--------------------------------
Annual Report September 30, 1997
--------------------------------
OPPENHEIMER
Champion
Income Fund
[GRAPHIC OMITTED]
[LOGO]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Report highlights
- --------------------------------------------------------------------------------
o 5-Star Ranking: The Fund's Class A shares received a 5-star ranking by
Morningstar Mutual Funds for the 3- and 5-year periods ended 9/30/97 among 1,309
(3-year) and 713 (5-year) fixed-income funds.(1)
o An ideal economic environment over the past twelve months, of moderate
economic growth with virtually no inflation, has contributed to an improving
credit picture for many companies in the high-yield universe.
o Upgraded Quality: Because the difference in income is so little from a
low-quality to a high-quality bond, we've taken this opportunity to upgrade the
high-yield bonds in our portfolio.
o Mergers and acquisitions in the broadcasting and energy industries boosted
the returns of the Fund's investments in those areas.
- ------------------------
Avg Annual Total Returns
- ------------------------
For the 1-year period ended
9/30/97 without sales charges(2)
Class A
- ------------------------
13.96%
- ------------------------
Class B
- ------------------------
13.10%
- ------------------------
Class C
- ------------------------
13.12%
- ------------------------
Contents
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Managers
10 Statement of
Investments
30 Statement of
Assets &
Liabilities
32 Statement of
Operations
33 Statements of
Changes in
Net Assets
34 Financial Highlights
36 Notes to Financial
Statements
47 Independent
Auditors' Report
48 Federal
Income Tax
Information
49 Officers & Trustees
52 Information &
Services
Total returns include changes 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. Source: Morningstar Mutual Funds, 9/30/97. Morningstar, Inc. ranks mutual
funds in broad investment classes, based on risk-adjusted returns after
considering sales charges and expenses. Return and risk are measured as
performance above and below 90-day U.S. Treasury bill returns, respectively.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2 Oppenheimer Champion Income Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO]
James C. Swain
Chairman
Oppenheimer Champion Income Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer Champion Income Fund
As you are no doubt aware, during the end of October and early November many
stock markets around the world recorded their all-time largest point declines,
followed by subsequent gains and continued volatility, leaving investors
uncertain about what would occur next.
To put those events in focus, let's look at a "snapshot" of the two-week
time period. Sharp declines in the overseas stock markets, particularly in Asia,
triggered a series of sell-offs throughout Europe, Latin America and the United
States. In response, the U.S. stock market, as measured by the Dow Jones
Industrial Average, dropped 554 points on October 27, its largest point decline
in history. However, almost as quickly, the U.S. stock market bounced back over
the succeeding few days, regaining nearly all of its losses.
While no one could have predicted the timing or extent of these
fluctuations, many analysts, including our fund managers here at
OppenheimerFunds, had warned of a correction for several months. We believed
that U.S. valuations were too high, stocks were expensive relative to bonds,
recent corporate earnings were somewhat disappointing and that Federal Reserve
Chairman Alan Greenspan could possibly seek a short-term interest rate hike.
As a result, when October 27 arrived, our equity funds held above-average
cash positions relative to many of our competitors. Not only did our higher cash
levels serve as a protection, they also enabled us to buy the stocks of numerous
excellent companies that were selling at more reasonable prices. In addition,
our international and global funds were not as impacted because they weren't
heavily invested in Southeast Asia and Japan. Finally, on the fixed-income side,
our bond funds were generally characterized by longer-than-normal durations,
which allowed us to lock in higher yields.
In conclusion, many of our funds experienced relatively strong performance
during the October-November market shake-ups. We'd like to take this opportunity
to remind shareholders that stock market volatility is a normal and expected
part of the business cycle. As Alan Greenspan suggested, in years to come this
period will likely be remembered as a positive change for a market that was
growing too quickly.
For frequent market updates, please visit our website
at www.oppenheimerfunds.com or call 1-800-835-3104 to listen to our recorded
messages. In the meantime, 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 /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
November 7, 1997
3 Oppenheimer Champion Income Fund
<PAGE>
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Champion Income Fund performed very well over the past year. In
fact, for the one-year period ended September 30, 1997, Oppenheimer Champion
Income Fund's Class A shares returned 13.96%, without sales charges.(2) Given
our current strategy of investing in higher-quality high-yield bonds, thereby
attempting to upgrade the portfolio quality and eliminate as much risk as we
can, we believe that our performance has been exceptionally good.
- ------------------------
Avg Annual Total Returns
- ------------------------
For the Period Ended 9/30/97(1)
Class A
Since
1 year 5 year Inception
- ------------------------
8.55% 10.63% 12.78%
- ------------------------
Class B
Since
1 year 5 year Inception
- ------------------------
8.10% N/A 10.89%
- ------------------------
Class C
Since
1 year 5 year Inception
- ------------------------
12.12% N/A 9.26%
- ------------------------
- ------------------------
Cumulative Total Return
- ------------------------
For the Period Ended 9/30/97(1)
Class A
5 year
- ------------------------
65.73% $16,573(3)
- ------------------------
Growth of $10,000
Over five years
(without sales charges)3
[GRAPHIC OMITTED]
[The following table was represented as a mountain graph
in the printed materials.]
Oppenheimer Champion Income Fund Class A Shares
Unit Value Base: Q3 92 = $10,000.00
Q1 Q2 Q3 Q4
92 -- -- $10,000.00 $10,136.73
93 $10,947.71 $11,491.41 $11,670.33 $12,165.10
94 $12,033.17 $12,096.25 $12,187.11 $12,150.23
95 $12,547.70 $13,090.89 $13,416.81 $13,935.22
96 $14,347.35 $14,601.10 $15,198.84 $15,802.80
97 $15,820.07 $16,571.49 $17,307.69 --
Merrill Lynch High Yield Bond Master Index
Unit Value Base: Q3 92 = $10,000.00
Q1 Q2 Q3 Q4
92 -- -- $10,000.00 $10,142.49
93 $10,772.53 $11,202.53 $11,487.22 $11,885.33
94 $11,665.43 $11,530.32 $11,687.56 $11,746.79
95 $12,455.40 $13,245.68 $13,632.63 $14,085.83
96 $14,290.89 $14,487.00 $15,052.13 $15,644.22
97 $15,808.13 $16,558.57 $17,206.65 --
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
4.75%. Class A shares were first publicly offered on 11/16/87. Class B returns
include the applicable contingent deferred sales charge of 5% (1-year) and 4%
(since inception on 10/2/95). Class C returns for the 1-year result include the
contingent deferred sales charge of 1%. Class C shares have an inception date of
12/1/93. An explanation of the different performance calculations is in the
Fund's prospectus. Class B and C shares are subject to an annual 0.75%
asset-based sales charge and Class A shares are subject to an annual 0.25%
asset-based sales charge.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
4 Oppenheimer Champion Income Fund
<PAGE>
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Champion Income Fund is for investors looking for high income and
growth potential for their portfolio.
What We Look For
o Improvement in relative cash flows and liquidity to meet financial
obligations.
o Corporate sectors that are currently undervalued.
o Changes in the business cycle that might affect corporate profits.
o Sectors or industries that help provide diversification benefits to the
portfolio.
- ----------------------
Standardized Yields(4)
- ----------------------
For the 30 Days Ended 9/30/97
Class A
- ----------------------
7.09%
- ----------------------
Class B
- ----------------------
6.68%
- ----------------------
Class C
- ----------------------
6.69%
- ----------------------
Credit Allocation(5)
[PIE CHART]
AAA 0.1%
BBB 1.8
BB 18.1
B 68.6
CCC 1.8
CC 0.3
Not Rated 9.3
Top Five Issuers(5)
...........................................................
EchoStar 1.4%
...........................................................
SD Warren Co. 1.2
...........................................................
Riverwood International 1.2
...........................................................
Algoma Steel, Inc. 1.1
...........................................................
Clark Refining & Marketing 1.1
...........................................................
3. Results of a hypothetical $10,000 investment in Class A shares on September
30, 1992. The Merrill Lynch High Yield Bond Master Index is an unmanaged index
of below investment grade U.S. corporate issuers, and cannot be purchased
directly by investors.
