[desert scene]
Annual Report December 31, 1999
Oppenheimer
Total Return Fund, Inc.
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
In a robust U.S. economic environment, the Fund showed strong gains from its
growth-oriented holdings, while value-oriented stocks languished.
Our strongest gains came from holdings in the technology and retail sectors.
During the period, we reduced our holdings in the weaker-performing financial
and health-care sectors.
Contents
[sidebar text]
- -----------------------------
1 President's Letter
3 An Interview
with Your Fund's
Managers
7 Fund Performance
12 Financial
Statements
35 Independent
Auditors' Report
36 Federal
Income Tax
Information
37 Officers and Directors
- -----------------------------
[callout]
- -----------------------
Average Annual
Total Returns
For the 1-Year Period
Ended 12/31/99*
Class A
Without With
Sales Chg. Sales Chg.
- -----------------------
18.34% 11.53%
Class B
Without With
Sales Chg. Sales Chg.
- -----------------------
17.37% 12.37%
Class C
Without With
Sales Chg. Sales Chg.
- -----------------------
17.37% 16.37%
Class Y
Without With
Sales Chg. Sales Chg.
- -----------------------
18.53% 18.53%
- -----------------------
[end callout]
- -----------------------
Not FDIC Insured.
No Bank Guarantee.
May Lose Value.
- -----------------------
*See page 10 for further details.
<PAGE>
PRESIDENT'S LETTER
Dear shareholder,
Whenever a new year begins--let alone a new decade or century--it makes
sense to pause a moment to assess where we've been and where we're going.
In retrospect, U.S. stocks and bonds in 1999 were subject to sudden and
substantial swings in investor sentiment because of economic uncertainty. When
the year began, investors were concerned that growth in the United States might
slow in response to economic weakness overseas. At mid-year, investors were
concerned that the economy was too strong, potentially rekindling inflationary
pressures. Yet, by year end, it became clearer that while the U.S. economy grew
robustly in 1999, inflation remained at low levels. Indeed, investors appeared
more comfortable with the economy after the Federal Reserve Board demonstrated
its inflation-fighting resolve by raising interest rates three times between
June and November.
As is normal in a rising-interest-rate environment, bond prices generally
declined in 1999, led lower by U.S. Treasury bonds. In the stock market, while
most major indices advanced, strong performance was mostly limited to a handful
of large-capitalization growth companies, principally in the technology arena.
Smaller and value-oriented stocks provided particularly lackluster returns, and
overall, foreign stocks outperformed U.S. stocks in 1999.
Looking forward, we expect the U.S. economy to remain on a
moderate-growth, low-inflation course. As recent revisions of 1999's economic
statistics demonstrated, the economy has defied many analysts' forecasts by
growing at a strong rate, which should be positive for the bond market.
Similarly, positive economic forces could help the stock market's performance
broaden to include value-oriented and smaller stocks.
[photo]
James C. Swain
Chairman
Oppenheimer
Total Return Fund, Inc.
Bridget A. Macaskill
President
Oppenheimer
Total Return Fund, Inc.
1 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
PRESIDENT'S LETTER
We see particularly compelling opportunities outside of the U.S. market.
Many foreign stocks also ended 1999 more attractively valued than large-cap U.S.
stocks, and economic trends in overseas markets could lead to higher stock
prices. In Europe, corporate restructuring has just begun, giving companies
there the same potential for cost-cutting and productivity improvements that
U.S. companies enjoyed 10 years ago. In Japan and Asia, economic recovery is
expected to gain strength, which could allow stocks to rally from relatively low
levels.
Another 1999 trend that should remain in force in 2000 is the growth of
businesses related to the Internet. The rise of e-commerce has been good for
consumers and the economy because of greater price competition, which has helped
keep inflation under control. The Internet has also been good for investors, as
even companies with no earnings have seen their stock prices soar. Clearly,
while the Internet is here to stay, not all "dot-com" companies will survive,
and many of these high-flying Internet stocks will eventually--and perhaps very
suddenly--return to more reasonable levels. The long-term winners are most
likely to be companies that support the Internet's growth with content or
infrastructure.
What else is in store for investors in 2000? While we do not have an
infallible crystal ball, we believe that in almost any investment environment,
consistent success stems from an unwavering focus on fundamental investment
principles such as maintaining a long-term perspective, using diversification to
manage risk and availing oneself of the services of a knowledgeable financial
advisor. Indeed, these principles serve as the foundation for every investment
we offer, helping to make OppenheimerFunds The Right Way to Invest in 2000 and
beyond.
Sincerely,
/s/ James C. Swain /s/ Bridget A, Macaskill
James C. Swain Bridget A. Macaskill
January 24, 2000
These general market views represent opinions of OppenheimerFunds, Inc.
and are not intended to predict or depict performance of any particular fund.
Specific discussion, as it applies to your Fund, is contained in the pages that
follow.
2 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
[photo]
Portfolio Management
Team (l to r)
John Doney
Bruce Bartlett
Q How did Oppenheimer Total Return Fund, Inc. perform during 1999?
A. We're generally pleased with the Fund's positive performance during the
fiscal year that ended December 31, 1999. In particular, the growth component of
the Fund's portfolio delivered excellent returns, while the value-oriented
holdings served to help reduce the Fund's risk profile.
To what do you attribute the Fund's success?
Throughout 1999, U.S. economic growth remained robust, largely driven by the
performance of technology-oriented companies. However, the possibility that
growth might slow in the face of increasing domestic interest rates gave rise to
economic uncertainty. In such an environment, the market tends to reward
companies that appear most likely to deliver strong and sustainable growth.
These are precisely the kinds of companies on which the Fund's growth portfolio
focuses.
How did you manage the Fund in light of these conditions?
With technology fueling much of the economy's growth, we found many attractive
investments among companies supplying the building blocks of the world's
technological infrastructure. Our exposure to technology-related issues rose
from approximately 9% of the Fund's portfolio at the beginning of the year to
approximately 24% by year's end. In particular, we added to our positions in
companies that are
3 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
[callout]
"We found
many attractive
investments
among companies
supplying the
building blocks
of the world's
technological
infrastructure."
[end callout]
helping to build today's high-speed, high-capacity data communications and
telecommunications networks. By providing the equipment to increase the
geographical reach and bandwidth of these networks, such companies are profiting
from the explosive growth of the Internet and other forms of business
communications.
