<PAGE>
OPPENHEIMER CHAMPION INCOME FUND
Semiannual Report March 31, 1997
[Photo]
"We need our
money to
WORK
as hard as
it can."
[LOGO]
OPPENHEIMERFUNDS
THE RIGHT WAY TO INVEST
<PAGE>
News
Standardized Yields
For the 30 Days Ended 3/31/97:3
Class A
7.97%
Class B
7.53%
Class C
7.58%
Beat the Average
Cumulative Total Return for the 5-Year Period Ended 3/31/97:
Oppenheimer Champion Income Fund
Class A Shares (at net asset value)(1)
70.09%
Lipper High Current Yield Average for 61 Funds for the 5-Year Period Ended 3/3
1/97(4)
65.71%
THE FUND'S CLASS A SHARES WERE RANKED ***** BY MORNINGSTAR MUTUAL FUNDS AMONG
1,172 (3-YEAR) AND 630 (5-YEAR) TAXABLE BOND FUNDS FOR THE COMBINED 3- AND
5-YEAR PERIODS ENDED 3/31/97.(5)
This Fund is for people who want HIGH INCOME and the potential for growth.
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 for the six months ended 3/31/97 were 4.09% for Class A shares,
3.69% for Class B shares and 3.70% for Class C shares, without deducting
sales charges.(1)
Your Fund's average annual total returns for Class A shares for the
1- and 5-year periods ended 3/31/97 and since inception on 11/16/87 were
5.03%, 10.13% and 12.41%, respectively. For Class B shares, average annual total
returns for the 1-year period ended 3/31/97 and since inception on 10/2/95 were
4.40% and 8.08%, respectively. For Class C shares, average annual total returns
for the 1-year period ended 3/31/97 and since inception on 12/1/93 were 8.53%
and 7.86%, respectively.(2)
OUTLOOK
"We feel it is imprudent to take undue risk if it is not compensated by return,
and we are positioning the Fund in some relatively higher-rated, high-yield
credits to protect from any downside potential in 1997."
Ralph Stellmacher, Portfolio Manager
March 31, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods
shown. IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL
COST.
1. Includes the change in net asset value per share without deducting any
sales charges. Such performance is not annualized and would have been lower if
sales charges were taken into account.
2. Class A returns include 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
less. Class B returns include the applicable contingent deferred sales charge of
5% (1 year) and 4% (since inception). Class C returns include the 1% contingent
deferred sales charge for the 1-year result. An explanation of the different
returns is in the Fund's prospectus. Class B and Class C shares are subject to
an annual 0.75% asset-based sales charge.
3. Standardized yield is based on net investment income for the 30-day period
ended 3/31/97. Falling net asset values will tend to artificially raise yields.
4. Source: Lipper Analytical Services, 3/31/97. The Lipper average is shown
for comparative purposes only. Funds included in the index may have different
investment policies and risks than the Fund. Oppenheimer Champion Income Fund is
characterized by Lipper as a high current yield fund. Lipper performance is
based on total return and does not take sales charges into account.
5. Source: MORNINGSTAR MUTUAL FUNDS, 3/31/97. Morningstar, Inc. ranks mutual
funds in broad investment classes, based on risk-adjusted investment return
after considering sales charges and expenses. Return and risk are measured as
performance above and below 90-day U.S. Treasury bill returns, respectively.
Current star rankings are based on the weighted average of 3-, 5- and 10-year
(if applicable) rankings for a fund or class and are subject to change monthly.
The top 10%: 5 stars. Next 22.5%: 4 stars. Middle 35%: 3 stars. Next 22.5%: 2
stars. Bottom 10%: 1 star. The Fund's Class A shares are ranked 5 stars (3-year)
and 5 stars (5-year), weighted 40% and 60%, respectively, and 4 stars (1-year)
among 1,696 funds.
2 Oppenheimer Champion Income Fund
<PAGE>
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Champion
Income Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Champion
Income Fund
Dear Shareholder,
As we enter the second quarter, we are optimistic regarding the prospects for
fixed income investors who maintain a long-term perspective. While U.S. economic
policy makers face a considerable challenge in 1997, maintaining the delicate
balance between moderate growth and low inflation, we believe current political
and economic stability creates a favorable environment for long-term
investments. In fact, the current economic trend appears to follow the pattern
that emerged in early 1996.
The similarities between the first few months of 1996 and those of 1997 are
striking. In both cases, economic growth was slightly more robust than expected,
and many experts were concerned that an overheating economy would generate
inflation. On March 18th, as a preemptive move against inflation, Federal
Reserve Board Chairman Alan Greenspan raised short-term interest rates by a
modest amount. This was the first change in monetary policy since January 1996,
and the first increase in short-term interest rates in over two years. Today, it
appears this initial interest-rate increase may not be the last, and investors
remain concerned about high stock market valuations and the potential re-
emergence of inflation.
At OppenheimerFunds, we are optimistic regarding the long-term expectations
for fixed income markets. We maintain that economic growth will not accelerate
substantially but should continue at a modest rate. In addition, as investors in
general become more realistic about stock market returns, we foresee fixed
income investments becoming attractive relative to potentially more volatile
investments in equities.
In the near term, select yield-oriented securities, such as mortgage-backed
and foreign securities--particularly those in emerging markets--are well-
positioned for producing higher returns and current income. That's because
mortgage-backed securities perform well in a rising interest-rate environment,
and emerging market securities tend to be less sensitive to U.S. interest-rate
and currency movements. Our long-term outlook is that we may see an increase in
the demand for U.S. fixed income products which could drive yields lower and
make it difficult to maintain today's income stream. However, this increased
demand could provide the fixed income investor with enhanced long-term
investment opportunities.
Your portfolio managers discuss the outlook for your Fund in light of these
broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds, The RIGHT WAY to Invest. We look forward to helping you reach
your investment goals in the future.
/s/James C. Swain
James C. Swain
/s/ Bridget A. Macaskill
Bridget A. Macaskill
April 21, 1997
3 Oppenheimer Champion Income Fund
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[PHOTO]
[PHOTO]
Which investments made positive contributions?
Q + A
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW DID THE FUND PERFORM?
A convergence of global competition, technological inno-vations and financial-
market deregulation have created the well-balanced economy that contributed to
the Fund's positive return during the period. Oppenheimer Champion Income Fund's
Class A shares returned 4.09%, before sales charges, for the six-month period
ending March 31, 1997.1
WHAT INVESTMENTS OR MARKET FACTORS MADE POSITIVE CONTRIBUTIONS TO
PERFORMANCE?
Some of the Fund's best performers were in the telecommunications industry,
which has grown faster than the economy at large, and provided higher-than-
average yields. We found some opportunities among attractively priced start-up
companies trying to succeed in the newly dereg-ulated industry.
In addition, the energy sector provided some strong performers. We started
the period at almost double our normal weighting, and benefited from high oil
and natural-gas prices. After a warmer than expected winter, we anticipate that
declining demand, matched with a steady supply, should place downward pressure
on prices. Therefore, we have recently reduced our weighting in this sector to
just slightly above normal.2
DID ANY INVESTMENTS NOT PERFORM AS EXPECTED?
Our holdings in developed-market government bonds hurt the Fund's performance
for the period. These bonds were held in the issuer's local currency, and only
half were hedged to protect the Fund against local currency depre-ciation. When
the U.S. dollar began to appreciate, the Fund suffered from declining returns.
We did, however, maintain some positive return, since half of the holdings were
hedged.
[PHOTO]
1. Includes the change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
2. The Fund's portfolio is subject to change.
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 Some of the Fund's best performers were in the telecommunications industry.
In 1996, valuations in the high-yield bond market tightened in relation to
U.S. Treasuries, reaching spreads as narrow as they have been since the mid-
1980s. In addition, within high-yield bond issues, the spread between BB, high-
tier high yields, and B, low-tier high yields, has tightened. We moved much of
the portfolio into relatively higher-quality high yields (B, BB). Unfortunately
for the Fund, in the latter half of the period, the lowest-quality sectors of
the high-yield market (B-, CCC) outperformed all other high-yield bonds. The
Fund's per-formance was hurt by our relative underweighting in the higher-risk
high-yield bonds.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
After a slowdown in the early 1990s, the aerospace industry is once again
growing. Airline companies are ordering more aircraft to replace aging fleets,
and are keeping manufacturers very busy. These large manufacturers need parts
from smaller-parts producers, and we are looking to invest in companies
benefiting from these increased orders.
