<PAGE>
OPPENHEIMER CHAMPION INCOME FUND
Annual Report September 30, 1995
[PHOTO]
"We need our money to W O R K as hard as it can."
[LOGO]OPPENHEIMERFUNDS-c-
<PAGE>
This Fund is for people who want HIGH INCOME and the potential for
growth.
N E W S
"The Fund's standout
features are its low
[relative] risk and
appealing long-term
returns."
- --Morningstar Mutual Funds
September 15, 1995
- -------------------
STANDARDIZED YIELDS
- -------------------
For the 30 Days Ended 9/30/95:(3)
Class A
- -------------------
7.66%
- -------------------
Class C
- -------------------
7.27%
- -------------------
THE FUND'S CLASS A SHARES
ARE RANKED * * * * AMONG
773 TAXABLE BOND FUNDS AS
OF 9/30/95 BY
MORNINGSTAR MUTUAL FUNDS.(4)
- ------------------------
HOW YOUR FUND IS MANAGED
- ------------------------
Oppenheimer Champion Income Fund seeks high current income with a secondary
objective of capital growth. The Fund invests in high-yielding, lower-rated
corporate bonds. These types of securities often offer among the highest income
levels available from any type of fixed income investment to help provide the
potential for long-term growth.
- -----------
PERFORMANCE
- -----------
Total returns at net asset value for the 12 months ended 9/30/95 for Class A and
C shares were 10.09% and 9.16%, respectively.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/95 and since inception
of the Class on 11/16/87 were 4.86%, 14.10% and 12.57%, respectively. For Class
C shares, average annual total returns for the 1- year period ended 9/30/95 and
since inception of the Class on 12/1/93 were 8.16% and 5.54%, respectively.(2)
- -------
OUTLOOK
- -------
"In this environment, returns from all bond categories should come primarily
from income, so high yield bonds should continue to offer significant
advantages, especially in a steady economy. New supply has been strong, but
demand has been even stronger, which is another positive for the market."
Ralph Stellmacher, Portfolio Manager
September 30, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost.
1. Based on the change in net asset value per share for the periods shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 9/30/94, 9/30/90
and 11/16/87 (inception of class), after deducting the current maximum initial
sales charge of 4.75%. The Fund's maximum sales charge rate for Class A shares
was higher during a portion of some of the periods shown, and actual investment
results would be different as a result. Certain Class B performance is not yet
available because Class B shares were first publicly offered on 10/1/95. Class C
returns show results of hypothetical investments on 9/30/94 and 12/1/93
(inception of class), with the 1% contingent deferred sales charge deducted for
the 1-year result. An explanation of the different returns is in the Fund's
prospectus.
3. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 9/30/95, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
4. Source: Morningstar Mutual Funds, 9/30/95. Morningstar, Inc., an independent
mutual fund monitoring service, produces proprietary monthly rankings of funds
in broad investment categories (equity, taxable bond, tax-exempt bond, or
"hybrid") based on risk-adjusted investment return, after considering sales
charges and expenses. Investment return measures a fund's (or class's) 3-, 5-
and 10-year (depending on the inception of the class or fund) average annual
total returns in excess of 90-day U.S. Treasury bill returns. Risk measures a
fund's (or class's) performance below 90-day U.S. Treasury bill returns. Risk
and returns are combined to produce star rankings, reflecting performance
relative to the average fund in a fund's category. Five stars is the highest
ranking (top 10%), and 1 star is the lowest (bottom 1%). The 4-star current
ranking is a weighted average of the 3- and 5-year rankings for the class, which
were 4 and 5 stars, weighted 40%/60%, respectively. The Fund was ranked among
773 taxable bond funds. Rankings are subject to change. The Fund's Class A and C
shares have the same portfolio.
2 Oppenheimer Champion Income Fund
<PAGE>
[PHOTO]
James C. Swain
Chairman
Oppenheimer Champion
Income Fund
[PHOTO]
Jon S. Fossel
President
Oppenheimer Champion
Income Fund
DEAR OPPENHEIMERFUNDS SHAREHOLDER,
Although the U.S. stock market has received much of the media attention this
year, the bond market has also turned in an excellent performance thus far in
1995. The driving force: steadily falling long-term interest rates along with an
expectation that inflation would remain low.
As you may know, inflation erodes the purchasing power of future income
because bonds pay a fixed rate of income over a fixed time period. Therefore, as
a result of low inflation expectations and slower, more stable economic growth,
investors had a greater demand for bonds and, as such, prices rose and yields
fell.
Unlike short-term interest rates, which are affected primarily by the
actions of the Federal Reserve Board, long-term interest rates are driven by
investors expectations. So even though long-term interest rates were falling,
short-term interest rates were not generally declining until July 6, when the
Fed cut short-term rates for the first time in three years in an attempt to
stimulate the weakening U.S. economy in second quarter. Back in 1994, the
surging economy caused the Fed to increase interest rates seven times prior to
its July 6 rate cut--and those rate hikes were primarily responsible for the
poor performance of the U.S. bond market last year. But investors who remained
patient and stayed the course have been rewarded in 1995.
And, although the economy has shown a variety of mixed signals recently, we
believe the Federal Reserve will not return to a tightening policy any time in
the near future. Indeed, the Fed appears to have successfully engineered a "soft
landing" for the U.S. economy, one in which growth is moderate and inflation
almost nonexistent.
This two-year period is an excellent example of why investors need to
maintain their objectivity and perspective. Like all markets, there will be
volatility in bonds from year to year but, over time, the fixed income markets
should tend to provide strong current income relative to inflation, and capital
appreciation and depreciation typically offset each other. As a result of the
Fed's change in policy, we believe we're now in a period in which capital gains
and losses will again take a back seat to income as the main driver behind bond
investing.
At the same time, the U.S. dollar has strengthened against major overseas
currencies as both Japan and Germany continue to reduce interest rates to
stimulate their economies--actions which make the U.S. bond market relatively
more attractive to foreign investors. So as a result of international market
forces, a moderate U.S. economic environment, and the Fed's anti-inflationary
goal, we expect interest rates to remain relatively stable. And finally, as
mentioned in a recent mailing to you, your Fund's name changed to Oppenheimer
Champion Income Fund on October 1, 1995, to reflect its greater diversification
potential. Thank you for your confidence in OppenheimerFunds, and we look
forward to helping you reach your investment goals in the future.
/S/James C. Swain /S/Jon S. Fossel
James C. Swain Jon S. Fossel
October 23, 1995
3 Oppenheimer Champion Income Fund
<PAGE>
Q & A
[PHOTO] [PHOTO]
Q What is your OUTLOOK for the fund?
AN INTERVIEW WITH YOUR FUND'S MANAGER.
HIGH YIELD BONDS HAVE CHARACTERISTICS OF BOTH STOCKS AND BONDS. TO WHAT EXTENT
HAVE THEY PARTICIPATED IN THE UPSWINGS IN BOTH MARKETS?
The high yield market has been performing very well, benefiting mostly from the
general decline in interest rates that took place over the first half of the
year. This drop in rates caused price appreciation in high yield bonds just as
it did in the general market.
On the equity side of the equation, high yield bonds' performance has been
influenced positively by changes in economic news. Now that the Federal Reserve
has cut rates and the economy seems safe from recession, prices have climbed and
yields, while still offering an impressive advantage over Treasuries, are
somewhat lower.
HOW HAS THE FEDERAL RESERVE'S DRAMATIC CHANGE IN POLICY ALTERED YOUR INVESTMENT
STRATEGY?
Early in 1994, the difference in yields on higher-rated bonds versus lower-rated
bonds was small, yet we had a fear of recession. This fear made us fairly
conservative; thus, we held higher-quality bonds. In June, the Federal Reserve
eased monetary policy, which should lengthen the business cycle, pushing our
concerns about recession further off into the future.