We also discovered attractive investments among consumer cyclical
companies, particularly those in the retail and specialty retail areas. Our
holdings included electronics retailers that are benefiting from strong consumer
demand for the latest generation of digital cameras, disk players and other
digital media. Home Depot, Inc., another substantial holding, grew rapidly as
consumers devoted increasing amounts of time and money to their homes.
Did any areas of the Fund's investments exhibit weakness during the period?
Financial stocks proved to be volatile performers during 1999. The sector was
buoyed during the first half of the year by the healthy U.S. economy and signs
of financial strength among worldwide emerging markets. However, financial
stocks generally suffered during the second half of the year under pressure from
slowing earnings and moderate, but consistent, increases in long-term interest
rates. In response, we significantly reduced our position in financial
companies.
We also reduced our healthcare holdings. Patents on many of the
blockbuster drugs that have driven the earnings of major pharmaceutical
companies in recent years are about to expire, exposing these companies to
heightened competition from generic drug producers. In addition, both
pharmaceutical firms and healthcare services companies face potential
4 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
[callout]
- ----------------------------
Average Annual
Total Returns
For the Periods Ended 12/31/99(1)
Class A
1-Year 5-Year 10-Year
- ----------------------------
11.53% 21.81% 16.04%
Class B Since
1-Year 5-Year Inception
- ----------------------------
12.37% 22.06% 16.93%
Class C Since
1-Year 5-Year Inception
- ----------------------------
16.37% N/A 21.16%
Class Y Since
1-Year 5-Year Inception
- ----------------------------
18.53% 23.41% 20.04%
- ----------------------------
[end callout]
regulatory challenges that we believe are likely to increase pricing pressures
and negatively affect the industry's earnings. We focused our remaining
healthcare investments on biotechnology firms with strong product pipelines and
an arsenal of recently approved drugs that face relatively little competition.
How did the Fund's value-oriented investments perform?
Despite a brief shift in market sentiment in favor of value-oriented stocks
that occurred in April, most value stocks performed poorly overall during 1999.
By the end of the year, the gap in performance between growth-oriented stocks
and value-oriented stocks had rarely been greater. As a result, the Fund's value
component fell to approximately 40% of the total portfolio by the end of the
period. Nevertheless, the events of April remind us that shifts in market
sentiment can occur suddenly and without warning. We continue to believe that
our value-oriented holdings provide an important foundation for the Fund's
long-term performance in the volatile world markets.
1. See page 10 for further details.
5 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
What is your outlook for the Fund?
We believe that economic conditions remain favorable for growth investing.
Furthermore, as global economies strengthen, we believe growing demand for basic
products and materials is also likely to improve conditions for value-oriented
companies as well. But regardless of the direction the economy and markets take,
we believe the events of the last year underscore the importance of a
diversified, long-term investment strategy that includes both value and growth
components. That's why we rigorously maintain our value-and-growth investment
strategy, and why Oppenheimer Total Return Fund, Inc. remains part of The Right
Way to Invest.
[pie chart]
Portfolio Allocation(2)
o Stocks 81.5%
o Bonds 3.9
o Cash Equivalents 14.6
[end pie chart]
Top Ten Stock Holdings(3)
- ----------------------------------------------------------
JDS Uniphase Corp. 11.0%
- ----------------------------------------------------------
Home Depot, Inc. 6.6
- ----------------------------------------------------------
Microsoft Corp. 5.2
- ----------------------------------------------------------
Wal-Mart Stores, Inc. 3.8
- ----------------------------------------------------------
Cisco Systems, Inc. 3.4
- ----------------------------------------------------------
Tyco International Ltd. 3.3
- ----------------------------------------------------------
Amgen, Inc. 3.3
- ----------------------------------------------------------
EMC Corp. 2.6
- ----------------------------------------------------------
Tandy Corp. 2.2
- ----------------------------------------------------------
Biogen, Inc. 2.0
Top Five Common Stock Industries(3)
- ----------------------------------------------------------
Electronics 14.4%
- ----------------------------------------------------------
Retail: Specialty 13.8
- ----------------------------------------------------------
Computer Software 6.7
- ----------------------------------------------------------
HealthCare/Drugs 6.2
- ----------------------------------------------------------
Computer Hardware 6.1
2. Portfolio is subject to change. Percentages are as of December 31, 1999, and
are based on total market value of investments.
3. Portfolio is subject to change. Percentages are as of December 31, 1999, and
are based on total market value of common stock.
6 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
FUND PERFORMANCE
How has the Fund performed? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended December 31, 1999, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's discussion of performance. During the one-year period that ended
December 31, 1999, the performance of Oppenheimer Total Return Fund, Inc.
benefited strongly from the Fund's growth-oriented component. Driven by a strong
U.S. economy and fueled by rapid technological expansion, the Fund's technology
and retail holdings appreciated significantly during the year. The financial and
healthcare sectors proved less attractive, pressured by a variety of economic,
regulatory and competitive forces. In response, we significantly reduced the
Fund's exposure to these sectors. With the exception of a few weeks in April,
the Fund's value-oriented holdings underperformed the portfolio's
growth-oriented component. The Fund's portfolio holdings, allocations and our
management strategies are subject to change.
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of the Fund held
until December 31, 1999. In the case of Class A shares, performance is measured
over a ten-year period. In the case of Class B shares, performance is measured
from the inception of the class on May 3, 1993. In the case of Class C shares,
performance is measured from the inception of the class on August 29, 1995. In
the case of Class Y shares, performance is measured from the inception of the
class on June 1, 1994. The Fund's performance reflects the deduction of the
maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B and Class C shares, and reinvestments of all
dividends and capital gains distributions.
The Fund's performance is compared to the performance of the S&P 500
Index. The S&P 500 Index is a broad-based index of equity securities widely
regarded as a general measurement of the performance of the U.S. equity
securities market. Index performance reflects the reinvestment of income but
does not consider the effect of transaction costs, and none of the data in the
graphs shows the effect of taxes. The Fund's performance reflects the effects of
the Fund's business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the investments in the index.