[PHOTO]
Because they offer relatively high yield potential, we are also targeting
the metals/minerals and chemicals sectors, and will continue to seek income from
bonds in these sectors. At some point in the future, we expect prices to
appreciate in these sectors, if the economies of Europe and Japan enter
stronger-growth periods and boost commodity-related product prices through
stronger demand.
[PHOTO]
WHAT IS YOUR OUTLOOK FOR THE FUND?
Although we are fundamentally optimistic about the high-yield global
marketplace, we are cautious as we continue in 1997. For the past five years,
high-yield bonds have provided the best-performing fixed income market, and we
have seen record investor inflows. Since demand is rising at a faster rate than
supply, the spread on yields is tightening, and some high-yield, riskier bonds
are returning only slightly more than higher-rated credits. We feel it is
imprudent to take undue risk if it is not compensated by return, and we
are positioning the Fund in some relatively higher-rated, high-yield credits
to protect from any downside potential
in 1997.
5 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS March 31, 1997 (Unaudited)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
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<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--0.8%
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Federal Home Loan Mortgage Corp., Interest-Only
Stripped Mtg.-Backed Security,
Trust 177, Cl. B, 13.78%, 7/1/26(2) $ 1,463,219 $ 545,506
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Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 240,
Cl. 2, 13.40%, 9/1/23(2) 6,692,132 2,376,752
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Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. E, 7.51%, 2/15/28(3)(4) 1,513,000 1,213,237
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Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 460,317 454,132
Series 1995-C1, Cl. F, 6.90%, 2/25/27 352,091 307,750
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Salomon Brothers Mortgage Securities VII,
Series 1996-C1, Cl. E, 9.18%, 1/20/06 704,000 660,880
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Total Mortgage-Backed Obligations (Cost $5,090,975) 5,558,257
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U.S. GOVERNMENT OBLIGATIONS--3.3%
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U.S. Treasury Nts.:
6.25%, 2/28/02--2/15/07 2,740,000 2,633,001
8.875%, 11/15/97(5)(6) 20,500,000 20,865,166
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Total U.S. Government Obligations (Cost $24,251,058) 23,498,167
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FOREIGN GOVERNMENT
OBLIGATIONS--2.5%
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Argentina (Republic of) Discount Bonds, 6.375%, 3/31/23(3) 1,800,000 1,455,750
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Bonos de la Tesoreria de la Federacion,
Zero Coupon, 22.67%, 3/5/98(7) (MXP) 34,000,000 3,521,751
-----------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Gtd. Disc. Bonds, 6.50%, 4/15/24(3) 2,000,000 1,608,750
-----------------------------------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds, 6.437%, 2/28/25(3) 2,500,000 1,618,750
-----------------------------------------------------------------------------------------------
Poland (Republic of) Bonds:
12%, 2/12/02 (PLZ) 3,000,000 781,606
12%, 6/12/01 (PLZ) 3,340,000 875,590
16%, 10/12/98 (PLZ) 4,500,000 1,365,569
16%, 2/12/99 (PLZ) 6,500,000 1,966,992
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PT Hutama Karya Medium-Term Nts., Zero Coupon:
15.10%, 4/15/97(7) (IDR) 1,500,000,000 622,871
14.20%, 3/17/98(7) (IDR) 1,000,000,000 365,042
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Romanian Commercial Bank Bonds, 9.125%, 3/10/00(4) 730,000 715,856
-----------------------------------------------------------------------------------------------
South Africa (Republic of) Bonds, Series 162, 12.50%,
1/15/02 (ZAR) 9,425,000 1,948,328
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Venezuela (Republic of) Disc. Bonds, Series DL,
6.50%, 12/18/07(3) 1,750,000 1,513,750
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Total Foreign Government Obligations (Cost $18,731,105) 18,360,605
6 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
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<S> <C> <C> <C>
LOAN PARTICIPATIONS--0.6%
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Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.977%, 9/4/06(3) $ 1,900,000 $ 1,492,688
-----------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche B, 6.312%, 11/15/04(3)(4) 654,093 575,602
-----------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 6.375%, 1/1/09(3) 1,700,000 1,467,313
-----------------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.50%, 9/30/00(3)(4) JPY 98,339,151 730,732
------------
Total Loan Participations (Cost $4,357,845) 4,266,335
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MUNICIPAL BONDS AND NOTES--0.2%
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San Joaquin Hills, CA Transportation Corridor Agency Toll Road
Capital Appreciation Revenue Bonds, Jr. Lien, Zero Coupon,
9%, 1/1/28 (Cost $900,942)(7) 13,500,000 1,686,555
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CORPORATE BONDS AND NOTES--70.6%
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BASIC INDUSTRY--8.8%
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CHEMICALS--2.0% Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec.
Disc. Nts., 7/15/01 260,000 263,900
-----------------------------------------------------------------------------------------------
ISP Holdings, Inc.:
9% Sr. Nts., 10/15/03(8) 2,700,000 2,727,000
9.75% Sr. Nts., 2/15/02(8) 600,000 624,000
-----------------------------------------------------------------------------------------------
NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(9) 2,840,000 2,570,200
11.75% Sr. Sec. Nts., 10/15/03 1,230,000 1,300,725
-----------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr.
Disc. Nts., 8/15/08(9) 700,000 437,500
-----------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub.
Nts., 8/15/06 1,940,000 2,046,700
-----------------------------------------------------------------------------------------------
Terra Industries, Inc., 10.50% Sr. Nts., Series B, 6/15/05 3,880,000 4,200,100
------------
14,170,125
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CONTAINERS--0.7% Owens-Illinois, Inc., 11% Sr. Debs., 12/1/03 3,000,000 3,307,500
-----------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts., 10/15/06 1,850,000 1,933,250
------------
5,240,750
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METALS/MINING--1.0% Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03(4) 1,819,000 1,991,805
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Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 4,925,000 5,060,437
------------
7,052,242
7 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
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<S> <C> <C> <C>
PAPER--2.7% APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05 $ 2,400,000 $ 2,550,000
-----------------------------------------------------------------------------------------------
Asia Pulp & Paper International Finance Co.,
Zero Coupon Asian Currency Nts., 15.79%, 5/15/97(7)(8) IDR 700,000,000 287,449
-----------------------------------------------------------------------------------------------
Buckeye Cellulose Corp., 9.25% Sr. Sub. Nts., 9/15/08 1,385,000 1,409,237
-----------------------------------------------------------------------------------------------
Container Corp., 9.75% Gtd. Sr. Nts., 4/1/03 500,000 517,500
-----------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 3,450,000 3,777,750
-----------------------------------------------------------------------------------------------
Indah Kiat International Finance Co. BV,
12.50% Gtd. Sr. Sec. Nts., Series C, 6/15/06 2,540,000 2,819,400
-----------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04(4) 1,285,000 1,381,375
-----------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 560,000 574,000
-----------------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05 1,570,000 1,664,200
-----------------------------------------------------------------------------------------------
Repap Wisconsin, Inc.:
9.25% First Priority Sr. Sec. Nts., 2/1/02 500,000 495,000
9.875% Second Priority Sr. Nts., 5/1/06 695,000 675,887
-----------------------------------------------------------------------------------------------
Riverwood International Corp., 10.25% Sr. Nts., 4/1/06 520,000 483,600
-----------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 2,125,000 2,326,875
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18,962,273
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STEEL--2.4% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 4,320,000 4,287,600
-----------------------------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 3,460,000 3,719,500
-----------------------------------------------------------------------------------------------
Armco, Inc., 8.50% Sinking Fund Debs., 9/1/01 4,667,000 4,596,995
-----------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 2,850,000 2,850,000
-----------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875%
First Mtg. Nts., 12/15/01 1,950,000 1,745,250
------------
17,199,345
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CONSUMER RELATED--15.7%
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CONSUMER PRODUCTS--3.3% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 25.33%, 5/27/98(7) 6,630,000 5,834,400
-----------------------------------------------------------------------------------------------
E & S Holdings Corp., 10.375% Sr. Sub. Nts., 10/1/06 5,475,000 5,639,250
-----------------------------------------------------------------------------------------------
Harman International Industries, Inc., 12%
Sr. Sub. Nts., 8/1/02(4) 2,400,000 2,592,000
-----------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50%
Sr. Sec. Disc. Nts., 8/15/03(9) 5,050,000 2,815,375
-----------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc.