4. Standardized yield is based on net investment income for the 30-day period
ended 9/30/97. Falling net asset values will tend to artificially raise yields.
5. Portfolio data are as of 9/30/97, and are subject to change. Portfolio data
are dollar-weighted based on total market value of investments. Securities rated
by any rating organization are included in the equivalent Standard & Poor's
rating category. Average credit quality and allocation include rated securities
and those not rated by a national rating organization (currently 9.3% of total
investments) but which the ratings given above have been assigned by the Manager
for internal purposes as being comparable, in the Manager's judgment, to
securities rated by a rating agency in the same category.
5 Oppenheimer Champion Income Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
How did the Fund perform during the year?
For the one-year period ended September 30, 1997, Oppenheimer Champion Income
Fund's Class A shares provided an average annual total return of 13.96%, without
sales charges.1 Given our current strategy of investing in higher-quality
high-yield bonds, thereby attempting to upgrade the portfolio quality and
eliminate as much risk as we can, we believe that our performance has been
exceptionally good.
Why has the high-yield market remained so strong?
Over the past twelve months, we've had an ideal economic environment which has
contributed to an improving credit picture for many companies in the high-yield
universe. Corporate earnings and cash flows have remained strong as companies
have been working very aggressively to reduce costs and boost their operating
margins. In addition, the lower interest-rate environment has allowed companies
to refinance their debt at lower rates, which also contributes to improving cash
flows. The buoyant stock market has allowed companies to raise equity capital,
thereby reducing the percentage of debt on their balance sheet.
The strong stock market has also contributed to a burst of merger and
acquisition activity. Oftentimes, a well-capitalized company will acquire a
high-yield issuer, and overnight, the issuer has gone from a
below-investment-grade rating to an investment-grade rating, which boosts the
bond's price.
- ------------------
"We've upgraded
the quality
because we're
not being
compensated
for taking
high risk
in the portfolio."
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
6 Oppenheimer Champion Income Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Ralph Stellmacher
(Fund Manager)
Scott Scharer
Why have you chosen to focus on high-quality bonds?
We don't believe that we are being adequately compensated to invest in lower
quality. In 1991, the average high-yield bond paid as much as 10 percentage
points more than U.S. Treasury bonds, which have no credit risk. Today, that
differential is little more than three percentage points. For example, if a
ten-year U.S. Treasury bond offers 6%, then the average high-yield bond might
pay in the neighborhood of 9%-9.5%. The reason for this shrinking extra yield is
that the economy today is so good that investors view defaults on high-yield
bonds to be less likely.
The extra yield offered by low-quality high-yield bonds compared to
high-quality high-yield bonds has also shrunk. Because the extra income is so
modest, we prefer not to take the risk of owning too many low-quality bonds.
What sectors of the market are you emphasizing?
Although we invest in a broad array of industries, two in particular have stood
out: energy and broadcasting. In energy, we've been appropriately optimistic
about the rising trends in prices for oil and natural gas. That has given a
boost to all of the companies that make up the energy sector, but particularly
with Clark Oil and Refining and Forcenergy. In addition to having an optimistic
view of underlying commodity prices, we also like energy for its diversification
benefits. Natural gas and oil remain in demand around the world, and the energy
sector is not correlated with the U.S. economy.
7 Oppenheimer Champion Income Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
Even if the U.S. economy turns down, the price of oil may actually rise if
supply shortages develop. As a result, our energy-related high-yield bonds could
do better than other bonds in a recession.
The second sector, broadcasting, is associated with deregulation and
dramatic consolidation, particularly in radio. The licensing of radio broadcast
companies has become more liberal with deregulation over the last few years, and
that has allowed large players in the radio broadcasting arena to acquire more
stations. As radio companies purchase more stations, they are able to operate
more efficiently. Our holdings in high-yield bonds issued by radio broadcasters
have become more valuable as a result.
What sectors have you underweighted?
Our bias towards quality has caused us to limit our holdings in sectors such as
telecommunications. During the period, we were underweight in wireless
telecommunications, a growing sector of the high-yield market. Although many of
these companies have untested technologies, very few customers and negative cash
flow, the expectation is that these technologies will eventually be proven. As
lenders, we would have to be willing to loan money to these companies based
almost entirely on future prospects, not current collateral. While equity
investors may take this additional risk for the potentially unlimited gains they
may earn as stock owners, fixed-income investors, or lenders, need to weigh
these additional risks against a fixed return on investment (or loan). We have
limited our exposure to the telecommunications sector because we don't believe
that we would be earning enough yield to justify the substantial risk. However,
- -------------------
"The rising trends
in prices for
natural gas and oil
have helped our
energy bonds'
performance..."
8 Oppenheimer Champion Income Fund
<PAGE>
because of the buoyant economy, high-yield bonds issued by telecommunications
companies have done very well, even though many of these companies have not yet
produced profits.
Do you plan to continue your conservative strategy?
Yes. We're in the eighth year of an economic recovery, and we're not really
being paid enough yield to take risks today. There is a good possibility that
corporate earnings growth will slow in 1998. For these reasons, we still believe
that the right place is the high-quality end of the high-yield sector.
- ---------------
"...and added
diversification
benefits to the
portfolio."
9 Oppenheimer Champion Income Fund
<PAGE>
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Statement of Investments September 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
======================================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--2.4%
- ------------------------------------------------------------------------------------------------------
Amresco Commercial Mortgage Funding I Corp.,
Multiclass Mtg. Pass-Through Certificates, Series 1997-C1:
Cl. E, 7%, 6/17/29(2) $ 360,000 $ 326,813
Cl. H, 7%, 6/17/29(2) 360,000 324,563
- ------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates, Series 1997-D4:
Cl. B1, 7.525%, 4/14/29(3) 2,250,000 2,185,312
Cl. B2, 7.525%, 4/14/29(3) 3,750,000 3,551,953
Cl. B3, 7.525%, 4/14/29(3) 1,500,000 1,379,531
- ------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. E, 7.76%, 12/25/03(3) 622,000 626,665
- ------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg
Pass-Through Certificates, Series 1997-C1:
Cl. F, 7.50%, 6/20/13(4) 600,000 567,000
Cl. G, 7.50%, 6/20/14(2) 810,000 734,063
Cl. H, 7.50%, 8/20/14(2) 600,000 448,875
- ------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg
Pass-Through Certificates, Series 1997-CHL1,
8.134%, 2/25/11(2)(3) 4,000,000 3,295,000
- ------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Interest-Only
Stripped Mtg.-Backed Security, Series 1997-C1,
Cl. X, 8.334%, 7/15/27(5) 38,800,000 3,989,125
- ------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial
Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. E, 7.51%, 2/15/28(2)(3) 1,513,000 1,415,601
Series 1997-HF1, Cl. F, 6.86%, 2/15/20(2) 840,000 766,500
- ------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg
Pass-Through Certificates, Series 1997-MC1,
Cl. F, 7.452%, 5/20/07(2) 600,000 574,500
- ------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg
Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 448,710 454,249
Series 1995-C1, Cl. F, 6.90%, 2/25/27 315,102 295,162
- ------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII,
Series 1996-C1, Cl. E, 9.18%, 1/20/06 704,000 727,320
------------
Total Mortgage-Backed Obligations (Cost $20,691,755) 21,662,232
</TABLE>
10 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
======================================================================================================
<S> <C> <C>
Foreign Government Obligations--2.8%
- ------------------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina)
Medium-Term Nts., 10.625%, 8/7/06 $ 1,000,000 $ 1,108,750
- ------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
23.18%, 4/2/98(6)MXP 10,093,620 1,179,082
21.20%, 7/30/98(6)MXP 4,700,000 519,098
- ------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, 10.125%, 5/15/27 800,000 803,200
- ------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Capitalization Bonds, 8%,
4/15/14(7) 1,355,985 1,154,495
- ------------------------------------------------------------------------------------------------------
City of Buenos Aires Bonds, 10.50%, 5/28/04(2)ARP 750,000 780,145
- ------------------------------------------------------------------------------------------------------
City of St. Petersburg Sr. Unsub. Nts., 9.50%, 6/18/02(4) 1,070,000 1,104,775
- ------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of) Jordan Disc. Bonds, 6.75%,
12/23/23(3) 1,500,000 1,262,813
- ------------------------------------------------------------------------------------------------------
Hungary (Government of) Bonds, Series 98/H, 24%,
3/21/98HUF 157,000,000 820,748