Now, the difference between higher- and lower-rated bonds is larger. In
this environment, we've become more aggressive, still emphasizing strong
companies primarily in the B, B+ and BB- ratings range. A steady economy bodes
well for their businesses and their bonds offer higher income than their
better-rated counterparts, though with somewhat more risk. In general, we're
avoiding the lowest ratings because, although they pay the highest
[PHOTO]
4 Oppenheimer Champion Income Fund
<PAGE>
income, they also carry the highest risk of default of principal or interest in
any economic environment.(1)
FACING PAGE
Top left: Ralph Stellmacher,
Portfolio Manager
Top right: The trading desk
Bottom: Len Darling, Executive VP,
Director of Fixed Income Investing,
consults with Jon Fossel
THIS PAGE
Top and bottom: Ralph Stellmacher
[PHOTO]
A HIGH YIELD BONDS SHOULD CONTINUE TO OFFER SIGNIFICANT ADVANTAGES.
WHAT TYPES OF COMPANIES WOULD YOU EXPECT TO DO WELL IN THE CURRENT ENVIRONMENT?
We're looking for companies that can do well in a slower but steady economy.
We've been adding bonds for their individual attributes in insurance companies,
supermarkets, and restaurants.
In addition, we're anticipating that the media sector as a whole will
benefit from pending legislative approval of a cable and broadcasting
deregulation bill.
WHAT OTHER CHANGES HAVE YOU MADE IN THE PORTFOLIO OVER THE YEAR?
Recently, we've taken some profits in gaming companies. This sector suffered in
'94, allowing us to buy bonds at attractive prices early this year. Since then,
profitability in many of these companies has improved, and the prices of their
bonds have followed. We're also reducing our holdings in paper and container
board companies. While we continue to see strong operations and, as a result,
potentially improving balance sheets, inventories are beginning to increase for
companies in this sector, which could force them to reduce prices in the future.
In the retail sector, we still have some concerns about consumer purchasing
power, so we're reducing overall holdings there slightly.
WHAT IS YOUR OUTLOOK FOR THE MARKET AND THE FUND?
Without another major interest rate change, we don't expect to see further
dramatic appreciation or depreciation in the high yield market this year. In
this environment, returns from all bond categories should come primarily from
income, so high yield bonds should continue to offer significant advantages,
especially in a steady economy. New supply has been strong, but demand has been
even stronger, which is another positive for the market.
Still, we believe income will be the key. We'll continue to work to
maximize income while seeking to avoid unnecessary risks as the year
progresses./ /
[PHOTO]
1. The Fund's portfolio is subject to change.
5 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------
STATEMENT OF INVESTMENTS September 30, 1995
---------------------------------------------
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
===================================================================================================================================
MORTGAGE-BACKED OBLIGATIONS--2.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Securities:
Trust 218, Cl. 2, 16.521%, 4/25/23(2) $ 4,861,270 $ 1,436,353
Trust 240, Cl. 2, 11.715%, 9/25/23(2) 3,063,474 961,405
Trust 252, Cl. 2, 13.914%, 11/25/23(2) 4,829,306 1,454,828
---------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 6%, 10/1/25(13) 4,400,000 4,408,250
---------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 504,484 458,450
Series 1995-C1, Cl. F, 6.90%, 2/25/07 477,067 413,707
-----------
Total Mortgage-Backed Obligations (Cost $9,225,035) 9,132,993
===================================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--12.9%
- -----------------------------------------------------------------------------------------------------------------------------------
TREASURY--12.9% U.S. Treasury Nts.:
8.875%, 11/15/97 30,000,000 31,781,250
9.25%, 1/15/96 9,575,000 9,673,736
-----------
Total U.S. Government Obligations (Cost $41,386,078) 41,454,986
===================================================================================================================================
FOREIGN GOVERNMENT OBLIGATIONS--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC
International Finance BV Gtd. Bonds, 8%, 8/5/03 500,000 400,625
---------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds, 6.812%, 2/28/25(3) 1,500,000 740,550
---------------------------------------------------------------------------------------------------------------
Germany (Republic of) Debs., Bundesrepublic Deutscheland,
Series 95, 7.375%, 1/3/05DEM 2,700,000 1,983,425
-----------
Total Foreign Government Obligations (Cost $3,209,535) 3,124,600
===================================================================================================================================
MUNICIPAL BONDS AND NOTES--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, California Transportation Corridor
Agency Toll Road Capital Appreciation Revenue Bonds,
Jr. Lien, Zero Coupon, 1/1/28 (Cost $789,595) 13,500,000 1,016,861
===================================================================================================================================
CORPORATE BONDS AND NOTES--74.1%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--9.1%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--1.5% NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(4) 640,000 478,400
11.75% Sr. Sec. Nts., 10/15/03 1,600,000 1,696,000
---------------------------------------------------------------------------------------------------------------
OSI Specialties Holding Co., 0%/11.50% Sr. Sec. Disc. Debs., Series B, 4/15/04(4) 3,000,000 2,445,000
---------------------------------------------------------------------------------------------------------------
OSI Specialties, Inc., 9.25% Sr. Sub. Nts., 10/1/03 200,000 219,000
-----------
4,838,400
- -----------------------------------------------------------------------------------------------------------------------------------
CONTAINERS--1.7% Owens-Illinois, Inc., 11% Sr. Debs., 12/1/03 2,445,000 2,695,613
---------------------------------------------------------------------------------------------------------------
U.S. Can Co., 13.50% Sr. Sub. Nts., 1/15/02 2,500,000 2,750,000
-----------
5,445,613
- -----------------------------------------------------------------------------------------------------------------------------------
METALS/MINING--1.7% Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03 2,000,000 2,135,000
---------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 9.875% Sr. Nts., 2/15/02 3,000,000 3,015,000
---------------------------------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05 325,000 370,500
-----------
5,520,500
</TABLE>
6 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER--3.8% APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05 $ 500,000 $ 503,750
---------------------------------------------------------------------------------------------------------------
Domtar, Inc.:
11.25% Debs., 9/15/17 190,000 207,575
12% Nts., 4/15/01 190,000 219,450
---------------------------------------------------------------------------------------------------------------
Gaylord Container Corp.:
0%/12.75% Sr. Sub. Disc. Debs., 5/15/05(4) 750,000 740,625
11.50% Sr. Nts., 5/15/01 250,000 261,250
---------------------------------------------------------------------------------------------------------------
Indah Kiat Finance Co. BV, 12.50% Sr. Gtd. Sec. Nts., Series C, 6/15/06 2,400,000 2,496,000
---------------------------------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05 2,000,000 1,970,000
---------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 9.875% First Priority Sr. Sec. Nts., 7/15/00 1,300,000 1,309,750
---------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 11.25% Sr. Sub. Nts., 6/15/02 1,100,000 1,199,000
---------------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04 2,350,000 2,608,500
---------------------------------------------------------------------------------------------------------------
Stone Container Corp., 10.75% First Mtg. Nts., 10/1/02 650,000 677,625
-----------
12,193,525
- -----------------------------------------------------------------------------------------------------------------------------------
STEEL--0.4% AK Steel Corp., 10.75% Gtd. Sr. Nts., 4/1/04 800,000 858,000
---------------------------------------------------------------------------------------------------------------
Armco, Inc., 8.50% Sinking Fund Debs., 9/1/01 275,000 261,250
----------
1,119,250
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER-RELATED--19.5%
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 5/27/98 4,580,000 3,629,650
- --4.3% ---------------------------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 2,400,000 2,652,000
---------------------------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(4) 4,440,000 2,375,400
---------------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc.:
9.25% First Priority Sr. Sec. Nts., 2/1/02 2,620,000 2,534,850
9.875% Sr. Nts., 5/1/06 545,000 528,650
---------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., 3/15/98 1,450,000 1,065,750
---------------------------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05(5) 960,000 936,000
-----------
13,722,300
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/ Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 2,845,000 2,845,000
TOBACCO--2.4% ---------------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 1,500,000 1,526,250
---------------------------------------------------------------------------------------------------------------
Curtice-Burns Foods, Inc., 12.25% Sr. Sub. Nts., 2/1/05 1,000,000 1,062,500
---------------------------------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 450,000 339,750
---------------------------------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625% Sr. Disc. Nts., 2/15/03(4) 300,000 226,500
---------------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04 800,000 224,000
---------------------------------------------------------------------------------------------------------------
Specialty Foods Corp., 11.125% Sr. Nts., Series A, 10/1/02(5) 1,600,000 1,588,000
-----------
7,812,000
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--4.2% AmeriSource Health Corp., 11.25% Sr. Debs., 7/15/05(6) 945,093 1,025,426
---------------------------------------------------------------------------------------------------------------
Capstone Capital Corp., 10.50% Cv. Sub. Debs., 4/1/02 900,000 1,042,875
---------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04 3,070,000 3,330,950
---------------------------------------------------------------------------------------------------------------
Healthsouth Rehabilitation Corp., 9.50% Sr. Sub. Nts., 4/1/01 2,300,000 2,409,250
---------------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 500,000 567,500
---------------------------------------------------------------------------------------------------------------
OrNda Healthcorp, 12.25% Sr. Sub. Nts., 5/15/02 750,000 828,750
</TABLE>
7 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------
STATEMENT OF INVESTMENTS (Continued)
--------------------------------------
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 $ 750,000 $ 832,500
(CONTINUED) ---------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 10.125% Sr. Sub. Nts., 3/1/05 2,250,000 2,385,000
---------------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., Units (each unit consists of $1,000 principal
amount of 0%/12% sr. sub. disc. nts., 8/15/04 and nine shares
of non-voting class B common stock)(4)(7) 1,000,000 955,000
-----------
13,377,251
- -----------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING--4.8% Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00(8) 275,000 220,000
---------------------------------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 1,470,000 1,587,600
---------------------------------------------------------------------------------------------------------------
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts., 6/15/98 350,000 267,750
---------------------------------------------------------------------------------------------------------------
Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg. Nts., 3/15/04 1,100,000 1,075,250
---------------------------------------------------------------------------------------------------------------
Boyd Gaming Corp., 10.75% Sr. Sub. Nts., 9/1/03 500,000 522,500
---------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Promissory Nts. 7,500 --
---------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00(8) 100,000 90,000
---------------------------------------------------------------------------------------------------------------
Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02 1,800,000 1,813,500
---------------------------------------------------------------------------------------------------------------
GNF Corp., 10.625% Gtd. First Mtg. Nts., Series B, 4/1/03 200,000 175,000
---------------------------------------------------------------------------------------------------------------
Griffin Gaming & Entertainment, Inc., Zero Coupon First Mtg.
