Oppenheimer Champion Income Fund
Semiannual Report March 31, 1996
(Picture of Cafe Couple)
"We need our
money to
work
as hard as
it can."
[Oppenheimer Logo(R)]
<PAGE>
This Fund is for people who want high income
and the potential for growth.
News
Standardized Yields
For the 30 Days Ended 3/31/96:3
Class A
8.00%
Class B
7.50%
Class C
7.63%
Beat the Average
Total Return for the 3-Year Period
Ended 3/31/96:
Oppenheimer Champion
Income Fund
Class A (at NAV)1
31.79%
Lipper High Current Yield Average4
28.22%
The Fund's Class A shares
are ranked (FOUR STARS)
among 908 taxable bond
funds as of 3/31/96 by
Morningstar Mutual Funds.5
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 and help provide the
potential for long-term growth.
Performance
Total returns at net asset value for the 6 months ended 3/31/96 for Class A,
B and C shares were 6.94%, 6.34% and 6.46%, 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 3/31/96 and since inception
of the Class on 11/16/87 were 8.91%, 13.11% and 12.67%, respectively. For Class
B shares, cumulative total return since inception of the Class on 10/2/95 was
1.34%. For Class C shares, average annual total returns for the 1-year period
ended 3/31/96 and since inception of the Class on 12/1/93 were 12.40% and 7.15%,
respectively.2
Outlook
"We believe the coming year will be a good one for the Fund and the market. Even
if the economy remains slow, the yield advantage that non-investment-grade bonds
offer over their higher rated counterparts should continue to attract investors'
attention."
Ralph Stellmacher, Portfolio Manager
March 31, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future
results. Investment return and principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
1. 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 3/31/95, and
3/31/91, 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. Class B returns
show results of hypothetical investments on 10/2/95 and the deduction of the
applicable contingent deferred sales charge of 5%. Class C returns show
results of hypothetical investments on 3/31/95 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 3/31/96, 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: Lipper Analytical Services, 3/31/96, an independent mutual fund
monitoring service. The Lipper total return average for the 3-year period was
for 74 high current yield funds. The average is shown for comparative
purposes only. Oppenheimer Champion Income Fund is characterized by Lipper as
a high current yield fund. Lipper performance does not take sales charges
into consideration.
5. Source: Morningstar Mutual Funds, 3/31/96. 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%), four stars is "above
average" (next 22.5%), 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. There were
904 and 512 funds ranked in these respective periods. Rankings are subject to
change. The Fund's Class A, B and C shares have the same portfolio.
2 Oppenheimer Champion Income Fund
<PAGE>
(PHOTO OF JAMES C. SWAIN)
James C. Swain
Chairman
Oppenheimer
Champion
Income Fund
(PHOTO OF BRIDGET A. MACASKILL)
Bridget A. Macaskill
President
Oppenheimer
Champion
Income Fund
Dear Shareholder,
After posting double-digit returns in 1995, the bond market declined during the
first quarter of 1996 due to increased uncertainty about the strength of the
economy.
With yields on the 30-year U.S. Treasury bond trading between 6% and
6.75%, investors were able to earn substantial income over inflation. But as
interest rates became more volatile, pushing bond yields higher, bond prices
moved lower. This created a negative total return, albeit a slight one, for the
broad bond market.
Although the Federal Reserve Board cut short-term interest rates a quarter
of a percentage point on January 31, intermediate- and long-term bond yields
continued to move higher. This movement in the market came as a result of recent
economic data suggesting the economy might be stronger than previous statistics
had indicated. The market had expected further interest rate cuts to stimulate
what was perceived to be a slowing economy. However, the stronger economic
data--particularly the February jobs report that showed an increase of over
700,000 new jobs--made lower interest rates less likely.
Another reason for the increased market volatility was the inability of
Congress and the President to agree on a balanced budget. Further concern was
generated by the rise of anti-business themes during the presidential primary
season, including the possibility of tariffs and tax reform.
Despite the significant decline in bond prices, the market has already
begun to stabilize. Upon closer examination of the economic fundamentals, the
market realized that it may have over-reacted to these short-term events. As a
result, we believe the demand for domestic fixed-income securities will continue
to be strong, both here and abroad.
With the general long-term trend for the U.S. economy being seen as slow
growth and low inflation, long-term interest rates should be able to return to
the 6% level with a corresponding recovery in bond prices. While that will lower
bond yields, our fixed-income managers are on the lookout for securities that
offer high coupon payments without adding undue risk. While we still anticipate
that interest rates will fluctuate and that bond prices will continue to be
volatile, patient investors should continue to receive total returns which
substantially exceed inflation over the long term.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues on the following pages. 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/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
April 19, 1996
3 Oppenheimer Champion Income Fund
<PAGE>
Q + A
(PHOTO OF RALPH STELLMACHER)
(PHOTO OF SCOTT SCHARER)
Q How did
the Fund
perform?
An interview with your Fund's managers.
How did the Fund perform over the past six months?
The Fund performed very well over the period. As the rally in the bond market
continued to drive prices higher and yields lower, we benefited from an
increased demand for higher-yielding, lower-rated bonds by investors searching
for yield. These market factors, together with our carefully researched security
selections, served us well over the period. Of course, investors in high yield
bonds are subject to greater risk that the issuer will default on principal or
interest payments, and foreign investments entail greater risk and expenses,
such as adverse currency fluctuation. But over time, we expect that the
long-term returns will more than compensate for temporary risks, especially when
these investments are part of a diversified portfolio.
(PHOTO OF LEN DARLING)
Most recently, by increasing our investments in shorter-term bonds, thus
shortening the Fund's average maturity, we were able to perform well in
comparison to the overall market. And, although the market grew increasingly
volatile over the period, we continued to provide investors with a higher level
of income than was available from many traditional fixed-income investment
alternatives while maintaining greater stability of principal.
What investments or market factors made positive contributions to performance?
Early in the period, we focused our investments in bonds issued by companies
whose earnings have the potential to grow faster than the economy. These
investments paid off as the economy began to show signs of slowing in the second
half of 1995.
One sector that held particularly good prospects for growth and
contributed
4 Oppenheimer Champion Income Fund
<PAGE>
Facing page
Top left: Ralph Stellmacher,
Portfolio Manager
Top right: Scott Scharer, Member
of Fixed Income Investments Team
Bottom: Len Darling, Executive
VP, Director of Fixed Income
Investments
This page
Top: Ralph Stellmacher
Bottom: David Negri with Mark
Frank, Members of Fixed Income
Investments Team
A Shortening
the Fund's
average maturity
aided
performance.
significantly to the Fund's good performance was the media sector. Our
investments in the bonds issued by companies in the telecommunications and cable
industries not only experienced rapid earnings growth, but many benefited from
the passage of new, less restrictive, telecommunications legislation during the
period.1
Did any investment not perform as you'd expected?
We were disappointed with some paper company holdings. Many of these companies
suffered as a result of the increased production capacity and the subsequent
increase in supply, and drop in demand which depressed the prices of many paper
grades. However, our emphasis on the lower risk bonds within this sector helped
dampen the impact.
What areas are you currently targeting?
In addition to maintaining our focus on companies in growth industries, we are
moving into bonds issued by companies in the energy, healthcare and gaming
industries. These bonds offer further diversification and their earnings tend to
be less closely tied to the overall growth of the economy.
(PHOTO OF RALPH STELLMACHER)
Within the healthcare industry we've been buying regionally diversified
hospital management companies that we feel are best positioned to benefit from
the proposed reforms and consolidations that are taking place in the healthcare
industry. Another sector we're focusing on is gaming. Although bonds in this
sector have been out of favor for a while, many gaming companies' credit
fundamentals are strong. Because these bonds are among the highest yielding
within the high yield market, we believe there are significant values to be
found.
What is your outlook for the Fund?
We believe the coming year will be a good one for the Fund and the market.