Nts., 11.14%, 3/15/01(7)(8) 6,810,000 4,273,275
-----------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 1,865,000 2,130,762
------------
23,285,062
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FOOD/BEVERAGES/TOBACCO--1.9% CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., 1/15/04(4) 2,760,000 2,829,000
-----------------------------------------------------------------------------------------------
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 2,845,000 2,987,250
-----------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 3,885,000 3,972,412
-----------------------------------------------------------------------------------------------
Foodbrands America, Inc., 10.75% Sr. Sub. Nts., 5/15/06 815,000 929,100
-----------------------------------------------------------------------------------------------
International Home Foods, Inc., 10.375%
Sr. Sub. Nts., 11/1/06(8) 2,655,000 2,668,275
------------
13,386,037
8 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
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<S> <C> <C> <C>
HEALTHCARE--2.6% Genesis Health Ventures, Inc., 9.25% Sr. Sub. Nts., 10/1/06 $ 3,760,000 $3,797,600
-----------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 10.25% Sr.
Sub. Nts., 10/31/06(8) 2,470,000 2,574,975
-----------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub.
Nts., Series A, 4/15/04 4,920,000 5,461,200
-----------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
10.125% Sr. Sub. Nts., 3/1/05 3,750,000 4,068,750
8.625% Sr. Sub. Nts., 1/15/07 2,840,000 2,754,800
------------
18,657,325
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HOTEL/GAMING--4.2% Arizona Charlie's, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(4) 275,000 187,000
-----------------------------------------------------------------------------------------------
Boyd Gaming Corp., 9.25% Sr. Nts., 10/1/03 1,960,000 1,832,600
-----------------------------------------------------------------------------------------------
California Hotel Finance Corp., 11% Sr. Sub. Nts., 12/1/02 800,000 840,000
-----------------------------------------------------------------------------------------------
Capital Gaming International, Inc., Promissory Nts., 8/1/95(10) 7,500 --
-----------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(4)(10) 100,000 71,000
-----------------------------------------------------------------------------------------------
Empress River Casino Finance Corp.,
10.75% Gtd. Sr. Nts., 4/1/02(4) 2,705,000 2,860,537
-----------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 5,750,000 5,649,375
-----------------------------------------------------------------------------------------------
Griffin Gaming & Entertainment, Inc., 8.015% First Mtg.
Non-Recourse Pass-Through Nts., 6/30/00(3) 1,010,000 984,750
-----------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts.,
Series B, 12/15/07 2,110,000 2,104,725
-----------------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05 3,870,000 3,870,000
-----------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 2,075,000 2,687,125
-----------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 700,000 736,750
9.50% Gtd. Sr. Sub. Nts., 4/15/07(8) 480,000 474,000
-----------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 3,800,000 4,218,000
-----------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 3,845,000 3,489,337
-----------------------------------------------------------------------------------------------
Trump's Castle Funding, Inc., 13.875% Sub. Nts., 11/15/05(11) 49 42
------------
30,005,241
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RESTAURANTS--1.1% Ameriking, Inc., 10.75% Sr. Nts., 12/1/06(4) 2,860,000 2,981,550
-----------------------------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,360,000 3,553,200
-----------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 1,390,000 1,421,275
9.75% Sr. Sub. Nts., 6/1/02 165,000 166,650
------------
8,122,675
9 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
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<S> <C> <C> <C>
TEXTILE/APPAREL--2.6% CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03 $ 2,595,000 $ 2,530,125
-----------------------------------------------------------------------------------------------
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts.,
Series B, 10/1/03 900,000 924,750
-----------------------------------------------------------------------------------------------
GFSI, Inc., 9.625% Sr. Sub. Nts., 3/1/07(8) 2,265,000 2,281,987
-----------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Gtd.
Unsec. Unsub. Nts., 3/29/01 850,000 852,125
-----------------------------------------------------------------------------------------------
Polymer Group, Inc., 12.25% Sr. Nts., 7/15/02 526,000 572,025
-----------------------------------------------------------------------------------------------
Polysindo International Finance Co. BV, 11.375%
Gtd. Sec. Nts., 6/15/06 1,725,000 1,850,062
-----------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Gtd. Nts., 6/15/01 260,000 293,150
-----------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07(8) 1,730,000 1,742,975
-----------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 4,170,000 4,190,850
-----------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06(8) 3,375,000 3,391,875
------------
18,629,924
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY--5.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.:
10.50% Sr. Nts., 6/1/02(4) 3,200,000 3,440,000
9.125% Sr. Nts., 4/15/06 3,660,000 3,783,525
-----------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07(8) 2,750,000 2,619,375
-----------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 2,690,000 2,770,700
-----------------------------------------------------------------------------------------------
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 2,915,000 3,024,312
-----------------------------------------------------------------------------------------------
Maxus Energy Corp., 11.50% Debs., 11/15/15 500,000 525,000
-----------------------------------------------------------------------------------------------
Mesa Operating Co.:
0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(9) 9,750,000 6,654,375
10.625% Gtd. Sr. Sub. Nts., 7/1/06 1,260,000 1,313,550
-----------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 2,810,000 2,887,275
-----------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06(4) 4,855,000 4,612,250
-----------------------------------------------------------------------------------------------
TransTexas Gas Corp., 11.50% Gtd. Sr. Sec. Nts., 6/15/02 6,120,000 6,762,600
------------
38,392,962
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--4.2%
- ----------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--1.3% Bank Dagang Nasional Indonesia, Zero Coupon
Negotiable CD, 13.60%, 11/20/97(7) IDR 500,000,000 191,910
-----------------------------------------------------------------------------------------------
Bank of America Malaysia, Zero Coupon Nts.,
7.19%, 4/28/97(7) MYR 2,600,000 1,044,300
-----------------------------------------------------------------------------------------------
Chase Malaysia, Zero Coupon Nts., 7.21%, 4/25/97(7) MYR 1,525,000 612,888
-----------------------------------------------------------------------------------------------
Citibank Malaysia Banker's Acceptance,
Zero Coupon Negotiable CD:
7.86%, 4/17/97(7) MYR 1,300,000 523,317
6.55%, 4/30/97(7) MYR 1,100,000 441,643
-----------------------------------------------------------------------------------------------
Deutsche Bank Malaysia, Zero Coupon Negotiable CD, 6.86%,
5/13/97(7) MYR 1,129,000 452,116
-----------------------------------------------------------------------------------------------
First Nationwide Escrow Corp., 10.625% Sr. Sub. Nts., 10/1/03(8) 2,150,000 2,284,375
-----------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc., 9.125% Sr. Sub. Nts., 1/15/03 1,800,000 1,804,500
-----------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 1,600,000 1,752,000
------------
9,107,049
10 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCIAL--1.5% Aames Financial Corp., 9.125% Sr. Nts., 11/1/03 $ 1,640,000 $ 1,603,100
-----------------------------------------------------------------------------------------------
Americredit Corp., 9.25% Sr. Nts., 2/1/04(8) 2,275,000 2,212,437
-----------------------------------------------------------------------------------------------
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 1,250,000 1,235,938
-----------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(4) 241,631 267,002
-----------------------------------------------------------------------------------------------
General Electric Capital Corp., 11.625% Nts., 10/29/97 (SKK) 32,000,000 959,815
-----------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03(4)(10) 600,000 126,000
-----------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of
$1,000 principal amount of 11.50% sr. nts., 3/15/07,
and one warrant to purchase 6.84 shares of common stock)(12) 1,150,000 1,135,625
-----------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625%
Sr. Sec. Nts., Series B, 4/1/02 1,925,000 2,069,375
-----------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc., 13% Nts., 1/1/04 1,300,000 1,309,750
------------
10,919,042
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--1.4% American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04 1,220,000 1,381,650
-----------------------------------------------------------------------------------------------
Life Partners Group, Inc., 12.75% Sr. Sub. Nts., 7/15/02(4) 3,000,000 3,165,000
-----------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 1,600,000 1,668,000
-----------------------------------------------------------------------------------------------
Terra Nova Insurance (UK) Holdings plc, 10.75% Sr. Nts., 7/1/05 720,000 796,611
-----------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03(8) 2,810,000 2,795,950
------------
9,807,211
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED--1.9%
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--1.3% American Standard, Inc.:
0%/10.50% Sr. Sub. Disc. Debs., 6/1/05(9) 2,075,000 1,986,813
10.875% Sr. Nts., 5/15/99(4) 1,000,000 1,061,250
-----------------------------------------------------------------------------------------------
Building Materials Corp. of America, 8.625% Sr. Nts., 12/15/06 3,325,000 3,254,344
-----------------------------------------------------------------------------------------------
Nortek, Inc., 9.25% Sr. Nts., 3/15/07(8) 3,125,000 3,093,750
------------
9,396,157