Non-Recourse Pass-Through Nts., 6/30/00 1,010,000 893,850
---------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., 5/15/05(5) 1,050,000 1,039,500
---------------------------------------------------------------------------------------------------------------
Maritime Group Ltd., Units (each unit consists of $1,000 principal amount of
14.25% first mtg. nts., series A, 2/15/97 and one warrant to purchase one share
of Palace Casinos, Inc., series A common stock)(5)(7)(9) 276,577 114,779
---------------------------------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp., 12% First Mtg. Nts., 5/1/02 1,295,000 1,427,738
---------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., 11/15/02(5) 1,000,000 1,042,500
---------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05(5) 600,000 582,000
---------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05(5) 1,150,000 1,119,813
---------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 2,790,000 2,664,450
---------------------------------------------------------------------------------------------------------------
Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01 350,000 324,625
---------------------------------------------------------------------------------------------------------------
Trump Taj Mahal Funding, Inc., 11.35% Debs., Series A, 11/15/99 300,000 255,542
---------------------------------------------------------------------------------------------------------------
Trump's Castle Funding, Inc., 13.875% Sub. Nts., 11/15/05(6) 40 30
-----------
15,216,427
- -----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--1.6% Carrols Corp., 11.50% Sr. Nts., 8/15/03 2,620,000 2,606,900
---------------------------------------------------------------------------------------------------------------
Flagstar Corp., 10.75% Sr. Nts., 9/15/01 1,800,000 1,687,500
---------------------------------------------------------------------------------------------------------------
Foodmaker, Inc., 9.25% Sr. Nts., 3/1/99 1,015,000 941,413
----------
5,235,813
- -----------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03 900,000 846,000
- --2.2% ---------------------------------------------------------------------------------------------------------------
Fieldcrest Cannon, Inc., 11.25% Sr. Sub. Debs., 6/15/04 200,000 209,500
---------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.75% Sr. Nts., 7/15/02(5) 750,000 776,250
---------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
13% Sr. Nts., 6/15/01 350,000 362,250
Zero Coupon Promissory Nts., 10/23/96IDR 3,000,000,000 1,037,688
---------------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 1,550,000 1,534,500
---------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 2,400,000 2,346,000
-----------
7,112,188
</TABLE>
8 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY--6.4%
- -----------------------------------------------------------------------------------------------------------------------------------
AmeriGas Partners LP, 10.125% Sr. Nts., 4/15/07 $ 320,000 $ 337,600
---------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 10.50% Sr. Nts., 6/1/02 750,000 753,750
---------------------------------------------------------------------------------------------------------------
Crown Central Petroleum Corp., 10.875% Sr. Nts., 2/1/05 1,110,000 1,171,050
---------------------------------------------------------------------------------------------------------------
Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01 1,400,000 1,463,000
---------------------------------------------------------------------------------------------------------------
Giant Industries, Inc., 9.75% Sr. Sub. Nts., 11/15/03 1,850,000 1,831,500
---------------------------------------------------------------------------------------------------------------
Kelley Oil & Gas Corp., 13.50% Sr. Nts., 6/15/99 1,100,000 1,061,500
---------------------------------------------------------------------------------------------------------------
Maxus Energy Corp.:
11.50% Debs., 11/15/15 500,000 507,500
9.875% Nts., 10/15/02 1,100,000 1,078,000
---------------------------------------------------------------------------------------------------------------
Nuevo Energy Co., 12.50% Sr. Sub. Nts., 6/15/02 560,000 611,800
---------------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 1,225,000 1,396,500
---------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05 2,035,000 2,207,975
9.375% Sub. Debs., 2/1/06 270,000 252,450
---------------------------------------------------------------------------------------------------------------
Plains Resources, Inc., 12% Sr. Sub. Nts., 10/1/99 400,000 414,000
---------------------------------------------------------------------------------------------------------------
Santa Fe Energy Resources, Inc., 11% Sr. Sub. Debs., 5/15/04 3,230,000 3,472,250
---------------------------------------------------------------------------------------------------------------
Triton Energy Corp., Zero Coupon Sr. Sub. Disc. Nts., 11/1/97 3,200,000 2,740,000
---------------------------------------------------------------------------------------------------------------
Wainoco Oil Corp., 12% Sr. Nts., 8/1/02 1,000,000 1,005,000
---------------------------------------------------------------------------------------------------------------
Wilrig AS, 11.25% Sr. Sec. Nts., 3/15/04 200,000 217,000
-----------
20,520,875
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--4.4%
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(8) 477,959 525,755
FINANCIAL--1.0% ---------------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 2,250,000 2,016,563
---------------------------------------------------------------------------------------------------------------
GPA Holland BV, 8.94% Medium-Term Nts., Series C, 2/16/99 700,000 607,250
---------------------------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03 600,000 103,500
---------
3,253,068
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--3.4% American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04 2,220,000 2,353,200
---------------------------------------------------------------------------------------------------------------
Chartwell Re Corp., 10.25% Sr. Nts., 3/1/04 1,200,000 1,206,000
---------------------------------------------------------------------------------------------------------------
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 3,000,000 3,345,000
---------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 2,250,000 2,227,500
---------------------------------------------------------------------------------------------------------------
Terra Nova Insurance (UK) Holdings PLC, 10.75% Sr. Nts., 7/1/05 1,600,000 1,708,000
-----------
10,839,700
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSING-RELATED--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS American Standard, Inc.:
- --1.8% 0%/10.50% Sr. Sub. Disc. Debs., 6/1/05(4) 2,075,000 1,691,125
10.875% Sr. Nts., 5/15/99 1,000,000 1,082,500
---------------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 800,000 756,000
---------------------------------------------------------------------------------------------------------------
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01 735,000 821,363
---------------------------------------------------------------------------------------------------------------
Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03 1,100,000 1,127,500
---------------------------------------------------------------------------------------------------------------
Walter Industries, Inc., 17% Sub. Nts., 1/1/96(9) 350,000 222,250
-----------
5,700,738
</TABLE>
9 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------
STATEMENT OF INVESTMENTS (Continued)
--------------------------------------
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/ Beazer Homes USA, Inc., 9% Sr. Nts., 3/1/04 $1,200,000 $ 1,122,000
REAL ESTATE--1.5% ---------------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 1,600,000 1,552,000
---------------------------------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd., 11% Debs., Series 3, 11/4/49(10)CAD 1,250,000 634,541
---------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02 1,375,000 1,337,188
----------
4,645,729
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 1,000,000 1,060,000
ELECTRONICS/ ---------------------------------------------------------------------------------------------------------------
COMPUTERS--1.0% Businessland, Inc., 5.50% Sub. Debs., 3/1/07 805,000 241,500
---------------------------------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 1,470,000 1,525,125
---------------------------------------------------------------------------------------------------------------
Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97(3) 200,000 217,000
-----------
3,043,625
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.7% Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B, 8/1/04 2,350,000 2,485,125
---------------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.:
11.25% Sr. Nts., 10/1/02 450,000 461,250
9.50% Sr. Sec. Nts., 6/1/00 200,000 201,000
---------------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 450,000 457,313
---------------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 975,000 853,125
---------------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 950,000 1,009,375
-----------
5,467,188
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--0.3% Imo Industries, Inc.:
12% Sr. Sub. Debs., 11/1/01 500,000 516,250
12.25% Sr. Sub. Debs., 8/15/97 562,000 568,323
----------
1,084,573
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA--14.5%
- -----------------------------------------------------------------------------------------------------------------------------------
BROADCASTING--2.1% New World Communications Group Holding Corp.,
Zero Coupon Sr. Disc. Nts., Series B, 6/15/99 1,600,000 1,080,000
---------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,055,000
---------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02(5) 2,000,000 1,967,500
---------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 12/15/03 250,000 255,625
10% Sr. Sub. Nts., 9/30/05 1,750,000 1,789,375
---------------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 500,000 540,000
----------
6,687,500
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(4) 968,211 559,142
- --9.6% ---------------------------------------------------------------------------------------------------------------
Australis Media Ltd., Units (each unit consists of $1,000 principal
amount of 0%/14% sr. sub. disc. nts., 5/15/03 and one warrant
to purchase 57.721 ordinary shares)(4)(7) 2,415,000 1,436,925
---------------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC:
0%/11.875% Sr. Disc. Nts., 9/15/05(4)(5) 2,000,000 1,180,000
0%/11.95% Sr. Disc. Nts., 7/15/04(4) 2,050,000 1,383,750
</TABLE>
10 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 $ 400,000 $ 426,000
(CONTINUED) ---------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.75% Sr. Sub. Debs., 4/1/04 200,000 211,750
9.875% Sr. Sub. Debs., 2/15/13 600,000 627,000
9.875% Sr. Sub. Debs., 4/1/23 400,000 419,000
---------------------------------------------------------------------------------------------------------------
Century Communications Corp.:
11.875% Sr. Sub. Debs., 10/15/03 700,000 745,500
9.50% Sr. Nts., 3/1/05 1,500,000 1,511,250
---------------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc.:
11% Sr. Sub. Debs., 6/1/07 270,000 299,700
9.50% Sr. Debs., 8/1/13 2,810,000 2,929,425
---------------------------------------------------------------------------------------------------------------
Diamond Cable Communications PLC, 0%/13.25% Sr. Disc. Nts., 9/30/04(4) 1,250,000 831,250
---------------------------------------------------------------------------------------------------------------
International CableTel, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(4) 160,000 108,000
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(4) 3,420,000 2,052,000
---------------------------------------------------------------------------------------------------------------
Marcus Cable Co., LP/Marcus Cable Capital Corp.,
0%/14.25% Sr. Disc. Nts., 12/15/05(4) 400,000 235,000
---------------------------------------------------------------------------------------------------------------
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(4) 3,725,000 2,560,938
---------------------------------------------------------------------------------------------------------------
People's Choice TV Corp., Units (each unit consists of $1,000 principal
amount of 0%/13.125% sr. disc. nts., 6/1/04 and one warrant
to purchase 1.427 shares of common stock)(4)(7) 1,350,000 705,375
---------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(4) 3,000,000 2,145,000
---------------------------------------------------------------------------------------------------------------
Rogers Cablesystems, Inc., 10% Sr. Nts., 3/15/05(5) 1,000,000 1,050,000
---------------------------------------------------------------------------------------------------------------
TeleWest Communications PLC:
0%/11% Sr. Disc. Debs., 10/1/07(4)(13) 3,425,000 2,020,750
9.625% Sr. Debs., 10/1/06(13) 1,500,000 1,507,500
---------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
9.125% Debs., 1/15/13 1,650,000 1,769,137
9.15% Debs., 2/1/23 300,000 325,624
---------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,575,000 1,778,070
---------------------------------------------------------------------------------------------------------------
Videotron Holdings PLC, 0%/11% Sr. Disc. Nts., 8/15/05(4) 3,550,000 2,041,250
-----------
30,859,336
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 1,300,000 1,378,000
- --1.8% ---------------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 700,000 807,995
---------------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 10.75% Sr. Nts., 8/15/03 200,000 193,000
---------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(4) 3,850,000 2,993,375
9.75% Sr. Sec. Nts., 8/1/00 400,000 418,000
-----------
5,790,370
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM AMC Entertainment, Inc., 11.875% Gtd. Sr. Nts., 8/1/00 200,000 219,000
- --0.6% ---------------------------------------------------------------------------------------------------------------
Imax Corp., 7% Sr. Nts., 3/1/01(11) 1,700,000 1,623,500
-----------
1,842,500
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(4) 2,070,000 1,293,750
- --0.4%
</TABLE>
11 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------
STATEMENT OF INVESTMENTS (Continued)
--------------------------------------
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER--2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 $ 690,000 $ 621,000
- --0.3% ---------------------------------------------------------------------------------------------------------------
Mid-American Waste Systems, Inc., 12.25% Sr. Sub. Nts., 2/15/03 200,000 208,000
---------
829,000
- -----------------------------------------------------------------------------------------------------------------------------------
SERVICES--2.2% Acetex Corp., 9.75% Sr. Sec. Nts., 10/1/03(5)(13) 2,000,000 2,025,000
---------------------------------------------------------------------------------------------------------------
Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 2,000,000 1,665,000
---------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc., Units (each unit consists of ten
$1,000 principal amount of 0%/13.625% sr. sub. disc. nts., 6/30/05 and 32
warrants, each warrant entitles holder to purchase one share of Protection
One, Inc. common stock)(4)(5)(7) 4,750,000 3,313,125
----------
7,003,125
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL--5.2%
- -----------------------------------------------------------------------------------------------------------------------------------
DRUG STORES--1.1% Duane Reade, 12% Sr. Nts., Series B, 9/15/02 700,000 633,500
---------------------------------------------------------------------------------------------------------------
Revco D.S., Inc., 9.125% Sr. Nts., 1/15/00 700,000 735,000
---------------------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 2,000,000 2,095,000
-----------
3,463,500
- -----------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B, 9/1/03 1,000,000 930,000
- --1.7% ---------------------------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 600,000 597,000
---------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 800,000 680,000
---------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 1,285,000 1,252,875
---------------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05(5) 2,000,000 2,145,000
-----------
5,604,875
- -----------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--2.4% Grand Union Co., 12% Sr. Nts., 9/1/04 3,452,000 3,331,180
---------------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03(6) 320,300 317,898
---------------------------------------------------------------------------------------------------------------
Penn Traffic Co., 9.625% Sr. Sub. Nts., 4/15/05 3,900,000 3,217,500
---------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 625,000 684,375
----------
7,550,953
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
RAILROADS--0.6% Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(4) 3,200,000 2,032,000