However, defaults have risen slightly, making careful research and individual
security selection more important than ever. Even if the economy remains slow,
the yield advantage that non-investment-grade bonds offer over their
higher-rated counterparts should continue to attract investors' attention. These
market factors, together with our bottom-up, research-driven approach to
investing, should prove positive for the Fund. (Solid Box)
(PHOTO OF DAVID NEGRI WITH MARK FRANK)
1. The Fund's portfolio is subject to change.
5 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Certificates of Deposit--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Krungthai Thanakit CD, Zero Coupon,
10.087%, 6/10/96 (Cost $1,401,874)(2)(3) THB 36,000,000 $ 1,400,597
===================================================================================================================================
Mortgage-Backed Obligations--1.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 240, Cl. 2, 14.086%-16.065%, 9/1/23(4) 7,274,835 2,376,825
Trust 257, Cl. 2, 17.452%, 2/1/24(4) 1,611,523 530,292
--------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 6%, 4/15/26(5) 2,200,000 2,195,875
--------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 488,593 460,881
Series 1995-C1, Cl. F, 6.90%, 2/25/27 432,144 364,757
----------
Total Mortgage-Backed Obligations (Cost $5,692,199) 5,928,630
===================================================================================================================================
U.S. Government Obligations--7.4%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 8.875%, 11/15/97 (Cost $31,479,844)(6)(7) 30,000,000 31,425,000
===================================================================================================================================
Foreign Government Obligations--10.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.812%, 9/4/06(8)(9) 2,000,000 1,090,000
--------------------------------------------------------------------------------------------------------
Argentina (Republic of):
Bonds, Bonos del Tesoro, Series 10, 5.742%, 4/1/00(8) 167,471 154,305
Past Due Interest Bonds, Series L, 6.312%, 3/31/05(8) 500,000 360,625
--------------------------------------------------------------------------------------------------------
Australia (Commonwealth of) Bonds:
12%, 7/15/99 AUD 235,000 202,124
12.50%, 1/15/98 AUD 248,000 207,509
--------------------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina)
Medium-Term Nts., 10.625%, 3/29/99(10) 250,000 250,125
--------------------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC International Finance BV:
Gtd. Nts., 8%, 8/5/03 500,000 425,625
Medium-Term Nts., 8%, 4/14/00 350,000 323,750
--------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Interest Due and Unpaid Bonds, 6.375%, 1/1/01(8) 1,627,500 1,462,716
--------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Sr. Unsub. Unsec. Nts., 10%, 12/7/98 DEM 600,000 431,290
--------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.25%, 7/28/24(8) 1,750,000 872,813
--------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 7.75%, 9/1/99 CAD 2,982,000 2,264,412
--------------------------------------------------------------------------------------------------------
Central Bank of Costa Rica Interest Claim Bonds, Series B, 6.094%, 5/21/05(8) 176,425 157,019
--------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989-1990 Integrated Loan
Facility Bonds, 6.875%, 7/1/01(8)(9) 342,880 320,593
--------------------------------------------------------------------------------------------------------
Denmark (Kingdom of) Bonds, 8%, 5/15/03 DKK 16,695,000 3,093,733
--------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds, 6.063%, 2/28/25(8) 3,700,000 2,007,250
--------------------------------------------------------------------------------------------------------
Hashemite Kingdom of Jordan Disc. Bonds, 6.437%, 12/23/23(8) 1,250,000 834,375
</TABLE>
6 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Foreign Government Italy (Republic of) Treasury Bonds, Buoni del Tesoro
Obligations (continued) Poliennali, 10.50%, 11/1/98 ITL 1,930,000,000 $ 1,243,614
--------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 6.594%, 1/1/09(8) 1,450,000 1,000,500
--------------------------------------------------------------------------------------------------------
National Treasury Management Agency
(Irish Government) Bonds, 8%, 10/18/00 IEP 280,000 453,177
--------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd. Bonds, 12%, 12/1/01 AUD 675,000 600,930
--------------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 10%, 7/15/97 NZD 3,040,000 2,105,562
--------------------------------------------------------------------------------------------------------
Norwegian Government Bonds, 9.50%, 10/31/02 NOK 2,710,000 493,654
--------------------------------------------------------------------------------------------------------
Panama (Republic of) Debs., 6.75%, 5/10/02(8) 1,800,000 1,602,000
--------------------------------------------------------------------------------------------------------
Poland (Republic of) Treasury Bills, Zero Coupon:
22.405%, 7/24/96(3) PLZ 400,000 145,147
25.031%, 5/2/96(3) PLZ 2,250,000 856,174
--------------------------------------------------------------------------------------------------------
Portugal (Republic of) Gtd. Bonds, Obrigicion
do tes Medio Prazo, 11.875%, 2/23/00 PTE 185,000,000 1,327,266
--------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion
del Estado, 12.25%, 3/25/00 ESP 367,000,000 3,254,271
--------------------------------------------------------------------------------------------------------
Sweden (Kingdom of) Bonds, Series 1028, 11%, 1/21/99 SEK 9,100,000 1,486,014
--------------------------------------------------------------------------------------------------------
Thai Fuji Finance Zero Coupon Bonds, 10.348%, 6/3/96(3) THB 20,000,000 779,017
--------------------------------------------------------------------------------------------------------
Thai Oil Co. Ltd. Zero Coupon Nts., 11.137%, 5/2/96(3) THB 20,000,000 786,255
--------------------------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.565%, 9/30/00(8)(9) JPY 65,484,502 524,244
--------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 13%, 7/14/00 GBP 1,920,000 3,504,235
--------------------------------------------------------------------------------------------------------
United Mexican States:
Bonds, 10.375%, 1/29/03 DEM 2,500,000 1,692,480
Nts., 9.75%, 2/6/01 1,750,000 1,704,063
Nacional Financiera SNC Nts., 10%, 8/17/98 DEM 2,550,000 1,806,644
--------------------------------------------------------------------------------------------------------
Venezuela (Republic of):
Collateralized Par Bonds, Series W-B, 6.75%, 3/31/20 1,250,000 710,150
Disc. Bonds, Series DL, 6.563%, 12/18/07(8) 1,750,000 1,059,835
--------------------------------------------------------------------------------------------------------
Western Australia Treasury Corp. Gtd. Bonds, Series 98, 12.50%, 4/1/98 AUD 1,090,000 916,633
-----------
Total Foreign Government Obligations (Cost $42,291,410) 42,510,129
===================================================================================================================================
Municipal Bonds and Notes--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, California Transportation Corridor Agency
Toll Road Capital Appreciation Revenue Bonds,
Jr. Lien, Zero Coupon, 9%, 1/1/28 (Cost $825,124)(3) 13,500,000 1,214,379
===================================================================================================================================
Corporate Bonds and Notes--72.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Industry--7.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.8% Acetex Corp., 9.75% Sr. Sec. Nts., 10/1/03 3,620,000 3,656,200
--------------------------------------------------------------------------------------------------------
NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(11) 3,280,000 2,476,400
11.75% Sr. Sec. Nts., 10/15/03 1,600,000 1,668,000
-----------
7,800,600
</TABLE>
7 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Containers--0.6% U.S. Can Co., 13.50% Sr. Sub. Nts., 1/15/02 $2,500,000 $ 2,737,500
- -----------------------------------------------------------------------------------------------------------------------------------
Metals/Mining--0.9% Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03 1,819,000 1,964,520
--------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 9.875% Sr. Nts., 2/15/02 1,600,000 1,600,000
--------------------------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05 325,000 376,187
-----------
3,940,707
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--3.0% Crown Paper Co., 11% Sr. Sub. Nts., 9/1/05 400,000 373,000
--------------------------------------------------------------------------------------------------------
Domtar, Inc.:
11.25% Debs., 9/15/17 190,000 202,350
12% Nts., 4/15/01 190,000 218,500
--------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01 500,000 511,250
--------------------------------------------------------------------------------------------------------
Indah Kiat International Finance Co. BV,
12.50% Sr. Sec. Gtd. Nts., Series C, 6/15/06 3,040,000 3,066,600
--------------------------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05 2,480,000 2,517,200
--------------------------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts., 2/1/02 1,000,000 960,000
--------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.25% Sr. Nts., 4/1/06 1,055,000 1,065,550
10.875% Sr. Sub. Nts., 4/1/08 335,000 336,675
--------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04 2,350,000 2,479,250
--------------------------------------------------------------------------------------------------------
Stone Container Corp., 10.75% First Mtg. Nts., 10/1/02 1,000,000 1,000,000
-----------
12,730,375
- -----------------------------------------------------------------------------------------------------------------------------------
Steel--1.0% AK Steel Corp., 10.75% Sr. Gtd. Nts., 4/1/04 1,800,000 1,984,500
--------------------------------------------------------------------------------------------------------
Armco, Inc., 8.50% Sinking Fund Debs., 9/1/01 293,000 290,070
--------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02 1,900,000 1,928,500
-----------
4,203,070
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Related--16.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Products--2.6% Coleman Holdings, Inc., Zero Coupon Sr. Sec.