7 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Total Return Fund, Inc. (Class A)
and S&P 500 Index
[line chart]
Oppenheimer Total Return Fund, Inc. Class A S&P 500 Index
12.31.89 9425 10000
9062 9690
12.31.91 12346 12635
13931 13597
12.31.93 16889 14966
15562 15162
12.31.95 20250 20851
24245 25630
12.31.97 30884 34176
37419 43944
12.31.99 44282 53181
[end line chart]
Average Annual Total Return of Class A Shares of the Fund at 12/31/99(1)
1-Year 11.53% 5-Year 21.81% 10-Year 16.04%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Total Return Fund, Inc. (Class B)
and S&P 500 Index
[line chart]
Oppenheimer Total Return Fund, Inc. Class B S&P 500 Index
5.3.93 10000 10000
12.31.93 11309 10808
12.31.94 10332 10949
12.31.95 13330 15057
12.31.96 15835 18509
12.31.97 19978 24680
12.31.98 24025 31734
12.31.99 28197 38405
[end line chart]
Average Annual Total Return of Class B Shares of the Fund at 12/31/99(1)
1-Year 12.37% 5-Year 22.06% Life 16.93%
The performance information for the S&P 500 index begins on 12/31/89 for Class
A, 4/30/93 for Class B, 8/31/95 for Class C and 5/31/94 for Class Y.
1. See page 10 for further details.
8 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Total Return Fund, Inc. (Class C)
and S&P 500 Index
[line chart]
Oppenheimer Total Return Fund, Inc. Class C S&P 500 Index
8.29.95 10000 10000
12.31.95 10882 11049
12.31.96 12915 13581
12.31.97 16302 18109
12.31.98 19596 23285
12.31.99 22999 28180
[end line chart]
Average Annual Total Return of Class C Shares of the Fund at 12/31/99(1)
1-Year 16.37% Life 21.16%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Total Return Fund, Inc. (Class Y)
and S&P 500 Index
[line chart]
Oppenheimer Total Return Fund, Inc. Class Y S&P 500 Index
6.1.94 10000 10000
12.31.94 9686 10229
12.31.95 12613 14067
12.31.96 15120 17291
12.31.97 19283 23056
12.31.98 23396 29646
12.31.99 27731 35878
[end line chart]
Average Annual Total Return of Class Y Shares of the Fund at 12/31/99(1)
1-Year 18.53% 5-Year 23.41% Life 20.04%
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
9 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
NOTES
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. Because of ongoing
market volatility, the Fund's performance may be subject to substantial
short-term changes. For updates on the Fund's performance, please contact your
financial advisor, call us at 1.800.525.7048 or visit our website,
www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
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 A returns include the current maximum initial sales
charge of 5.75%.
Class B shares of the Fund were first publicly offered on 5/3/93. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 1% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "life of class" return for Class B uses Class A performance
for the period after conversion. Class B shares are subject to an annual 0.75%
asset-based sales charge.
Class C shares of the Fund were first publicly offered on 8/29/95. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class C shares are subject to an annual 0.75% asset-based sales charge.
Class Y shares of the Fund were first publicly offered on 6/1/94. Class Y shares
are offered only to certain institutional investors under special agreement with
the Distributor.
An explanation of the different performance calculations is in the
Fund's prospectus.
10 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
------------------------------------------------------------
Financials
11 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
STATEMENT OF INVESTMENTS December 31, 1999
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
=================================================================================================================
Common Stocks--77.8%
- -----------------------------------------------------------------------------------------------------------------
Basic Materials--1.5%
- -----------------------------------------------------------------------------------------------------------------
Chemicals--0.2%
International Flavors & Fragrances, Inc. 260,000 $ 9,815,000
- -----------------------------------------------------------------------------------------------------------------
Paper--1.3%
International Paper Co. 460,412 25,984,502
- -----------------------------------------------------------------------------------------------------------------
Pactiv Corp.(1) 300,000 3,187,500
- -----------------------------------------------------------------------------------------------------------------
Smurfit-Stone Container Corp.(1) 300,000 7,350,000
- -----------------------------------------------------------------------------------------------------------------
Sonoco Products Co. 330,000 7,507,500
- -----------------------------------------------------------------------------------------------------------------
Weyerhaeuser Co. 200,000 14,362,500
------------
58,392,002
- -----------------------------------------------------------------------------------------------------------------
Capital Goods--3.7%
- -----------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.1%
Goodrich (B.F.) Co. 200,000 5,500,000
- -----------------------------------------------------------------------------------------------------------------
Raytheon Co., Cl. A 12,754 316,459
------------
5,816,459
- -----------------------------------------------------------------------------------------------------------------
Industrial Services--0.3%
Republic Services, Inc.(1) 1,000,000 14,375,000
- -----------------------------------------------------------------------------------------------------------------
Manufacturing--3.3%
American Standard Cos., Inc.(1) 285,300 13,088,137
- -----------------------------------------------------------------------------------------------------------------
Honeywell International, Inc. 337,500 19,469,531
- -----------------------------------------------------------------------------------------------------------------
Tenneco Automotive Inc.(1) 60,000 558,750
- -----------------------------------------------------------------------------------------------------------------
Tyco International Ltd. 2,956,576 114,936,892
------------
148,053,310
- -----------------------------------------------------------------------------------------------------------------
Communication Services--4.3%
- -----------------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--1.8%
AT&T Corp. 246,554 12,512,615
- -----------------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(1) 373,650 19,826,803
- -----------------------------------------------------------------------------------------------------------------
Nortel Networks Corp. 478,200 48,298,200
------------
80,637,618
- -----------------------------------------------------------------------------------------------------------------
Telephone Utilities--2.5%
Bell Atlantic Corp. 758,400 46,689,000
- -----------------------------------------------------------------------------------------------------------------
BellSouth Corp. 360,000 16,852,500
- -----------------------------------------------------------------------------------------------------------------
GTE Corp. 400,000 28,225,000
- -----------------------------------------------------------------------------------------------------------------
SBC Communications, Inc. 400,000 19,500,000
------------
111,266,500
</TABLE>
12 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--17.3%
- -----------------------------------------------------------------------------------------------------------------
Autos & Housing--0.3%
Delphi Automotive Systems Corp. 293,500 $ 4,622,625
- -----------------------------------------------------------------------------------------------------------------
Lear Corp.(1) 271,800 8,697,600
------------
13,320,225
- -----------------------------------------------------------------------------------------------------------------
Consumer Services--1.3%
Dun & Bradstreet Corp. 600,000 17,700,000
- -----------------------------------------------------------------------------------------------------------------
Young & Rubicam, Inc. 557,000 39,407,750
------------
57,107,750
- -----------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--0.6%
Carnival Corp. 400,000 19,125,000
- -----------------------------------------------------------------------------------------------------------------