- -----------------------------------------------------------------------------------------------------------------------------------
SHIPPING--1.5% Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 2,600,000 2,769,000
---------------------------------------------------------------------------------------------------------------
Sea Containers Ltd.:
12.50% Sr. Sub. Debs., Series A, 12/1/04 250,000 276,250
12.50% Sr. Sub. Debs., Series B, 12/1/04 100,000 108,000
9.50% Sr. Sub. Debs., 7/1/03 50,000 49,813
---------------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 1,700,000 1,742,500
-----------
4,945,563
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--4.1%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(4) 2,220,000 1,992,152
- --0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS Cellular Communications International, Inc., Units (each unit consists
- --3.5% of $1,000 principal amount of zero coupon sr. disc. nts., 8/15/00 and
one warrant to purchase 1.126 shares of common stock)(7) 3,725,000 2,067,375
</TABLE>
12 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(4) $2,250,000 $ 1,721,250
(CONTINUED) ---------------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(4) 2,000,000 1,700,000
---------------------------------------------------------------------------------------------------------------
In Flight Phone Corp., Units (each unit consists of $1,000 principal
amount of 0%/14% sr. disc. nts., series A, 5/15/02 and one warrant
to purchase one share of common stock)(4)(5)(7) 1,600,000 640,000
---------------------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc. (ICG) and IntelCom Group, Inc., Units
(each unit consists of ten 0%/13.50% sr. disc. nts., 9/15/05 of ICG and
33 warrants to purchase an equal number of common shares of IntelCom
at an exercise price equal to $12.51 per share)(4)(5)(7) 4,900,000 2,731,750
---------------------------------------------------------------------------------------------------------------
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(4) 1,400,000 1,064,000
---------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01(4) 810,000 672,300
---------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 500,000 572,500
-----------
11,169,175
-----------
Total Corporate Bonds and Notes (Cost $233,457,117) 237,212,562
SHARES
===================================================================================================================================
COMMON STOCKS--0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(8) 75 75,000
---------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(12) 2,261 5,653
---------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc.(12) 2,333 40,244
---------------------------------------------------------------------------------------------------------------
Gaylord Container Corp.(12) 914 8,626
---------------------------------------------------------------------------------------------------------------
Grand Union Co.(12) 1,767 22,971
---------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp.(12) 10,000 70,000
---------------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc.(12) 5,000 127,500
---------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(8)(12) 9,500 19,000
---------------------------------------------------------------------------------------------------------------
Zale Corp.(12) 1,985 27,542
----------
Total Common Stocks (Cost $315,766) 396,536
===================================================================================================================================
PREFERRED STOCKS--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 2,600 289,250
---------------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 13,700 1,520,700
---------------------------------------------------------------------------------------------------------------
K-III Communications Corp., $11.625 Exchangeable, Series B(6) 7,299 715,311
---------------------------------------------------------------------------------------------------------------
SDW Holdings Corp., Units (each unit consists of ten shares of sr.
exchangeable preferred stock and one cl. B warrant to purchase one
share of common stock)(5)(7)(12) 2,812 787,360
---------
Total Preferred Stocks (Cost $3,142,636) 3,312,621
UNITS
===================================================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES--0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 3,500 9,625
---------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A 6,200 62
Litigation Trust 19,829 198
---------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(8) 12,500 18,750
---------------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 1,631 245
---------------------------------------------------------------------------------------------------------------
Echostar Communications Corp. Wts., Exp. 6/04 5,340 58,740
</TABLE>
13 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------
STATEMENT OF INVESTMENTS (Continued)
--------------------------------------
MARKET VALUE
UNITS SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS Eye Care Centers of America, Inc. Wts., Exp. 10/03(5) 800 $ 4,000
AND CERTIFICATES ---------------------------------------------------------------------------------------------------------------
(CONTINUED) Federated Department Stores, Inc. Wts.:
Cl. C, Exp. 12/99 6,741 61,512
Cl. D, Exp. 12/01 6,741 63,197
---------------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 7/96 1,174 9,979
---------------------------------------------------------------------------------------------------------------
Interco, Inc. Wts., Series 1, Exp. 8/99 14,540 14,540
---------------------------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited Partners' Interest 1,985 --
---------------------------------------------------------------------------------------------------------------
OSI Specialties Corp. Wts., 4/99(5) 3,000 19,500
---------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03 28,000 248,500
---------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc. Wts., Exp. 8/97(8) 1,733 35
---------------------------------------------------------------------------------------------------------------
Southland Corp. Wts., Exp. 3/96 300 450
---------------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/97(5) 300 30
---------------------------------------------------------------------------------------------------------------
Trizec Corp. Wts., Exp. 7/99 1,985 2,874
---------------------------------------------------------------------------------------------------------------
UGI Corp. Wts., Exp. 3/98 4,750 238
----------
Total Rights, Warrants and Certificates (Cost $232,937) 512,475
FACE
AMOUNT(1)
===================================================================================================================================
REPURCHASE Repurchase agreement with First Chicago Capital Markets, 6.35%, dated 9/29/95,
AGREEMENTS--9.8% to be repurchased at $31,286,547 on 10/2/95, collateralized by U.S. Treasury
Nts., 4.25%--8.75%, 11/30/95--8/15/00, with a value of $21,319,344, U.S.
Treasury Bills maturing 12/28/95--3/28/96, with a value of $4,840,122, and U.S.
Treasury Bonds, 8.50%--13.25%, 5/15/14--2/15/20, with a value of $5,795,452
(Cost $31,270,000) $31,270,000 31,270,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (Cost $323,028,699) 102.3% 327,433,634
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (2.3) (7,363,387)
------- ------------
NET ASSETS 100.0% $320,070,247
------- ------------
------- ------------
<FN>
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies:
CAD--Canadian Dollar
DEM--German Deutsche Mark
IDR--Indonesian Rupiah
2. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of
mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed-income
securities increase in price when interest rates decline. The principal amount of the underlying pool represents
the notional amount on which current interest is calculated. The price of these securities is typically more
sensitive to changes in prepay ment rates than traditional mortgage-backed securities (for example, GNMA pass-
throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated
timing and amount of future cash flows.
3. Represents the current interest rate for a variable rate security.
4. Represents a zero coupon bond that converts to a fixed rate of interest at a designated future date.
5. Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of
1933, as amended. This security has been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $23,062,107 or 7.21% of the Fund's net assets, at September 30, 1995.
6. Interest or dividend is paid in kind.
7. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at
some point in the future.
8. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial Statements.