- ------------------------------------------------------------------------------------------------------
Jamaica (Government of) Bonds:
9.625%, 7/2/02(4) 600,000 607,500
9.625%, 7/2/02 800,000 812,500
- ------------------------------------------------------------------------------------------------------
Jordan (Hashemite Kingdom of) Disc. Bonds,
Series DEF, 6.75%, 12/23/23(3) 500,000 439,375
- ------------------------------------------------------------------------------------------------------
Moldova (Republic of) Sr. Unsub. Nts., 8.465%, 12/10/99(3) 1,780,000 1,817,380
- ------------------------------------------------------------------------------------------------------
Pakistan (Republic of) Bonds, 9.946%, 5/30/00(3) 1,130,000 1,146,950
- ------------------------------------------------------------------------------------------------------
Pakistan (Republic of) Debs., 11.50%, 12/22/99 171,000 179,978
- ------------------------------------------------------------------------------------------------------
Peru (Republic of) Past Due Interest Bonds, 4%, 3/7/17(3) 2,170,000 1,456,613
- ------------------------------------------------------------------------------------------------------
Perusahaan Listr, 17%, 8/21/01IDR 1,000,000,000 279,141
- ------------------------------------------------------------------------------------------------------
Poland (Republic of) Bonds:
12%, 6/12/01PLZ 1,560,000 354,750
15%, 10/12/99PLZ 2,800,000 727,224
- ------------------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon,
27.05%, 3/17/98(6)IDR 1,000,000,000 272,597
- ------------------------------------------------------------------------------------------------------
Renel R.A. Nts., 8.50%, 2/21/02(2)(3) 1,000,000 1,004,375
- ------------------------------------------------------------------------------------------------------
Romanian Commercial Bank SA Bonds, 9.125%, 3/10/00 1,230,000 1,228,462
- ------------------------------------------------------------------------------------------------------
South Africa (Republic of) Bonds:
Series 150, 12%, 2/28/05ZAR 10,794,860 2,118,565
Series 162, 12.50%, 1/15/02ZAR 4,736,630 973,745
Series 175, 9%, 10/15/02ZAR 7,670,810 1,358,939
- ------------------------------------------------------------------------------------------------------
Turkey (Government of) Treasury Bills, Zero Coupon:
103.104%, 8/5/98(6)TRL 280,000,000,000 793,371
101.25%, 9/16/98(6)TRL 447,990,000,000 1,177,278
- ------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds,
Series DL, 6.75%, 12/18/07(3) 250,000 239,219
------------
Total Foreign Government Obligations (Cost $25,643,885) 25,721,068
</TABLE>
11 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
======================================================================================================
<S> <C> <C>
Loan Participations--0.3%
- ------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 7%, 9/4/06(3) $ 1,270,000 $ 1,142,206
- ------------------------------------------------------------------------------------------------------
AO Rostelecom Loan Facility Nts., 9.50%, 2/15/00(2)(3) 800,000 807,500
- ------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche B, 6.563%, 11/15/04(2)(3) 654,093 614,848
------------
Total Loan Participations (Cost $2,328,482) 2,564,554
======================================================================================================
Municipal Bonds and Notes--0.3%
- ------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor Agency
Toll Road Capital Appreciation Revenue Bonds, Jr. Lien,
Zero Coupon, 9%, 1/1/28 (Cost $941,597)(6) 13,500,000 2,665,575
======================================================================================================
Corporate Bonds and Notes--81.9%
- ------------------------------------------------------------------------------------------------------
Basic Industry--10.6%
- ------------------------------------------------------------------------------------------------------
Chemicals--3.1%
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec
Disc. Nts., 7/15/01 260,000 272,350
- ------------------------------------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07(4) 600,000 634,500
- ------------------------------------------------------------------------------------------------------
ISP Holdings, Inc.:
9% Sr. Nts., Series B, 10/15/03 2,700,000 2,835,000
9.75% Sr. Nts., Series B, 2/15/02 600,000 642,000
- ------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07(4) 2,615,000 2,647,687
- ------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 4,750,000 5,260,625
- ------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(4) 1,975,000 1,984,875
- ------------------------------------------------------------------------------------------------------
Polytama International Finance BV, 11.25% Gtd. Sec. Nts., 6/15/07 840,000 833,700
- ------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Sub. Nts., 8/1/07(4) 3,050,000 3,126,250
- ------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08(8) 5,380,000 3,806,350
- ------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 860,000 941,700
11.75% Sr. Unsec. Sub. Nts., 8/15/06 4,915,000 5,443,362
------------
28,428,399
- ------------------------------------------------------------------------------------------------------
Containers--1.0%
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(2) 1,500,000 1,635,000
- ------------------------------------------------------------------------------------------------------
IVEX Holdings Corp., 0%/13.25% Sr. Disc. Debs., Series B, 3/15/05(8) 5,950,000 5,087,250
- ------------------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts., 10/15/06 2,300,000 2,455,250
------------
9,177,500
- ------------------------------------------------------------------------------------------------------
Metals/Mining--0.3%
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 3,000,000 2,925,000
</TABLE>
12 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paper--3.7%
Ainsworth Lumber Ltd., 12.50% Sr. Nts., 7/15/07(4)(9) $ 2,875,000 $ 2,875,000
- ------------------------------------------------------------------------------------------------------
Buckeye Cellulose Corp., 9.25% Sr. Sub. Nts., 9/15/08 3,470,000 3,643,500
- ------------------------------------------------------------------------------------------------------
Container Corp., 9.75% Gtd. Sr. Nts., 4/1/03 500,000 542,500
- ------------------------------------------------------------------------------------------------------
Four M Corp., 12% Sr. Nts., Series B, 6/1/06(2) 645,000 694,987
- ------------------------------------------------------------------------------------------------------
Indah Kiat International Finance Co. BV:
11.875% Gtd. Sr. Sec. Nts., 6/15/02 1,400,000 1,513,750
12.50% Gtd. Sec. Nts., 6/15/06 920,000 1,017,750
- ------------------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 4,895,000 5,103,037
- ------------------------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05(2) 1,570,000 1,713,262
- ------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority
Sr. Sec. Nts., 4/15/05 2,645,000 2,611,937
- ------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Nts., 8/1/07(4) 5,360,000 5,628,000
10.875% Sr. Sub. Nts., 4/1/08 4,785,000 4,802,944
- ------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 3,450,000 3,924,375
- ------------------------------------------------------------------------------------------------------
Tjiwi Kimia International Finance Co. BV, 13.25% Gtd
Sr. Nts., 8/1/01 355,000 394,050
------------
34,465,092
- ------------------------------------------------------------------------------------------------------
Steel--2.5%
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 8,733,000 10,239,442
- ------------------------------------------------------------------------------------------------------
Armco, Inc., 8.50% Sinking Fund Debs., 9/1/01 3,805,000 3,824,025
- ------------------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 4,270,000 4,611,600
- ------------------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Nts., 8/1/07(4) 2,220,000 2,278,275
- ------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 2,450,000 2,382,625
------------
23,335,967
- ------------------------------------------------------------------------------------------------------
Consumer Related--13.5%
- ------------------------------------------------------------------------------------------------------
Consumer Products--2.0%
Coleman Escrow Corp., Zero Coupon Sr. First Priority
Disc. Nts., 11.05%, 5/15/01(4)(6) 6,130,000 4,199,050
- ------------------------------------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07(4) 860,000 884,725
- ------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
11.07%, 3/15/01(6) 8,555,000 6,223,762
- ------------------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 4,360,000 5,014,000
- ------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 1,865,000 2,205,362
------------
18,526,899
</TABLE>
13 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food/Beverages/Tobacco--1.8%
CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., 1/15/04 $ 3,620,000 $ 3,656,200
- ------------------------------------------------------------------------------------------------------
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 2,845,000 2,973,025
- ------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 3,885,000 4,098,675
- ------------------------------------------------------------------------------------------------------
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 4,655,000 5,167,050
- ------------------------------------------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07(4) 860,000 894,400
------------
16,789,350
- ------------------------------------------------------------------------------------------------------
Healthcare--1.7%
Genesis Health Ventures, Inc., 9.25% Sr. Sub. Nts., 10/1/06(10) 1,505,000 1,550,150
- ------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc.:
11% Sr. Sub. Nts., 4/30/06(3)(4) 2,850,000 3,049,500