Hasbro, Inc. 300,000 5,718,750
------------
24,843,750
- -----------------------------------------------------------------------------------------------------------------
Media--0.0%
R.H. Donnelley Corp.(1) 100,000 1,887,500
- -----------------------------------------------------------------------------------------------------------------
Retail: General--4.3%
Kohl's Corp.(1) 820,000 59,193,750
- -----------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1,900,000 131,337,500
------------
190,531,250
- -----------------------------------------------------------------------------------------------------------------
Retail: Specialty--10.8%
Abercrombie & Fitch Co., Cl. A(1) 720,024 19,215,640
- -----------------------------------------------------------------------------------------------------------------
AutoNation, Inc.(1) 1,900,000 17,575,000
- -----------------------------------------------------------------------------------------------------------------
AutoZone, Inc.(1) 500,000 16,156,250
- -----------------------------------------------------------------------------------------------------------------
Best Buy Co., Inc.(1) 1,120,000 56,210,000
- -----------------------------------------------------------------------------------------------------------------
Circuit City Stores-Circuit City Group 600,000 27,037,500
- -----------------------------------------------------------------------------------------------------------------
Home Depot, Inc. 3,341,691 229,114,689
- -----------------------------------------------------------------------------------------------------------------
Intimate Brands, Inc., Cl. A 100,000 4,312,500
- -----------------------------------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 555,800 16,465,575
- -----------------------------------------------------------------------------------------------------------------
OfficeMax, Inc.(1) 1,900,000 10,450,000
- -----------------------------------------------------------------------------------------------------------------
Sherwin-Williams Co. 302,200 6,346,200
- -----------------------------------------------------------------------------------------------------------------
Tandy Corp. 1,515,000 74,519,062
------------
477,402,416
- -----------------------------------------------------------------------------------------------------------------
Consumer Staples--4.3%
- -----------------------------------------------------------------------------------------------------------------
Beverages--0.4%
Anheuser-Busch Cos., Inc. 250,000 17,718,750
</TABLE>
13 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Broadcasting--0.5%
Fox Entertainment Group, Inc., A Shares(1) 200,000 $ 4,987,500
- -----------------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., Cl. A(1) 500,100 18,097,369
------------
23,084,869
- -----------------------------------------------------------------------------------------------------------------
Entertainment--1.1%
Brinker International, Inc.(1) 500,000 12,000,000
- -----------------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 700,000 34,518,750
------------
46,518,750
- -----------------------------------------------------------------------------------------------------------------
Food--0.5%
General Mills, Inc. 200,000 7,150,000
- -----------------------------------------------------------------------------------------------------------------
Heinz (H.J.) Co. 200,000 7,962,500
- -----------------------------------------------------------------------------------------------------------------
Nabisco Group Holdings Corp. 700,000 7,437,500
------------
22,550,000
- -----------------------------------------------------------------------------------------------------------------
Food & Drug Retailers--0.9%
CVS Corp. 943,000 37,661,062
- -----------------------------------------------------------------------------------------------------------------
Kroger Co.(1) 100,000 1,887,500
------------
39,548,562
- -----------------------------------------------------------------------------------------------------------------
Household Goods--0.8%
Dial Corp. (The) 950,000 23,096,875
- -----------------------------------------------------------------------------------------------------------------
Newell Rubbermaid, Inc. 400,000 11,600,000
------------
34,696,875
- -----------------------------------------------------------------------------------------------------------------
Tobacco--0.1%
Philip Morris Cos., Inc. 200,000 4,637,500
- -----------------------------------------------------------------------------------------------------------------
Energy--3.3%
- -----------------------------------------------------------------------------------------------------------------
Energy Services--0.7%
Coastal Corp. 400,000 14,175,000
- -----------------------------------------------------------------------------------------------------------------
Schlumberger Ltd. 253,600 14,265,000
- -----------------------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc. 49,096 1,653,921
------------
30,093,921
- -----------------------------------------------------------------------------------------------------------------
Oil: Domestic--2.5%
Atlantic Richfield Co. 150,000 12,975,000
- -----------------------------------------------------------------------------------------------------------------
Conoco, Inc., Cl. B 624,600 15,536,925
- -----------------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 564,030 45,439,667
- -----------------------------------------------------------------------------------------------------------------
Tosco Corp. 400,000 10,875,000
- -----------------------------------------------------------------------------------------------------------------
Unocal Corp. 300,000 10,068,750
- -----------------------------------------------------------------------------------------------------------------
USX-Marathon Group 600,000 14,812,500
------------
109,707,842
</TABLE>
14 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Oil: International--0.1%
Royal Dutch Petroleum Co., NY Shares 100,000 $ 6,043,750
- -----------------------------------------------------------------------------------------------------------------
Financial--9.8%
- -----------------------------------------------------------------------------------------------------------------
Banks--4.0%
Bank of America Corp. 582,900 29,254,294
- -----------------------------------------------------------------------------------------------------------------
Bank One Corp. 330,000 10,580,625
- -----------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 300,000 23,306,250
- -----------------------------------------------------------------------------------------------------------------
East West Bancorp, Inc.(2) 1,000,000 11,437,500
- -----------------------------------------------------------------------------------------------------------------
Fifth Third Bancorp 310,000 22,746,250
- -----------------------------------------------------------------------------------------------------------------
First Union Corp. 400,000 13,125,000
- -----------------------------------------------------------------------------------------------------------------
Firstar Corp. 625,000 13,203,125
- -----------------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp. 200,600 6,983,387
- -----------------------------------------------------------------------------------------------------------------
KeyCorp 400,000 8,850,000
- -----------------------------------------------------------------------------------------------------------------
National City Corp. 620,000 14,686,250
- -----------------------------------------------------------------------------------------------------------------
PNC Bank Corp. 270,000 12,015,000
- -----------------------------------------------------------------------------------------------------------------
Summit Bancorp 360,000 11,025,000
------------
177,212,681
- -----------------------------------------------------------------------------------------------------------------
Diversified Financial--3.9%
American Express Co. 50,000 8,312,500
- -----------------------------------------------------------------------------------------------------------------
Anthracite Capital, Inc. 400,000 2,550,000
