-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HYV97UHz2A1+3Cd09o4z5I3nf9O2bZYGbc/S3y5+GupMpgpUC9ls46POSFU39XdX EGROtmY3zQm6ShA8msUhjg== 0000935069-03-000865.txt : 20030630 0000935069-03-000865.hdr.sgml : 20030630 20030627184715 ACCESSION NUMBER: 0000935069-03-000865 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030630 EFFECTIVENESS DATE: 20030630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER TOTAL RETURN BOND FUND CENTRAL INDEX KEY: 0001210130 STATE OF INCORPORATION: MA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-21268 FILM NUMBER: 03762422 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUSCON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 N-CSR 1 ra0535_8470vef.txt RA0535_8470VEF UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-21268 Oppenheimer Total Return Bond Fund (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. 498 Seventh Avenue, New York, New York 10018 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 -------------- Date of fiscal year end: April 30 Date of reporting period: February 21, 2003 - April 30, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. April 30, 2003 Oppenheimer Total Return Bond Fund Management Commentaries and Annual Report [GRAPHIC] MANAGEMENT COMMENTARIES Performance Update Investment Strategy Discussion ANNUAL REPORT AND FINANCIAL STATEMENTS Listing of Investments Financials [LOGO] Oppenheimer Funds(R) The Right Way to invest HIGHLIGHTS Fund Objective OPPENHEIMER TOTAL RETURN BOND FUND seeks high total return through both capital appreciation and income. In seeking its objective, the Fund attempts to preserve capital. MANAGEMENT COMMENTARIES AND ADDITIONAL DISCLOSURES 1 Letter to Shareholders 2 An Interview with Your Fund's Managers 21 Federal Income Tax Information 28 Privacy Policy Notice ANNUAL REPORT AND FINANCIAL STATEMENTS 5 Statement of Investments 8 Statement of Assets and Liabilities 9 Statement of Operations 10 Statement of Changes in Net Assets 11 Financial Highlights 13 Notes to Financial Statements 20 Report of Independent Auditors 22 Trustees and Officers Bios Cumulative Total Returns* For the Period since the Fund's inception on 2/21/03 until 4/30/03 Without With Sales Chg. Sales Chg. - -------------------------------------- Class A 1.14% -3.67% - -------------------------------------- Class B 0.97 -4.03 - -------------------------------------- Class C 0.96 -0.04 - -------------------------------------- Class N 1.08 0.08 - -------------------------------------- Standardized Yields 1 For the 30 Days Ended 4/30/03 - -------------------------------------- Class A 1.30% - -------------------------------------- Class B 0.49% - -------------------------------------- Class C 0.26% - -------------------------------------- Class N 1.12% 1. Standardized yield is based on net investment income for the 30-day period ended April 30, 2003. Falling share prices will tend to artificially raise yields. 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. *See Notes on page 4 for further details. Not part of the annual report to Fund shareholders LETTER TO SHAREHOLDERS Dear Shareholder, It is nearly impossible to reflect on the past six months without thinking about the war with Iraq. We experienced a range of emotions in the days leading up to the war and especially as the media brought the war into our homes, as never before. At OppenheimerFunds, we face the difficult task of looking beyond the war to see its long-term impact, together with other factors, on the global economy, the financial markets and, in the end, your investment with us. It's a responsibility that we take very seriously and becomes our primary focus during uncertain times like these. It is our strong belief that investors can be well served by this professional insight and by the guidance provided by a financial advisor. In partnership with OppenheimerFunds, your financial advisor can help you navigate through this volatile and sometimes unpredictable environment. We encourage you to continue to work closely with your advisor to develop and implement an investment plan that fits your goals and risk tolerance. On our end, we continue to be the home to some of the most experienced and talented investment professionals in the industry. They remain focused on proven methods that drive informed, intelligent investment decisions. It is an approach we are proud of and one that has served investors well in a variety of market conditions. We've found that in good times and bad, the fundamental principles of investing remain key for financial success. These principles--investing according to your goals, diversifying your portfolio and benefiting from the value of professional investment advice--are simple ideas that have proven themselves over time, and, we believe, will prove themselves again. We thank you for your continued confidence in OppenheimerFunds and encourage you to visit our website, www.oppenheimerfunds.com, or speak with your advisor for up to date information on your investments and the markets. Sincerely, /s/ John V. Murphy John V. Murphy May 21, 2003 These general market views represent opinions of OppenheimerFunds, Inc. and are not intended to predict performance of the securities markets or any particular fund. Specific information that applies to your Fund is contained in the pages that follow. [PHOTO] John V. Murphy John V. Murphy President Oppenheimer Total Return Bond Fund Not part of the annual report to Fund shareholders 1 | OPPENHEIMER TOTAL RETURN BOND FUND AN INTERVIEW WITH YOUR FUND'S MANAGERS Q How has OPPENHEIMER TOTAL RETURN BOND FUND performed since its inception on February 21, 2003 until April 30, 2003? A. Even though it was an extremely limited time period, the Fund performed well during this period, producing positive total returns. On a relative basis, the Fund slightly underperformed its benchmark, the Salomon Brothers Broad Investment Grade Index. 2 What were the market conditions like during this short period and how did they affect performance? During the period, many segments of the fixed-income markets fared well versus equities. Within the fixed-income markets, non-Treasury securities, or "spread products," outperformed Treasuries and the Fund's exposure to these types of bonds was a clear contributor during the period. In fact, corporate bonds, a sector in which the Fund was overweight, was a strong contributor to performance during the period, as companies continued to cut down on debt and clean up balance sheets. Regarding the Treasury yield curve, our positioning was generally defensive, meaning that the Fund's assets carried less interest rate sensitivity than that of its peers. Such a position would benefit relative performance if interest rates increased. As it turned out, the curve did not change much during the period. U.S. government agency securities also performed well. While we remain neutral towards mortgage-backed securities, because of what we believe is a fair valuation, our strong security selection within the sector added to performance. Can you explain the investment approach being used by the Fund? Our investment approach can be broken down into three main components, maximizing total return, having broad exposure with measured risk and utilizing our team advantage. First, OPPENHEIMER TOTAL RETURN BOND FUND has a "core-plus" approach, which seeks to maximize total return, while controlling risk through diversification. Our "core-plus" style leads the Fund to invest primarily in high-quality Treasuries, corporate and government agencies, including mortgage-backed securities. We will opportunistically invest in high yield bonds and foreign developed and emerging market bonds, as market events dictate. Secondly, alongside a proprietary risk management model, our investment decisions are based on careful assessment of five critical areas: credit risk, prepayment risk, interest rate sensitivity, yield curve and international exposure. The third and final piece of our investment approach focuses on utilizing the benefits of team-oriented portfolio management. A group of specialists, including portfolio managers, analysts and traders, work together to provide a level of oversight and direction that a single manager would find difficult to achieve alone. Arranged by areas of expertise, these specialists are responsible for managing specific portions of the Fund's investments, which we believe gives us a competitive advantage over our peers. [SIDEBAR] Portfolio Management Team Angelo Manioudakis Benjamin Gord Chuck Moon 2. The Fund's performance (Class A shares @ NAV) is compared to the Salomon Brothers Broad Investment Grade Index, a market-capitalization weighted index that includes fixed-rate Treasury, government-sponsored, corporate and mortgage securities. Not part of the annual report to Fund shareholders 2 | OPPENHEIMER TOTAL RETURN BOND FUND What is your outlook going forward? The duration of the Fund's holdings continues to be a third less than its Lipper peer group. We believe the market is pricing in continued economic weakness; however, we