Disc. Nts., Series B, 9.52%, 5/27/98(3) 4,580,000 3,801,400
--------------------------------------------------------------------------------------------------------
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(11) 4,400,000 2,640,000
--------------------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 960,000 957,600
--------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(10) 1,000,000 1,005,000
-----------
11,056,000
- -----------------------------------------------------------------------------------------------------------------------------------
Food/Beverages/Tobacco--1.8%
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 2,845,000 2,916,125
--------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 3,000,000 2,985,000
--------------------------------------------------------------------------------------------------------
Curtice-Burns Foods, Inc., 12.25% Sr. Sub. Nts., 2/1/05 1,000,000 985,000
--------------------------------------------------------------------------------------------------------
Doane Products Co., 10.625% Sr. Nts., 3/1/06 440,000 451,000
--------------------------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04(12) 800,000 312,000
----------
7,649,125
</TABLE>
8 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare--3.1% AmeriSource Health Corp., 11.25% Sr. Debs., 7/15/05(13) $ 945,093 $ 1,049,053
--------------------------------------------------------------------------------------------------------
Capstone Capital Corp., 10.50% Cv. Sub. Debs., 4/1/02 900,000 1,182,375
--------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04 3,370,000 3,757,550
--------------------------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 500,000 570,000
--------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02 750,000 834,375
--------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 10.125% Sr. Sub. Nts., 3/1/05 3,550,000 3,825,125
--------------------------------------------------------------------------------------------------------
Total Renal Care, Inc., 0%/12% Sr. Sub. Disc. Nts., 8/15/04(11) 1,935,000 1,925,325
-----------
13,143,803
- -----------------------------------------------------------------------------------------------------------------------------------
Hotel/Gaming--5.4% Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00(9) 275,000 178,750
--------------------------------------------------------------------------------------------------------
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts., 10.011%, 6/15/98(3) 1,200,000 1,020,000
--------------------------------------------------------------------------------------------------------
Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg. Nts., 3/15/04 1,115,000 1,126,150
--------------------------------------------------------------------------------------------------------
Boyd Gaming Corp., 10.75% Sr. Sub. Nts., 9/1/03 1,500,000 1,590,000
--------------------------------------------------------------------------------------------------------
California Hotel Finance Corp., 11% Sr. Sub. Nts., 12/1/02 800,000 850,000
--------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Promissory Nts. 7,500 --
--------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00(9)(12) 100,000 70,000
--------------------------------------------------------------------------------------------------------
Empress River Casino Finance Corp., 10.75% Sr. Gtd. Nts., 4/1/02 2,000,000 2,060,000
--------------------------------------------------------------------------------------------------------
GNF Corp., 10.625% Gtd. First Mtg. Nts., Series B, 4/1/03 785,000 785,000
--------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 1,750,000 1,863,750
--------------------------------------------------------------------------------------------------------
Griffin Gaming & Entertainment, Inc., 7.97% First Mtg.
Non-Recourse Pass-Through Nts., 6/30/00(8) 1,010,000 954,450
--------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., 12/15/07(10) 1,210,000 1,161,600
--------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., 5/15/05 2,470,000 2,408,250
--------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., 11/15/02(10) 1,640,000 1,959,800
--------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 950,000 964,250
--------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 1,400,000 1,498,000
--------------------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., 3/15/03(10) 1,100,000 1,122,000
--------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 2,000,000 2,000,000
--------------------------------------------------------------------------------------------------------
Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01 1,350,000 1,518,750
--------------------------------------------------------------------------------------------------------
Trump's Castle Funding, Inc., 13.875% Sub. Nts., 11/15/05(13) 43 39
-----------
23,130,789
- -----------------------------------------------------------------------------------------------------------------------------------
Restaurants--1.3% Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,020,000 3,125,700
--------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 1,765,000 1,729,700
9.75% Sr. Sub. Nts., 6/1/02 775,000 751,750
-----------
5,607,150
</TABLE>
9 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Textile/Apparel--2.2% Consoltex Group, Inc., 11% Sr. Sub. Gtd. Nts., Series B, 10/1/03 $ 900,000 $ 814,500
--------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02 750,000 774,375
--------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
13% Sr. Nts., 6/15/01 350,000 369,250
Zero Coupon Promissory Nts., 17.899%, 10/23/96(3) IDR 3,000,000,000 1,146,427
Zero Coupon Promissory Nts., 19.112%, 2/28/97(3) IDR 1,500,000,000 542,546
--------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 2,800,000 2,954,000
--------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 2,620,000 2,613,450
-----------
9,214,548
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
AmeriGas Partners LP, 10.125% Sr. Nts., 4/15/07 320,000 344,000
---------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 10.50% Sr. Nts., 6/1/02 750,000 791,250
---------------------------------------------------------------------------------------------------------
Coda Energy, Inc., 10.50% Sr. Sub. Nts., 4/1/06(10) 660,000 655,875
---------------------------------------------------------------------------------------------------------
Crown Central Petroleum Corp., 10.875% Sr. Nts., 2/1/05 910,000 937,300
---------------------------------------------------------------------------------------------------------
DeepTech International, Inc., 12% Sr. Sec. Nts., 12/15/00 1,645,000 1,570,975
---------------------------------------------------------------------------------------------------------
Falcon Drilling, Inc., 8.875% Sr. Nts., 3/15/03(10) 2,800,000 2,786,000
---------------------------------------------------------------------------------------------------------
Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01 1,400,000 1,484,000
---------------------------------------------------------------------------------------------------------
Gerrity Oil & Gas Corp., 11.75% Sr. Sub. Nts., 7/15/04 2,000,000 2,090,000
---------------------------------------------------------------------------------------------------------
Giant Industries, Inc., 9.75% Sr. Sub. Nts., 11/15/03 820,000 832,300
---------------------------------------------------------------------------------------------------------
Kelley Oil & Gas Corp., 13.50% Sr. Nts., 6/15/99 1,320,000 1,392,600
---------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 11.50% Debs., 11/15/15 500,000 525,000
---------------------------------------------------------------------------------------------------------
Nuevo Energy Co., 12.50% Sr. Sub. Nts., 6/15/02 560,000 603,400
---------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Sr. Gtd. Nts., 7/15/02 1,225,000 1,365,875
---------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05 1,376,000 1,554,880
9.375% Sub. Debs., 2/1/06 970,000 970,000
---------------------------------------------------------------------------------------------------------
Plains Resources, Inc., 12% Sr. Sub. Nts., 10/1/99 400,000 424,000
---------------------------------------------------------------------------------------------------------
Santa Fe Energy Resources, Inc., 11% Sr. Sub. Debs., 5/15/04 3,230,000 3,569,150
---------------------------------------------------------------------------------------------------------
TransTexas Gas Corp., 11.50% Sr. Sec. Gtd. Nts., 6/15/02 2,000,000 1,965,000
---------------------------------------------------------------------------------------------------------
Triton Energy Corp., Zero Coupon Sr. Sub. Disc. Nts., 10.394%, 11/1/97(3) 3,200,000 2,832,000
---------------------------------------------------------------------------------------------------------
United Meridian Corp., 10.375% Sr. Sub. Gtd. Nts., 10/15/05 1,100,000 1,166,000
---------------------------------------------------------------------------------------------------------
Vintage Petroleum, Inc., 9% Sr. Sub. Nts., 12/15/05 2,435,000 2,374,125
-----------
30,233,730
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services--4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks & Thrifts--0.7% Banco Bamerindus do Brasil SA, 11% Unsub. Unsec. Nts., 11/24/97 225,000 221,062
---------------------------------------------------------------------------------------------------------
Banco Ganadero SA, Zero Coupon Sr. Unsub. Unsec. Nts., 9.25%, 5/24/96(3) 600,000 593,040
---------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 7% Cv. Jr. Sub. Unsec. Gtd. Nts., 12/15/99 300,000 265,125
---------------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc., 9.125% Sr. Sub. Nts., 1/15/03(10) 1,800,000 1,777,500
-----------
2,856,727
</TABLE>
10 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--1.0% ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(9) $ 410,726 $ 451,799
-------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 3,010,000 3,055,150
-------------------------------------------------------------------------------------------------------