- -----------------------------------------------------------------------------------------------------------------
Citigroup, Inc. 1,250,700 69,492,019
- -----------------------------------------------------------------------------------------------------------------
Freddie Mac 200,000 9,412,500
- -----------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 108,200 10,191,087
- -----------------------------------------------------------------------------------------------------------------
Household International, Inc. 759,990 28,309,628
- -----------------------------------------------------------------------------------------------------------------
Imperial Credit Commercial Mortgage Investment Corp. 500,000 5,687,500
- -----------------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. 981,400 37,661,225
------------
171,616,459
- -----------------------------------------------------------------------------------------------------------------
Insurance--1.6%
Aetna, Inc. 225,000 12,557,813
- -----------------------------------------------------------------------------------------------------------------
AFLAC, Inc. 275,000 12,976,563
- -----------------------------------------------------------------------------------------------------------------
American General Corp. 300,000 22,762,500
- -----------------------------------------------------------------------------------------------------------------
Enhance Financial Services Group, Inc. 600,000 9,750,000
- -----------------------------------------------------------------------------------------------------------------
St. Paul Cos., Inc. 400,000 13,475,000
------------
71,521,876
- -----------------------------------------------------------------------------------------------------------------
Savings & Loans--0.3%
Local Financial Corp.(1) 400,000 4,150,000
- -----------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc. 300,000 7,800,000
------------
11,950,000
</TABLE>
15 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Healthcare--5.9%
- -----------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.9%
American Home Products Corp. 300,000 $ 11,831,250
- -----------------------------------------------------------------------------------------------------------------
Amgen, Inc.(1) 1,900,000 114,118,750
- -----------------------------------------------------------------------------------------------------------------
Biogen, Inc.(1) 827,800 69,949,100
- -----------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 300,000 19,256,250
------------
215,155,350
- -----------------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.0%
Bausch & Lomb, Inc. 150,000 10,265,625
- -----------------------------------------------------------------------------------------------------------------
Cardinal Health, Inc. 495,300 23,712,488
- -----------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 430,000 2,311,250
- -----------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 229,000 8,344,188
------------
44,633,551
- -----------------------------------------------------------------------------------------------------------------
Technology--24.0%
- -----------------------------------------------------------------------------------------------------------------
Computer Hardware--4.7%
Dell Computer Corp.(1) 790,000 40,290,000
- -----------------------------------------------------------------------------------------------------------------
EMC Corp.(1) 833,300 91,038,025
- -----------------------------------------------------------------------------------------------------------------
Gateway, Inc.(1) 400,700 28,875,444
- -----------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 552,500 50,001,250
------------
210,204,719
- -----------------------------------------------------------------------------------------------------------------
Computer Software--5.2%
Compuware Corp.(1) 1,335,000 49,728,750
- -----------------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 1,545,861 180,479,272
------------
230,208,022
- -----------------------------------------------------------------------------------------------------------------
Communications Equipment--2.6%
Cisco Systems, Inc.(1) 1,094,000 117,194,750
- -----------------------------------------------------------------------------------------------------------------
Electronics--11.2%
Intel Corp. 290,000 23,870,625
- -----------------------------------------------------------------------------------------------------------------
JDS Uniphase Corp.(1) 2,359,416 380,603,294
- -----------------------------------------------------------------------------------------------------------------
Motorola, Inc. 225,000 33,131,250
- -----------------------------------------------------------------------------------------------------------------
Solectron Corp.(1) 350,000 33,293,750
- -----------------------------------------------------------------------------------------------------------------
Waters Corp.(1) 500,000 26,500,000
------------
497,398,919
- -----------------------------------------------------------------------------------------------------------------
Photography--0.3%
Eastman Kodak Co. 200,000 13,250,000
</TABLE>
16 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Utilities--3.7%
- -----------------------------------------------------------------------------------------------------------------
Electric Utilities--2.2%
AES Corp. (The)(1) 561,000 $ 41,934,750
- -----------------------------------------------------------------------------------------------------------------
Allegheny Energy, Inc. 210,000 5,656,875
- -----------------------------------------------------------------------------------------------------------------
Carolina Power & Light Co. 110,000 3,348,125
- -----------------------------------------------------------------------------------------------------------------
DQE, Inc. 144,100 4,989,462
- -----------------------------------------------------------------------------------------------------------------
Illinova Corp. 300,000 10,425,000
- -----------------------------------------------------------------------------------------------------------------
New Century Energies, Inc. 200,000 6,075,000
- -----------------------------------------------------------------------------------------------------------------
Southern Co. 298,500 7,014,750
- -----------------------------------------------------------------------------------------------------------------
Texas Utilities Co. 200,000 7,112,500
- -----------------------------------------------------------------------------------------------------------------
Unicom Corp. 300,000 10,050,000
--------------
96,606,462
- -----------------------------------------------------------------------------------------------------------------
Gas Utilities--1.5%
Enron Corp. 1,500,000 66,562,500
--------------
Total Common Stocks (Cost $2,041,966,331) 3,451,564,888
=================================================================================================================
Preferred Stocks--0.3%
TCI Pacific Communications, Inc., 5% Cum. Cv. Sr., Cl. A (Cost $4,851,250) 50,000 15,414,300
=================================================================================================================
Other Securities--2.1%
Coastal Corp., 6.625% Cv. Preferred Redeemable Increased
Dividend Equity Securities 300,000 6,993,750
- -----------------------------------------------------------------------------------------------------------------
Dollar General Corp., 8.50% Cv. Structured Yield Product
Exchangeable for Stock 271,100 9,793,487
- -----------------------------------------------------------------------------------------------------------------
MediaOne Group, Inc., 6.25% Cv. Premium Income Exchangeable Securities
for Airtouch Communications, Inc. Common Stock 258,000 27,864,000
- -----------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25% Structured Yield Product
Exchangeable for Stock of IMC Global, Inc. 90,900 1,624,838
- -----------------------------------------------------------------------------------------------------------------
Newell Financial Trust I, 5.25% Cum. Cv. Quarterly Income
Preferred Securities, Non-Vtg.(2) 163,000 6,214,375
- -----------------------------------------------------------------------------------------------------------------
Premier Parks, Inc., 7.50% Cum. Cv. Premium Income