- ----------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/ Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds, 4/15/06 250,000 251,250
REAL ESTATE--0.6% -----------------------------------------------------------------------------------------------
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05 CAD 375,500 303,643
Units (each unit consists of one $10 principal amount of
8.50% cv. sub. debs., 12/15/15 and 40 common shares)(12) CAD 225,830 364,617
-----------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 830,000 865,275
-----------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 430,000 446,125
-----------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 900,000 929,250
-----------------------------------------------------------------------------------------------
U.S. Home Corp., 9.75% Sr. Nts., 6/15/03 1,060,000 1,089,150
------------
4,249,310
11 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING--7.2%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ELECTRONICS/ America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 $ 5,838,000 $ 6,144,495
COMPUTERS--3.0% -----------------------------------------------------------------------------------------------
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02(4) 1,500,000 1,620,000
-----------------------------------------------------------------------------------------------
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs.,
Series B, 3/1/05(9) 4,070,000 3,154,250
-----------------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07(4) 805,000 422,625
-----------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07(8) 750,000 735,000
-----------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 4,010,000 4,050,100
-----------------------------------------------------------------------------------------------
GPA Holland BV, 8.94% Medium-Term Nts., Series C, 2/16/99(4) 700,000 712,250
-----------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07(8) 910,000 887,250
-----------------------------------------------------------------------------------------------
UNC, Inc., 11% Sr. Sub. Nts., 6/1/06 2,000,000 2,350,000
-----------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 1,275,000 1,332,375
------------
21,408,345
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.5% Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 4,100,000 4,489,500
-----------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 3,080,000 3,341,800
-----------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 2,585,000 2,688,400
------------
10,519,700
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--2.7% Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06 3,200,000 3,368,000
-----------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05(4) 652,000 725,350
-----------------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp., 9.50% Gtd. Sr. Sec. Nts., 6/1/00(4) 200,000 203,500
-----------------------------------------------------------------------------------------------
Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 6,305,000 6,525,675
-----------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05(4) 4,360,000 4,894,100
-----------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 2,100,000 2,068,813
-----------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(4) 1,075,000 1,085,750
------------
18,871,188
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIA--7.2%
- ----------------------------------------------------------------------------------------------------------------------------------
BROADCASTING--1.3% American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 500,000 495,000
-----------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 1,450,000 1,500,750
-----------------------------------------------------------------------------------------------
Granite Broadcasting Corp., 9.375% Sr. Sub. Nts.,
Series A, 12/1/05 1,050,000 1,005,375
-----------------------------------------------------------------------------------------------
New World Communications Group Holding Corp.,
Zero Coupon Sr. Disc. Nts., Series B, 11.46%, 6/15/99(7) 1,030,000 885,800
-----------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,089,039
-----------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 575,000 596,563
-----------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06 850,000 886,125
-----------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 1,930,000 1,939,650
-----------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06 1,200,000 1,146,000
------------
9,544,302
12 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CABLE TELEVISION--2.1% Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08 $ 400,000 $ 415,252
-----------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.75% Sr. Sub. Debs., 4/1/04 1,700,000 1,755,250
9.875% Sr. Sub. Debs., 2/15/13 215,000 209,088
9.875% Sr. Sub. Nts., 5/15/06 2,410,000 2,422,050
-----------------------------------------------------------------------------------------------
Echostar I, 8.25% Bonds, 2/26/01(4) 1,156,821 1,142,361
-----------------------------------------------------------------------------------------------
Echostar II, 8.25% Bonds, 11/9/01(4) 1,022,978 1,010,191
-----------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr.
Disc. Nts., 6/1/04(9) 60,000 51,600
-----------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04(9) 560,000 450,800
-----------------------------------------------------------------------------------------------
Optel, Inc., Units (each unit consists of $1,000
principal amount of 13% sr. nts., 2/15/05 and one
warrant to purchase one share of non-vtg. common stock)(8)(12) 1,300,000 1,196,000
-----------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr.
Sub. Disc. Nts., 8/1/03(9) 3,930,000 3,704,025
-----------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/10.875% Sr. Sub. Nts., 2/15/07(8)(9) 535,000 243,425
10.875% Sr. Sub. Nts., 2/15/07(8) 995,000 875,600
-----------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,575,000 1,703,251
------------
15,178,893
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA--2.0% Ackerley Communications, Inc., 10.75% Sr. Sec. Nts.,
Series A, 10/1/03 2,800,000 2,954,000
-----------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 835,000 880,925
-----------------------------------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub. Nts., 1/15/07(8) 1,200,000 1,164,000
-----------------------------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 3,190,000 3,197,975
-----------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 700,000 783,665
-----------------------------------------------------------------------------------------------
Universal Outdoor, Inc.:
9.75% Sr. Sub. Nts., 10/15/06 1,740,000 1,761,750
9.75% Sr. Sub. Nts., Series B, 10/15/06(8) 3,175,000 3,123,406
------------
13,865,721
- ----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.3% Imax Corp., 10% Sr. Nts., 3/1/01 1,700,000 1,736,125
- ----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--1.5% Hollinger International Publishing, Inc.:
9.25% Gtd. Sr. Sub. Nts., 2/1/06 2,170,000 2,115,750
9.25% Gtd. Sr. Sub. Nts., 3/15/07 3,575,000 3,485,625
-----------------------------------------------------------------------------------------------
K-III Communications Corp., 10.625% Sr. Sec. Nts., 5/1/02 2,100,000 2,184,000
-----------------------------------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07(8) 2,680,000 2,606,300
------------
10,391,675
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER--3.2%
- ----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--0.2% Empresas ICA Sociedad Controladora SA de CV, 5% Cv.
Sub. Debs., 3/15/04 1,900,000 1,439,250
-----------------------------------------------------------------------------------------------
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(9) 150,000 135,563
------------
1,574,813
13 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENVIRONMENTAL--0.1% Mid-American Waste Systems, Inc., 12.25% Sr. Sub. Nts.,
2/15/03(4)(10) $ 1,900,000 $ 983,250
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICES--2.9% Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03 3,000,000 2,962,500
9.625% Sr. Sub. Nts., 3/15/07(8) 2,150,000 2,096,250
-----------------------------------------------------------------------------------------------
Coinstar, Inc., Units (each unit consists of $1,000
principal amount of 0%/13% sr. sub. disc. nts., 10/1/06
and one warrant to purchase seven ordinary shares)(4)(9)(12) 2,025,000 1,468,125
-----------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts.,
2/15/09(8) 4,875,000 4,728,750
-----------------------------------------------------------------------------------------------
Neodata Services, Inc., 12% Sr. Nts., Series B, 5/1/03 1,200,000 1,281,000
-----------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(9) 4,750,000 4,571,875
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 1,368,000 1,301,310
-----------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(8) 2,200,000 1,856,250
------------
20,266,060
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL--3.2%
- ----------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--0.8% Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts.,
Series B, 9/1/03 1,000,000 1,052,500
-----------------------------------------------------------------------------------------------
Central Termica Guemes, 12% Bonds, 11/26/01(4) 401,000 412,028
-----------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 900,000 960,750
-----------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03 1,670,000 1,766,025
-----------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 1,028,000 1,156,500
------------
5,347,803
- ----------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--2.4% Dominick's Finer Foods, Inc., 10.875% Sr. Sub. Nts., 5/1/05 1,500,000 1,635,000
-----------------------------------------------------------------------------------------------
Grand Union Co., 12% Sr. Nts., 9/1/04 5,702,000 5,687,745
-----------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 2,175,000 2,310,938
-----------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 9.625% Sr. Sub. Nts., 5/1/03 600,000 576,000
-----------------------------------------------------------------------------------------------
Ralph's Grocery Co.:
(New), 11% Sr. Sub. Nts., 6/15/05(8) 2,700,000 2,797,875
10.45% Sr. Nts., 6/15/04 2,450,000 2,578,625
11% Sr. Sub. Nts., 6/15/05 660,000 683,100
-----------------------------------------------------------------------------------------------
Smith's Food & Drug Centers, Inc., 11.25% Sr. Unsec.