GPA Holland BV, 8.94% Medium-Term Nts., Series C, 2/16/99 700,000 686,000
-------------------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03(12) 600,000 75,000
-----------
4,267,949
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--2.6% American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04 2,220,000 2,342,100
-------------------------------------------------------------------------------------------------------
Chartwell Re Corp., 10.25% Sr. Nts., 3/1/04 760,000 793,688
-------------------------------------------------------------------------------------------------------
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02 3,000,000 3,315,000
-------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 2,750,000 2,811,875
-------------------------------------------------------------------------------------------------------
Terra Nova Insurance (UK) Holdings PLC, 10.75% Sr. Nts., 7/1/05 1,600,000 1,800,000
-----------
11,062,663
- -----------------------------------------------------------------------------------------------------------------------------------
Housing Related--2.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Building Materials--0.8% American Standard, Inc.:
0%/10.50% Sr. Sub. Disc. Debs., 6/1/05(11) 2,075,000 1,789,687
10.875% Sr. Nts., 5/15/99 1,000,000 1,085,000
-------------------------------------------------------------------------------------------------------
Building Materials Corp., 0%/11.75% Sr. Deferred Coupon Nts.,
Series B, 7/1/04(11) 750,000 558,750
-------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 60,000 57,600
-----------
3,491,037
- -----------------------------------------------------------------------------------------------------------------------------------
Homebuilders/Real Estate--1.8%
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05 CAD 375,500 278,360
Units (each unit consists of one $10 principal amount of
8.50% cv. sub. debs., 12/15/15 and 40 common shares)(14) CAD 225,830 298,352
-------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Sr. Gtd. Nts., 4/15/03 1,900,000 1,919,000
-------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 1,375,000 1,405,937
-------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(10) 2,200,000 1,661,000
-------------------------------------------------------------------------------------------------------
U.S. Home Corp., 9.75% Sr. Nts., 6/15/03 1,900,000 1,952,250
------------
7,514,899
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Electronics/
Computers--1.0% Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03 1,000,000 1,105,000
-------------------------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07(9) 805,000 432,688
-------------------------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 2,420,000 2,528,900
-----------
4,066,588
- -----------------------------------------------------------------------------------------------------------------------------------
Automotive--1.0% Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B, 8/1/04 1,650,000 1,790,250
-------------------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 9.50% Sr. Sec. Nts., 6/1/00 200,000 195,000
-------------------------------------------------------------------------------------------------------
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01 300,000 298,500
-------------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 975,000 804,375
-------------------------------------------------------------------------------------------------------
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02 950,000 1,009,375
-----------
4,097,500
</TABLE>
11 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Goods--0.3% Imo Industries, Inc.:
12% Sr. Sub. Debs., 11/1/01 $ 500,000 $ 513,750
12.25% Sr. Sub. Debs., 8/15/97 562,000 567,620
-----------
1,081,370
- -----------------------------------------------------------------------------------------------------------------------------------
Media--14.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Broadcasting--3.6% American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 1,500,000 1,470,000
--------------------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 1,450,000 1,406,500
--------------------------------------------------------------------------------------------------------
Granite Broadcasting Corp., 9.375% Sr. Sub. Nts., Series A, 12/1/05(10) 1,050,000 997,500
--------------------------------------------------------------------------------------------------------
New World Communications Group Holding Corp.,
Zero Coupon Sr. Disc. Nts., Series B, 11.457%, 6/15/99(3) 1,030,000 746,750
--------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,120,000
--------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 4,500,000 4,803,750
--------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts.:
12/15/03 250,000 248,750
9/30/05 2,780,000 2,766,100
--------------------------------------------------------------------------------------------------------
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01 500,000 533,125
--------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 9% Sr. Sub. Nts., 1/15/06(10) 1,500,000 1,432,500
-----------
15,524,975
- -----------------------------------------------------------------------------------------------------------------------------------
Cable Television--7.4% American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04(11) 2,923,211 2,210,678
--------------------------------------------------------------------------------------------------------
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)(11)(14) 4,465,000 3,080,850
--------------------------------------------------------------------------------------------------------
Bell Cablemedia PLC:
0%/11.875% Sr. Disc. Nts., 9/15/05(11) 2,330,000 1,488,288
0%/11.95% Sr. Disc. Nts., 7/15/04(11) 3,050,000 2,188,375
--------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 400,000 430,000
--------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04 200,000 211,500
--------------------------------------------------------------------------------------------------------
Century Communications Corp., 11.875% Sr. Sub. Debs., 10/15/03 700,000 753,375
--------------------------------------------------------------------------------------------------------
Continental Cablevision, Inc., 11% Sr. Sub. Debs., 6/1/07 270,000 305,775
--------------------------------------------------------------------------------------------------------
CS Wireless Systems, Inc., Units (each unit consists of four
$1,000 principal 0%/11.375% sr. disc. nts., 3/1/06 and 1.1 shares
of common stock)(10)(11)(14) 1,000,000 216,000
--------------------------------------------------------------------------------------------------------
Diamond Cable Communications PLC, 0%/13.25% Sr. Disc. Nts., 9/30/04(11) 180,000 127,800
--------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(11) 2,050,000 1,506,750
--------------------------------------------------------------------------------------------------------
International CableTel, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(11) 160,000 115,600
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(11) 3,448,000 2,206,720
</TABLE>
12 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Cable Television Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
(continued) 0%/13.50% Sr. Sub. Gtd. Disc. Nts., Series II, 8/1/04(11) $4,615,000 $ 3,363,181
--------------------------------------------------------------------------------------------------------
People's Choice TV Corp., 0%/13.125% Sr. Disc. Nts., 6/1/04(11) 2,170,000 1,377,950
--------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 11% Sr. Sub. Gtd. Debs., 12/1/15 1,200,000 1,302,000
--------------------------------------------------------------------------------------------------------
TeleWest PLC:
0%/11% Sr. Disc. Debs., 10/1/07(11) 3,070,000 1,857,350
9.625% Sr. Debs., 10/1/06 1,500,000 1,503,750
--------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,575,000 1,805,344
--------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.:
Series B, 12%, 11/15/99(3) 2,060,000 1,339,000
12.501%, 11/15/99(3) 3,000,000 1,950,000
--------------------------------------------------------------------------------------------------------
Videotron Holdings PLC, 0%/11% Sr. Disc. Nts., 8/15/05(11) 3,550,000 2,272,000
-----------
31,612,286
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Media--1.6% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts., Series A, 10/1/03 1,300,000 1,423,500
--------------------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 835,000 812,038
--------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Sr. Gtd. Debs., 10/15/12 700,000 811,109
--------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 10.75% Sr. Nts., 8/15/03 200,000 202,000
--------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.:
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(11) 3,680,000 3,100,400
9.75% Sr. Sec. Nts., 8/1/00 400,000 420,000
-----------
6,769,047
- -----------------------------------------------------------------------------------------------------------------------------------
Entertainment/Film--0.4% Imax Corp., 7% Sr. Nts., 3/1/01(15) 1,700,000 1,674,500
- -----------------------------------------------------------------------------------------------------------------------------------
Publishing/Printing--1.3% Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(11) 3,070,000 2,010,850
--------------------------------------------------------------------------------------------------------
Hollinger International Publishing, Inc., 9.25% Sr. Sub. Gtd. Nts., 2/1/06 1,870,000 1,841,950
--------------------------------------------------------------------------------------------------------
Sullivan Graphics, Inc., 12.75% Sr. Sub. Nts., 8/1/05 1,712,000 1,660,640
-----------
5,513,440
- -----------------------------------------------------------------------------------------------------------------------------------
Other--2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Environmental--0.9% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 250,000 225,000