are positioning the Fund for more of a recovery. We are confident corporate bonds will continue to perform well and offer favorable yields over Treasuries. This is due to the fact that companies are sharpening their focus on their balance sheets, which tends to bode well for corporate bondholders. In the mortgage sector, valuations relative to Treasuries are fair, in our opinion. However, as these securities cheapen, as we expect, we'll likely increase our exposure to those types of bonds from our current neutral weighting. At this time, we do not plan to extend the Fund's duration as we maintain our belief that interest rates remain somewhat vulnerable to changes in the near term. We believe our team oriented approach and ability to effectively understand and manage risk will benefit shareholders and continue to make OPPENHEIMER TOTAL RETURN BOND FUND part of The Right Way to Invest. [SIDEBAR] "We are confident corporate bonds will continue to perform well and offer favorable yields over Treasuries." Not part of the annual report to Fund shareholders 3 | OPPENHEIMER TOTAL RETURN BOND FUND NOTES In reviewing performance, please remember that past performance cannot 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 fluctuations, and current performance may be more or less than the results shown. For updates on the Fund's performance, visit our website at www.oppenheimerfunds.com. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Because the Fund was first publicly offered on February 21, 2003, no performance information is included in graphic form. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. For more complete information about the Fund, including charges, expenses and risks, please refer to the prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus carefully before you invest or send money. Please remember this Fund has a limited operating history. Class A shares of the Fund were first publicly offered on 2/21/03. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 4.75%. Class B shares of the Fund were first publicly offered on 2/21/03. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (since inception). 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 2/21/03. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the one-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. Class N shares of the Fund were first publicly offered on 2/21/03. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the one-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. Not part of the annual report to Fund shareholders 4 | OPPENHEIMER TOTAL RETURN BOND FUND STATEMENT OF INVESTMENTS April 30, 2003
Principal Market Value Amount See Note 1 - --------------------------------------------------------------------------------------------------------------------------------- Asset-Backed Securities--3.1% BMW Vehicle Owner Trust, Automobile Loan Certificates, Series 2003-A, Cl. A2, 1.45%, 11/25/05 $ 190,000 $ 190,000 - --------------------------------------------------------------------------------------------------------------------------------- Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates, Series 2003-A, Cl. AF1, 1.836%, 10/25/17 59,309 59,257 - --------------------------------------------------------------------------------------------------------------------------------- CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized Mtg. Obligations, Series 2003-1, Cl. AF1, 1.94%, 1/25/33 1 150,732 150,764 - --------------------------------------------------------------------------------------------------------------------------------- Residential Funding Mortgage Securities II, Inc., Home Equity Loan Pass-Through Certificates, Series 2003-HS1, Cl. AI2, 1.422%, 1/25/33 1,2 219,166 219,134 - --------------------------------------------------------------------------------------------------------------------------------- Toyota Auto Receivables Owner Trust, Automobile Mortgage-Backed Obligations, Series 2003-A, Cl. A2, 1.28%, 8/15/05 260,000 259,961 ------------- Total Asset-Backed Securities (Cost $879,196) 879,116 - --------------------------------------------------------------------------------------------------------------------------------- Mortgage-Backed Obligations--41.1% - --------------------------------------------------------------------------------------------------------------------------------- Government Agency--39.2% - --------------------------------------------------------------------------------------------------------------------------------- FHLMC/FNMA/Sponsored--39.2% Federal Home Loan Mortgage Corp., Structured Pass-Through Securities, Collateralized Mtg. Obligations, Series H006, Cl. A1, 1.724%, 4/15/08 1 140,000 140,000 - --------------------------------------------------------------------------------------------------------------------------------- Federal National Mortgage Assn.: 5.50%, 5/16/18-5/13/33 3 995,000 1,028,237 6%, 5/16/18-5/25/33 3 2,391,000 2,493,914 6.50%, 5/1/18-5/25/33 3 2,820,000 2,953,803 7%, 5/25/33-6/25/33 3 4,374,000 4,622,132 8.50%, 7/1/32 46,653 50,337 ------------- 11,288,423 - --------------------------------------------------------------------------------------------------------------------------------- Private--1.9% - --------------------------------------------------------------------------------------------------------------------------------- Commercial--1.9% Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mtg. Obligations, Series 2003-T10, Cl. A1, 4%, 3/13/40 172,000 174,284 - --------------------------------------------------------------------------------------------------------------------------------- GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2003-C1, Cl. A2, 4.093%, 1/10/38 138,000 140,525 - --------------------------------------------------------------------------------------------------------------------------------- J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 2003-ML1A, Cl. A1, 3.972%, 3/12/39 103,000 104,439 - --------------------------------------------------------------------------------------------------------------------------------- Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 117,000 137,782 ------------- 557,030 ------------- Total Mortgage-Backed Obligations (Cost $11,797,124) 11,845,453 - --------------------------------------------------------------------------------------------------------------------------------- U.S. Government Obligations--37.6% Federal Home Loan Mortgage Corp. Unsec. Nts., 4.50%, 1/15/13 1,000,000 1,023,490 - --------------------------------------------------------------------------------------------------------------------------------- Federal National Mortgage Assn. Unsec. Nts., 4.25%, 7/15/07 1,150,000 1,219,031 - --------------------------------------------------------------------------------------------------------------------------------- U.S. Treasury Bonds: 5.375%, 2/15/31 17,000 18,555 6.875%, 8/15/25 1,500,000 1,912,911 - --------------------------------------------------------------------------------------------------------------------------------- U.S. Treasury Nts.: 1.625%, 3/31/05 1,807,000 1,812,931 3%, 2/15/08 258,000 260,741 3.875%, 2/15/13 98,000 98,161 5.875%, 11/15/04 1,555,000 1,662,818 7%, 7/15/06 2,450,000 2,821,425 ------------- Total U.S. Government Obligations (Cost $10,796,811) 10,830,063
5 | OPPENHEIMER TOTAL RETURN BOND FUND STATEMENT OF INVESTMENTS Continued
Principal Market Value Amount See Note 1 - --------------------------------------------------------------------------------------------------------------------------- Corporate Bonds and Notes--14.1% AT&T Wireless Services, Inc.: 7.50% Sr. Unsec. Nts., 5/1/07 $ 140,000 $ 158,132 8.75% Sr. Unsec. Nts., 3/1/31 50,000 62,485 - --------------------------------------------------------------------------------------------------------------------------- AXA Group, 8.60% Unsec. Sub. Nts., 12/15/30 90,000 108,781 - --------------------------------------------------------------------------------------------------------------------------- Citizens Communications Co., 9.25% Sr. Nts., 5/15/11 65,000 82,302 - --------------------------------------------------------------------------------------------------------------------------- Core Investment Grade Bond Trust I, 4.727% Pass-Through Certificates, Series 2002-1, 11/30/07 1,000,000 1,036,415 - --------------------------------------------------------------------------------------------------------------------------- Deutsche Telekom International BV, 8.75% Unsec. Unsub. Nts., 6/15/30 40,000 49,605 - --------------------------------------------------------------------------------------------------------------------------- DTE Energy Co., 6.375% Sr. Nts., 4/15/33 85,000 89,428 - --------------------------------------------------------------------------------------------------------------------------- Federated Department Stores, Inc., 6.625% Sr. Nts., 4/1/11 70,000 77,620 - --------------------------------------------------------------------------------------------------------------------------- FirstEnergy