Equity Securities, Non-Vtg. 232,000 12,528,000
- -----------------------------------------------------------------------------------------------------------------
Reliant Energy, Inc., 7% Automatic Common Exchange Securities
for Time Warner, Inc. Common Stock 80,000 9,640,000
- -----------------------------------------------------------------------------------------------------------------
Sovereign Capital Trust II, 7.50% Cv. Preferred Income Equity Redeemable Stock(1) 87,900 4,285,125
- -----------------------------------------------------------------------------------------------------------------
St. George Bank, ADR 9% Cv. Structured Yield Product
Exchangeable for Common Stock of St. George Bank(2) 90,000 4,820,625
- -----------------------------------------------------------------------------------------------------------------
Texas Utilities Co., 9.25% Cv. Preferred Redeemable Increased
Dividend Equity Securities, Non-Vtg. 117,600 5,130,300
- -----------------------------------------------------------------------------------------------------------------
Union Pacific Capital Trust, 6.25% Cum. Term Income
Deferrable Equity Securities, Non-Vtg. 87,600 3,646,350
--------------
Total Other Securities (Cost $80,110,206) 92,540,850
</TABLE>
17 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
Face Market Value
Amount(3) See Note 1
<S> <C> <C>
=================================================================================================================
U.S. Government Obligations--3.5%
U.S. Treasury Bonds:
6.625%, 2/15/27 $ 25,675,000 $ 25,434,297
STRIPS, 6.17%, 2/15/20(4) 100,000,000 25,646,800
STRIPS, 6.51%, 8/15/19(4) 100,000,000 26,478,100
STRIPS, 6.92%, 11/15/18(4) 54,000,000 15,044,778
- -----------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.25%, 2/15/07 31,200,000 30,712,500
6.625%, 3/31/02 30,050,000 30,265,999
------------
Total U.S. Government Obligations (Cost $158,147,522) 153,582,474
=================================================================================================================
Non-Convertible Corporate Bonds and Notes--0.0%
Dresdner Finance BV, 5.50% Gtd. Nts., 4/30/04 DEM (Cost $279,377) 417,000 425,928
=================================================================================================================
Convertible Corporate Bonds and Notes--1.4%
EMC Corp., 3.25% Cv. Sub. Nts., 3/15/02(2) 4,500,000 43,458,750
- -----------------------------------------------------------------------------------------------------------------
Level One Communications, Inc., 4% Cv. Sub. Nts., 9/1/04(2) 3,500,000 9,480,625
- -----------------------------------------------------------------------------------------------------------------
Offshore Logistics, Inc., 6% Cv. Sub. Nts., 12/15/03(2) 5,000,000 4,118,750
- -----------------------------------------------------------------------------------------------------------------
Sunrise Assisted Living, Inc., 5.50% Cv. Nts., 6/15/02(2) 3,409,000 2,684,588
------------
Total Convertible Corporate Bonds and Notes (Cost $16,490,250) 59,742,713
=================================================================================================================
Short-Term Notes--14.3%
CIT Group Holdings, Inc., 6.27%, 1/26/00(5) 50,000,000 49,782,292
- -----------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank:
5.60%, 1/7/00(5) 25,000,000 24,976,667
5.78%, 1/21/00(5) 25,000,000 24,919,722
- -----------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5.60%, 1/13/00(5) 33,110,000 33,048,084
5.61%, 1/11/00(5) 44,728,000 44,658,299
5.65%, 1/10/00(5) 50,000,000 49,929,375
5.76%, 1/28/00(5) 40,000,000 39,827,200
- -----------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
5.61%, 1/18/00(5) 50,000,000 49,867,542
5.64%, 1/16/00(5) 50,000,000 49,960,833
- -----------------------------------------------------------------------------------------------------------------
General Electric Capital Services, 5.87%, 1/14/00(5) 50,000,000 49,894,014
- -----------------------------------------------------------------------------------------------------------------
Hertz Corp., 5.93%, 1/10/00(5) 50,000,000 49,925,875
- -----------------------------------------------------------------------------------------------------------------
IBM Credit Corp., 6.02%, 2/9/00(5) 50,000,000 49,673,916
- -----------------------------------------------------------------------------------------------------------------
Koch Industries, Inc.:
3.50%, 1/5/00(5) 20,000,000 19,991,111
4.50%, 1/3/00(5) 50,000,000 49,987,500
- -----------------------------------------------------------------------------------------------------------------
Wells Fargo Co., 5.94%, 1/12/00(5) 50,000,000 49,909,250
------------
Total Short-Term Notes (Cost $636,351,680) 636,351,680
</TABLE>
18 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(3) See Note 1
<S> <C> <C>
=================================================================================================================
Repurchase Agreements--0.2%
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%, dated
12/31/99, to be repurchased at $11,402,613 on 1/3/00, collateralized
by U.S. Treasury Bonds, 5.25%-12%, 2/15/01-11/15/28, with a value
of $4,474,383 and U.S. Treasury Nts., 5%-7.50%, 12/31/00-2/15/07,
with a value of $7,160,234 (Cost $11,400,000) $11,400,000 $ 11,400,000
- -----------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $2,949,596,616) 99.6% 4,421,022,833
- -----------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.4 16,744,002
----------------------------
Net Assets 100.0% $4,437,766,835
============================
</TABLE>
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income-producing security.
2. 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 $82,215,213 or 1.85% of the Fund's net
assets as of December 31, 1999.
3. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency:
DEM German Mark
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
5. 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, 1999
<TABLE>
<S> <C>
========================================================================================================
Assets
Investments, at value (cost $2,949,596,616)--see accompanying statement $4,421,022,833
- --------------------------------------------------------------------------------------------------------
Cash 1,154,274
- --------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 15,263,576
Interest and dividends 4,893,650
Shares of capital stock sold 2,537,231
Other 72,116
--------------
Total assets 4,444,943,680
========================================================================================================
Liabilities
Payables and other liabilities:
Shares of capital stock redeemed 3,897,881
Distribution and service plan fees 2,140,769
Transfer and shareholder servicing agent fees 514,069
Shareholder reports 444,246
Directors' compensation 7,053
Other 172,827
--------------
Total liabilities 7,176,845
========================================================================================================
Net Assets $4,437,766,835
==============
========================================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 33,599,079
- --------------------------------------------------------------------------------------------------------
Additional paid-in capital 2,890,533,792
- --------------------------------------------------------------------------------------------------------
Undistributed net investment income 6,412,023
- --------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 35,796,031
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 1,471,425,910
--------------
Net assets $4,437,766,835
==============
========================================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$3,157,204,313 and 238,298,222 shares of capital stock outstanding) $13.25
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $14.06
- --------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$1,152,234,676 and 87,955,473 shares of capital stock outstanding) $13.10
- --------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $75,885,558
and 5,780,856 shares of capital stock outstanding) $13.13
- --------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $52,442,288 and 3,956,243 shares of capital stock outstanding) $13.26
</TABLE>
See accompanying Notes to Financial Statements.