--------------------------------------------------------------------------------------------------------
Mid-American Waste Systems, Inc., 12.25% Sr. Sub. Nts., 2/15/03(12) 1,900,000 1,320,500
--------------------------------------------------------------------------------------------------------
Norcal Waste Systems, Inc., 12.50% Sr. Nts., 11/15/05(10)(15) 2,250,000 2,340,000
-----------
3,885,500
- -----------------------------------------------------------------------------------------------------------------------------------
Services--1.8% Borg-Warner Security Corp., 9.125% Sr. Sub. Nts., 5/1/03 3,000,000 2,812,500
--------------------------------------------------------------------------------------------------------
Protection One, Inc., 0%/13.625% Sr. Disc. Nts., 6/30/05(11) 4,750,000 4,013,750
--------------------------------------------------------------------------------------------------------
Sociedad Comercial del Plata SA, 10.75% Medium-Term Nts., 3/6/98(10) 1,000,000 1,006,250
-----------
7,832,500
</TABLE>
13 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Retail--3.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Drug Stores--0.3% Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 $1,100,000 $ 1,270,500
- -----------------------------------------------------------------------------------------------------------------------------------
Specialty Retailing--1.1% Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B, 9/1/03 1,000,000 925,000
--------------------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 600,000 618,000
--------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 1,285,000 1,214,325
--------------------------------------------------------------------------------------------------------
Matahari International Finance Co. BV, 11.25% Gtd. Nts., 3/15/01(10) 1,000,000 1,027,500
-------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 900,000 1,017,000
-----------
4,801,825
- -----------------------------------------------------------------------------------------------------------------------------------
Supermarkets--2.4% Grand Union Co., 12% Sr. Nts., 9/1/04 5,372,000 4,727,360
-------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03(13) 1,650,000 1,641,750
-------------------------------------------------------------------------------------------------------
Penn Traffic Co., 9.625% Sr. Sub. Nts., 4/15/05 2,690,000 2,333,575
-------------------------------------------------------------------------------------------------------
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99 275,000 300,438
-------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04 1,410,000 1,360,650
-----------
10,363,773
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--2.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Air Transportation--0.4% Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 1,500,000 1,605,000
- -----------------------------------------------------------------------------------------------------------------------------------
Railroads--0.5% Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(11) 3,200,000 2,224,000
--------------------------------------------------------------------------------------------------------
Shipping--1.1% Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 2,850,000 3,021,000
--------------------------------------------------------------------------------------------------------
Sea Containers Ltd., 12.50% Sr. Sub. Debs., Series A, 12/1/04 100,000 109,250
--------------------------------------------------------------------------------------------------------
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04 1,480,000 1,535,500
------------
4,665,750
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--9.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--0.4% California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(11) 1,890,000 1,809,675
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications--9.0% 360 Communications Co.:
7.125% Sr. Nts., 3/1/03 550,000 536,997
7.50% Sr. Nts., 3/1/06 550,000 533,830
--------------------------------------------------------------------------------------------------------
A+ Network, Inc., 11.875% Sr. Sub. Nts., 11/1/05 2,025,000 2,085,750
--------------------------------------------------------------------------------------------------------
American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(10)(11) 1,650,000 878,625
0%/13% Sr. Disc. Nts., 11/1/05(10)(11) 725,000 409,625
--------------------------------------------------------------------------------------------------------
Arch Communications Group, Inc., 0%/10.875% Sr. Disc. Nts., 3/15/08(11) 2,470,000 1,420,250
--------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/10.875% Sr. Disc. Nts., 3/1/06(10)(11) 1,100,000 643,500
--------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts., 6/15/05(10) 500,000 350,000
--------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.,
Zero Coupon Sr. Disc. Nts., 12.249%, 8/15/00(3) 6,335,000 3,864,350
--------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(11) 2,250,000 1,783,125
--------------------------------------------------------------------------------------------------------
Cencall Communications Corp., 0%/10.125% Sr. Disc. Nts., 1/15/04(11) 785,000 467,075
--------------------------------------------------------------------------------------------------------
Comcast Cellular Corp., Zero Coupon Nts., Series B, 6.743%, 3/5/00(3) 2,600,000 1,911,000
--------------------------------------------------------------------------------------------------------
Comunicacion Celular SA, Units (each unit consists of $1,000 principal
0%/13.125% sr. deferred coupon bond, 11/15/03 and one warrant for
12,860 shares of common stock at $1.32 per 1,000 shares)(10)(11)(14) 2,000,000 1,170,000
--------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts.,
3/15/04(10)(11) 2,070,000 1,273,050
--------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 2,000,000 2,240,000
</TABLE>
14 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications GST Telecommunications, Inc., Units (each unit consists of eight
(continued) 0%/13.875% sr. disc. nts., 12/15/05 and one 0%/13.875%
cv. sr. sub. disc. nt., 12/15/05)(10)(11)(14) $4,070,000 $ 2,401,300
--------------------------------------------------------------------------------------------------------
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(11) 3,888,000 3,402,000
--------------------------------------------------------------------------------------------------------
In-Flight Phone Corp., 0%/14% Sr. Disc. Nts., 5/15/02(11) 1,600,000 504,000
--------------------------------------------------------------------------------------------------------
IntelCom Group (USA), Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(11) 4,910,000 3,185,363
--------------------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(11) 3,095,000 1,953,719
0%/9.375% Sr. Disc. Nts., 1/15/04(11) 2,830,000 2,168,488
--------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/11.50% Sr. Disc. Nts., 9/1/03(11) 1,250,000 834,375
--------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(11) 3,500,000 2,782,500
0%/14% Sr. Sub. Disc. Nts., 11/15/01(11) 810,000 724,950
--------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 500,000 582,500
9.50% Sr. Nts., 2/1/04 88,000 86,900
------------
38,193,272
------------
Total Corporate Bonds and Notes (Cost $302,971,916) 307,632,173
Shares
===================================================================================================================================
Common Stocks--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc.(16) 4,100 34,338
--------------------------------------------------------------------------------------------------------
American Telecasting, Inc.(16) 10,000 147,500
--------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., Cl. A(16) 15,895 536,456
--------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(9) 75 75,000
--------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(16) 2,261 5,652
--------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc.(16) 2,333 33,245
--------------------------------------------------------------------------------------------------------
Grand Union Co.(16) 1,767 10,602
--------------------------------------------------------------------------------------------------------
Hollywood Casino Corp.(16) 10,000 34,375
--------------------------------------------------------------------------------------------------------
IntelCom Group, Inc.(16) 56,000 994,000
--------------------------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc.(16) 4,500 100,688
--------------------------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. B(16) 3,001 58,895
--------------------------------------------------------------------------------------------------------
Omnipoint Corp.(16) 50,000 1,275,000
--------------------------------------------------------------------------------------------------------
People's Choice TV Corp.(16) 9,200 167,900
--------------------------------------------------------------------------------------------------------
Southland Corp.(16) 300 994
--------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(9)(16) 9,500 9,500
--------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Cl. A(16) 25,100 401,600
--------------------------------------------------------------------------------------------------------
Walter Industries, Inc.(16) 16,291 224,001
--------------------------------------------------------------------------------------------------------
Zale Corp.(16) 1,985 34,117
------------
Total Common Stocks (Cost $3,331,923) 4,143,863
</TABLE>
15 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Preferred Stocks and Other Securities--1.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
11.125%, Series L(10)(13) 4,000 $ 398,000
8.50% Cum. Cv., Series I 44,000 1,243,000
--------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 3,040 333,640
--------------------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Series A Preferred Stock(13) 14,250 1,467,750
--------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum.