Corp., 7.375% Sr. Unsub. Nts., Series C, 11/15/31 90,000 99,555 - --------------------------------------------------------------------------------------------------------------------------- Ford Motor Co., 7.45% Bonds, 7/16/31 110,000 98,171 - --------------------------------------------------------------------------------------------------------------------------- France Telecom SA, 10% Sr. Unsec. Nts., 3/1/31 2 55,000 73,406 - --------------------------------------------------------------------------------------------------------------------------- Franklin Resources, Inc., 3.70% Nts., 4/15/08 49,000 49,168 - --------------------------------------------------------------------------------------------------------------------------- General Motors Acceptance Corp., 6.875% Unsec. Unsub. Nts., 8/28/12 270,000 275,042 - --------------------------------------------------------------------------------------------------------------------------- Hertz Corp. (The), 7.625% Sr. Nts., 6/1/12 200,000 200,500 - --------------------------------------------------------------------------------------------------------------------------- Household Finance Corp., 7% Nts., 5/15/12 100,000 114,725 - --------------------------------------------------------------------------------------------------------------------------- Hutchison Whampoa International Ltd., 6.50% Nts., 2/13/13 4 90,000 91,419 - --------------------------------------------------------------------------------------------------------------------------- J.P. Morgan Chase & Co., 6.75% Sub. Nts., 2/1/11 63,000 71,850 - --------------------------------------------------------------------------------------------------------------------------- MidAmerican Energy Holdings Co., 5.875% Sr. Nts., 10/1/12 130,000 136,113 - --------------------------------------------------------------------------------------------------------------------------- Morgan Stanley, 6.60% Nts., 4/1/12 70,000 79,381 - --------------------------------------------------------------------------------------------------------------------------- News America Holdings, Inc., 7.75% Sr. Unsec. Debs., 12/1/45 120,000 136,997 - --------------------------------------------------------------------------------------------------------------------------- Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11 75,000 87,965 - --------------------------------------------------------------------------------------------------------------------------- Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 4 100,000 121,818 - --------------------------------------------------------------------------------------------------------------------------- Rogers Wireless Communications, Inc., 9.625% Sr. Sec. Nts., 5/1/11 21,000 23,231 - --------------------------------------------------------------------------------------------------------------------------- Simon DeBartolo Group LP, 6.875% Unsec. Nts., 11/15/06 80,000 88,775 - --------------------------------------------------------------------------------------------------------------------------- TECO Energy, Inc., 10.50% Sr. Unsec. Nts., 12/1/07 37,000 42,180 - --------------------------------------------------------------------------------------------------------------------------- Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 40,000 49,442 - --------------------------------------------------------------------------------------------------------------------------- Time Warner, Inc., 9.125% Debs., 1/15/13 90,000 110,225 - --------------------------------------------------------------------------------------------------------------------------- Verizon Global Funding Corp., 7.75% Sr. Unsub. Nts., 12/1/30 130,000 161,137 - --------------------------------------------------------------------------------------------------------------------------- Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 65,000 66,988 - --------------------------------------------------------------------------------------------------------------------------- Walt Disney Co. (The), 6.375% Sr. Unsec. Nts., 3/1/12 95,000 104,100 - --------------------------------------------------------------------------------------------------------------------------- Waste Management, Inc., 7% Sr. Nts., 7/15/28 115,000 127,662 ------------ Total Corporate Bonds and Notes (Cost $3,999,144) 4,074,618 Shares - --------------------------------------------------------------------------------------------------------------------------- Common Stocks--4.4% iShares GS$ InvesTop Corp. Bond Fund (Cost $1,248,186) 11,400 1,277,370
6 | OPPENHEIMER TOTAL RETURN BOND FUND
Principal Market Value Amount See Note 1 - ------------------------------------------------------------------------------------------------------------------------------------ Structured Notes--12.2% JPMorgan Chase Bank, High Yield Index Credit Linked Trust Nts., 7.55%, 11/15/07 $ 980,392 $ 1,045,343 - ------------------------------------------------------------------------------------------------------------------------------------ Lehman Brothers Holdings, Inc., Targeted Return Index Securities Linked Nts., Series 10-2002, 6.961%, 1/15/12 4,5 1,095,000 1,244,321 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley, Tradable Custodial Receipt Nts., 6.799%, 6/15/12 4,5 1,080,000 1,214,742 -------------- Total Structured Notes (Cost $3,426,924) 3,504,406 - ------------------------------------------------------------------------------------------------------------------------------------ Joint Repurchase Agreements--23.9% 6 Undivided interest of 2.06% in joint repurchase agreement (Principal Amount/Market Value $332,883,000, with a maturity value of $332,894,651) with Banc One Capital Markets, Inc., 1.26%, dated 4/30/03, to be repurchased at $6,872,241 on 5/1/03, collateralized by U.S. Treasury Nts., 4.875%--5.875%, 11/15/04--2/15/12, with a value of $327,261,153 and U.S. Treasury Bonds, 2.125%, 8/31/04, with a value of $12,489,849 (Cost $6,872,000) 6,872,000 6,872,000 - ------------------------------------------------------------------------------------------------------------------------------------ Total Investments, at Value (Cost $39,019,385) 136.4% 39,283,026 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities in Excess of Other Assets (36.4) (10,477,440) ------------------------------- Net Assets 100.0% $ 28,805,586 ===============================
Footnotes to Statement of Investments 1. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial Statements. 2. Represents the current interest rate for a variable or increasing rate security. 3. When-issued security to be delivered and settled after April 30, 2003. 4. 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 Trustees. These securities amount to $2,672,300 or 9.28% of the Fund's net assets as of April 30, 2003. 5. Interest rate represents a weighted average rate comprised of the interest rates of the underlying securities. 6. The Fund may have elements of risk due to concentrated investments. Such concentrations may subject the Fund to additional risks. See accompanying Notes to Financial Statements. 7 | OPPENHEIMER TOTAL RETURN BOND FUND STATEMENT OF ASSETS AND LIABILITIES April 30, 2003
- ------------------------------------------------------------------------------------------------------------------------- Assets Investments, at value (including cost and market value of $6,872,000 in repurchase agreements) (cost $39,019,385)--see accompanying statement $ 39,283,026 - ------------------------------------------------------------------------------------------------------------------------- Cash 15,202 - ------------------------------------------------------------------------------------------------------------------------- Due from broker 80,000 - ------------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest 298,545 Shares of beneficial interest sold 226,386 Daily variation on futures contracts 175,487 Investments sold 59,512 Other 9 -------------- Total assets 40,138,167 - ------------------------------------------------------------------------------------------------------------------------- Liabilities Payables and other liabilities: Investments purchased (including $11,080,960 purchased on a when-issued basis) 11,258,707 Dividends 37,568 Distribution and service plan fees 9,641 Trustees' compensation 395 Shares of beneficial interest redeemed 350 Transfer and shareholder servicing agent fees 289 Other 25,631 -------------- Total liabilities 11,332,581 - ------------------------------------------------------------------------------------------------------------------------- Net Assets $28,805,586 ============== - ------------------------------------------------------------------------------------------------------------------------- Composition of Net Assets Par value of shares of beneficial interest $ 2,858 - ------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 28,567,102 - ------------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 9,712 - ------------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (718) - ------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments 226,632 -------------- Net Assets $28,805,586 ============== - ------------------------------------------------------------------------------------------------------------------------- Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $27,598,182 and 2,738,137 shares of beneficial interest outstanding) $10.08 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $10.58 - ------------------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $798,162 and 79,195 shares of beneficial interest outstanding) $10.08 - ------------------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $387,741 and 38,483 shares of beneficial interest outstanding) $10.08 - ------------------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $21,501 and 2,133 shares of beneficial interest outstanding) $10.08