20 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended December 31, 1999
<TABLE>
<S> <C>
========================================================================================================
Investment Income
Interest $ 42,046,242
- --------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $25,688) 38,890,786
------------
Total income 80,937,028
========================================================================================================
Expenses
Management fees 21,073,662
- --------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 5,331,807
Class B 11,962,493
Class C 661,360
- --------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 3,235,481
Class B 1,411,254
Class C 77,447
Class Y 53,917
- --------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 169,062
Class B 20,025
Class C 4,932
Class Y 3,673
- --------------------------------------------------------------------------------------------------------
Custodian fees and expenses 81,921
- --------------------------------------------------------------------------------------------------------
Directors' compensation 80,666
- --------------------------------------------------------------------------------------------------------
Other 1,239,971
------------
Total expenses 45,407,671
Less expenses paid indirectly (23,971)
------------
Net expenses 45,383,700
========================================================================================================
Net Investment Income 35,553,328
========================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 346,131,891
Closing and expiration of option contracts written 1,736,517
Foreign currency transactions (2,806)
------------
Net realized gain 347,865,602
- --------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 302,086,494
Translation of assets and liabilities denominated in foreign currencies (41,816)
------------
Net change 302,044,678
------------
Net realized and unrealized gain 649,910,280
========================================================================================================
Net Increase in Net Assets Resulting from Operations $685,463,608
============
</TABLE>
See accompanying Notes to Financial Statements.
21 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998
<S> <C> <C>
=======================================================================================================
Operations
Net investment income $ 35,553,328 $ 37,480,042
- -------------------------------------------------------------------------------------------------------
Net realized gain 347,865,602 243,431,853
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 302,044,678 397,047,043
---------------------------------
Net increase in net assets resulting from operations 685,463,608 677,958,938
=======================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (25,530,440) (30,566,836)
Class B (1,169,315) (5,719,175)
Class C (87,933) (263,905)
Class Y (526,019) (455,751)
- -------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (223,029,885) (172,164,137)
Class B (82,260,938) (80,057,166)
Class C (5,385,579) (3,815,686)
Class Y (3,747,230) (2,532,986)
=======================================================================================================
Capital Stock Transactions
Net increase (decrease) in net assets resulting from capital stock
transactions:
Class A 329,538,222 96,918,666
Class B (150,785,101) 100,622,566
Class C 12,461,790 16,796,414
Class Y 9,804,068 8,780,891
=======================================================================================================
Net Assets
Total increase 544,745,248 605,501,833
- -------------------------------------------------------------------------------------------------------
Beginning of period 3,893,021,587 3,287,519,754
---------------------------------
End of period (including undistributed net investment
income of $6,412,023 and $846,860, respectively) $4,437,766,835 $3,893,021,587
=================================
</TABLE>
See accompanying Notes to Financial Statements.
22 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Year Ended December 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
=============================================================================================================
Per Share Operating Data
Net asset value, beginning of period $12.23 $11.00 $9.77 $9.35 $7.80
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .16 .16 .20 .23
Net realized and unrealized gain 2.01 2.09 2.49 1.63 2.09
----------------------------------------------------------
Total income from investment operations 2.15 2.25 2.65 1.83 2.32
- -------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.12) (.15) (.14) (.20) (.22)
Distributions from net realized gain (1.01) (.87) (1.28) (1.21) (.55)
----------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.13) (1.02) (1.42) (1.41) (.77)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.25 $12.23 $11.00 $9.77 $9.35
==========================================================
=============================================================================================================
Total Return, at Net Asset Value(1) 18.34% 21.16% 27.39% 19.73% 30.12%
=============================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $3,157 $2,594 $2,238 $1,827 $1,551
- -------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $2,757 $2,388 $2,045 $1,685 $1,394
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 1.12% 1.31% 1.43% 1.96% 2.53%
Expenses 0.87% 0.86%(3) 0.89%(3) 0.90%(3) 0.92%(3)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 34% 38% 92% 118% 85%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. 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, 1999, were $1,189,628,921 and $1,455,549,024, respectively.
See accompanying Notes to Financial Statements.
23 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class B Year Ended December 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
============================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $12.10 $10.89 $9.70 $9.29 $7.76
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .06 .07 .12 .15
Net realized and unrealized gain 1.98 2.08 2.45 1.62 2.08
-----------------------------------------------------------------------
Total income from investment operations 2.02 2.14 2.52 1.74 2.23
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.06) (.05) (.12) (.15)
Distributions from net realized gain (1.01) (.87) (1.28) (1.21) (.55)
-----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.02) (.93) (1.33) (1.33) (.70)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.10 $12.10 $10.89 $9.70 $9.29
=======================================================================
============================================================================================================================
Total Return, at Net Asset Value(1) 17.37% 20.25% 26.17% 18.78% 29.03%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,152 $1,202 $987 $755 $590
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,196 $1,080 $878 $672 $511
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.32% 0.50% 0.62% 1.15% 1.70%
Expenses 1.67% 1.67%(3) 1.71%(3) 1.71%(3) 1.75%(3)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 34% 38% 92% 118% 85%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. 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, 1999, were $1,189,628,921 and $1,455,549,024, respectively.
See accompanying Notes to Financial Statements.
24 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
<TABLE>
<CAPTION>
Class C Year Ended December 31, 1999 1998 1997 1996 1995(5)
<S> <C> <C> <C> <C> <C>
============================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $12.13 $10.92 $9.72 $9.33 $9.19
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .06 .07 .16 .07
Net realized and unrealized gain 1.98 2.08 2.46 1.57 .73
-----------------------------------------------------------------------
Total income from investment operations 2.02 2.14 2.53 1.73 .80
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) (.06) (.05) (.13) (.11)
Distributions from net realized gain (1.00) (.87) (1.28) (1.21) (.55)
-----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.02) (.93) (1.33) (1.34) (.66)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.13 $12.13 $10.92 $9.72 $9.33
=======================================================================
============================================================================================================================
Total Return, at Net Asset Value(1) 17.37% 20.20% 26.23% 18.67% 8.82%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $76 $58 $37 $18 $2
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $66 $47 $27 $8 $1
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 0.31% 0.50% 0.63% 1.05% 1.42%
Expenses 1.68% 1.67%(3) 1.72%(3) 1.76%(3) 1.77%(3)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 34% 38% 92% 118% 84%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. 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, 1999, were $1,189,628,921 and $1,455,549,024, respectively.
5. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
See accompanying Notes to Financial Statements.
25 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class Y Year Ended December 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
============================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $12.24 $11.00 $9.77 $9.35 $7.80
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .17 .17 .18 .23 .20
Net realized and unrealized gain 2.00 2.10 2.48 1.61 2.13
-----------------------------------------------------------------------
Total income from investment operations 2.17 2.27 2.66 1.84 2.33
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.14) (.16) (.15) (.21) (.23)
Distributions from net realized gain (1.01) (.87) (1.28) (1.21) (.55)
-----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.15) (1.03) (1.43) (1.42) (.78)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.26 $12.24 $11.00 $9.77 $9.35
=======================================================================
============================================================================================================================
Total Return, at Net Asset Value(1) 18.53% 21.33% 27.53% 19.88% 30.23%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $52 $39 $27 $18 $7
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $47 $34 $22 $13 $4
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 1.32% 1.39% 1.60% 2.08% 2.51%
Expenses 0.67% 0.80%(3) 0.74%(3) 0.77%(3) 0.87%(3)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 34% 38% 92% 118% 85%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. 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, 1999, were $1,189,628,921 and $1,455,549,024, respectively.
5. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
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 at their offering price, which is normally net asset value plus
an initial sales charge. Class B and Class C shares are sold without an initial
sales charge but may be subject to a contingent deferred sales charge (CDSC).
Class Y shares are sold to certain institutional investors without either a
front-end sales charge or a CDSC. 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. Classes A, B and C shares 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.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
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.
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 rates 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, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
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 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, 1999, amounts have been
reclassified to reflect an increase in additional paid-in capital of $3,466, a
decrease in undistributed net investment income of $2,674,458, and an increase
in accumulated net realized gain on investments of $2,670,992.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. Realized gains
and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
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 $0.10 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, 1999 Year Ended December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Class A
Sold 38,779,624 $ 500,033,094 20,090,100 $238,366,108
Dividends and/or
distributions reinvested 19,101,991 234,710,226 16,639,080 191,036,172
Redeemed (31,642,249) (405,205,098) (28,120,324) (332,483,614)
---------------------------------------------------------
Net increase 26,239,366 $ 329,538,222 8,608,856 $ 96,918,666
=========================================================
- -------------------------------------------------------------------------------------
Class B
Sold 13,846,247 $ 175,056,306 13,699,912 $160,764,683
Dividends and/or
distributions reinvested 6,611,034 80,167,708 7,233,729 82,019,204
Redeemed (31,792,050) (406,009,115) (12,211,618) (142,161,321)
---------------------------------------------------------
Net increase (decrease) (11,334,769) $(150,785,101) 8,722,023 $100,622,566
=========================================================
- -------------------------------------------------------------------------------------
Class C
Sold 2,517,651 $ 31,966,080 2,117,847 $ 24,988,182
Dividends and/or
distributions reinvested 431,425 5,244,298 344,352 3,914,027
Redeemed (1,956,338) (24,748,588) (1,031,386) (12,105,795)
---------------------------------------------------------
Net increase 992,738 $ 12,461,790 1,430,813 $ 16,796,414
=========================================================
- -------------------------------------------------------------------------------------
Class Y
Sold 2,101,137 $ 26,918,940 1,821,738 $ 21,338,887
Dividends and/or
distributions reinvested 347,285 4,273,249 260,255 2,988,737
Redeemed (1,668,891) (21,388,121) (1,318,484) (15,546,733)
---------------------------------------------------------
Net increase 779,531 $ 9,804,068 763,509 $ 8,780,891
=========================================================
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities of
$1,471,426,217 was composed of gross appreciation of $1,646,998,173, and gross
depreciation of $175,571,956.
30 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.75% of
the first $100 million of average annual net assets of the Fund, 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 average annual net assets
in excess of $500 million. The Fund's management fee for the year ended December
31, 1999, was 0.52% of the average annual net assets for each class of shares.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and for other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
- --------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End on Class A on Class B on Class C
Sales Charges Sales Charges Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
December 31, 1999 $3,586,666 $1,235,653 $101,858 $4,474,217 $223,694
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
December 31, 1999 $10,798 $1,286,143 $27,758
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
31 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management Fees and Other Transactions with Affiliates Continued
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the fiscal year ended December 31, 1999,
payments under the Class A Plan totaled $5,331,807, all of which was paid by the
Distributor to recipients. That included $433,314 paid to an affiliate of the
Manager. Any unreimbursed expenses the Distributor incurs with respect to Class
A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and asset-based sales charges from the Fund
under the plans. If any plan is terminated by the Fund, the Board of Directors
may allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended December 31, 1999,
were as follows:
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- -------------------------------------------------------------------------------
Class B Plan $11,962,493 $9,316,015 $8,634,201 0.75%
Class C Plan 661,360 248,487 707,054 0.93
32 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuation. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of the
forward transaction. Realized gains and losses are reported with all other
foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
================================================================================
6. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Gains and losses are reported in the
Statement of Operations.
33 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
6. Option Activity Continued
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended December 31, 1999, was as follows:
Call Options
------------------------
Number of Amount of
Options Premiums
- -----------------------------------------------------------------------
Options outstanding as of
December 31, 1998 3,412 $ 671,969
Options written 9,512 2,334,239
Options closed or expired (12,512) (2,902,469)
Options exercised (412) (103,739)
------------------------
Options outstanding as of
December 31, 1999 -- $ --
========================
================================================================================
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 0.45%. 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 0.08%
per annum.
The Fund had no borrowings outstanding during the year ended December 31,
1999.
34 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
To 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, 1999, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended December 31, 1999
and 1998 and the financial highlights for the period January 1, 1995, to
December 31, 1999. 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 as of
December 31, 1999, 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. as of December 31, 1999, 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 24, 2000
35 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $1.0366, $1.0066, $1.0086 and $1.0426 per share were paid
to Class A, Class B, Class C and Class Y shareholders on December 10, 1999, of
which $0.9880 was designated as a "capital gain distribution" for federal income
tax purposes. Whether received in stock or in cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended December 31, 1999,
which are not designated as capital gain distributions should be multiplied by
92.13% 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, Director and Chairman of the Board
Bridget A. Macaskill, Director and President
William H. Armstrong, Director
Robert G. Avis, Director
William A. Baker, Director
George C. Bowen, Director
Edward L. Cameron, Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
Bruce L. Bartlett, Vice President
John P. Doney, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
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 Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible
loss of the principal amount invested.
37 OPPENHEIMER TOTAL RETURN FUND, INC.
<PAGE>
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to
help.
- --------------------------------------------------------------------------------
Internet
24-hr access to account information and transactions
www.oppenheimerfunds.com
- --------------------------------------------------------------------------------
General Information
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
Telephone Transactions
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
- --------------------------------------------------------------------------------
PhoneLink
24-hr automated information and automated transactions
1.800.533.3310
- --------------------------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OppenheimerFunds Information Hotline 24 hours a day, timely and insightful
messages on the economy and issues that may affect your investments
1.800.835.3104
- --------------------------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
[logo] Oppenheimer Funds(R)
RA0420.001.1299 February 29, 2000 Distributor, Inc.