Exchangeable Perpetual Preferred Stock, Series A 20,000 537,500
--------------------------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 13,700 1,541,250
--------------------------------------------------------------------------------------------------------
K-III Communications Corp., $11.625 Exchangeable, Series B(13) 7,729 800,004
--------------------------------------------------------------------------------------------------------
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred Stock(10) 28,120 829,540
----------
Total Preferred Stocks and Other Securities (Cost $6,638,957) 7,150,684
Units
===================================================================================================================================
Rights, Warrants and Certificates--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(10) 725 38,062
--------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99 5,500 41,250
Exp. 8/00(10) 850 31,450
--------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A(9) 6,200 62
Litigation Trust(9) 19,829 198
--------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(9) 12,500 3,125
--------------------------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 1,631 --
--------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03 5,120 76,800
--------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc.:
Cl. C Wts., Exp. 12/99 6,741 83,420
Cl. D Wts., Exp. 12/01 6,741 80,892
--------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 7/96 1,174 10,273
--------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02(10) 1,600 --
--------------------------------------------------------------------------------------------------------
IntelCom Group, Inc. Wts., Exp. 9/05(10) 17,655 180,964
--------------------------------------------------------------------------------------------------------
Interco, Inc. Wts., Series 1, Exp. 8/99 14,540 39,985
--------------------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited Partners' Interest 1,985 --
--------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 8,000 204,000
--------------------------------------------------------------------------------------------------------
People's Choice TV Corp. Wts., Exp. 6/00 2,170 21,700
--------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03 28,000 402,500
Exp. 6/05 15,200 140,600
--------------------------------------------------------------------------------------------------------
SDW Holdings Corp., Cl. B Wts., Exp. 12/06(10) 2,812 36,556
--------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/97(10) 300 30
--------------------------------------------------------------------------------------------------------
Trizec Corp. Wts., Exp. 7/99 1,985 1,821
--------------------------------------------------------------------------------------------------------
UGI Corp. Wts., Exp. 3/98 4,750 475
--------------------------------------------------------------------------------------------------------
Venezuela (Government of) Par W-B Wts., Exp. 4/20 6,250 --
---------
Total Rights, Warrants and Certificates (Cost $230,384) 1,394,163
</TABLE>
16 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Structured Instruments--1.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale, New York Branch,
5.60% CD Linked Nts., 1/30/97 (indexed to the closing
Nikkei 225 Index on 1/23/97 10 yr. Japanese Yen
swap rate & New Zealand Dollar on 1/28/97)(2) NZD 603,409 $ 418,041
--------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, New York Branch,
16% CD Linked Nts., 9/11/96 (indexed to the Russian
Federation GKO, Zero Coupon, 9/4/96) 2,000,000 1,995,000
--------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit
Linked Nts., 12.638%, 1/3/97 (indexed to the Brazilian National
Treasury Nts., Zero Coupon, 1/2/97)(3) 900,000 824,940
--------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.886%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(3) 500,000 458,300
--------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
12.61%, 1/3/97 (indexed to the Brazilian National Treasury Nts.,
Zero Coupon, 1/2/97)(3) 500,000 458,300
--------------------------------------------------------------------------------------------------------
United Mexican States Linked Nts. (indexed to the greater
of Cetes Option Amount or USD LIBOR Option Amount, 11/27/96)(10) 900,000 987,750
----------
Total Structured Instruments (Cost $5,032,792) 5,142,331
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
<S> <C> <C> <C> <C> <C>
===================================================================================================================================
Call Option Purchased--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
OTC Deutsche Mark/U.S. Dollar
Call Opt. (Cost $14,424) May 96 1.495 DEM 2,943,734 33,264
===================================================================================================================================
Put Options Purchased--0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds,
Tranche A, 6.25%, 7/28/24, Put Opt. Apr. 96 $ 45.25 1,750 1,225
--------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds,
Tranche A, 6.25%, 7/28/24, Put Opt. Apr. 96 $ 50.438 875 16,054
--------------------------------------------------------------------------------------------------------
Merrill Lynch International Ltd.,
Standard & Poor's 500 Index, Put Opt. Apr. 96 $675.413 11,659 349,443
--------------------------------------------------------------------------------------------------------
OTC Deutsche Mark/U.S. Dollar Put May 96 1.495 DEM 2,943,734 15,896
----------
Total Put Options Purchased (Cost $479,315) 382,618
</TABLE>
17 Oppenheimer Champion Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Repurchase Agreement--2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with J.P. Morgan Securities, Inc., 5.40%,
dated 3/29/96, to be repurchased at $11,605,220 on 4/1/96,
collateralized by U.S. Treasury Bonds, 10.375%-14%, 11/15/11-8/15/13,
with a value of $11,928,592 (Cost $11,600,000) $11,600,000 $ 11,600,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $411,201,911) 98.6% 419,957,831
Other Assets Net of Liabilities 1.4 5,918,479
----------- ------------
Net Assets 100.0% $425,876,310
=========== ============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
AUD -- Australian Dollar ITL -- Italian Lira
CAD -- Canadian Dollar JPY -- Japanese Yen
DEM -- German Deutsche Mark NOK -- Norwegian Krone
DKK -- Danish Krone NZD -- New Zealand Dollar
ESP -- Spanish Peseta PLZ -- Polish Zloty
GBP -- British Pound Sterling PTE -- Portuguese Escudo
IDR -- Indonesian Rupiah SEK -- Swedish Krona
IEP -- Irish Punt THB -- Thai Baht
2. Indexed instrument for which the principal amount and/or interest due at
maturity is affected by the relative value of a foreign currency.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. 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 prepayment 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.
5. When-issued security to be delivered and settled after March 31, 1996.
6. Securities with an aggregate market value of $524,063 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
7. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
Face/Contracts Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Call Option on Argentina (Republic of)
Past Due Interest Bonds, Series L, 6.312%, 3/31/05 125,000 4/96 $73.5625 $ 1,813 $ 1,325
- ----------------------------------------------------------------------------------------------------------------------------------
Call Option on German Deutsche Mark 2,943,735 5/96 1.4947 DEM 70,944 57,992
- ----------------------------------------------------------------------------------------------------------------------------------
Call Option on Morocco (Kingdom of) Loan
Participation Agreement, Tranche A, 6.594%, 1/1/09 250,000 4/96 $69.25 4,375 4,123
- ----------------------------------------------------------------------------------------------------------------------------------
Call Option on New Zealand Dollar 496,625 4/96 1.46 NZD 3,357 1,540
------- -------
$80,489 $64,980
======= =======
</TABLE>
8. Represents the current interest rate for a variable rate security.
9. Identifies issues considered to be illiquid--See Note 8 of Notes to Financial
Statements.
10. 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 $29,027,102 or 6.82% of the Fund's net
assets, at March 31, 1996.
11. Denotes a step bond: a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
12. Non-income producing--issuer is in default of interest payment.
13. Interest or dividend is paid in kind.
14. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
15. Represents the current interest rate for an increasing rate security.
16. Non-income producing security.
See accompanying Notes to Financial Statements.
18 Oppenheimer Champion Income Fund
<PAGE>
Statement of Assets and Liabilities March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
===================================================================================================================================
Assets Investments, at value (cost $411,201,911)--see accompanying statement $419,957,831
--------------------------------------------------------------------------------------------------------
Cash 117,779
--------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 67,825
--------------------------------------------------------------------------------------------------------
Receivables:
Interest 8,505,017
Shares of beneficial interest sold 3,220,056
Investments sold and options written 2,862,095
Closed forward foreign currency exchange contracts 12,149
Daily variation on futures contracts--Note 6 60,000
--------------------------------------------------------------------------------------------------------
Other 14,370
------------
Total assets 434,817,122
===================================================================================================================================
Liabilities Options written, at value (premiums received $80,489)-- see accompanying
statement--Note 7 64,979
--------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 21,439
--------------------------------------------------------------------------------------------------------
Payables and other
liabilities: Investments purchased 6,444,204
Closed forward foreign currency exchange contracts 7,775
Shares of beneficial interest redeemed 1,088,227
Dividends 979,692
Distribution and service plan fees 241,183
Other 93,313
------------
Total liabilities 8,940,812
===================================================================================================================================
Net Assets $425,876,310
============
===================================================================================================================================
Composition of Paid-in capital $417,940,017
Net Assets --------------------------------------------------------------------------------------------------------
Undistributed net investment income 83,753
--------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (945,431)
--------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 8,797,971
------------
Net assets $425,876,310
============
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $306,865,260 and 24,075,647 shares of beneficial interest outstanding) $12.75
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $13.39
--------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $29,406,730 and 2,308,869 shares of beneficial interest outstanding) $12.74
--------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $89,604,320 and 7,036,129 shares of beneficial interest outstanding) $12.73
See accompanying Notes to Financial Statements.