9. Non-income producing--issuer is in default of interest payment.
10. Partial interest payment received.
11. Represents the current interest rate for an increasing rate security.
12. Non-income producing security.
13. When-issued security to be delivered and settled after September 30, 1995.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
14 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 1995
--------------------------------------------------------
<S> <C> <C>
===================================================================================================================================
ASSETS Investments, at value (cost $323,028,699)--see accompanying statement $327,433,634
---------------------------------------------------------------------------------------------------------------
Cash 63,697
---------------------------------------------------------------------------------------------------------------
Receivables:
Interest 6,418,536
Shares of beneficial interest sold 2,766,153
Investments sold 658,469
---------------------------------------------------------------------------------------------------------------
Other 6,497
------------
Total assets 337,346,986
===================================================================================================================================
LIABILITIES Unrealized depreciation on forward foreign currency exchange contracts--Note 5 72,922
---------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 15,766,147
Shares of beneficial interest redeemed 758,052
Dividends 387,692
Distribution and service plan fees--Note 6 179,121
Transfer and shareholder servicing agent fees 15,302
Other 97,503
------------
Total liabilities 17,276,739
===================================================================================================================================
NET ASSETS $320,070,247
============
===================================================================================================================================
COMPOSITION OF Paid-in capital $319,662,117
NET ASSETS ---------------------------------------------------------------------------------------------------------------
Undistributed net investment income 83,753
---------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investments, written options
and foreign currency transactions (4,005,696)
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 4,330,073
------------
Net assets $320,070,247
============
===================================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $255,138,637 and 20,463,959 shares of beneficial interest outstanding) $12.47
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $13.09
---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $64,931,610 and 5,211,966 shares of beneficial interest outstanding) $12.46
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended September 30, 1995
---------------------------------------------------------------
<S> <C> <C>
===================================================================================================================================
INVESTMENT INCOME Interest (net of foreign withholding taxes of $6,629) $23,754,025
---------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $546) 141,832
-----------
Total income 23,895,857
===================================================================================================================================
EXPENSES Management fees--Note 6 1,728,602
---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 6:
Class A 490,347
Class C 435,523
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 6 361,618
---------------------------------------------------------------------------------------------------------------
Shareholder reports 160,593
---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 28,149
Class C 11,750
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 30,901
---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 7,436
---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,849
---------------------------------------------------------------------------------------------------------------
Other 1,246
-----------
Total expenses 3,258,014
===================================================================================================================================
NET INVESTMENT INCOME 20,637,843
===================================================================================================================================
REALIZED AND Net realized gain (loss) from:
UNREALIZED GAIN Investments (3,446,180)
(LOSS) ON INVEST- Closing of options written (44,972)
MENTS, OPTIONS Foreign currency transactions 125,359
WRITTEN AND FOREIGN Closing of futures contracts 466,937
CURRENCY ----------
TRANSACTIONS Net realized loss (2,898,856)
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments and options written 7,383,893
Translation of assets and liabilities denominated in foreign currencies (171,824)
----------
Net change 7,212,069
----------
Net realized and unrealized gain on investments, options written
and foreign currency transactions 4,313,213
===================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $24,951,056
===========
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------
STATEMENTS OF CHANGES IN ASSETS
-------------------------------
YEAR ENDED SEPTEMBER 30,
1995 1994
<S> <C> <C> <C>
===================================================================================================================================
OPERATIONS Net investment income $ 20,637,843 $ 12,321,861
---------------------------------------------------------------------------------------------------------------
Net realized loss on investments, options written and
foreign currency transactions (2,898,856) (587,272)
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments, options
written and translation of assets and liabilities denominated in foreign
currencies 7,212,069 (5,840,526)
----------- -----------
Net increase in net assets resulting from operations 24,951,056 5,894,063
===================================================================================================================================
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($1.039 and $1.102 per share, respectively) (17,271,188) (11,428,985)
SHAREHOLDERS Class C ($.944 and $.765 per share, respectively) (3,335,380) (828,957)
---------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.006 per share) -- (59,802)
Class C ($.004 per share) -- (4,337)
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments, options written and foreign
currency transactions:
Class A ($.002 per share) (26,483) --
Class C ($.002 per share) (4,572) --
---------------------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments, options written and
foreign currency transactions:
Class A ($.189 per share) -- (1,773,705)
Class C ($.189 per share) -- (25,332)
===================================================================================================================================
BENEFICIAL INTEREST Net increase in net assets resulting from Class A beneficial
TRANSACTIONS interest transactions--Note 2 91,132,115 63,236,754
---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C beneficial
interest transactions--Note 2 36,376,191 28,773,777
===================================================================================================================================
NET ASSETS Total increase 131,821,739 83,783,476
---------------------------------------------------------------------------------------------------------------
Beginning of period 188,248,508 104,465,032
----------- -----------
End of period [including undistributed (overdistributed) net
investment income of $83,753 and $(232,629), respectively] $320,070,247 $188,248,508
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
CLASS A
--------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
=========================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.32 $12.90 $12.26 $11.49 $10.46
- ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.05 1.10 1.22 1.41 1.45
Net realized and unrealized gain
(loss) on investments, options written
and foreign currency transactions .14 (.38) .64 .77 1.04
------ ------ ------ ------ ------
Total income from investment
operations 1.19 .72 1.86 2.18 2.49
- ---------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.04) (1.10) (1.22) (1.41) (1.46)
Dividends in excess of net
investment income -- (.01) -- -- --
Distributions from net realized gain
on investments, options wrtitten
and foreign currency transactions --(4) -- -- -- --
Distributions in excess of net realized
gain on investments, options written
and foreign currency transactions -- (.19) -- -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.04) (1.30) (1.22) (1.41) (1.46)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.47 $12.32 $12.90 $12.26 $11.49
------ ------ ------ ------ ------
------ ------ ------ ------ ------
=========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 10.09% 5.61% 15.92% 19.94% 25.62%
=========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $255,139 $160,505 $104,465 $47,125 $16,044
- ---------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $204,917 $135,431 $73,334 $28,270 $14,057
- ---------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 20,464 13,026 8,096 3,844 1,397
- ---------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.45% 8.49% 9.52% 11.60% 13.49%
Expenses 1.18% 1.22% 1.24% 1.35% 1.49%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 72.5% 108.0% 116.2% 121.5% 114.8%
</TABLE>
<TABLE>
<CAPTION>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
CLASS A CLASS C
----------------------------------- -----------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
1990 1989 1988(2) 1995 1994(1)
=========================================================================================================
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.53 $12.10 $11.43 $12.32 $13.13
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.43 1.42(3) 1.24 .95 .75
Net realized and unrealized gain
(loss) on investments, options written
and foreign currency transactions (1.08) (.43) .67 .13 (.60)
------ ------ ------ ------ ------
Total income from investment
operations .35 .99 1.91 1.08 .15
- ---------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.42) (1.42) (1.24) (.94) (.77)
Dividends in excess of net
investment income -- -- -- -- --(4)
Distributions from net realized gain
on investments, options wrtitten
and foreign currency transactions -- (.14) -- --(4) --
Distributions in excess of net realized
gain on investments, options written
and foreign currency transactions -- -- -- -- (.19)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.42) (1.56) (1.24) (.94) (.96)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.46 $11.53 $12.10 $12.46 $12.32
------ ------ ------ ------ ------
------ ------ ------ ------ ------
=========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 3.13% 8.53% 17.29% 9.16% 1.11%
=========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $13,910 $20,642 $18,579 $64,932 $27,743
- ---------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $17,163 $21,349 $11,116 $43,584 $13,693
- ---------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 1,330 1,790 1,535 5,212 2,251
- ---------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 12.92% 11.87% 11.50%(6) 7.63% 7.24%(6)
Expenses 1.40% 1.19%(3) 1.05%(6) 1.95% 1.94%(6)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 67.8% 98.5% 31.6% 72.5% 108.0%
<FN>
1. For the period from December 1, 1993 (inception of offering) to September 30, 1994.
2. For the period from November 16, 1987 (commencement of operations) to September 30, 1988.
3. Net investment income would have been $1.41 per share absent the voluntary expense
reimbursement, resulting in an expense ratio of 1.25%.
4. Less than $.005 per share.
5. Assumes a hypothetical initial investment on the business day before the first day
of the fiscal period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period, divided by the
monthly average of the market value of portfolio securities owned during the period.
Securities with a maturity or expiration date at the time of acquisition of one year
or less are excluded from the calculation. Purchases and sales of investment securities
(excluding short-term securities) for the period ended September 30, 1995 were $283,471,759
and $137,564,816, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
18 Oppenheimer Champion Income Fund
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
================================================================================
1. SIGNIFICANT Oppenheimer Champion Income Fund (the Fund), operating under
ACCOUNTING the name Oppenheimer Champion High Yield Fund through
POLICIES September 30, 1995, is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment advisor
is Oppenheimer Management Corporation (the Manager). The
Fund offers both Class A and Class C shares. Class A shares
are sold with a front-end sales charge. Class C shares may
be subject to a contingent deferred sales charge. Both
classes of shares have identical rights to earnings, assets
and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attribu-
table to a particular class and exclusive voting rights with
respect to matters affecting a single class. The following
is a summary of significant accounting policies consistently
followed by the Fund.
-----------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the
close of the New York Stock Exchange on each trading day.
Listed and unlisted securities for which such information is
regularly reported are valued at the last sale price of the
day or, in the absence of sales, at values based on the
closing bid or asked price or the last sale price on the
prior trading day. Long-term and short-term "non-money
market" debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Such securities
which cannot be valued by the approved portfolio pricing
service are valued using dealer-supplied valuations provided
the Manager is satisfied that the firm rendering the quotes
is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures
established by the Board of Trustees to determine fair value
in good faith. Short-term "money market type" debt securi-
ties having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted
for amortization to maturity of any premium or discount.
Forward contracts are valued based on the closing prices of
the forward currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable
bank or dealer. Options are valued based upon the last sale
price on the principal exchange on which the option is
traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading
date if it is within the spread between the closing bid and
asked prices. If the last sale price is outside the spread,
the closing bid or asked price closest to the last
reported sale price is used.