9.50% Sr. Sub. Nts., 9/15/07(4) 5,100,000 5,278,500
- ------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts.,
Series A, 4/15/04 1,770,000 1,958,062
- ------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(4) 3,340,000 3,456,900
------------
15,293,112
- ------------------------------------------------------------------------------------------------------
Hotel/Gaming--5.5%
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series B, 11/15/00(2)(11) 275,000 147,125
- ------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., Promissory Nts., 8/1/95(11) 7,500 --
- ------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(2)(11) 100,000 17,500
- ------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07(4) 2,100,000 2,131,500
- ------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 1,675,000 1,800,625
- ------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 3,180,000 3,100,500
- ------------------------------------------------------------------------------------------------------
Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02 2,705,000 2,934,925
- ------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 6,705,000 7,140,825
- ------------------------------------------------------------------------------------------------------
Griffin Gaming & Entertainment, Inc., 7.97% First Mtg
Non-Recourse Pass-Through Nts., 6/30/00(2)(3) 1,010,000 1,025,150
- ------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 2,110,000 2,178,575
- ------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05 3,320,000 3,510,900
- ------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(4) 5,895,000 6,116,062
- ------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 2,340,000 3,077,100
- ------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 1,825,000 1,993,812
9.50% Gtd. Sr. Sub. Nts., 4/15/07 2,560,000 2,720,000
- ------------------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 5,240,000 6,052,200
- ------------------------------------------------------------------------------------------------------
Signature Resorts, Inc., 9.75% Sr. Sub. Nts., 10/1/07(4) 3,635,000 3,698,612
- ------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 10.125% Sr. Sub. Nts., 3/15/06 2,980,000 3,032,150
- ------------------------------------------------------------------------------------------------------
Trump's Castle Funding, Inc., 13.875% Sub. Nts., 11/15/05(9) 52 45
------------
50,677,606
</TABLE>
14 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Restaurants--0.9%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 $ 3,101,000 $ 3,302,565
- ------------------------------------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,360,000 3,591,000
- ------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99(2) 993,000 1,019,066
9.75% Sr. Sub. Nts., 6/1/02(2) 165,000 170,775
------------
8,083,406
- ------------------------------------------------------------------------------------------------------
Textile/Apparel--1.6%
CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03(2) 2,750,000 2,708,750
- ------------------------------------------------------------------------------------------------------
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03(2) 900,000 945,000
- ------------------------------------------------------------------------------------------------------
Dan River, Inc., 10.125% Sr. Sub. Nts., 12/15/03 1,395,000 1,506,600
- ------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Gtd. Nts., 6/15/01 260,000 287,625
- ------------------------------------------------------------------------------------------------------
Tultex Corp., 9.625% Sr. Nts., 4/15/07 2,375,000 2,550,156
- ------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 3,880,000 4,112,800
- ------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06 2,375,000 2,481,875
------------
14,592,806
- ------------------------------------------------------------------------------------------------------
Energy--8.1%
- ------------------------------------------------------------------------------------------------------
Belco Oil & Gas Corp., 8.875% Sr. Sub. Nts., 9/15/07(4) 560,000 567,000
- ------------------------------------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07(4) 6,510,000 6,591,375
- ------------------------------------------------------------------------------------------------------
Canadian Forest Oil Ltd., 8.75% Sr. Sub. Nts., 9/15/07(4) 4,500,000 4,502,812
- ------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.:
8.50% Sr. Nts., 3/15/12 2,080,000 2,028,000
9.125% Sr. Nts., 4/15/06 4,500,000 4,590,000
- ------------------------------------------------------------------------------------------------------
Clark Oil & Refining Corp., 10.50% Sr. Nts., 12/1/01 4,000,000 4,140,000
- ------------------------------------------------------------------------------------------------------
Clark R&M Holdings, Inc., Zero Coupon Sr. Sec. Nts.,
Series A, 10.50%, 2/15/00(6) 7,230,000 5,720,737
- ------------------------------------------------------------------------------------------------------
Cliffs Drilling Co., 10.25% Sr. Nts., 5/15/03(4) 560,000 608,300
- ------------------------------------------------------------------------------------------------------
Dailey Petroleum Services Corp., 9.75% Gtd. Sr. Unsec
Nts., 8/15/07(4) 1,790,000 1,870,550
- ------------------------------------------------------------------------------------------------------
Energy Corp. of America, 9.50% Sr. Sub. Nts., 5/15/07 2,600,000 2,626,000
- ------------------------------------------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., 2/15/07 3,575,000 3,575,000
9.50% Sr. Sub. Nts., 11/1/06 5,845,000 6,151,862
- ------------------------------------------------------------------------------------------------------
Gothic Energy Corp., Units (each unit consists of $1,000
principal amount of 0%/12.25% sr. disc. nts., 9/1/04 and
14 warrants to purchase one ordinary share)(4)(8)(12) 6,500,000 6,776,250
- ------------------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06(10) 2,840,000 2,974,900
- ------------------------------------------------------------------------------------------------------
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 735,000 751,537
- ------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(8) 2,900,000 2,320,000
- ------------------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 3,210,000 3,370,500
- ------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 4,855,000 4,587,975
- ------------------------------------------------------------------------------------------------------
</TABLE>
15 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Energy (continued)
- ------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sub. Nts., 5/15/07(4) $ 1,530,000 $ 1,568,250
- ------------------------------------------------------------------------------------------------------
Rutherford-Moran Oil Corp., 10.75% Sr. Sub. Nts., 10/1/04(4) 1,000,000 1,038,750
- ------------------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg., Series B, 11/15/03 1,050,000 1,114,312
- ------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07(4) 4,005,000 3,989,981
- ------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 0%/13% Sr. Disc. Nts., 6/15/02(4)(8) 2,900,000 2,316,375
- ------------------------------------------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07(4) 450,000 441,000
------------
74,221,466
- ------------------------------------------------------------------------------------------------------
Financial Services--3.3%
- ------------------------------------------------------------------------------------------------------
Banks & Thrifts--0.7%
Bank Plus Corp., 12% Sr. Nts., 7/18/07 578,000 638,690
- ------------------------------------------------------------------------------------------------------
CEI Citicorp Holdings, 11.25% Bonds, 2/14/07ARP 1,045,000 1,067,405
- ------------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc.:
10.625% Sr. Sub. Nts., 10/1/03 730,000 808,475
9.125% Sr. Sub. Nts., 1/15/03 1,800,000 1,872,000
- ------------------------------------------------------------------------------------------------------
Western Financial Bank, 8.875% Sub. Bonds, 8/1/07 1,650,000 1,643,784
------------
6,030,354
- ------------------------------------------------------------------------------------------------------
Diversified Financial--1.8%
Americredit Corp., 9.25% Sr. Nts., 2/1/04 1,230,000 1,254,600
- ------------------------------------------------------------------------------------------------------
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 1,550,000 1,623,625
- ------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(2) 197,785 218,059
- ------------------------------------------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr. Nts., 9/15/04(4) 2,380,000 2,427,600
- ------------------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03(2)(11) 600,000 114,000
- ------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03(2) 625,000 704,688
- ------------------------------------------------------------------------------------------------------
Pindo Deli Finance Mauritius Ltd., 10.75% Gtd. Nts.,
10/1/07(2)(13) 455,000 470,925
- ------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, Zero Coupon Promissory
Nts., 16.55%, 7/15/98(6)IDR 5,000,000,000 1,263,956
- ------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec
Nts., Series B, 4/1/02 2,375,000 2,559,063
- ------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust, 7.375% Sr. Nts., 5/31/02(2)(3) 5,469,000 5,660,833
------------
16,297,349
- ------------------------------------------------------------------------------------------------------
Insurance--0.8%
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03(2) 1,600,000 1,680,000
- ------------------------------------------------------------------------------------------------------
Residential Reinsurance, 11.416% Nts., 12/15/98(3) 1,500,000 1,526,484
- ------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 3,935,000 4,200,613