</TABLE>
19 Oppenheimer Champion Income Fund
<PAGE>
Statement of Operations For the Six Months Ended March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
===================================================================================================================================
Investment Income Interest (net of foreign withholding taxes of $1,169) $ 18,799,792
--------------------------------------------------------------------------------------------------------
Dividends 179,276
------------
Total income 18,979,068
===================================================================================================================================
Expenses Management fees--Note 4 1,272,853
--------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 342,600
Class B 58,495
Class C 392,875
--------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 280,279
--------------------------------------------------------------------------------------------------------
Shareholder reports 97,952
--------------------------------------------------------------------------------------------------------
Custodian fees and expenses 36,913
--------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 14,162
Class B 10,001
Class C 7,570
--------------------------------------------------------------------------------------------------------
Legal and auditing fees 13,142
--------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,949
--------------------------------------------------------------------------------------------------------
Other 13,855
-----------
Total expenses 2,542,646
===================================================================================================================================
Net Investment Income 16,436,422
===================================================================================================================================
Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) Investments 3,631,299
Closing of futures contracts (231,343)
Closing of options written (116,088)
Foreign currency transactions (223,603)
---------
Net realized gain 3,060,265
--------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 4,208,204
Translation of assets and liabilities denominated in foreign currencies 259,694
-----------
Net change 4,467,898
-----------
Net realized and unrealized gain 7,528,163
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $23,964,585
===========
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Champion Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30,
(Unaudited) 1995
<S> <C> <C> <C>
===================================================================================================================================
Operations
Net investment income $ 16,436,422 $ 20,637,843
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) 3,060,265 (2,898,856)
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 4,467,898 7,212,069
------------ ------------
Net increase in net assets resulting from operations 23,964,585 24,951,056
===================================================================================================================================
Dividends and Distributions Dividends from net investment income:
To Shareholders Class A (12,733,848) (17,271,188)
Class B (458,427) --
Class C (3,244,147) (3,335,380)
-----------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (26,483)
Class C -- (4,572)
===================================================================================================================================
Beneficial Interest Net increase in net assets resulting from beneficial
Transactions interest transactions--Note 2:
Class A 45,841,880 91,132,115
Class B 29,357,644 --
Class C 23,078,376 36,376,191
===================================================================================================================================
Net Assets Total increase 105,806,063 131,821,739
-----------------------------------------------------------------------------------------------------
Beginning of period 320,070,247 188,248,508
------------ ------------
End of period (including undistributed net
investment income of $83,753 in each period) $425,876,310 $320,070,247
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Champion Income Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------
Six Months
Ended
Mar. 31, 1996 Year Ended September 30,
(Unaudited) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
==========================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $12.47 $12.32 $12.90 $12.26 $11.49 $10.46
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .57 1.05 1.10 1.22 1.41 1.45
Net realized and unrealized
gain (loss) .28 .14 (.38) .64 .77 1.04
-------- -------- -------- -------- -------- --------
Total income from investment
operations .85 1.19 .72 1.86 2.18 2.49
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment inco (.57) (1.04) (1.10) (1.22) (1.41) (1.46)
Dividends in excess of net
investment income -- -- (.01) -- -- --
Distributions from net realized gain -- --(3) -- -- -- --
Distributions in excess of net
realized gain -- -- (.19) -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.57) (1.04) (1.30) (1.22) (1.41) (1.46)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.75 $12.47 $12.32 $12.90 $12.26 $11.49
======== ======== ======== ======== ======== ========
==========================================================================================================================
Total Return, at Net Asset Value(4) 6.94% 10.09% 5.61% 15.92% 19.94% 25.62%
==========================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $306,865 $255,139 $160,505 $104,465 $47,125 $16,044
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $282,019 $204,917 $135,431 $ 73,334 $28,270 $14,057
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.03%(5) 8.45% 8.49% 9.52% 11.60% 13.49%
Expenses 1.18%(5) 1.18% 1.22% 1.24% 1.35% 1.49%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 50.1% 72.5% 108.0% 116.2% 121.5% 114.8%
</TABLE>
<PAGE>
(RESTUBBED TABLE)
<TABLE>
<CAPTION>
Class B Class C
---------------- ------------------------------------
Period Six Months
Ended Ended Year Ended
Mar. 31, 1996(2) Mar. 31, 1996 September 30,
(Unaudited) (Unaudited) 1995 1994(1)
<S> <C> <C> <C> <C>
========================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $12.47 $12.46 $12.32 $13.13
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .51 .53 .95 .75
Net realized and unrealized
gain (loss) .27 .27 .13 (.60)
-------- -------- -------- --------
Total income from investment
operations .78 .80 1.08 .15
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment inco (.51) (.53) (.94) (.77)
Dividends in excess of net
investment income -- -- -- --(3)
Distributions from net realized gain -- -- --(3) --
Distributions in excess of net
realized gain -- -- -- (.19)
-------- -------- -------- --------
Total dividends and distributions
to shareholders (.51) (.53) (.94) (.96)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.74 $12.73 $12.46 $12.32
======== ======== ======== ========
========================================================================================================
Total Return, at Net Asset Value(4) 6.34% 6.46% 9.16% 1.11%
========================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $29,407 $89,604 $64,932 $27,743
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $11,944 $78,625 $43,584 $13,693
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.69%(5) 8.24%(5) 7.63% 7.24%(5)
Expenses 2.05%(5) 1.94%(5) 1.95% 1.94%(5)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 50.1% 50.1% 72.5% 108.0%
(END OF RESTUBBED TABLE)
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to September 30,
1994.
2. For the period from October 2, 1995 to March 31, 1996.
3. Less than $.005 per share.
4. 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.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended March 31, 1996 were $272,375,420 and $173,380,961, respectively.
See accompanying Notes to Financial Statements.
22 Oppenheimer Champion Income Fund
<PAGE>
Notes to Financial Statements (Unaudited)
================================================================================
1. Significant
Accounting Policies
Oppenheimer Champion Income Fund (the Fund), operating under the name
Oppenheimer Champion High Yield Fund through 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 objective is to seek a
high level of current income primarily through investing in a diversified
portfolio of high-yield fixed income securities. The Fund's investment advisor
is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
and Class C shares may be subject to a contingent deferred sales charge. All
three 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 attributable to a particular class and exclusive voting rights
with respect to matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
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 securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. Forward foreign currency exchange contracts
are valued based on the closing prices of the forward currency contract rates in
the London foreign exchange markets on a daily basis as provided by a reliable
bank or dealer. 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.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of March 31, 1996,
the Fund had entered into outstanding when-issued or forward commitments of
$2,222,687.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Fund may enter into mortgage "dollar-rolls" in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
- --------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high yield securities, 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 March 31, 1996, securities with an
aggregate market value of $1,777,500, representing .42% of the Fund's net
assets, were in default.
23 Oppenheimer Champion Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant
Accounting Policies
(continued)
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of 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 distributed may differ from the year that the
income or realized gain (loss) was recorded by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and 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 periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
24 Oppenheimer Champion Income Fund
<PAGE>
================================================================================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996(1) Year Ended September 30, 1995
--------------------------------- -----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Class A:
Sold 7,023,301 $89,222,309 13,552,963 $166,240,526
Dividends and distributions reinvested 675,877 8,583,562 941,789 11,588,722
Redeemed (4,087,490) (51,963,991) (7,056,689) (86,697,133)
---------- ----------- ---------- ------------
Net increase 3,611,688 $45,841,880 7,438,063 $ 91,132,115
========== =========== ========== ============
- ------------------------------------------------------------------------------------------------------------------
Class B:
Sold 2,473,789 $31,466,367 -- $ --
Dividends and distributions reinvested 24,139 307,846 -- --
Redeemed (189,059) (2,416,569) -- --
---------- ----------- ---------- ------------
Net increase 2,308,869 $29,357,644 -- $ --
========== =========== ========== ============
- ------------------------------------------------------------------------------------------------------------------
Class C:
Sold 2,252,525 $28,540,194 3,640,178 $ 44,736,101
Dividends and distributions reinvested 176,187 2,235,855 176,650 2,175,061
Redeemed (604,549) (7,697,673) (856,281) (10,534,971)
---------- ----------- ---------- ------------
Net increase 1,824,163 $23,078,376 2,960,547 $ 36,376,191
========== =========== ========== ============
</TABLE>
1. For the six months ended March 31, 1996 for Class A and Class C shares and
for the period from October 2, 1995 (inception of offering) to March 31, 1996
for Class B shares.
================================================================================
3. Unrealized Gains and
Losses on Investments
At March 31, 1996, net unrealized appreciation on investments and options
written of $8,771,430 was composed of gross appreciation of $14,484,928, and
gross depreciation of $5,713,498.
================================================================================
4. Management Fees
And Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .70% on the first
$250 million of average annual net assets, .65% on the next $250 million, .60%
on the next $500 million and .55% on net assets in excess of $1 billion. The
Manager has agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent applicable regulatory limit on Fund
expenses.
