc.
<PAGE>
================================================================================
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.
The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the year ended December 31, 1997, amounts have been
reclassified to reflect a decrease in undistributed net investment income of
$3,973,853. Accumulated net realized gain was increased by the same amount.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life
of the respective securities, in accordance with federal income tax
requirements. Realized gains and losses on investments and options written and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
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.
29 Oppenheimer Total Return Fund, Inc.
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
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>
Year Ended December 31, 1997 Year Ended December 31, 1996
---------------------------- ----------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 18,977,566 $206,996,029 20,733,025 $208,977,166
Dividends and
distributions reinvested 22,473,543 244,366,731 22,428,454 219,649,555
Redeemed (24,890,415) (271,470,224) (22,110,493) (222,168,619)
----------- ------------ ----------- ------------
Net increase 16,560,694 $179,892,536 21,050,986 $206,458,102
=========== ============ =========== ============
- -------------------------------------------------------------------------------------------
Class B:
Sold 12,559,650 $135,933,408 14,539,920 $145,115,033
Dividends and
distributions reinvested 9,542,266 102,769,569 8,941,258 86,830,460
Redeemed (9,385,924) (101,884,774) (9,142,775) (91,055,003)
----------- ------------ ----------- ------------
Net increase 12,715,992 $136,818,203 14,338,403 $140,890,490
=========== ============ =========== ============
- -------------------------------------------------------------------------------------------
Class C:
Sold 1,650,829 $17,900,517 1,529,403 $15,491,645
Dividends and
distributions reinvested 345,135 3,728,540 198,823 1,933,848
Redeemed (444,581) (4,815,980) (99,731) (1,021,039)
----------- ------------ ----------- ------------
Net increase 1,551,383 $16,813,077 1,628,495 $16,404,454
=========== ============ =========== ============
- -------------------------------------------------------------------------------------------
Class Y:
Sold 1,064,357 $11,578,084 1,481,212 $14,899,947
Dividends and
distributions reinvested 276,903 3,011,615 228,630 2,238,523
Redeemed (796,261) (8,548,321) (559,150) (5,782,726)
----------- ------------ ----------- ------------
Net increase 544,999 $6,041,378 1,150,692 $11,355,744
=========== ============ =========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
At December 31, 1997, net unrealized appreciation on investments of
$772,334,464 was composed of gross appreciation of $795,250,361, and gross
depreciation of $22,915,897.
30 Oppenheimer Total Return Fund, Inc.
<PAGE>
================================================================================
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 year ended December 31, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $4,143,424, of which
$1,483,220 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 $4,481,926 and $158,724, of which
$429,411 and $9,157, respectively, was paid to an affiliated broker/dealer.
During the year ended December 31, 1997, OFDI received contingent deferred
sales charges of $1,085,492 and $7,720, 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 year ended
December 31, 1997, OFDI paid $302,756 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
31 Oppenheimer Total Return Fund, Inc.
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its 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 for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and Class C shares. Each fee
is 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 year ended
December 31, 1997, OFDI paid $126,247 and $1,915, respectively, to an
affiliated broker/dealer as compensation for Class B and Class C personal
service and maintenance expenses and retained $6,895,337 and $174,053,
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 for distributing shares before the Plan
was terminated. At December 31, 1997, OFDI had incurred unreimbursed expenses
of $16,364,058 for Class B and $329,908 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.
32 Oppenheimer Total Return Fund, Inc.
<PAGE>
================================================================================
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.
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 year ended December 31, 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 151,125,962 2,741,334 17,683,914 133,098
Options closed or expired (157,874,487) (2,364,293) (1,382,810) (38,953)
Options exercised (2,869,550) (560,350) (16,301,104) (94,145)
------------ ------------ ------------ --------
Options outstanding at
December 31, 1997 -- $ -- -- $ --
============ ============ ============ ========
</TABLE>
================================================================================
6. Illiquid and Restricted Securities
At December 31, 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 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 December 31, 1997 was
$10,137,587, which represents 0.31% of the Fund's net assets.
33 Oppenheimer Total Return Fund, Inc.
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
7. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended
December 31, 1997.
34 Oppenheimer Total Return Fund, Inc.
<PAGE>
Independent Auditors' Report
================================================================================
The Board of Directors and Shareholders of
Oppenheimer Total Return Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Total Return Fund, Inc. as of
December 31, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended December 31, 1997
and 1996, and the financial highlights for the period January 1, 1993 to
December 31, 1997. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
December 31, 1997 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Total Return Fund, Inc. at December 31, 1997, the results of its operations,
the changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Denver, Colorado
January 23, 1998
35 Oppenheimer Total Return Fund, Inc.
<PAGE>
Federal Income Tax Information (Unaudited)
================================================================================
In early 1998, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1997.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
Distributions of $1.3054, $1.2773, $1.2774 and $1.3100 per share were
paid to Class A, Class B, Class C and Class Y shareholders, respectively, on
December 17, 1997, of which, for each class of shares, $0.5315 was designated
as a capital gain distribution in the "28% Rate Group" and $0.3243 was
designated as a capital gain distribution in the "20% Rate Group" for federal
income tax purposes. Whether received in stock or cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets.
Dividends paid by the Fund during the fiscal year ended December 31,
1997 which are not designated as capital gain distributions should be
multiplied by 24.21% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
36 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, Director, Vice President, Treasurer
and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Bruce Bartlett, Vice President
John P. Doney, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor 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.
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 OppenheimerFunds 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.
37 Oppenheimer Total Return Fund, Inc.
<PAGE>
OppenheimerFunds Family
<TABLE>
<S> <C> <C>
==========================================================================================
Real Asset Funds
- ------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==========================================================================================
Stock Funds
- ------------------------------------------------------------------------------------------
Developing Markets Fund Discovery Fund Growth Fund
International Small Quest Small Cap Value Fund Global Fund
Company Fund MidCap Fund Quest Global Value Fund
Enterprise Fund Capital Appreciation Fund(1) Disciplined Value Fund
International Growth Fund Quest Capital Value Fund Quest Value Fund
==========================================================================================
Stock & Bond Funds
- ------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==========================================================================================
Bond Funds
- ------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==========================================================================================
Municipal Funds
- ------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==========================================================================================
Money Market Funds(4)
- ------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==========================================================================================
LifeSpan
- ------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
38 Oppenheimer Total Return Fund, Inc.
<PAGE>
<PAGE>
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
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PhoneLink
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OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
1-800-835-3104
RA0420.001.1297 February 27, 1998
| Information and services
- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
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And when you need help, our Customer Service Representatives are only a
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When you want to make a transaction, you can do it easily by calling
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For added convenience, you can get automated information with
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PhoneLink gives you access to a variety of fund, account, and market
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You can count on us whenever you need assistance. That's why the
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So call us today, or visit us at our website at
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