Sub. Nts., 5/15/07 1,000,000 1,092,500
------------
17,361,783
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
RAILROADS--0.4% Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(4)(9) 3,800,000 3,087,500
- ----------------------------------------------------------------------------------------------------------------------------------
SHIPPING--0.4% Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 2,850,000 3,127,875
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--13.0%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.6% CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 215,000 223,063
-----------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 4,360,000 4,665,200
-----------------------------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 400,000 430,500
9.25% Sr. Nts., 2/1/04 785,000 798,738
-----------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 4,550,000 4,948,125
------------
11,065,626
14 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS--11.4% American Communications Services, Inc.:
0%/12.75% Sr. Disc. Nts., 4/1/06(9) $ 1,760,000 $ 981,200
0%/13% Sr. Disc. Nts., 11/1/05(9) 900,000 537,750
-----------------------------------------------------------------------------------------------
Bell Cablemedia plc:
0%/11.875% Sr. Disc. Nts., 9/15/05(9) 5,080,000 4,064,000
0%/11.95% Sr. Disc. Nts., 7/15/04(9) 2,800,000 2,439,500
-----------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts., 3/1/06(9) 650,000 416,000
0%/11.875% Sr. Disc. Nts., 11/1/06(9) 4,675,000 2,863,438
-----------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts.,
6/15/05(4)(9) 1,000,000 675,000
-----------------------------------------------------------------------------------------------
Cellular Communications International, Inc.,
Zero Coupon Sr. Disc. Nts., 12.25%, 8/15/00(7) 6,935,000 5,010,538
-----------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(9) 2,250,000 2,086,875
-----------------------------------------------------------------------------------------------
Colt Telecom Group plc, Units (each unit consists of
$1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06
and one warrant to purchase 7.8 ordinary shares)(9)(12) 2,240,000 1,355,200
-----------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07(9) 2,850,000 1,938,000
-----------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon
Bonds, 11/15/03(9) 2,300,000 1,592,750
-----------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(9) 4,610,000 3,019,550
-----------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07(8) 900,000 882,000
-----------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 2,000,000 1,660,000
-----------------------------------------------------------------------------------------------
Globalstar LP/Globalstar Capital Corp., Units (each unit
consists of $1,000 principal amount of 11.375% sr. nts.,
2/15/04 and one warrant to purchase 2.0645 ordinary
shares)(8)(12) 1,925,000 1,896,125
-----------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub.
Disc. Nts., 12/15/05(8)(9) 407,000 280,830
-----------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(9) 3,256,000 1,994,300
-----------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc., 0%/13% Sr. Disc. Nts.,
Series B, 4/15/03(9) 265,000 147,738
-----------------------------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(9) 370,000 233,100
0%/13.50% Sr. Disc. Nts., 9/15/05(9) 4,285,000 2,924,513
-----------------------------------------------------------------------------------------------
McCaw International Ltd., Units (each unit consists of
$1,000 principal amount of 0%/13% sr. disc. nts., 4/15/07
and one warrant to purchase 0.10616 share of
common stock)(8)(9)(12) 3,360,000 1,596,000
-----------------------------------------------------------------------------------------------
McLeod, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07(8)(9) 1,385,000 775,600
-----------------------------------------------------------------------------------------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 1,755,000 1,412,775
-----------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(9) 600,000 456,750
0%/9.375% Sr. Disc. Nts., 1/15/04(9) 9,060,000 8,233,275
15 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS Mobile Telecommunications Technologies Corp.,
(CONTINUED) 13.50% Sr. Nts., 12/15/02 $ 320,000 $ 289,600
-----------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(9) 160,000 128,800
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(9) 1,650,000 1,171,500
10% Sr. Nts., 2/15/07(8) 3,465,000 3,326,400
-----------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06(8) 3,000,000 2,655,000
11.625% Sr. Nts., 8/15/06 560,000 495,600
-----------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 1,150,000 1,170,125
-----------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(8) 200,000 208,250
Units (each unit consists of $1,000 principal amount of 0%/14%
sr. disc. nts., 6/1/04 and one warrant to purchase 34 ordinary
shares)(4)(9)(12) 1,450,000 1,218,000
-----------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(9) 3,060,000 2,754,000
0%/14% Sr. Sub. Disc. Nts., 11/15/01(4)(9) 460,000 462,300
10.75% Sr. Nts., 11/1/04 830,000 825,850
-----------------------------------------------------------------------------------------------
Rogers Cantel, Inc., 9.375% Sr. Sec. Debs., 6/1/08 3,000,000 3,105,000
-----------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.,
0%/12.50% Sr. Disc. Nts., 8/15/06(9) 2,390,000 1,565,450
-----------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07(9) 5,815,000 3,896,050
9.875% Sr. Nts., 7/1/06 825,000 860,063
-----------------------------------------------------------------------------------------------
TeleWest plc:
0%/11% Sr. Disc. Debs., 10/1/07(9) 2,025,000 1,331,438
9.625% Sr. Debs., 10/1/06 1,500,000 1,447,500
-----------------------------------------------------------------------------------------------
UNIFI Communications, Inc., Units (each unit consists
of $1,000 principal amount of 14% sr. nts., 3/1/04 and
one warrant to purchase 27.52 ordinary shares)(8)(12) 2,500,000 2,512,500
-----------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 1,100,000 1,152,250
-----------------------------------------------------------------------------------------------
Videotron Holdings plc, 0%/11% Sr. Disc. Nts., 8/15/05(9) 1,000,000 792,500
------------
80,840,983
------------
Total Corporate Bonds and Notes (Cost $497,865,677) 501,754,372
16 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.(14) 9,800 $ 257,250
-----------------------------------------------------------------------------------------------
EchoStar Communications Corp., Cl. A(14) 14,000 287,000
-----------------------------------------------------------------------------------------------
ECM Fund, L.P.I. (4) 75 75,375
-----------------------------------------------------------------------------------------------
El Paso Electric Co. (14) 56,400 338,400
-----------------------------------------------------------------------------------------------
Equitable Bag, Inc.(4)(14) 2,261 11,305
-----------------------------------------------------------------------------------------------
Grand Union Co.(14) 1,767 6,295
-----------------------------------------------------------------------------------------------
Greate Bay Casino Corp.(14) 1,678 2,517
-----------------------------------------------------------------------------------------------
Hollywood Casino Corp., Cl. A(14) 10,000 35,000
-----------------------------------------------------------------------------------------------
News Corp. Ltd., Sponsored ADR, Preference 2,901 43,152
-----------------------------------------------------------------------------------------------
Omnipoint Corp.(4)(14) 50,000 463,125
-----------------------------------------------------------------------------------------------
Southwest Airlines Co. 53,100 1,174,838
-----------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(4)(14) 9,500 9,500
-----------------------------------------------------------------------------------------------
WorldCom, Inc. 52,000 1,144,000
------------
Total Common Stocks (Cost $4,573,766) 3,847,757
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--3.2%
- ----------------------------------------------------------------------------------------------------------------------------------
American Radio Systems Corp., 11.375% Cum. Exchangeable
Preferred Stock(8)(11) 8,317 817,145
-----------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
11.125% Exchangeable Preferred Stock, Series M(11) 4,526 405,077
8.50% Cum. Cv., Series I 28,900 596,062
-----------------------------------------------------------------------------------------------
California Federal Bank:
10.625% Non-Cum., Series B 5,040 554,400
11.50% Non-Cum. 11,700 1,322,100
-----------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 12,000 405,000
-----------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr. Preferred Stock, Series C(4)(11) 110,000 1,144,000
-----------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Series A Preferred Stock(11) 15,890 1,755,845
-----------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual
Preferred Stock, Series A(4) 20,000 585,000
-----------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9% Preferred Securities 6,090,000 6,090,000
-----------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 8,500 499,375
-----------------------------------------------------------------------------------------------