------------
7,407,097
</TABLE>
16 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Housing Related--2.6%
- ------------------------------------------------------------------------------------------------------
Building Materials--1.6%
Building Materials Corp. of America, 8.625% Sr. Nts.,
Series B, 12/15/06 $ 3,400,000 $ 3,527,500
- ------------------------------------------------------------------------------------------------------
Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07(4) 1,425,000 1,474,875
- ------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.25% Sr. Nts., 3/15/07 4,570,000 4,661,400
9.125% Sr. Nts., 9/1/07(4) 4,540,000 4,613,775
------------
14,277,550
- ------------------------------------------------------------------------------------------------------
Homebuilders/Real Estate--1.0%
Continental Homes Holding Corp., 10% Gtd. Unsec
Bonds, 4/15/06 250,000 265,000
- ------------------------------------------------------------------------------------------------------
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05CAD 375,500 321,793
Units (each unit consists of one $10 principal
amount of 8.50% cv. sub. debs., 12/15/15 and
40 common shares)(12)CAD 225,830 532,829
- ------------------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 830,000 913,000
- ------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd
Sub. Nts., 4/15/02 3,180,000 3,362,850
- ------------------------------------------------------------------------------------------------------
International de Ceramica SA, 9.75% Gtd. Unsec
Unsub. Nts., 8/1/02(2) 225,000 227,813
- ------------------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 900,000 990,000
- ------------------------------------------------------------------------------------------------------
Standard Pacific Corp., 8.50% Sr. Nts., 6/15/07 2,480,000 2,529,600
------------
9,142,885
- ------------------------------------------------------------------------------------------------------
Manufacturing--7.7%
- ------------------------------------------------------------------------------------------------------
Aerospace--1.6%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 5,838,000 6,275,850
- ------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(4) 1,475,000 1,510,031
- ------------------------------------------------------------------------------------------------------
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 2,750,000 3,093,750
- ------------------------------------------------------------------------------------------------------
Northwest Airlines Corp.:
8.375% Gtd. Nts., 3/15/04 480,000 497,229
8.70% Nts., 3/15/07 1,650,000 1,743,578
- ------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr
Nts., Cl. A, 6/15/04(2) 1,969,467 2,014,371
------------
15,134,809
- ------------------------------------------------------------------------------------------------------
Automotive--2.3%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., 7/15/07(4) 2,440,000 2,562,000
- ------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts.,
4/15/06 6,200,000 7,122,250
</TABLE>
17 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automotive (continued)
Hayes Wheels International, Inc.:
11% Sr. Sub. Nts., 7/15/06 $ 4,160,000 $ 4,674,800
9.125% Sr. Sub. Nts., 7/15/07(4) 4,000,000 4,140,000
- ------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 2,405,000 2,537,275
------------
21,036,325
- ------------------------------------------------------------------------------------------------------
Capital Goods--3.8%
Burke Industries, Inc., 10% Sr. Nts., 8/15/07(4) 1,125,000 1,161,563
- ------------------------------------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 3,200,000 3,480,000
12.50% Debs., 7/15/07(4)(9) 827,892 910,681
- ------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12%
Sr. Sub. Nts., Series B, 8/1/05 802,000 892,225
- ------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375%
Sr. Sub. Nts., 8/1/07(4) 2,275,000 2,377,375
- ------------------------------------------------------------------------------------------------------
Insilco Corp., 10.25% Sr. Sub. Nts., 8/15/07(4) 3,770,000 3,911,375
- ------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05(4) 3,720,000 4,082,700
- ------------------------------------------------------------------------------------------------------
Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 6,495,000 7,306,875
- ------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07(4) 960,000 974,400
- ------------------------------------------------------------------------------------------------------
Roller Bearing Co. (America), 9.625% Sr. Sub. Nts., 6/15/07(2) 2,285,000 2,344,981
- ------------------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07 2,980,000 3,084,300
- ------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 3,600,000 3,771,000
- ------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(2) 1,075,000 1,115,313
------------
35,412,788
- ------------------------------------------------------------------------------------------------------
Media--11.9%
- ------------------------------------------------------------------------------------------------------
Broadcasting--3.6%
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 1,450,000 1,587,750
- ------------------------------------------------------------------------------------------------------
Azteca Holdings SA, 11% Sr. Nts., 6/15/02(4) 1,270,000 1,343,025
- ------------------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 1,990,000 2,049,700
- ------------------------------------------------------------------------------------------------------
Chancellor Radio Broadcasting Co., 8.75% Sr. Sub. Nts., 6/15/07(4) 2,100,000 2,157,750
- ------------------------------------------------------------------------------------------------------
Conecel Holdings Ltd., Units (each unit consists of $1,000
principal amount of 14% sec. nts., 10/1/00 and one
warrant to purchase class B common stock)(2)(12)(13) 355,000 365,650
- ------------------------------------------------------------------------------------------------------
Consorcio Ecuatoriano, 14% Nts., 5/1/02(2) 1,255,000 1,358,538
- ------------------------------------------------------------------------------------------------------
Jacor Communications Co.:
8.75% Gtd. Sr. Sub. Nts., 6/15/07(4) 3,785,000 3,874,894
9.75% Gtd. Unsec. Sr. Sub. Nts., 12/15/06 500,000 538,750
- ------------------------------------------------------------------------------------------------------
NWCG Holdings Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 11.07%, 6/15/99(6) 1,030,000 927,000
- ------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,074,854
- ------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., 5/15/04(4)(14) 1,000,000 965,000
</TABLE>
18 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06 $ 2,335,000 $ 2,571,419
- ------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 9/30/05 3,100,000 3,270,500
9% Sr. Sub. Nts., 7/15/07(4) 5,250,000 5,236,875
- ------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.:
11% Sr. Nts., 3/15/04 650,000 711,750
12.50% Sr. Nts., 6/15/02 300,000 343,500
- ------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 3,950,000 3,871,000
9% Sr. Sub. Nts., Series B, 1/15/06 1,200,000 1,206,000
------------
33,453,955
- ------------------------------------------------------------------------------------------------------
Cable Television--3.4%
Adelphia Communications Corp.:
9.25% Sr. Nts., 10/1/02(4) 5,500,000 5,555,000
9.875% Sr. Nts., 3/1/07 2,415,000 2,505,563
- ------------------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08(15) 400,000 432,872
- ------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
9.875% Sr. Sub. Debs., 2/15/13 215,000 233,275
9.875% Sr. Sub. Nts., 5/15/06 2,710,000 2,947,125
- ------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc
Nts., 6/1/04(8) 850,000 770,313
- ------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02(4) 2,730,000 3,023,475
- ------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(2) 1,527,008 1,511,739
- ------------------------------------------------------------------------------------------------------
EchoStar II, 8.25% Bonds, 11/9/01(2) 1,397,880 1,383,902
- ------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec
Disc. Nts., 3/15/04(8) 3,075,000 2,583,000
- ------------------------------------------------------------------------------------------------------
FrontierVision Holdings LP, 0%/11.875% Sr. Disc
Nts., 9/15/07(4)(8) 900,000 621,000
- ------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 2,265,000 2,256,506
- ------------------------------------------------------------------------------------------------------
Panamsat International Systems LP, 12.75% Debs., 4/15/05(9) 1,537,000 1,859,770
- ------------------------------------------------------------------------------------------------------
Rogers Communications, Inc.:
8.75% Sr. Nts., 7/15/07CAD 2,070,000 1,494,207
8.875% Sr. Nts., 7/15/07 1,300,000 1,313,000
- ------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/10.875% Sr. Sub. Nts., 2/15/07(4)(8) 830,000 543,650
10.875% Sr. Sub. Nts., 2/15/07(4) 2,550,000 2,690,250
------------
31,724,647
- ------------------------------------------------------------------------------------------------------
Diversified Media--3.4%
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts.,
Series A, 10/1/03 2,800,000 3,010,000
- ------------------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 835,000 880,925
- ------------------------------------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07(4) 700,000 745,500
</TABLE>
19 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Diversified Media (continued)
ITT Promedia, 9.125% Sr. Sub. Nts., 9/15/07(4)DEM 16,000,000 $ 9,455,397
- ------------------------------------------------------------------------------------------------------
ITT Publimedia BV, 9.375% Sr. Sub. Nts., 9/15/07(4) 2,280,000 2,371,200