See accompanying Notes to Financial Statements. 8 | OPPENHEIMER TOTAL RETURN BOND FUND STATEMENT OF OPERATIONS For the Period Ended April 30, 2003 1
- ------------------------------------------------------------------------------------------------- Investment Income Interest $ 123,064 - ------------------------------------------------------------------------------------------------- Dividends 10,312 ----------- Total investment income 133,376 - ------------------------------------------------------------------------------------------------- Expenses Management fees 24,656 - ------------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 9,555 Class B 617 Class C 228 Class N 5 - ------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 372 Class B 231 Class C 71 Class N 11 - ------------------------------------------------------------------------------------------------- Shareholder reports 10,109 - ------------------------------------------------------------------------------------------------- Professional fees 9,943 - ------------------------------------------------------------------------------------------------- Trustees' compensation 395 - ------------------------------------------------------------------------------------------------- Custodian fees and expenses 162 - ------------------------------------------------------------------------------------------------- Other 8,970 ----------- Total expenses 65,325 Less reduction to custodian expenses (162) Less voluntary waiver of expenses (19,307) Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (52) Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (50) Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (11) ----------- Net expenses 45,743 - ------------------------------------------------------------------------------------------------- Net Investment Income 87,633 - ------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) Net realized loss on: Investments (342) Closing of futures contracts (100) Foreign currency transactions (276) ----------- Net realized loss (718) - ------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments 263,641 Futures contracts (37,009) ----------- Net unrealized appreciation 226,632 - ------------------------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Operations $313,547 ===========
1. For the period from February 21, 2003 (commencement of operations) to April 30, 2003. See accompanying Notes to Financial Statements. 9 | OPPENHEIMER TOTAL RETURN BOND FUND STATEMENT OF CHANGES IN NET ASSETS
Period Ended April 30, 2003 1 - ------------------------------------------------------------------------------------------------------- Operations Net investment income $ 87,633 - ------------------------------------------------------------------------------------------------------- Net realized loss (718) - ------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation 226,632 ---------------- Net increase in net assets resulting from operations 313,547 - ------------------------------------------------------------------------------------------------------- Dividends and/or Distributions to Shareholders Dividends from net investment income: Class A (87,071) Class B (550) Class C (143) Class N (16) - ------------------------------------------------------------------------------------------------------- Beneficial Interest Transactions Net increase in net assets resulting from beneficial interest transactions: Class A 27,282,368 Class B 790,499 Class C 383,530 Class N 20,422 - ------------------------------------------------------------------------------------------------------- Net Assets Total increase 28,702,586 - ------------------------------------------------------------------------------------------------------- Beginning of period 103,000 2 ---------------- End of period [including undistributed net investment income of $9,712] $28,805,586 ================
1. For the period from February 21, 2003 (commencement of operations) to April 30, 2003. 2. Reflects the value of the Manager's initial seed money investment on February 6, 2003. See accompanying Notes to Financial Statements. 10 | OPPENHEIMER TOTAL RETURN BOND FUND FINANCIAL HIGHLIGHTS
Class A Class B Period Period Ended Ended April 30, April 30, 2003 1 2003 1 - ------------------------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 10.00 $ 10.00 - ------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .03 .02 Net realized and unrealized gain .08 .08 ------------------------ Total from investment operations .11 .10 - ------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.03) (.02) - ------------------------------------------------------------------------------------------------- Net asset value, end of period $10.08 $10.08 ======================== - ------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 1.14% 0.97% - ------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $27,598 $798 - ------------------------------------------------------------------------------------------------- Average net assets (in thousands) $26,027 $340 - ------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 1.77% 0.85% Expenses, gross 1.29% 2.36% Expenses, net 0.90% 4,5 1.65% 4,5,6 - ------------------------------------------------------------------------------------------------- Portfolio turnover rate 77% 77%
1. For the period from February 21, 2003 (commencement of operations) to April 30, 2003. 2. Assumes an investment at net asset value on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Net of voluntary waiver of expenses. 6. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 11 | OPPENHEIMER TOTAL RETURN BOND FUND FINANCIAL HIGHLIGHTS Continued
Class C Class N Period Period Ended Ended April 30, April 30, 2003 1 2003 1 - ------------------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 10.00 $ 10.00 - ------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .02 .03 Net realized and unrealized gain .08 .08 ------------------------ Total from investment operations .10 .11 - ------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.02) (.03) - ------------------------------------------------------------------------------------------- Net asset value, end of period $10.08 $10.08 ======================== - ------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 0.96% 1.08% - ------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $388 $22 - ------------------------------------------------------------------------------------------- Average net assets (in thousands) $126 $ 6 - ------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 0.59% 1.50% Expenses, gross 2.28% 2.63% Expenses, net 1.65% 4,5,6 1.15% 4,5,6 - ------------------------------------------------------------------------------------------- Portfolio turnover rate 77% 77%
1. For the period from February 21, 2003 (commencement of operations) to April 30, 2003. 2. Assumes an investment at net asset value on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Net of voluntary waiver of expenses. 6. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 12 | OPPENHEIMER TOTAL RETURN BOND FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Oppenheimer Total Return Bond Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek high total return through both capital appreciation and income. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). As of April 30, 2003, the Manager and its affiliates owned 2,510,000, 100, 100 and 100 shares of Class A, Class B, Class C and Class N, respectively. The Fund currently offers Class A, Class B, Class C and Class N shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. Classes A, B, C and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- Securities Valuation. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets and liabilities are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day's closing bid and asked prices, and if not, at the current day's closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- Structured Notes. The Fund invests in index-linked structured notes whose principal and/or interest depend on the performance of an underlying index. The structured notes are leveraged, which increases the volatility of each note's market value relative to the change in the underlying index. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of April 30, 2003, the market value of these securities comprised 12.2% of the Fund's net assets, and resulted in unrealized gains in the current period of $77,482. - -------------------------------------------------------------------------------- Securities on a When-Issued Basis. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Fund may, from time to time, purchase securities whose settlement date extends six months or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. As of April 30, 2003, the value of the segregated assets was $11,255,993. The purchase of securities on a when-issued basis may increase the volatility of the Fund's net asset value to the extent the Fund makes such purchases while remaining substantially fully invested. As of April 30, 2003, the Fund had entered into when-issued purchase commitments of $11,080,960. In connection with its ability to purchase securities on a when-issued basis, the Fund may enter into forward roll transactions with respect to mortgage-related securities. Forward roll transactions require the sale of securities for delivery in the current month, and a simultaneous agreement with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The forward roll may not extend for a period of greater than one year. The Fund generally records the incremental difference between the forward purchase and sale of each forward roll as interest income over the roll period. 13 | OPPENHEIMER TOTAL RETURN BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued Risks to the Fund of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities to what was sold to the counterparty at redelivery; counterparty credit risk; and the potential pay down speed variance between the mortgage-related pools. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- Joint Repurchase Agreements. The Fund, along with other affiliated funds of the Manager, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- 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 substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. As of April 30, 2003, the Fund had approximately $21,000 of post-October losses available to offset future capital gains, if any. Such losses, if unutilized, will expire in 2012. Additionally, the Fund had approximately $300 of post-October foreign currency losses which were deferred. - -------------------------------------------------------------------------------- Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared and paid monthly. Capital gain distributions, if any, are declared daily and paid annually. - -------------------------------------------------------------------------------- Classification of Dividends and Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily due to paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. 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 period ended April 30, 2003, amounts have been reclassified to reflect a decrease in paid-in capital of $9,859. Overdistributed net investment income was decreased by the same amount. Net assets of the Fund were unaffected by the reclassifications. 14 | OPPENHEIMER TOTAL RETURN BOND FUND The tax character of distributions paid during the period ended April 30, 2003 was as follows: Period Ended April 30, 2003 1 ------------------------------------------------- Distributions paid from: Ordinary income $ 87,780 1. For the period from February 21, 2003 (commencement of operations) to April 30, 2003. As of April 30, 2003, the components of distributable earnings on a tax basis were as follows: Undistributed net investment income $ 16,550 Accumulated net realized loss (32,492) Net unrealized appreciation 258,406 ----------- Total $242,464 =========== - -------------------------------------------------------------------------------- Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- Expense Offset Arrangement. The reduction of custodian fees represents earnings on cash balances maintained by the Fund. - -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
Period Ended April 30, 2003 1,2 Shares Amount - ------------------------------------------------------------------------------------------------------ Class A Sold 2,736,090 $ 27,361,875 Dividends and/or distributions reinvested 275 2,768 Redeemed (8,228) (82,275) ------------------------------------ Net increase 2,728,137 $27,282,368 ==================================== - ------------------------------------------------------------------------------------------------------ Class B Sold 88,955 $ 888,971 Dividends and/or distributions reinvested 36 365 Redeemed (9,896) (98,837) ------------------------------------ Net increase 79,095 $ 790,499 ==================================== - ------------------------------------------------------------------------------------------------------ Class C Sold 39,178 $ 391,527 Dividends and/or distributions reinvested 10 103 Redeemed (805) (8,100) ------------------------------------ Net increase 38,383 $ 383,530 ====================================
15 | OPPENHEIMER TOTAL RETURN BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 2. Shares of Beneficial Interest Continued
Period Ended April 30, 2003 1,2 Shares Amount - ---------------------------------------------------------------------------------------------- Class N Sold 2,032 $ 20,408 Dividends and/or distributions reinvested 1 14 ----------------------------- Net increase 2,033 $ 20,422 =============================
1. For the period from February 21, 2003 (commencement of operations) to April 30, 2003. 2. The Fund sold 10,000 shares of Class A at a value of $100,000 and 100 shares each of Class B, Class C and Class N at a value of $1,000, respectively, to the Manager upon seeding of the Fund on February 6, 2003. - -------------------------------------------------------------------------------- 3. Purchases and Sales of Securities The aggregate cost of purchases and proceeds from sales of securities, other than U.S. government obligations and short-term obligations, for the period ended April 30, 2003, were $10,478,011 and $191,419, respectively. There were purchases of $42,174,665 and sales of $20,259,763 of U.S. government and government agency obligations for the period ended April 30,2003. As of April 30, 2003, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $39,019,385 was composed of: Gross unrealized appreciation $ 279,519 Gross unrealized depreciation (15,878) ---------- Net unrealized appreciation $ 263,641 ========== The difference between book-basis and tax-basis unrealized appreciation and depreciation, if applicable, is attributable primarily to the tax deferral of losses on or the tax realization of unrealized gain or loss. - -------------------------------------------------------------------------------- 4. Fees and Other Transactions with Affiliates Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an annual rate of 0.50% of the first $250 million of average annual net assets of the Fund, 0.475% of the next $500 million, and 0.45% of average annual net assets in excess of $750 million. The Manager has voluntarily agreed to waive fees and reimburse expenses such that "Total Annual Operating Expenses" will not exceed 0.90% for Class A shares, 1.65% for Class B Shares, 1.65% for Class C shares, and 1.15% for Class N shares, respectively. The voluntary waivers described above may be amended or withdrawn at any time. For the period ended April 30, 2003, management fees in the amount of $19,307 were voluntarily waived by the Manager. - -------------------------------------------------------------------------------- Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $22.50 per account fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes, up to an annual rate of 0.35% of average net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- Offering and Organizational Costs. The Manager assumed all offering and organizational costs associated with the registration and seeding of the Fund. - -------------------------------------------------------------------------------- Distribution and Service Plan (12b-1) Fees. Under its General Distributor's Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. 16 | OPPENHEIMER TOTAL RETURN BOND 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.
Aggregate Class A Concessions Concessions Concessions Concessions Front-End Front-End on Class A on Class B on Class C on Class N Sales Charges Sales Charges Shares Shares Shares Shares on Class A Retained by Advanced by Advanced by Advanced by Advanced by Period Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1 - ------------------------------------------------------------------------------------------------------------------------------- April 30, 2003 $22,204 $9,189 $10 $9,448 $2,528 $87
1. The Distributor advances concession payments to dealers for certain sales of Class A shares and for sales of Class B, Class C and Class N shares from its own resources at the time of sale.