K-III Communications Corp., $11.625 Exchangeable, Series B(4)(11) 8,668 949,147
-----------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Units
(each unit consists of one sr. exchangeable preferred share and
one warrant)(8)(12)(14) 18,210 824,003
-----------------------------------------------------------------------------------------------
Panamsat Corp., 12.75% Sr. Preferred Exchangeable(4)(11) 1,444 1,732,800
-----------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 9,000 207,000
-----------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable, Series B(4)(14) 30,800 1,147,300
-----------------------------------------------------------------------------------------------
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred Stock(4)(14) 47,870 1,627,580
-----------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Preferred Stock 83,700 2,134,350
------------
Total Preferred Stocks (Cost $22,529,312) 22,796,184
17 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE
UNITS SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES
- --0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05 725 $ 29,000
-----------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99 5,500 4,469
Exp. 8/00 850 531
-----------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(4) 19,829 198
-----------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00(4) 190 2
-----------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(4) 12,500 3,125
-----------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 6/05 4,000 29,500
-----------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(4) 5,120 87,040
-----------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03(4) 2,300 161,000
-----------------------------------------------------------------------------------------------
Federated Department Stores, Inc.:
Cl. C Wts., Exp. 12/99 6,741 81,735
Cl. D Wts., Exp. 12/01 6,741 86,790
-----------------------------------------------------------------------------------------------
Furniture Brands International, Inc., Series 1 Wts., Exp. 8/99 14,540 114,503
-----------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 1,174 7,484
-----------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(4) 265 7,950
-----------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05 17,655 105,930
-----------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 1,600 --
-----------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited
Partners' Interest 1,985 --
-----------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(4) 8,000 74,100
-----------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(4) 28,000 169,260
Exp. 6/05(4) 15,200 91,884
-----------------------------------------------------------------------------------------------
SDW Holdings Corp., Cl. B Wts., Exp. 12/06(4) 2,812 36,556
-----------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 7/97(4) 300 30
-----------------------------------------------------------------------------------------------
Trizec Corp. Wts., Exp. 7/99 1,985 8,393
-----------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/02(4) 49,200 76,875
------------
Total Rights, Warrants and Certificates (Cost $314,703) 1,176,355
18 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STRUCTURED INSTRUMENTS--3.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale, New York Branch:
Deutsche Mark Currency Protected Yield Curve CD, 6.28%, 7/25/97 $ 500,000 $ 506,525
Lehman Brothers High Yield Bond Index Nts., 12.50%, 7/8/97 3,500,000 3,403,400
Lehman Brothers High Yield Bond Index Nts., 12.50%, 8/1/97 3,000,000 2,910,300
Nikkei 225 Equity-Linked Nts., 6.03%, 4/23/98 1,500,000 1,481,700
-----------------------------------------------------------------------------------------------
Bayerische Landesbank, New York Branch CD, 13.75%, 8/18/97
(indexed to the cross currency rates of Greek Drachma
and Chilean Peso) 2,300,000 2,288,500
-----------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, New York Branch:
CD, 11.25%, 9/4/97 (indexed to the Russian Federation GKO,
Zero Coupon, 8/27/97)(4) 250,000 248,000
CD, 17%, 4/2/97 (indexed to the Russian Federation GKO,
Zero Coupon, 3/26/97) 2,000,000 1,987,500
-----------------------------------------------------------------------------------------------
Canadian Imperial Bank, 17% U.S. Dollar CD Linked
to South African Rand, 1/21/98 500,000 501,250
-----------------------------------------------------------------------------------------------
German Bank, New York Branch, 2x High Yield Index Nts.,
11.95%, 8/5/97(4) 4,000,000 3,980,000
-----------------------------------------------------------------------------------------------
ING (U.S.) Capital Holdings Corp., Zero Coupon GKO
Pass-Through Nts., 15.059%, 5/21/97(7) 1,000,000 980,320
-----------------------------------------------------------------------------------------------
ING (U.S.) Financial Holdings Corp., Zero Coupon:
Korean Won/U.S. Dollar Linked Nts., 10.87%, 6/9/97(7) 500,000 448,720
Nts., Linked to the Czech Koruna/Swiss Franc Exchange Rate,
14.49%, 2/18/98(7) 575,000 481,505
Nts., Linked to the Greek Drachma/Swiss Franc Exchange Rate,
14.83%, 12/4/97(7) 1,000,000 901,830
Nts., Linked to the Greek Drachma/Swiss Franc Exchange Rate,
14.46%, 3/31/98(7) 1,000,000 851,600
Nts., Linked to the Slovakia Koruna/Swiss Franc Exchange Rate,
16.54%, 8/11/97(7) 1,000,000 901,000
South African Rand/U.S. Dollar Linked Nts., 16.10%, 2/25/98(7) 500,000 440,050
-----------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.:
S & P 500 Linked Nts., 5.459%, 4/21/97(3) 400,000 253,560
Zero Coupon U.S. Dollar Nts. Linked to Czech Koruna/Swiss Franc,
15%, 12/21/98(7) 1,000,000 999,500
Zero Coupon U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc,
15.64%, 12/23/97(7) 350,000 369,950
Zero Coupon U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc,
15.45%, 12/26/97(7) 400,000 422,480
Zero Coupon U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc,
15.50%, 12/30/97(7) 500,000 523,300
Zero Coupon U.S. Dollar Nts. Linked to Czech Koruna/Swiss Franc,
15.41%, 12/29/97(7) 1,000,000 1,055,700
-----------------------------------------------------------------------------------------------
Swiss Bank Corp., New York Branch CD, 6.05%, 6/20/97
(indexed to the closing Nikkei 225 Index on 1/23/97, 5 yr.
& 3 mos. Japanese Yen Swap rate & New Zealand Dollar) 1,100,000 1,144,715
-----------------------------------------------------------------------------------------------
U.S. Financial Co., Goldman Sachs S & P 500 Indexed
Promissory Nts., 5.05%, 4/10/97 373,980
------------
Total Structured Instruments (Cost $28,003,003) 27,455,385
</TABLE>
19 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE
DATE STRIKE CONTRACTS SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PUT OPTIONS PURCHASED--0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali, 9.50%,
2/1/06 Put Opt.
(Cost $69,613) 7/97 99.96% ITL 2,029 $ 1,421
<CAPTION>
FACE
AMOUNT(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REPURCHASE AGREEMENT--11.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman,
Sachs & Co., 6.35%, dated 3/31/97,
to be repurchased at $84,314,870 on
4/1/97, collateralized by
U.S. Treasury Nts., 6.375%--9.125%,
5/15/99--8/15/05, with a value of
$86,211,550 (Cost $84,300,000) $84,300,000 84,300,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $690,987,999) 97.7% 694,701,393
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.3 16,522,221
----------- ------------
NET ASSETS 100.0% $711,223,614
----------- ------------
----------- ------------
<CAPTION>
<S><C>>
1. Face amount is reported in U.S. Dollars, except for those denoted in the following
currencies:
CAD --Canadian Dollar MYR -- Malaysian Ringgit
IDR --Indonesian Rupiah PLZ -- Polish Zloty
ITL --Italian Lira SKK -- Slovakia Koruna
JPY --Japanese Yen ZAR -- South African Rand
MXP --Mexican Peso
2. Interest-Only Strips represent the right to receive the monthly interest payments on an
underlying pool of mortgage loans. These securities typically decline in price as interest
rates decline. Most other fixed income securities increase in price when interest rates decline.
The principal amount of the underlying pool represents the notional amount on which current
interest is calculated. The price of these securities is typically more sensitive to changes in
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.
3. Represents the current interest rate for a variable rate security.
4. Identifies issues considered to be illiquid or restricted--See Note 8 of Notes to Financial
Statements.
5. Securities with an aggregate market value of $1,017,813 are held in collateralized accounts
to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to
Financial Statements.
6. A sufficient amount of liquid assets has been designated to cover outstanding written call
and put options, as follows:
<CAPTION>
CONTRACTS/
FACE SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL/PUT DATES PRICE RECEIVED SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina (Republic of) Global Bonds, 11.375%,
1/30/17 Put Option 500,000 5/12/97 104.40% ARP $15,000 $23,250
- --------------------------------------------------------------------------------------------------------------------------
Mexican Peso Call Option 3,500,000 4/28/97 8.02 MXP 30,450 27,475
------- -------
$45,450 $50,725
------- -------
------- -------
<CAPTION>
<S><C>
7. For zero coupon bonds, the interest rate shown is the effective yield on the date
of purchase.