- ------------------------------------------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub. Nts., 1/15/07 1,075,000 1,161,000
- ------------------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07(4) 3,300,000 3,291,750
9.625% Sr. Sub. Nts., 12/1/06 3,270,000 3,466,200
- ------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 700,000 815,872
- ------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr. Sub. Nts., 6/15/07 3,750,000 3,843,750
- ------------------------------------------------------------------------------------------------------
Universal Outdoor, Inc.:
9.75% Sr. Sub. Nts., 10/15/06 835,000 893,450
9.75% Sr. Sub. Nts., Series B, 10/15/06 1,505,000 1,610,350
------------
31,545,394
- ------------------------------------------------------------------------------------------------------
Entertainment/Film--0.3%
Imax Corp., 10% Sr. Nts., 3/1/01 1,700,000 1,799,875
- ------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc., 8.50% Sr. Sub. Nts., 10/1/07(4) 1,000,000 1,007,500
------------
2,807,375
- ------------------------------------------------------------------------------------------------------
Publishing/Printing--1.2%
Hollinger International Publishing, Inc.:
9.25% Gtd. Sr. Sub. Nts., 2/1/06 4,170,000 4,357,650
9.25% Gtd. Sr. Sub. Nts., 3/15/07 4,075,000 4,258,375
- ------------------------------------------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07 2,680,000 2,787,200
------------
11,403,225
- ------------------------------------------------------------------------------------------------------
Other--3.4%
- ------------------------------------------------------------------------------------------------------
Conglomerates--0.1%
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(8) 465,000 458,025
- ------------------------------------------------------------------------------------------------------
Environmental--0.3%
Allied Waste Industries, Inc., 0%/11.30% Sr. Disc
Nts., 6/1/07(4)(8) 4,500,000 3,054,375
- ------------------------------------------------------------------------------------------------------
Services--3.0%
Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03 6,500,000 6,646,250
9.625% Sr. Sub. Nts., 3/15/07 2,570,000 2,672,800
- ------------------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(2)(8) 2,025,000 1,589,625
- ------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 7,290,000 7,144,200
- ------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(8) 4,750,000 5,130,000
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 2,868,000 3,341,220
- ------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 1,028,000 1,170,635
------------
27,694,730
</TABLE>
20 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail--2.7%
- ------------------------------------------------------------------------------------------------------
Specialty Retailing--0.6%
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 $ 900,000 $ 999,000
- ------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(2) 1,670,000 1,778,550
- ------------------------------------------------------------------------------------------------------
Profitt's, Inc., 8.125% Sr. Nts., Series B, 5/15/04 600,000 615,000
- ------------------------------------------------------------------------------------------------------
Specialty Retailers, Inc.:
8.50% Gtd. Sr. Nts., 7/15/05 1,250,000 1,287,500
9% Gtd. Sr. Sub. Nts., 7/15/07 550,000 563,750
------------
5,243,800
- ------------------------------------------------------------------------------------------------------
Supermarkets--2.1%
Fleming Cos., Inc.:
10.625% Sr. Sub. Nts., 7/31/07(4) 5,150,000 5,407,500
10.50% Sr. Sub. Nts., 12/1/04(4) 1,010,000 1,060,500
- ------------------------------------------------------------------------------------------------------
P&C Food Markets, Inc., 11.50% Sr. Nts., 10/15/01 860,000 834,200
- ------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04 5,060,000 5,566,000
- ------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., 7/1/07(4) 4,770,000 4,829,625
- ------------------------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9% Sr. Sub. Nts., 7/1/04(4) 1,830,000 1,887,188
------------
19,585,013
- ------------------------------------------------------------------------------------------------------
Technology--14.6%
- ------------------------------------------------------------------------------------------------------
Information Technology--7.4%
Amphenol Corp., 9.875% Sr. Sub. Nts., 5/15/07 600,000 639,000
- ------------------------------------------------------------------------------------------------------
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs.,
Series B, 3/1/05(8) 4,070,000 3,439,150
- ------------------------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07(2) 805,000 523,250
- ------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc.:
0%/13% Sr. Disc. Nts., 6/15/05(2)(8) 1,000,000 705,000
Units (each unit consists of $1,000 principal amount of
0%/14% sr. disc. nts., 10/1/07 and one warrant to purchase
13.671 shares of common stock at $14.30 per share)(2)(8)(12) 1,500,000 763,125
- ------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc., Zero
Coupon Sr. Disc. Nts., 10.90%, 8/15/00(6) 4,910,000 3,805,250
- ------------------------------------------------------------------------------------------------------
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(2)(8) 2,250,000 2,193,750
- ------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc., 0%/14.75% Sr. Disc
Nts., 12/15/05(8) 680,000 527,000
- ------------------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125% Sr. Deferred
Coupon Bonds, 11/15/03(8) 2,300,000 1,794,000
- ------------------------------------------------------------------------------------------------------
Dial Call Communications, Inc., 0%/12.25% Sr. Disc
Nts., 4/15/04(8) 700,000 657,125
- ------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07(4) 2,930,000 2,948,313
- ------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 2,150,000 2,176,875
- ------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(2) 2,000,000 1,700,000
</TABLE>
21 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Information Technology (continued)
HighwayMaster Communications, Inc., Units
(each unit consists of $1,000 principal amount of 13.75% sr. nts.,
9/15/05 and one warrant to purchase 6.566 shares of
common stock at $9.625 per share)(4)(12) $ 1,400,000 $ 1,466,500
- ------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc
Nts., 6/1/06(8) 1,200,000 822,000
- ------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc
Nts., 6/1/06(8) 2,905,000 2,265,900
- ------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/10.65% Sr. Disc
Nts., 9/15/07(4)(8) 7,375,000 4,590,938
- ------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 9.625% Sr. Nts., 10/1/07(13) 3,350,000 3,467,250
- ------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 980,000 1,019,200
11.625% Sr. Nts., Series A, 8/15/06 180,000 187,200
- ------------------------------------------------------------------------------------------------------
Pierce Leahy Corp., 11.125% Sr. Sub. Nts., 7/15/06 3,114,000 3,518,820
- ------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(8) 3,060,000 3,113,550
0%/14% Sr. Sub. Disc. Nts., 11/15/01(8) 460,000 515,200
10.75% Sr. Nts., 11/1/04 1,130,000 1,226,050
- ------------------------------------------------------------------------------------------------------
Rogers Cantel, Inc.:
8.80% Sr. Sub. Nts., 10/1/07(2) 5,000,000 5,006,250
9.375% Sr. Sec. Debs., 6/1/08 3,000,000 3,217,500
- ------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.:
0%/12.50% Sr. Disc. Nts., 8/15/06(8) 3,965,000 3,023,313
11% Sr. Nts., 8/15/06 1,600,000 1,800,000
- ------------------------------------------------------------------------------------------------------
Teletrac, Inc., Units (each unit consists of $1,000 principal
amount of 14% sr. nts., 8/1/07 and one warrant to buy
.537495 ordinary share)(2)(12) 980,000 1,026,550
- ------------------------------------------------------------------------------------------------------
Therma-Wave, Inc., 10.625% Sr. Nts., 5/15/04(4) 360,000 387,000
- ------------------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 4,010,000 4,130,300
- ------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 2,275,000 2,570,750
- ------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
14% Sr. Nts., 11/1/04 655,000 740,150
9.50% Sr. Nts., 2/1/04 375,000 373,125
- ------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07(4) 1,440,000 1,490,400
------------
67,829,784
- ------------------------------------------------------------------------------------------------------
Telecommunications/Technology--7.2%
American Communications Services, Inc., 13.75%
Sr. Nts., 7/15/07(4) 1,950,000 2,232,750
- ------------------------------------------------------------------------------------------------------
Bell Cablemedia plc:
0%/11.875% Sr. Disc. Nts., 9/15/05(8) 5,080,000 4,430,669
0%/11.95% Sr. Disc. Nts., 7/15/04(2)(8) 2,800,000 2,618,000
</TABLE>
22 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts., 3/1/06(8) $ 1,025,000 $ 832,813
0%/11.875% Sr. Disc. Nts., 11/1/06(8) 3,225,000 2,527,594
10% Sr. Nts., 6/1/07 2,100,000 2,394,000
- ------------------------------------------------------------------------------------------------------
BTI Telecom Corp., 10.50% Sr. Nts., 9/15/07(4) 2,735,000 2,830,725
- ------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc.:
0%/9.27% Sr. Disc. Nts., 8/15/07(8) 1,700,000 1,139,000
8.375% Sr. Nts., 8/15/07CAD 2,100,000 1,579,458
- ------------------------------------------------------------------------------------------------------
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)(8)(12) 3,165,000 2,357,925
- ------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc
Debs., 11/15/07(8) 2,850,000 2,251,500
- ------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc:
0%/10.75% Sr. Disc. Nts., 2/15/07(8) 1,800,000 1,179,000
0%/11.75% Sr. Disc. Nts., 12/15/05(8) 3,570,000 2,695,350
- ------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub.