Class A Class B Class C Class N Contingent Deferred Contingent Deferred Contingent Deferred Contingent Deferred Sales Charges Sales Charges Sales Charges Sales Charges Retained by Retained by Retained by Retained by Period Ended Distributor Distributor Distributor Distributor - ----------------------------------------------------------------------------------------------------------------------- April 30, 2003 $-- $-- $-- $--
- -------------------------------------------------------------------------------- Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A Shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. For the period ended April 30, 2003, payments under the Class A Plan totaled $9,555, all of which were paid by the Distributor to recipients, none of which was 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. - -------------------------------------------------------------------------------- Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares and the Fund pays the Distributor an annual asset-based sales charge of 0.25% per year on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. Distribution fees paid to the Distributor for the period ended April 30, 2003, were as follows:
Distributor's Aggregate Distributor's Aggregate Unreimbursed Total Payments Amount Retained Unreimbursed Expenses Expenses as % of Under Plan by Distributor Under Plan Net Assets of Class - ---------------------------------------------------------------------------------------------------------------------- Class B Plan $617 $-- $-- --% Class C Plan 228 -- -- -- Class N Plan 5 -- -- --
- -------------------------------------------------------------------------------- 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 to settle specific purchases or sales of securities denominated in a foreign currency 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 prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the forward transaction. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of April 30, 2003, the Fund had no outstanding foreign currency contracts. 17 | OPPENHEIMER TOTAL RETURN BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 6. Futures Contracts A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date at a negotiated price. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices (financial futures) or debt securities (interest rate futures) in order to gain exposure to or to seek to protect against changes in market value of stock and bonds or interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures contracts to gain exposure to market changes as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Cash held by the broker to cover initial margin requirements on open futures contracts is noted in the Statement of Assets and Liabilities. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Realized gains and losses are reported on the Statement of Operations at the closing and expiration of futures contracts. The net change in unrealized appreciation and depreciation is reported on the Statement of Operations. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of April 30, 2003, the Fund had outstanding futures contracts as follows:
Expiration Number of Valuation as of Unrealized Contract Description Dates Contracts April 30, 2003 Depreciation - ----------------------------------------------------------------------------------------------------------------------- Contracts to Purchase Euro-Bundesobligation 6/6/03 7 $ 896,818 $ 5,234 ---------- Contracts to Sell U.S. Treasury Bonds 6/19/03 5 570,156 5,750 U.S. Treasury Nts., 2 yr. 6/26/03 4 863,625 1,053 U.S. Treasury Nts., 5 yr. 6/19/03 56 6,370,000 14,555 U.S. Treasury Nts., 10 yr. 6/19/03 12 1,381,500 10,417 ---------- 31,775 ---------- $37,009 ==========
- -------------------------------------------------------------------------------- 7. Illiquid Securities As of April 30, 2003, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. The aggregate value of illiquid securities subject to this limitation as of April 30, 2003 was $509,898, which represents 1.77% of the Fund's net assets. 18 | OPPENHEIMER TOTAL RETURN BOND FUND - -------------------------------------------------------------------------------- 8. Borrowing and Lending Arrangements Interfund Borrowing and Lending Arrangements. The Fund entered into an "interfund borrowing and lending arrangement" with other funds in the Oppenheimer funds complex, to allow funds to borrow for liquidity purposes. The arrangement was initiated pursuant to exemptive relief granted by the Securities and Exchange Commission to allow these affiliated funds to lend money to, and borrow money from, each other, in an attempt to reduce borrowing costs below those of bank loan facilities. Under the arrangement the Fund may lend money to other Oppenheimer funds and may borrow from other Oppenheimer funds at a rate set by the Fund's Board of Trustees, based upon a recommendation by the Manager. The Fund's borrowings, if any, are subject to asset coverage requirements under the Investment Company Act and the provisions of the SEC order and other applicable regulations. If the Fund borrows money, there is a risk that the loan could be called on one day's notice, in which case the Fund might have to borrow from a bank at higher rates if a loan were not available from another Oppenheimer fund. If the Fund lends money to another fund, it will be subject to the risk that the other fund might not repay the loan in a timely manner, or at all. The Fund had no interfund borrowings or loans outstanding during the period ended or at April 30, 2003. 19 | OPPENHEIMER TOTAL RETURN BOND FUND INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- To the Shareholders and Board of Trustees of Oppenheimer Total Return Bond Fund We have audited the accompanying statement of assets and liabilities of Oppenheimer Total Return Bond Fund (the "Fund"), including the statement of investments, as of April 30, 2003, and the related statements of operations and changes in net assets and the financial highlights for the period from February 21, 2003 (commencement of operations) to April 30, 2003. 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. 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 April 30, 2003, by correspondence with the custodian and others. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of OPPENHEIMER TOTAL RETURN BOND FUND at April 30, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the period from February 21, 2003 to April 30, 2003, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP New York, New York June 6, 2003 20 | OPPENHEIMER TOTAL RETURN BOND FUND FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- In early 2004, if applicable, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2003. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends paid by the Fund during the fiscal year ended April 30, 2003 which are not designated as capital gain distributions should be multiplied by 5.26% to arrive at the amount eligible for the corporate dividend-received deduction. Dividends paid by the Fund during the fiscal year ended April 30, 2003 which are not designated as capital gain distribution, may be eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. In early 2004, shareholders of record will receive information regarding the percentage of distributions that are eligible for lower individual income tax rates. The amount will be the maximum amount allowed. 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. Not part of the annual report to Fund shareholders 21 | OPPENHEIMER TOTAL RETURN BOND FUND TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------------------------------------------------------- Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held by Trustee; Fund, Length of Service, Age Number of Portfolios in Fund Complex Currently Overseen by Trustee INDEPENDENT The address of each Trustee and Interested Trustee in the charts below is 6803 S. Tucson TRUSTEES Way, Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his or her resignation, retirement, death or removal. Ronald J. Abdow, President (since 1959) of Abdow Trustee (since 2003) Corporation (operator of restaurants); Trustee of the following real estate businesses Age: 71 (owners and operators of restaurants): G&R Realty Co. Trust (since 1978), G&R Trust (since 1973), Abdow Partnership (since 1975), Auburn Associates (since 1983); Hazard Associates (since 1985); Chairman (since 1996) of Western Mass Development Corp. (non-profit development); Chairman of American International College (non-profit college); Trustee (since 1993) of MML Series Investment Fund and Trustee (since 1994) of MassMutual Institutional Funds (MMIF) (open-end investment companies). Oversees 9 port- folios in the OppenheimerFunds complex. Joseph M. Wikler, Self-employed as an investment consultant; a director (since 1996) of Lakes Trustee (since 2003) Environmental Association, and Medintec (since 1992) and Cathco (since 1995) (medical Age: 62 device companies); and a member of the investment committee of the Associated Jewish Charities of Baltimore (since 1994); formerly a director of Fortis/Hartford mutual funds (1994 - December 2001). Oversees 7 portfolios in the OppenheimerFunds complex. Peter I. Wold, President of Wold Properties, Inc. (an oil and gas exploration and production company); Trustee (since 2003) Vice President, Secretary and Treasurer of Wold Trona Company, Inc. (soda ash processing and Age: 55 production); Vice President of Wold Talc Company, Inc. (talc mining); Managing Member, Hole-in-the-Wall Ranch (cattle ranching); formerly Director and Chairman of the Board, Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999) and Director of PacifiCorp. (1995 - 1999), an electric utility. Oversees 7 portfolios in the OppenheimerFunds complex. - --------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE Eustis Walcott, Principal with Ardsley Associates (since 2000) (consulting firm); formerly Senior Vice Trustee (since 2003) President, MassMutual Financial Group (May 1990 - July 2000). Trustee (since 2000) of Age: 65 Cornerstone Real Estate Advisors and MML Investors Services, Trustee of OFI Trust Company (since 2001) and of the American International College (since 1995). Oversees 7 portfolios in the OppenheimerFunds complex. - --------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New York, NY 10018. AND OFFICER Mr. Murphy serves for an indefinite term, until his resignation, death or removal. John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President (since President, Trustee and September 2000) of the Manager; President and a director or trustee of other Oppenheimer Chairman of the Board, funds; President and a director (since July 2001) of Oppenheimer Acquisition Corp. (the Trustee (since 2003) Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (a Age: 53 holding company subsidiary of the Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager); President and a director (since July 2001) of OppenheimerFunds Legacy Program (a charitable trust program established by the Manager); a director of the investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc. and Centennial Asset Management Corporation (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of Trinity Investment Management Corp. and Tremont Advisers, Inc. (Investment advisory affiliates of the Manager); Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company (the Manager's parent company); a director (since June 1995) of DLB Acquisition Corporation (a holding company that owns the shares of David L. Babson & Company, Inc.); formerly, Chief Operating Officer (September 2000-June 2001) of the Manager; President and trustee (November 1999-November 2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end investment companies); a director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief Executive Officer and director (September 1999-August 2000) of MML Bay State Life Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 74 portfolios in the OppenheimerFunds complex.