8. Represents securities sold under Rule 144A, which are exempt from registration under
the Securities Act of 1933, as amended. These securities have been determined to be
liquid under guidelines established by the Board of Trustees. These securities amount
to $72,135,658 or 10.14% of the Fund's net assets, at March 31, 1997.
9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest
rate at a designated future date.
10. Non-income producing--issuer is in default of interest payment.
11. Interest or dividend is paid in kind.
12. 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.
13. Non-income producing security.
See accompanying Notes to Financial Statements.
</TABLE>
20 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES March 31, 1997 (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value (including repurchase agreement of $84,300,000)
(cost $690,987,999)--see accompanying statement $694,701,393
-----------------------------------------------------------------------------------------------
Cash 255,422
-----------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign
currency exchange contracts--Note 5 15,244
-----------------------------------------------------------------------------------------------
Receivables:
Investments sold 17,479,263
Interest, dividends and principal paydowns 13,272,940
Shares of beneficial interest sold 6,200,827
Closed forward foreign currency exchange contracts--Note 5 322,975
Daily variation on futures contracts--Note 6 79,616
-----------------------------------------------------------------------------------------------
Other 810,183
------------
Total assets 733,137,863
-----------------------------------------------------------------------------------------------
LIABILITIES Options written, at value (premiums received $45,450)
see accompanying statement--Note 7 50,725
-----------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 14,726,663
Shares of beneficial interest redeemed 4,689,064
Dividends 1,541,268
Distribution and service plan fees 413,035
Closed forward foreign currency exchange contracts--Note 5 149,175
Transfer and shareholder servicing agent fees 49,507
Trustees' fees 1,369
Other 293,443
------------
Total liabilities 21,914,249
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $711,223,614
------------
------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $700,758,557
NET ASSETS -----------------------------------------------------------------------------------------------
Undistributed net investment income 27,637
-----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions 6,333,184
-----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 4,104,236
------------
Net assets $711,223,614
------------
------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $423,589,497 and 32,925,982 shares of beneficial interest outstanding) $12.86
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $13.50
-----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $148,022,980 and 11,516,983 shares of beneficial interest
outstanding) $12.85
-----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $139,611,137 and 10,862,486 shares of beneficial interest
outstanding) $12.85
See accompanying Notes to Financial Statements.
21 Oppenheimer Champion Income Fund
<PAGE>
<CAPTION>
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1997 (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest $ 31,200,762
-----------------------------------------------------------------------------------------------
Dividends 539,988
------------
Total income 31,740,750
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 2,078,089
-----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 477,101
Class B 559,884
Class C 631,124
-----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 419,829
-----------------------------------------------------------------------------------------------
Shareholder reports 112,518
-----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 20,146
Class B 19,864
Class C 8,374
-----------------------------------------------------------------------------------------------
Custodian fees and expenses 24,719
-----------------------------------------------------------------------------------------------
Legal and auditing fees 9,062
-----------------------------------------------------------------------------------------------
Insurance expenses 3,952
-----------------------------------------------------------------------------------------------
Trustees' fees and expenses 3,638
-----------------------------------------------------------------------------------------------
Other 12,683
------------
Total expenses 4,380,983
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 27,359,767
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) on:
GAIN (LOSS) Investments 7,490,581
Closing of futures contracts 575,391
Closing and expiration of options written (311,494)
Foreign currency transactions (299,265)
------------
Net realized gain 7,455,213
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (12,430,199)
Translation of assets and liabilities denominated in foreign currencies (106,381)
------------
Net change (12,536,580)
------------
Net realized and unrealized loss (5,081,367)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $ 22,278,400
------------
------------
See accompanying Notes to Financial Statements.
</TABLE>
22 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30,
(UNAUDITED) 1996
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $ 27,359,767 $ 37,363,248
-----------------------------------------------------------------------------------------------
Net realized gain 7,455,213 2,827,552
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (12,536,580) 12,310,743
------------ ------------
Net increase in net assets resulting from operations 22,278,400 52,501,543
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income:
TO SHAREHOLDERS Class A (17,609,563) (27,408,362)
Class B (4,560,537) (2,625,608)
Class C (5,189,731) (7,329,215)
- ----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from beneficial
TRANSACTIONS interest transactions--Note 2:
Class A 67,032,303 93,320,881
Class B 67,442,141 80,797,723
Class C 27,625,198 44,878,194
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 157,018,211 234,135,156
-----------------------------------------------------------------------------------------------
Beginning of period 554,205,403 320,070,247
------------ ------------
End of period (including undistributed net investment
income of $27,638 and $27,701, respectively) $711,223,614 $554,205,403
------------ ------------
------------ ------------
See accompanying Notes to Financial Statements.
</TABLE>
23 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.92 $12.47 $12.32 $12.90 $12.26 $11.49
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 1.15 1.05 1.10 1.22 1.41
Net realized and unrealized gain (loss) (.06) .44 .14 (.38) .64 .77
-------- -------- -------- -------- -------- --------
Total income from investment operations .53 1.59 1.19 .72 1.86 2.18
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.59) (1.14) (1.04) (1.10) (1.22) (1.41)
Dividends in excess of net investment income -- -- -- (.01) -- --
Distributions in excess of net realized gain -- -- -- (.19) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions to shareholders (.59) (1.14) (1.04) (1.30) (1.22) (1.41)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.86 $12.92 $12.47 $12.32 $12.90 $12.26
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 4.09% 13.28% 10.09% 5.61% 15.92% 19.94%
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $423,589 $359,208 $255,139 $160,505 $104,465 $47,125
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $394,080 $305,638 $204,917 $135,431 $ 73,334 $28,270
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.46%(5) 8.97% 8.45% 8.49% 9.52% 11.60%
Expenses 1.09%(5) 1.17% 1.18% 1.22% 1.24% 1.35%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 76.0% 95.0% 72.5% 108.0% 116.2% 121.5%
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 (or inception of
offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
</TABLE>
24 Oppenheimer Champion Income Fund
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------- ----------------------------------------------
SIX MONTHS PERIOD SIX MONTHS
ENDED ENDED ENDED
MARCH 31, 1997 SEPT. 30, MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996(2) (UNAUDITED) 1996 1995 1994(1)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.91 $12.47 $12.91 $12.46 $12.32 $13.13
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 1.03 .54 1.06 .95 .75
Net realized and unrealized gain (loss) (.06) .44 (.06) .44 .13 (.60)
-------- -------- -------- -------- -------- --------
Total income from investment operations .47 1.47 .48 1.50 1.08 .15
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.53) (1.03) (.54) (1.05) (.94) (.77)
Dividends in excess of net investment income -- -- -- -- -- --(3)
Distributions in excess of net realized gain -- -- -- -- -- (.19)
-------- -------- -------- -------- -------- --------
Total dividends and distributions to shareholders (.53) (1.03) (.54) (1.05) (.94) (.96)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.85 $12.91 $12.85 $12.91 $12.46 $12.32
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 3.69% 12.20% 3.70% 12.44% 9.16% 1.11%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $148,023 $82,052 $139,611 $112,945 $64,932 $27,743
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $112,786 $33,189 $127,051 $89,416 $43,584 $13,693
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.70%(5) 7.90%(5) 8.70%(5) 8.19% 7.63% 7.24%(5)
Expenses 1.86%(5) 1.97%(5) 1.84%(5) 1.93% 1.95% 1.94%(5)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 76.0% 95.0% 76.0% 95.0% 72.5% 108.0%
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, 1997 were $519,513,343 and $445,310,562, respectively.
See accompanying Notes to Financial Statements.
</TABLE>
25 Oppenheimer Champion Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Champion Income Fund (the Fund) is
ACCOUNTING POLICIES 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 adviser 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 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 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 is used.
--------------------------------------------------
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, 1997, securities with an aggregate
market value of $1,180,250, representing 0.17% of
the Fund's net assets, were in default.