Disc. Nts., 12/15/05(4)(8) 407,000 306,776
- ------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(8) 1,720,000 1,320,100
- ------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(8) 4,320,000 3,499,200
- ------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc
Nts., 7/15/07(8) 625,000 437,500
- ------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred
Coupon Nts., Series B, 2/1/06(8) 1,500,000 1,125,000
- ------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 1,785,000 2,061,675
- ------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts., 3/1/07(8) 2,675,000 1,912,625
9.25% Sr. Nts., 7/15/07(4) 710,000 759,700
- ------------------------------------------------------------------------------------------------------
MGC Communications, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. sec. nts., 10/1/04 and
one warrant to purchase 8.07 shares of common stock
at $0.01 per share)(4)(12) 2,775,000 2,899,875
- ------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(8) 160,000 146,800
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(8) 850,000 688,500
10% Sr. Nts., 2/15/07 3,690,000 3,874,500
- ------------------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(4) 200,000 266,750
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)(2)(8)(12) 1,450,000 1,384,750
- ------------------------------------------------------------------------------------------------------
PTC International Finance BV, 0%/10.75% Gtd. Sr. Sub.
Unsec. Bonds, 7/1/07(4)(8) 785,000 480,813
</TABLE>
23 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Telecommunications/Technology (continued)
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07(8) $ 5,370,000 $ 4,215,450
9.875% Sr. Nts., 7/1/06 825,000 905,438
- ------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(8) 1,755,000 1,325,025
9.625% Sr. Debs., 10/1/06 2,500,000 2,606,250
- ------------------------------------------------------------------------------------------------------
UNIFI Communications, Inc., 14% Sr. Nts., 3/1/04 2,500,000 2,387,500
- ------------------------------------------------------------------------------------------------------
Videotron Holdings plc, 0%/11% Sr. Disc. Nts., 8/15/05(8) 1,000,000 867,500
- ------------------------------------------------------------------------------------------------------
WorldCom, Inc.:
8.875% Sr. Nts., 1/15/06(2) 442,000 477,913
9.375% Sr. Nts., 1/15/04(2) 3,233,000 3,459,310
------------
66,477,734
- ------------------------------------------------------------------------------------------------------
Transportation--2.0%
- ------------------------------------------------------------------------------------------------------
Railroads--0.4%
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(8) 4,391,000 3,831,148
- ------------------------------------------------------------------------------------------------------
Shipping--1.2%
Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 715,000 792,756
- ------------------------------------------------------------------------------------------------------
Greyhound Lines, Inc., 11.50% Sr. Nts., Series B, 4/15/07 3,200,000 3,496,000
- ------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 3,315,000 3,563,625
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and one warrant)(4)(12) 2,605,000 2,930,625
------------
10,783,006
- ------------------------------------------------------------------------------------------------------
Trucking--0.4%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., 7/1/07(4) 2,430,000 2,454,300
- ------------------------------------------------------------------------------------------------------
Road King Infrastructure Finance (1997) Ltd., 9.50% Gtd
Unsec. Unsub. Bonds, 7/15/07(2) 400,000 397,000
- ------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(4) 1,133,420 981,826
------------
3,833,126
- ------------------------------------------------------------------------------------------------------
Utilities--1.5%
- ------------------------------------------------------------------------------------------------------
Electric Utilities--1.5%
AES Corp., 8.375% Sr. Sub. Nts., 8/15/07 1,850,000 1,863,875
- ------------------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 3,530,000 3,821,225
- ------------------------------------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06(2) 400,000 439,000
9.25% Sr. Nts., 2/1/04 1,360,000 1,404,200
- ------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 4,350,000 4,828,500
- ------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04(2) 1,750,000 1,706,250
------------
14,063,050
------------
Total Corporate Bonds and Notes (Cost $726,019,568) 755,044,147
</TABLE>
24 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
======================================================================================================
<S> <C> <C>
Common Stocks--0.6%
- ------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc.(16) 4,000 $ 50,250
- ------------------------------------------------------------------------------------------------------
Coinstar, Inc.(16) 14,175 184,275
- ------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., Cl. A(16) 14,000 339,500
- ------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(2) 75 75,188
- ------------------------------------------------------------------------------------------------------
El Paso Electric Co. 56,400 338,400
- ------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(2) 2,261 11,305
- ------------------------------------------------------------------------------------------------------
Grand Union Co.(16) 1,767 3,092
- ------------------------------------------------------------------------------------------------------
Greate Bay Casino Corp.(16) 1,678 2,307
- ------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., Cl. A(16) 10,000 28,750
- ------------------------------------------------------------------------------------------------------
News Corp. Ltd., Sponsored ADR, Preference 2,901 52,037
- ------------------------------------------------------------------------------------------------------
Omnipoint Corp.(2)(16) 50,000 1,003,438
- ------------------------------------------------------------------------------------------------------
Optel, Inc.(2)(16) 2,240 22
- ------------------------------------------------------------------------------------------------------
Southwest Airlines Co. 53,100 1,695,881
- ------------------------------------------------------------------------------------------------------
WorldCom, Inc. 52,000 1,839,500
------------
Total Common Stocks (Cost $4,307,122) 5,623,945
- ------------------------------------------------------------------------------------------------------
Preferred Stocks--2.8%
- ------------------------------------------------------------------------------------------------------
American Radio Systems Corp., 11.375% Cum
Exchangeable Preferred(9) 11,744 1,412,216
- ------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable Preferred
Stock, Non-Vtg 61,560 1,739,070
- ------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
11.125% Exchangeable Preferred Stock, Series M(9) 4,780 525,202
8.50% Cum. Cv., Series I 28,900 845,325
- ------------------------------------------------------------------------------------------------------
California Federal Bank, 11.50% Non-Cum., Non-Vtg 11,700 1,334,531
- ------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred(2)(16)(17) 130,000 3,250,000
- ------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Preferred Stock(4)(9)(13) 1,000 1,027,500
- ------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 12,000 435,000
- ------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr. Preferred Stock, Series C(2)(9) 110,000 1,072,500
- ------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable Preferred Stock, Series B(4)(9)(13) 2,625 2,730,000
- ------------------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Preferred Stock, Series A(9) 16,807 1,869,779
- ------------------------------------------------------------------------------------------------------
Golden State Bancorp., 8.75% Cv. Preferred Stock, Series A 8,500 630,594
- ------------------------------------------------------------------------------------------------------
K-III Communications Corp.:
$11.625 Exchangeable, Series B(2)(9) 8,668 941,563
9.20% Preferred Stock, Series E(4) 22,500 2,266,875
- ------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr. Exchangeable
Preferred(9) 32,480 2,135,560
- ------------------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 9,000 218,250
- ------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625% Cum., Series E, Non-Vtg 700 810,250
</TABLE>
25 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