For the six months ended March 31, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $1,508,494, of which $367,785 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $910,776 and $409,152, of which $11,972 and $2,915,
respectively, was paid to an affiliated broker/dealer. During the six months
ended March 31, 1996, OFDI received contingent deferred sales charges of $10,069
and $11,232, respectively, upon redemption of Class B and Class C shares, as
reimbursement for sales commissions advanced by OFDI at the time of sale of such
shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed .25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the six months ended March 31, 1996, OFDI paid $12,577 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
25 Oppenheimer Champion Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
4. Management Fees
And Other Transactions
With Affiliates
(continued)
The Fund has adopted a compensation type Distribution and Service Plan for Class
B shares to compensate OFDI for its services and costs in distributing Class B
shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual
asset-based sales charge of .75% per year on Class B shares that are outstanding
for 6 years or less. OFDI also receives a service fee of .25% per year to
compensate dealers for providing personal services for accounts that hold Class
B shares. Both fees are computed on the average annual net assets of Class B
shares, determined as of the close of each regular business day. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for certain expenses it
incurred before the Plan was terminated. During the six months ended March 31,
1996, OFDI retained $58,495 as compensation for Class B sales commissions and
service fee advances, as well as financing costs. As of March 31, 1996, OFDI had
incurred unreimbursed expenses of $1,242,977 for Class B.
The Fund has adopted a reimbursement type Distribution and Service Plan for
Class C shares to reimburse OFDI for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of .75% per year on Class C shares. OFDI also
receives a service fee of .25% per year to reimburse dealers for providing
personal services for accounts that hold Class C shares. Both fees are computed
on the average annual net assets of Class C shares, determined as of the close
of each regular business day. If the Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before the Plan was terminated.
During the six months ended March 31, 1996, OFDI paid $3,283 to an affiliated
broker/dealer as reimbursement for Class C personal service and maintenance
expenses and retained $244,713 as reimbursement for Class C sales commissions
and service fee advances, as well as financing costs. As of March 31, 1996, OFDI
had incurred unreimbursed expenses of $1,097,779 for Class C.
================================================================================
5. Forward Contracts
A forward foreign currency exchange contract (forward 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 portfolio 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 transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is 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 counterparty to meet the terms
of the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
26 Oppenheimer Champion Income Fund
<PAGE>
================================================================================
5. Forward Contracts
(Continued)
At March 31, 1996, outstanding forward contracts to buy and sell currencies were
as follows:
<TABLE>
<CAPTION>
Contract
Amount Valuation as of Unrealized Unrealized
Contracts to Sell Expiration Date (000s) March 31, 1996 Appreciation Depreciation
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
German Deutsche Mark (DEM) 5/2/96 1,500 DEM $1,018,422 $ 620 $ --
Italian Lira (ITL) 4/22/96 1,020,000 ITL 648,345 -- 6,343
Japanese Yen (JPY) 12/18/96 55,100 JPY 531,685 38,413 --
New Zealand Dollar (NZD) 4/2/96 3 NZD 2,205 13 --
---------- ------- -------
$2,200,657 39,046 6,343
========== ======= =======
Contracts to Buy
- ----------------------------------------------------------------------------------------------------------------
German Deutsche Mark (DEM) 4/22/96 924 DEM $ 626,906 $ -- $15,096
New Zealand Dollar (NZD) 12/18/96 899 NZD 598,877 28,779 --
---------- ------- -------
$1,225,783 28,779 15,096
========== ------- -------
$67,825 $21,439
======= =======
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell interest rate futures contracts in 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 negative 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 contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
At March 31, 1996, the Fund had outstanding futures contracts to purchase debt
securities as follows:
Number of
Expiration Futures Valuation as of Unrealized
Contracts to Purchase Date Contract March 31, 1996 Depreciation
- --------------------------------------------------------------------------------
U.S. Treasury Bonds 6/96 80 $8,917,500 $21,875
27 Oppenheimer Champion Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
7. 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 exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
Written call option activity for the six months ended March 31, 1996 was as
follows:
Call Options
--------------------------
Number of Amount of
Options Premiums
- --------------------------------------------------------------------------------
Options outstanding at September 30, 1995 -- $ --
Options written 3,443,485 116,589
Options cancelled in closing transactions (2,750) (36,100)
--------- --------
Options outstanding at March 31, 1996 3,440,735 $ 80,489
========= ========
28 Oppenheimer Champion Income Fund
<PAGE>
================================================================================
8. Illiquid and Restricted
Securities
At March 31, 1996, investments in securities included issues that are illiquid
or restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of 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 March 31, 1996 was $3,155,958 which represents .74% of the Fund's
net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation
Cost Per Unit as of
Security Acquisition Date Per Unit March 31, 1996
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.812%, 9/4/06 3/13/96-3/31/96 $ 55.13 $ 54.50
- --------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A 12/30/92 $ -- $ .01
Litigation Trust 12/30/92 $ -- $ .01
- --------------------------------------------------------------------------------------------------------------------
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 11/18/93 $ 100.00 $ 65.00
- --------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93 $ 2.00 $ .25
- --------------------------------------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07 9/20/91-6/8/92 $ 54.59 $ 53.75
- --------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 $ 87.50 $ 70.00
- --------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989-1990 Integrated Loan
Facility Bonds, 6.875%, 7/1/01 12/5/95 $ 92.00 $ 93.50
- --------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. Common Stock 5/2/94 $ 9.50 $ 1.00
- --------------------------------------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.565%, 9/30/00 12/13/95 $ 85.00 $ 85.50
</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.
29 Oppenheimer Champion Income Fund
<PAGE>
Oppenheimer Champion Income Fund
================================================================================
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Bridget A. Macaskill, Trustee and President
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President and Secretary
Ralph W. Stellmacher, Vice President
George C. Bowen, Vice President and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors. This is a copy of a report
to shareholders of Oppenheimer 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 obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.
30 Oppenheimer Champion Income Fund
<PAGE>
OppenheimerFunds Family
================================================================================
OppenheimerFunds offers over 50 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 comfortable 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 $50
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 telephone.1 For more information on
Oppenheimer funds, please contact 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.
<TABLE>
<CAPTION>
============================================================================================
<S> <C> <C>
Stock Funds Disciplined Value Fund Oppenheimer Fund
Discovery Fund Quest Global Value Fund
Enterprise Fund Quest Small Cap Value Fund
Global Emerging Growth Fund Quest Value Fund
Global Fund Target Fund
Gold & Special Minerals Fund Value Stock Fund
Growth Fund
============================================================================================
Stock & Bond Funds Asset Allocation Fund Main Street Income & Growth Fund
Bond Fund for Growth Quest Growth & Income Value Fund
Disciplined Allocation Fund Quest Opportunity Value Fund
Equity Income Fund Strategic Income & Growth Fund
Global Growth & Income Fund Total Return Fund
============================================================================================
Bond Funds Bond Fund Limited-Term Government Fund
Champion Income Fund Strategic Income Fund
High Yield Fund U.S. Government Trust
International Bond Fund
============================================================================================
Tax-Exempt Funds California Tax-Exempt Fund(2) Pennsylvania Tax-Exempt Fund(2)
Florida Tax-Exempt Fund(2) Tax-Free Bond Fund
Insured Tax-Exempt Fund
Intermediate Tax-Exempt Fund Rochester Division
New Jersey Tax-Exempt Fund(2) Limited-Term N.Y. Municipal Fund
New York Tax-Exempt Fund(2) Rochester Fund Municipals
============================================================================================
Money Market Funds Cash Reserves Money Market Fund
============================================================================================
Lifespan Balanced Fund Income Fund
Growth Fund
</TABLE>
1. Exchange privileges are subject to change or termination. Shares may be
exchanged only for shares of the same class of eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
31 Oppenheimer Champion Income Fund
<PAGE>
Information
General Information
Monday-Friday 8:30 a.m.-9 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
Telephone Transactions
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PhoneLink
24 hours a day, automated
information and transactions
1-800-533-3310
Telecommunications Device
for the Deaf (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OppenheimerFunds
Information Hotline
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RS0190.001.0396 May 31, 1996
[Picture of Jennifer Leonard]
[Caption] Jennifer Leonard, Customer Service Representative
OppenheimerFunds Service
"How may I help you?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[Oppenheimer Logo(R)]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
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