--------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting
records of the Fund are maintained in U.S.
dollars. Prices of securities denominated in
foreign currencies are translated into U.S.
dollars at the closing rates of exchange. Amounts
related to the purchase and sale of securities and
investment income are translated at the rates of
exchange prevailing on the respective dates of
such transactions.
The effect of changes in foreign
currency exchange rates on investments is
separately identified from the 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.
26 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
1. SIGNIFICANT FEDERAL TAXES. The Fund intends to continue to
ACCOUNTING POLICIES comply with provisions of the Internal Revenue
(CONTINUED) 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 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 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.
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no
BENEFICIAL INTEREST 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, 1997 YEAR ENDED SEPTEMBER 30, 1996(1)
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 7,860,505 $102,851,183 13,390,615 $170,144,406
Dividends and distributions reinvested 906,084 11,832,508 1,445,851 18,398,126
Redeemed (3,648,997) (47,651,388) (7,492,035) (95,221,651)
---------- ------------ ---------- ------------
Net increase 5,117,592 $67,032,303 7,344,431 $93,320,881
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
- ---------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 5,531,949 $72,301,661 6,824,247 $86,737,093
Dividends and distributions reinvested 214,424 2,797,446 132,964 1,694,762
Redeemed (587,168) (7,656,966) (599,433) (7,634,132)
---------- ------------ ---------- ------------
Net increase 5,159,205 $67,442,141 6,357,778 $80,797,723
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
- ---------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 3,186,017 $41,657,588 4,628,427 $58,715,116
Dividends and distributions reinvested 281,089 3,667,102 401,746 5,108,872
Redeemed (1,356,368) (17,699,492) (1,490,391) (18,945,794)
---------- ------------ ---------- ------------
Net increase 2,110,738 $27,625,198 3,539,782 $44,878,194
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
1. For the year ended September 30, 1996 for Class A and Class C shares and for the period from October 2, 1995 (inception of
offering) to September 30, 1996 for Class B shares.
</TABLE>
27 Oppenheimer Champion Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- ---------------------------------------------------------------------------
3. UNREALIZED GAINS AND At March 31, 1997, net unrealized appreciation on
LOSSES ON INVESTMENTS investments and options written of $3,708,119 was
composed of gross appreciation of $15,359,069, and
gross depreciation of $11,650,950.
- ---------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager were in
AND OTHER TRANSACTIONS accordance with the investment advisory agreement
WITH AFFILIATES with the Fund which provides for a fee of 0.70% on
the first $250 million of average annual net
assets, 0.65% on the next $250 million, 0.60% on
the next $500 million and 0.55% on net assets in
excess of $1 billion.
For the six months ended March 31, 1997,
commissions (sales charges paid by investors) on
sales of Class A shares totaled $1,304,734, of
which $368,570 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 $2,511,162 and
$377,189, of which $48,231 and $4,512,
respectively, was paid to an affiliated
broker/dealer. During the six months ended March
31, 1997, OFDI received contingent deferred sales
charges of $62,337 and $29,306, 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 0.25% of the
average annual net assets of Class A shares of the
Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial
institutions quarterly for providing personal
service and maintenance of accounts of their
customers that hold Class A shares. During the six
months ended March 31, 1997, OFDI paid $20,613 to
an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses.
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 0.75% per year
on Class B shares. OFDI also receives a service
fee of 0.25% per year to compensate dealers for
providing personal services for accounts that hold
Class B 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. During the six months ended March
31, 1997, OFDI retained $537,586 as compensation
for Class B sales commissions and service fee
advances, as well as financing costs. 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. As of March 31, 1997, OFDI had
incurred unreimbursed expenses of $5,788,087 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 0.75% per year
on Class C shares. OFDI also receives a service
fee of 0.25% 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. During the six months ended March
31, 1997, OFDI paid $5,323 to an affiliated
broker/dealer as reimbursement for Class C
personal service and maintenance expenses and
retained $279,096 as reimbursement for Class C
sales commissions and service fee advances, as
well as financing costs. 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. As of March 31,
1997, OFDI had incurred unreimbursed expenses of
$1,738,944 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.
28 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS Forward contracts are valued based on the closing
(CONTINUED) 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.
At March 31, 1997, the Fund had outstanding
forward contracts to purchase foreign currencies
as follows:
<TABLE>
<CAPTION>
EXPIRATION CONTRACT VALUATION AS OF UNREALIZED
DATES AMOUNT (000S) MARCH 31, 1997 APPRECIATION
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Polish Zloty (PLZ) 4/2/97 5,779 PLZ $1,879,787 $ 8,767
South African Rand (ZAR) 4/3/97 8,877 ZAR 2,006,527 6,477
---------- -------
$3,886,314 $15,244
---------- -------
---------- -------
</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, 1997, the Fund had outstanding
futures contracts as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUATION AS OF UNREALIZED
EXPIRATION DATES FUTURES CONTRACTS MARCH 31, 1997 APPRECIATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Standard & Poor's 500 6/97 6 $ 2,274,000 $119,250
U.S. Treasury Bonds, 30 yr. 6/97 207 22,194,281 277,313
----------- --------
$24,468,281 $396,563
----------- --------
----------- --------
</TABLE>
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY The Fund may buy and sell put and call options, or
write put and covered call options on portfolio
securities in order to produce incremental
earnings or protect against changes in the value
of portfolio securities.
The Fund generally purchases put options
or writes covered call options to hedge against
adverse movements in the value of portfolio
holdings. When an option is written, the Fund
receives a premium and becomes obligated to sell
or purchase the underlying security at a fixed
price, upon exercise of the option.
Options are valued daily based upon the
last sale price on the principal exchange on which
the option is traded and unrealized appreciation
or depreciation is recorded. The Fund will realize
a gain or loss upon the expiration or closing of
the option transaction. When an option is
exercised, the proceeds on sales for a written
call option, the purchase cost for a written put
option, or the cost of the security for a
purchased put or call option is adjusted by the
amount of premium received or paid.
29 Oppenheimer Champion Income Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- -----------------------------------------------------------------------------
7. OPTION ACTIVITY Securities designated to cover outstanding call
(CONTINUED) 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, 1997 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
-------------------------- -------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at
September 30, 1996 11,000 $ 74,680 -- $ --
Options written 31,177,408 340,740 759,470 18,996
Options closed or expired (23,922,008) (331,917) (758,750) (2,808)
Options exercised (3,766,400) (53,053) (220) (1,188)
----------- --------- -------- -------
Options outstanding at
March 31, 1997 3,500,000 $ 30,450 500 $15,000
----------- --------- -------- -------
----------- --------- -------- -------
</TABLE>
- -----------------------------------------------------------------------------
8. ILLIQUID AND RESTRICTED At March 31, 1997, investments in securities
SECURITIES included issues that are illiquid or restricted.
Restricted securities are often purchased in
private placement transactions, are not registered
under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued
under methods approved by the Board of Trustees as
reflecting fair value. A security may be
considered illiquid if it lacks a
readily-available market or if its valuation has
not changed for a certain period of time. The Fund
intends to invest no more than 10% of its net
assets (determined at the time of purchase and
reviewed from time to time) in illiquid or
restricted securities. Certain restricted
securities, eligible for resale to qualified
institutional investors, are not subject to that
limit. The aggregate value of illiquid or
restricted securities subject to this limitation
at March 31, 1997 was $63,604,680, which
represents 8.94% of the Fund's net assets.
Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATES COST PER UNIT MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS
Arizona Charlie's Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 100.00% 68.00%
- --------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 95.74 17.00
- --------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 7/28/92 100.50 110.50
STOCKS AND WARRANTS
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93 $2.00 $.25
- --------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I. 4/14/92 1,000.00 1,005.00
- --------------------------------------------------------------------------------------------------------------
Omnipoint Corp. 1/26/96 16.00 9.26
- --------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 9.26
- --------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 5/2/94 9.50 1.00
</TABLE>
30 Oppenheimer Champion Income Fund
<PAGE>
OPPENHEIMER CHAMPION INCOME FUND
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Ralph W. Stellmacher, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
Distributor OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER
SERVICING AGENT
- --------------------------------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche LLP
- --------------------------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
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, are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
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
RS0190.001.0397 May 31, 1997
"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.
[PHOTO]
Customer Service Representative
OppenheimerFunds Services
- -------------------------------------------------------------------------------
[LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
- ------------------------
Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
- ------------------------