22 | OPPENHEIMER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------- OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Manioudakis and Zack, 498 Seventh Avenue, New York, NY 10018, for Mr. Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an annual term or until his or her earlier resignation, death or removal. Angelo Manioudakis, Senior Vice President of the Manager (since April 2002); an officer of 12 portfolios in Vice President (since 2003) the OppenheimerFunds complex; formerly Executive Director and portfolio manager for Age: 36 Miller, Anderson & Sherrerd, a division of Morgan Stanley Investment Management (August 1993-April 2002). Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer (since Treasurer, Principal Financial March 1999) of HarbourView Asset Management Corporation, Shareholder Services, Inc., and Accounting Officer Oppenheimer Real Asset Management Corporation, Shareholder Financial Services, Inc., (since 2003) Oppenheimer Partnership Holdings, Inc., OFI Private Investments, Inc. (since March Age: 43 2000), OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc (since May 2000) and OFI Institutional Asset Management, Inc. (since November 2000); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy Program (since April 2000); formerly Principal and Chief Operating Officer (March 1995-March 1999) of Bankers Trust Company-Mutual Fund Services Division. An officer of 90 portfolios in the OppenheimerFunds complex. Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002) of the Secretary (since 2003) Manager; General Counsel and a director (since November 2001) of OppenheimerFunds Age: 54 Distributor, Inc.; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset Management Corporation; Vice President and a director (since November 2000) of Oppenheimer Partnership Holdings, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI Institutional Asset Management, Inc.; General Counsel (since November 2001) of Centennial Asset Management Corporation; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director (since November 2001) of OppenheimerFunds International Ltd.; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Secretary (since November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001); OppenheimerFunds International Ltd. And Oppenheimer Millennium Funds plc (October 1997-November 2001). An officer of 90 portfolios in the OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information about the Fund's Trustees and is available without charge upon request. 23 | OPPENHEIMER TOTAL RETURN BOND FUND OPPENHEIMER TOTAL RETURN BOND FUND - -------------------------------------------------------------------------------- Investment Advisor OppenheimerFunds, Inc. - -------------------------------------------------------------------------------- Distributor OppenheimerFunds Distributor, Inc. - -------------------------------------------------------------------------------- Transfer and Shareholder OppenheimerFunds Services Servicing Agent - -------------------------------------------------------------------------------- Independent Auditors Ernst & Young LLP - -------------------------------------------------------------------------------- Legal Counsel Mayer Brown Rowe & Maw (C)Copyright 2003 OppenheimerFunds, Inc. All rights reserved. Not part of the annual report to Fund shareholders 24 | OPPENHEIMER TOTAL RETURN BOND FUND OPPENHEIMERFUNDS FAMILY
- ------------------------------------------------------------------------------------------------------------ Global Equity Developing Markets Fund Global Fund International Small Company Fund Quest Global Value Fund, Inc. International Growth Fund Global Opportunities Fund 1 - ------------------------------------------------------------------------------------------------------------ Equity Stock Stock & Bond Emerging Technologies Fund Quest Opportunity Value Fund Emerging Growth Fund Total Return Fund, Inc. Enterprise Fund Quest Balanced Value Fund Discovery Fund Capital Income Fund Main Street Small Cap Fund(R) Multiple Strategies Fund Small Cap Value Fund Disciplined Allocation Fund MidCap Fund Convertible Securities Fund Main Street Opportunity Fund(R) Specialty Growth Fund Real Asset Fund(R) Capital Appreciation Fund Gold & Special Minerals Fund Main Street Fund(R) 2 Tremont Market Neutral Fund, LLC 3 Value Fund Tremont Opportunity Fund, LLC 3 Quest Capital Value Fund, Inc. Quest Value Fund, Inc. Trinity Large Cap Growth Fund Trinity Core Fund Trinity Value Fund - ------------------------------------------------------------------------------------------------------------ Income Taxable Rochester Division International Bond Fund California Municipal Fund 5 High Yield Fund New Jersey Municipal Fund 5 Champion Income Fund AMT-Free New York Municipals 5,6 Strategic Income Fund Municipal Bond Fund Bond Fund Limited Term Municipal Fund Total Return Bond Fund Rochester National Municipals Senior Floating Rate Fund Rochester Fund Municipals U.S. Government Trust Limited Term New York Municipal Fund Limited-Term Government Fund Pennsylvania Municipal Fund 5 Capital Preservation Fund 4 - ------------------------------------------------------------------------------------------------------------ Select Managers Stock Stock & Bond Mercury Advisors Focus Growth Fund QM Active Balanced Fund 4 Gartmore Millennium Growth Fund II Jennison Growth Fund Salomon Brothers All Cap Fund Mercury Advisors S&P 500(R) Index Fund 4 - ------------------------------------------------------------------------------------------------------------ Money Market 7 Money Market Fund, Inc. Cash Reserves
1. The Fund's name changed from Oppenheimer Global Growth & Income Fund on 6/1/03. 2. The Fund's name changed from Oppenheimer Main Street Growth & Income Fund(R) on 4/30/03. 3. Special investor qualification and minimum investment requirements apply. See the prospectus for details. 4. Available only through qualified retirement plans. 5. Available to investors only in certain states. 6. The Fund's name changed from Oppenheimer New York Municipal Fund on 1/22/03. 7. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. Not part of the annual report to Fund shareholders 25 | OPPENHEIMER TOTAL RETURN BOND FUND 1.800.CALL OPP PHONELINK Call 1.800.CALL OPP (225.5677) for answers to many of your questions. Our automated speech recognition system provides you access to all the information and services you need. With PhoneLink you can: o Obtain account balances, share price (NAV) and dividends paid o Verify your most recent transactions o Buy, redeem or exchange mutual fund shares o Create custom lists of your accounts, funds or market indices o Order duplicate statements or Form 1099 DIV o Obtain market data (closing market information for Dow Jones Industrial Average, Nasdaq Composite and S&P 500 Index) o Speak to a Customer Service Representative 1 by saying "Agent" when prompted o And more! Quick list of PhoneLink commands Say To: [Account # or Social Security # + PIN] Get dollar and share balances, NAVs, transaction history or request transactions [Fund name, share class] Get current price/dividend information Balance Hear your balance/list of accounts History Hear your most recent transactions Purchase or buy Buy shares Exchange Exchange shares Liquidation or redemption Sell shares Dow Jones or Market Indices Hear closing market information (Dow Jones Industrial Average, Nasdaq Composite and S&P 500) Custom list Create, play or edit custom list of your accounts, funds or market indices 1. You may speak to a Customer Service Representative during normal business hours. Not part of the annual report to Fund shareholders 26 | OPPENHEIMER TOTAL RETURN BOND FUND THIS PAGE INTENTIONALLY LEFT BLANK. 