-----------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high yield securi-
ties, which may be subject to a greater degree of credit
risk, greater market fluctuations and risk of loss of income
and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income
securities. The Fund may acquire securities in default, and
is not obligated to dispose of securities whose issuers
subsequently default. At September 30, 1995, securities with
an aggregate market value of $971,570, representing .30% of
the Fund's net assets, were in default.
-----------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the
Fund are maintained in U.S. dollars. Prices of securities
denominated in foreign currencies are translated into U.S.
dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income
are translated at the 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 fluc-
tuations arising from changes in market values of securities
held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
-----------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to
take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the
custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying
securities is required to be at least 102% of the resale
price at the time of purchase. If the seller of the agree-
ment defaults and the value of the collateral declines, or
if the seller enters an insolvency proceeding, realization
of the value of the collateral by the Fund may be delayed or
limited.
-----------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income,
expenses (other than those attributable to a specific class
and gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly
attributable to a specific class are charged against the
operations of that class.
19 Oppenheimer Champion Income Fund
<PAGE>
-------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-------------------------------------------
================================================================================
1. SIGNIFICANT FEDERAL TAXES. The Fund intends to continue to comply with
ACCOUNTING provisions of the Internal Revenue Code applicable to
POLICIES regulated investment companies and to distribute all of its
(CONTINUED) taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders.
Therefore, no federal income or excise tax provision is
required. At September 30, 1995, the Fund had available for
federal income tax purposes an unused capital loss carryover
of approximately $811,000 expiring in 2003.
-----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare
dividends separately for Class A and Class C shares from net
investment income each day the New York Stock Exchange is
open for business and pay such dividends monthly. Distribu-
tions from net realized gains on investments, if any, will
be declared at least once each year.
-----------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net invest-
ment income (loss) and net realized gain (loss) may differ
for financial statement and tax purposes primarily because
of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of the distributions made
during the year from net investment income or net realized
gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to timing of dividend
distributions, the fiscal year in which amounts are distri-
buted may differ from the year that the income or realized
gain (loss) was recorded by the Fund.
During the year ended September 30, 1995, the Fund
changed the classification of distributions to shareholders
to better disclose the differences between financial state-
ment amounts and distributions determined in accordance with
income tax regulations. During the year ended September 30,
1995, amounts have been reclassified to reflect an increase
in undistributed net investment income of $285,107. Accumu-
lated net realized loss on investments was increased by the
same amount.
-----------------------------------------------------------
OTHER. Investment transactions are accounted for on the date
the investments are purchased or sold (trade date) and
dividend income is recorded on the ex-dividend date. Dis-
count on securities purchased is amortized over the life of
the respective securities, in accordance with federal income
tax requirements. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined
on an identified cost basis, which is the same basis used
for federal income tax purposes. Dividends in kind are
recognized as income on the ex-dividend date, at the current
market value of the underlying security. Interest on
payment-in-kind debt instruments is accrued as income at the
coupon rate and a market adjustment is made on the ex-date.
================================================================================
2. SHARES OF The Fund has authorized an unlimited number of no par value
BENEFICIAL shares of beneficial interest of each class. Transactions in
INTEREST shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994(1)
------------------ ---------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 13,552,963 $166,240,526 10,281,508 $131,255,862
Dividends and distributions reinvested 941,789 11,588,722 665,353 8,503,155
Redeemed (7,056,689) (86,697,133) (6,017,355) (76,522,263)
----------- ------------- ----------- -------------
Net increase 7,438,063 $ 91,132,115 4,929,506 $ 63,236,754
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
--------------------------------------------------------------------------------------------------------------
Class C:
Sold 3,640,178 $ 44,736,101 2,447,647 $ 31,251,062
Dividends and distributions reinvested 176,650 2,175,061 45,942 574,950
Redeemed (856,281) (10,534,971) (242,170) (3,052,235)
----------- ------------- ----------- -------------
Net increase 2,960,547 $ 36,376,191 2,251,419 $ 28,773,777
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
1. For the year ended September 30, 1994 for Class A shares
and for the period from December 1, 1993 (inception of
offering) to September 30, 1994 for Class C shares.
20 Oppenheimer Champion Income Fund
<PAGE>
===============================================================================
3. UNREALIZED GAINS At September 30, 1995, net unrealized appreciation on
AND LOSSES ON investments of $4,404,935 was composed of gross appreciation
INVESTMENTS of $8,699,682, and gross depreciation of $4,294,747.
===============================================================================
4. OPTION ACTIVITY The Fund may buy and sell put and call options, or write
covered put and call options on portfolio securities in
order to produce incremental earnings or protect against
changes in the value of portfolio securities.
The Fund generally purchases put options or writes
covered call options to hedge against adverse movements in
the value of portfolio holdings. When an option is written,
the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon
exercise of the option.
Options are valued daily based upon the last sale price
on the principal exchange on which the option is traded and
unrealized appreciation or depreciation is recorded. The
Fund will realize a gain or loss upon the expiration or
closing of the option transaction. When an option is exer-
cised, the proceeds on sales for a written call option, the
purchase cost for a written put option, or the cost of the
security for a purchased put or call option is adjusted by
the amount of premium received or paid.
In this report, securities designated to cover
outstanding call options are noted in the Statement of
Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments.
Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund
gives up the opportunity for profit if the market price of
the security increases and the option is exercised. The risk
in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund
pays a premium whether or not the option is exercised. The
Fund also has the additional risk of not being able to enter
into a closing transaction if a liquid secondary market does
not exist.
<TABLE>
<CAPTION>
Written call option activity for the year ended September
30, 1995 was as follows:
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
<S> <C> <C>
------------------------------------------------------------------------------------
Options outstanding at September 30, 1994 2,321,848 $ 29,435
Options closed (2,321,848) (29,435)
---------- --------
Options outstanding at September 30, 1995 -- $ --
---------- --------
---------- --------
</TABLE>
================================================================================
5. FORWARD A forward foreign currency exchange contract (forward
CONTRACTS contract) is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage
foreign currency risks. They may also be used to tactically
shift portfolio currency risk. The Fund generally enters
into forward contracts as a hedge upon the purchase or sale
of a security denominated in a foreign currency. In
addition, the Fund may enter into such contracts as a hedge
against changes in foreign currency exchange rates on port-
folio positions.
Forward contracts are valued based on the closing
prices of the forward currency contract rates in the London
foreign exchange markets on a daily basis as provided by a
reliable bank or dealer. The Fund will realize a gain or
loss upon the closing or settlement of the forward trans-
action.
In this report, securities held in segregated accounts
to cover net exposure on outstanding forward contracts are
noted in the Statement of Investments where applicable.
Gains and losses on outstanding contracts (unrealized
appreciation or depreciation on forward contracts) are
reported in the Statement of Assets and Liabilities.
Realized gains and losses are reported with all other
foreign currency gains and losses in the Fund's Statement of
Operations.
Risks include the potential inability of the counter-
party to meet the terms of the contract and unanticipated
movements in the value of a foreign currency relative to the
U.S. dollar.
At September 30, 1995, outstanding forward contracts to sell
currencies were as follows:
<TABLE>
<CAPTION>
CONTRACT VALUATION AS OF UNREALIZED
SECURITY EXCHANGE DATE AMOUNT (000S) SEPTEMBER 30, 1995 DEPRECIATION
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------
German Deutsche Mark (DEM) 10/11/95 2,800 DEM $1,968,912 $(72,922)
</TABLE>
21 Oppenheimer Champion Income Fund
<PAGE>
-------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-------------------------------------------
================================================================================
6. MANAGEMENT FEES Management fees paid to the Manager were in accordance with
AND OTHER the investment advisory agreement with the Fund which pro-
TRANSACTIONS vides for a fee of .70% on the first $250 million of average
WITH AFFILIATES annual net assets, .65% on the next $250 million, .60% on
the next $500 million and .55% on net assets in $1 billion.
The Manager has agreed to reimburse the Fund if aggregate
expenses (with specified exceptions) exceed the most strin-
gent applicable regulatory limit on Fund expenses.