27 | OPPENHEIMER TOTAL RETURN BOND FUND PRIVACY POLICY NOTICE As an Oppenheimer fund shareholder, you are entitled to know how we protect your personal information and how we limit its disclosure. Information Sources We obtain nonpublic personal information about our shareholders from the following sources: o Applications or other forms o When you create a user ID and password for online account access o When you enroll in eDocs Direct, our electronic document delivery service o Your transactions with us, our affiliates or others o A software program on our website, often referred to as a "cookie," which indicates which parts of our site you've visited If you visit www.oppenheimerfunds.com and do not log on to the secure account information areas, we do not obtain any personal information about you. When you do log on to a secure area, we do obtain your user ID and password to identify you. We also use this information to provide you with products and services you have requested, to inform you about products and services that you may be interested in and to assist you in other ways. Protection of Information We do not disclose any nonpublic personal information (such as names on a customer list) about current or former customers to anyone, except as permitted by law. Disclosure of Information We send your financial advisor (as designated by you) copies of confirmations, account statements and other documents reporting activity in your fund accounts. We may also use details about you and your investments to help us, our financial service affiliates or firms that jointly market their financial products and services with ours, to better serve your investment needs or suggest financial services or educational material that may be of interest to you. Right of Refusal We will not disclose your personal information to unaffiliated third parties (except as permitted by law), unless we first offer you a reasonable opportunity to refuse or "opt out" of such disclosure. Security In the coming months, an Internet browser that supports 128-bit encryption will be required to view the secure pages of www.oppenheimerfunds.com. These areas include: o Account access o Create a user ID and profile o User profile o eDocs Direct, our electronic document delivery service Not part of the annual report to Fund shareholders 28 | OPPENHEIMER TOTAL RETURN BOND FUND To find out if your Internet browser supports 128-bit encryption, or for instructions on how to upgrade your browser, visit the Help section of www.oppenheimerfunds.com. Emails and Encryption As a security measure, we do not include personal or account information in nonsecure emails, and we advise you not to send such information to us in nonsecure emails. Instead, you may take advantage of the secure features of our website to encrypt your email correspondence. To do this, you will need to use an Internet browser that supports 128-bit encryption. If you are not sure if your Internet browser supports 128-bit encryption, or need instructions on how to upgrade your browser, visit the Help section of www.oppenheimerfunds.com for assistance. o All transactions, including redemptions, exchanges and purchases are secured by Secure Socket Layers (SSL) and encryption. SSL is used to establish a secure connection between your PC and OppenheimerFunds' server. It transmits information in an encrypted and scrambled format. o Encryption is achieved through an electronic scrambling technology that uses a "key" to code and then decode the data. Encryption acts like the cable converter box you may have on your television set. It scrambles data with secret code so that no one can make sense of it while it is being transmitted. When the data reaches its destination, the same software unscrambles the data. o You can exit the secure area by either closing your browser, or for added security, you can use the Log Out of Account Area button before you close your browser. Other Security Measures We maintain physical, electronic and procedural safeguards to protect your personal account information. Our employees and agents have access to that information only so that they may offer you products or provide services to you, for example, when responding to your account questions. How You Can Help You can also do your part to keep your account information private, and to prevent unauthorized transactions. If you obtain a user ID and password for your account, do not allow it to be used by anyone else. Also, take special precautions when accessing your account on a computer used by others. - -------------------------------------------------------------------------------- This joint notice describes the privacy policies of Oppenheimer funds, OppenheimerFunds Distributor, Inc., the trustee of OppenheimerFunds Individual Retirement Accounts (IRAs) and the custodian of the OppenheimerFunds 403(b)(7) tax-sheltered custodial accounts. It applies to all Oppenheimer fund accounts you presently have, or may open in the future, using your Social Security number--whether or not you remain a shareholder of our funds. If you have any questions about these privacy policies, write to us at P.O. Box 5270, CO 80217-5270, email us by clicking on the Contact Us section of our website at www.oppenheimerfunds.com or call us at 1.800.525.7048. Not part of the annual report to Fund shareholders 29 | OPPENHEIMER TOTAL RETURN BOND FUND INFORMATION AND SERVICES [GRAPHIC] eDocsDirect Get This Report Online! You can quickly view, download and print this report at your convenience. It's EASY, FAST, CONVENIENT, and FREE! With OppenheimerFunds eDocs Direct, you'll receive email notification when shareholder reports, prospectuses or prospectus supplements for your fund(s) become available online, instead of receiving them through the mail. You'll cut down on paper mail and help reduce fund expenses! Sign up for eDocs Direct today at www.oppenheimerfunds.com Internet 24-hr access to account information and transactions 1 www.oppenheimerfunds.com - -------------------------------------------------------------------------------- PhoneLink 1 and General Information 24-hr automated information and automated transactions Representatives also available Mon-Fri 8am-9pm ET Sat (January-April) 10am-4pm ET 1.800.CALL OPP (1.800.225.5677) - -------------------------------------------------------------------------------- Written Correspondence and Transaction Requests OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 For Overnight Delivery OppenheimerFunds Services 10200 East Girard Avenue, Building D Denver, CO 80231 - -------------------------------------------------------------------------------- Ticker Symbols Class A: OTRAX 1. At times the website or PhoneLink may be inaccessible or their transaction features may be unavailable. Not part of the annual report to Fund shareholders [LOGO] Oppenheimer Funds(R) Distributor, Inc. RA0535.001.0403 June 27, 2003 ITEM 2. CODE OF ETHICS - NOT REQUIRED ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT - NOT REQUIRED ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED ITEM 5. RESERVED ITEM 6. RESERVED ITEM 7. NOT APPLICABLE ITEM 8. RESERVED ITEM 9. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940 (17 CFR 270.30a-2(c)) as of April 30, 2003, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to be appropriately designed to ensure that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation as indicated, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) EX-99.302CERT 3 ex99_302-535.txt EX99_302-535 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, JOHN V. MURPHY, certify that: -------------- 1. I have reviewed this report on Form N-CSR of Oppenheimer Total Return Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report. Date: 06/19/03 /S/JOHN V. MURPHY ----------------- John V. Murphy Chief Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, BRIAN W. WIXTED, certify that: --------------- 1. I have reviewed this report on Form N-CSR of Oppenheimer Total Return Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report. Date: 06/19/03 /S/BRIAN W. WIXTED ------------------ Brian W. Wixted Chief Financial Officer EX-99.906CERT 4 ex99_906-535.txt EX99_906-535 EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2003 JOHN V. MURPHY, Chief Executive Officer, and BRIAN W. WIXTED Chief Financial Officer of Oppenheimer Total Return Bond Fund (the "Registrant"), each certify to the best of his or her knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended April 30, 2003 (the "Form N-CSR") fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Chief Executive Officer Chief Financial Officer Oppenheimer Total Return Oppenheimer Total Return Bond Fund Bond Fund /S/JOHN V. MURPHY /S/BRIAN W. WIXTED - ----------------- ------------------ John V. Murphy Brian W. Wixted Date: 06/19/03 Date: 06/19/03 A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Oppenheimer Total Return Bond Fund and will be retained by Oppenheimer Total Return Bond Fund and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----