For the year ended September 30, 1995, commissions
(sales charges paid by investors) on sales of Class A shares
totaled $2,642,892, of which $650,296 was retained by Oppen-
heimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker
/dealer. Sales charges advanced to broker/dealers by OFDI on
sales of the Fund's Class C shares totaled $412,950, of
which $5,197 was paid to an affiliated broker/dealer.
During the year ended September 30, 1995, OFDI received
contingent deferred sales charges of $32,460 upon redemption
of Class C shares, as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of
the Manager, is the transfer and shareholder servicing agent
for the Fund, and for other registered investment companies.
OSS's total costs of providing such services are allocated
ratably to these companies.
Under separate approved plans, each class may expend up
to .25% of its net assets annually to reimburse OFDI for
costs incurred in connection with the personal service and
maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other
institutions. In addition, Class C shares are subject to an
asset-based sales charge of .75% of net assets annually, to
reimburse OFDI for sales commissions paid from its own
resources at the time of sale and associated financing
costs. In the event of termination or discontinuance of the
Class C plan, the Board of Trustees may allow the Fund to
continue payment of the asset-based sales charge to OFDI for
distribution expenses incurred on Class C shares sold prior
to termination or discontinuance of the plan. At September
30, 1995, OFDI had incurred unreimbursed expenses of
$814,968. During the year ended September 30, 1995, OFDI
paid $16,334 and $3,619, respectively, to an affiliated
broker/dealer as reimbursement for Class A and Class C
personal service and maintenance expenses and retained
$347,154 as reimbursement for Class C sales commissions and
service fee advances, as well as financing costs.
================================================================================
7. ILLIQUID AND At September 30, 1995, investments in securities included
RESTRICTED issues that are illiquid or restricted. The securities are
SECURITIES often purchased in private placement transactions, are not
registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under
methods approved by the Board of Trustees as reflecting fair
value. The Fund intends to invest no more than 10% of its
net assets (determined at the time of purchase) in illiquid
or restricted securities. The aggregate value of these
securities subject to this limitation at September 30, 1995
was $948,540, which represents .30% of the Fund's net
assets. Information concerning these securities is as
follows:
<TABLE>
<CAPTION>
ACQUISITION VALUATION PER UNIT
SECURITY DATE COST PER UNIT AS OF SEPT. 30, 1995
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 11/18/93 $ 100.00 $ 80.00
---------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp., 11/00 11/18/93 $ 2.00 $ 1.50
---------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 $ 87.50 $ 90.00
---------------------------------------------------------------------------------------------------------------
ECM Fund L.P.I.:
14% Sub. Nts., 6/10/02 7/28/92 $ 100.50 $ 110.00
Common Stock 4/14/92 $1,000.00 $1,000.00
---------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc. Wts., Exp. 8/97 10/25/93 $ -- $ .02
---------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Common Stock 5/2/94 $ 9.50 $ 2.00
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees,
certain unregistered securities are determined to be liquid
and are not included within the 10% limitation specified
above.
22 Oppenheimer Champion Income Fund
<PAGE>
================================================================================
8. FUTURES The Fund may buy and sell interest rate futures contracts in
CONTRACTS order to gain exposure to or protect against changes in
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 the resulting nega-
tive effect on the value of fixed rate portfolio securities.
The Fund may also purchase futures contracts to gain
exposure to changes in interest rates 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 in an amount
(initial margin) equal to a certain percentage of the con-
tract 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.
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 con-
tract or option may not correlate with changes in the value
of the underlying securities.
23 Oppenheimer Champion Income Fund
<PAGE>
----------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------
================================================================================
The Board of Trustees and Shareholders of Oppenheimer
Champion Income Fund:
We have audited the accompanying statement of assets and
liabilities, including the statement of investments, of
Oppenheimer Champion Income Fund as of September 30, 1995,
the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended
September 30, 1995 and 1994, and the financial highlights
for the period November 16, 1987 (commencement of opera-
tions) to September 30, 1995. 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 high-
lights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures
included confirmation of securities owned at September 30,
1995 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of Oppenheimer Champion Income Fund at
September 30, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for
the respective stated periods, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 20, 1995
24 Oppenheimer Champion Income Fund
<PAGE>
--------------------------------------------
FEDERAL INCOME TAX INFORMATION (Unaudited)
--------------------------------------------
================================================================================
In early 1996, shareholders will receive information regard-
ing all dividends and distributions paid to them by the Fund
during calendar year 1995. 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
September 30, 1995 which are not designated as capital gain
distributions should be multiplied by 0.66% to arrive at the
net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist share-
holders 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 regu-
lations, we recommend that you consult your tax advisor for
specific guidance.
25 Oppenheimer Champion Income Fund
<PAGE>
--------------------------------
OPPENHEIMER CHAMPION INCOME FUND
--------------------------------
================================================================================
OFFICERS AND James C. Swain, Chairman and Chief Executive Officer
TRUSTEES Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
Ralph W. Stellmacher, Vice President
George C. Bowen, Vice President, Secretary and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISOR Oppenheimer Management Corporation
================================================================================
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
================================================================================
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
================================================================================
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
================================================================================
INDEPENDENT AUDITORS Deloitte & Touche LLP
================================================================================
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer
Champion Income Fund. This report must be preceded or
accompanied by a Prospectus of Oppenheimer Champion Income
Fund. For material information concerning the Fund, see
the Prospectus.
Shares of Oppenheimer funds are not deposits or obliga-
tions of any bank, are not guaranteed by any bank, and are
not insured by the FDIC or any other agency, and involve
investment risks, including possible loss of the principal
amount invested.
26 Oppenheimer Champion Income Fund
<PAGE>
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OPPENHEIMERFUNDS FAMILY
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================================================================================
OppenheimerFunds offers over 30 funds designed to fit virtually
every investment goal. Whether you're investing for retirement,
your children's education or tax-free income, we have the funds
to help you seek your objective.
When you invest with OppenheimerFunds, you can feel comfor-
table knowing that you are investing with a respected financial
institution with over 35 years of experience in helping people
just like you reach their financial goals. And you're investing
with a leader in global, growth stock and flexible fixed income
investments--with over 2.8 million shareholder accounts and more
than $38 billion under Oppenheimer's management and that of our
affiliates.
At OppenheimerFunds, we don't charge a fee to exchange
shares. And you can exchange shares easily by mail or by tele-
phone.(1) For more information on Oppenheimer funds, please con-
tact your financial advisor or call us at 1-800-525-7048 for a
prospectus. You may also write us at the address shown on the
back cover. As always, please read the prospectus carefully
before you invest.
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STOCK FUNDS Discovery Fund Global Fund
Global Emerging Growth Fund Oppenheimer Fund
Target Fund Value Stock Fund
Growth Fund Gold & Special Minerals Fund
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STOCK & BOND Main Street Income & Growth Fund Equity Income Fund
FUNDS Total Return Fund Asset Allocation Fund
Global Growth & Income Fund Strategic Income & Growth Fund
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BOND FUNDS High Yield Fund Bond Fund
Champion Income Fund U.S. Government Trust
Strategic Income Fund Limited-Term Government Fund
International Bond Fund
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TAX-EXEMPT New York Tax-Exempt Fund(2) New Jersey Tax-Exempt Fund(2)
FUNDS California Tax-Exempt Fund(2) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(2) Insured Tax-Exempt Fund
Florida Tax-Exempt Fund(2) Intermediate Tax-Exempt Fund
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MONEY MARKET Money Market Fund Cash Reserves
FUNDS
1. Exchange privileges are subject to change or termination.
Shares may be exchanged only to the same class of eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by Oppenheimer Funds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
-c-Copyright 1995 Oppenheimer Management Corporation. All
rights reserved.
27 Oppenheimer Champion Income Fund
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
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1-800-525-7048
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TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
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1-800-852-8457
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PHONELINK
24 hours a day, automated
information and transactions
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1-800-533-3310
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TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
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1-800-843-4461
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OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
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1-800-835-3104
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RA0190.001.0995 November 30, 1995
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"HOW MAY I HELP YOU?" [PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
As an Oppenheimer funds shareholder, you have some privileges. Whether it's
automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer fund's transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
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[LOGO] OPPENHEIMERFUNDS-C- --------------
Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
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