======================================================================================================
<S> <C> <C>
Preferred Stocks (continued)
Spanish Broadcasting Systems, Inc., 14.25% Cum. Sr
Exchangeable Preferred Stock, Non-Vtg.(4) 700 $ 733,250
- ------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Preferred Stock 83,700 2,170,969
------------
Total Preferred Stocks (Cost $24,429,338) 26,148,434
======================================================================================================
Other Securities--0.7%
- ------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable, Series B 107,800 4,985,750
- ------------------------------------------------------------------------------------------------------
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred(2) 47,870 1,759,222
------------
Total Other Securities (Cost $6,108,221) 6,744,972
Units
======================================================================================================
Rights, Warrants and Certificates--0.2%
- ------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(2) 725 68,875
- ------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99(2) 5,500 55
Exp. 8/00(2) 850 10
- ------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(2) 19,829 198
- ------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00(2) 190 --
- ------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(2) 12,500 3,125
- ------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(2) 5,120 87,040
- ------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2)(17) 130,000 65,000
- ------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/05 1,320 9,834
- ------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03(2) 2,300 126,500
- ------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc.:
Cl. C Wts., Exp. 12/99 6,741 137,348
Cl. D Wts., Exp. 12/01 6,741 133,135
- ------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 1,174 10,566
- ------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(2) 265 10,733
- ------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(2) 17,655 264,825
- ------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 1,600 --
- ------------------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited Partners' Interest 1,985 --
- ------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts., Exp. 2/09(2) 30,310 --
- ------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 8,000 160,550
- ------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(2) 28,000 364,000
Exp. 6/05(2) 15,200 197,600
- ------------------------------------------------------------------------------------------------------
Trizec Corp. Wts., Exp. 7/99 1,985 11,125
- ------------------------------------------------------------------------------------------------------
UNIFI Communications, Inc. Wts., Exp. 3/07(2) 2,500 5,000
- ------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation
Wts., Exp. 4/20 5,355 --
- ------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/02(2) 49,200 64,575
------------
Total Rights, Warrants and Certificates (Cost $239,713) 1,720,094
</TABLE>
26 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
======================================================================================================
<S> <C> <C>
Structured Instruments--2.0%
- ------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Goldman Sachs Commodity Index Excess Return
CD Leveraged-Linked Nts., 5.106%, 11/21/97(3)(18) $ 1,250,000 $ 1,574,375
- ------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Nikkei 225 Equity-Linked Nts., 6.03%, 4/23/98 1,500,000 1,454,400
- ------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, U.S. Dollar Nts.:
Linked to the Colombian Peso, 18.25%, 9/29/98 1,600,000 1,575,840
Linked to the Ministry of Finance of the Russian Federation
GKO, Zero Coupon, 9.86%, 9/17/98(6) 865,000 774,002
- ------------------------------------------------------------------------------------------------------
Credit Suisse First Boston (Cayman) Ltd., City of Moscow,
Credit & Convertibility Linked Nts., Series EM 215, Zero
Coupon, 12.05%, 12/30/97(6) 5,000,000 4,854,755
- ------------------------------------------------------------------------------------------------------
ING (U.S.) Financial Holdings Corp.:
U.S. Dollar Hedged GKO Pass-Through Nts., Zero Coupon,
13.09%, 12/3/97(2)(6) 1,900,000 1,862,684
PT Polysindo Linked Nts., Zero Coupon, 10.43%, 7/15/98(2)(6) 400,000 359,100
- ------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. U.S. Dollar Nts. Linked to
the Greek Drachma/Swiss Franc Exchange Rate, Zero
Coupon, 10.59%, 12/26/97(6) 400,000 428,680
- ------------------------------------------------------------------------------------------------------
Lehman, Inc., Guatemalan Letras de Tesoreria
Linked Nts., Zero Coupon, 8.35%, 10/27/97(6) 735,000 730,517
- ------------------------------------------------------------------------------------------------------
Salomon, Inc., Colombian Peso Linked Nts.,
Zero Coupon, 18.17%, 8/20/98(6)(13) 934,000 802,903
- ------------------------------------------------------------------------------------------------------
Standard Chartered Bank:
Indian Rupee Linked Nts.:
15%, 10/20/97 441,000 434,032
32.641%, 11/28/97 154,000 158,497
35.115%, 11/28/97 154,000 157,927
Zero Coupon, 17.73%, 10/1/02(6)IDR 2,954,000,000 373,332
Korean Wong Principal & Interest Linked Deposit:
11.62%, 6/30/98 675,068 634,564
11.68%, 7/3/98 1,227,006 1,153,508
U.S. Dollar/Chinese Yuan Linked Nts., 12.903%, 12/5/97 400,000 403,600
- ------------------------------------------------------------------------------------------------------
Union Bank of Switzerland, Indian Rupee Linked Nts.,
5.40%, 11/17/97 294,000 294,764
------------
Total Structured Instruments (Cost $17,941,135) 18,027,480
<CAPTION>
Date Strike Contracts
======================================================================================================
<S> <C> <C> <C> <C>
Call Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Capitalization
Bonds, 8%, 4/15/14 Call Opt 10/97 83.625% 3,000 47,400
- ------------------------------------------------------------------------------------------------------
German Mark Call Opt 12/97 19.22CZK 735,000 12,789
- ------------------------------------------------------------------------------------------------------
Russian (Government of) Principal Loans
Debs., 5.80%, 12/29/49 Call Opt 10/97 69.875% 1,850 91,482
</TABLE>
27 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
======================================================================================================
<S> <C> <C> <C> <C>
Call Options Purchased (continued)
Russian (Government of) Principal Loans
Debs., 5.80%, 12/29/49 Call Opt 11/97 75.125% 1,080 $ 10,800
- ------------------------------------------------------------------------------------------------------
Total Call Options Purchased (Cost $109,819) 162,471
- ------------------------------------------------------------------------------------------------------
Put Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------------
Brazilian Rial Put Opt. (Cost $7,680) 10/97 1.108BRR 1,600,000 400
<CAPTION>
Face
Amount(1)
======================================================================================================
Repurchase Agreements--4.1%
- ------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 6.125%, dated 9/30/97,
to be repurchased at $37,806,431 on 10/1/97, collateralized by U.S.
Treasury Nts., 5.875%-7.25%, 5/31/99-8/15/04, with a value of
$38,594,876 (Cost $37,800,000) $37,800,000 37,800,000
- ------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $866,568,315) 98.1% 903,885,372
- ------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.9 17,855,433
----------- ------------
Net Assets 100.0% $921,740,805
=========== ============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso IDR--Indonesian Rupiah
BRR--Brazilian Rial MXP--Mexican Peso
CAD--Canadian Dollar PLZ--Polish Zloty
CZK--Czech Koruna TRL--Turkish Lira
DEM--German Mark ZAR--South African Rand
HUF--Hungarian Forint
2. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $208,050,124 or 22.57% of the Fund's net
assets, at September 30, 1997.
5. 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.
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
28 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Face Subject Expiration Exercise Premium Market Value
To Call Date Price Received See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brazil (Federal Republic of) Capitalization
Bonds, 8%, 4/15/14 Call Option $3,000,000 10/6/97 83.625% $ 36,428 $ 47,400
- -----------------------------------------------------------------------------------------------------
Russian (Government of) Principal Loans
Debs., 5.80%, 12/29/49 Call Option 1,850,000 10/14/97 69.875 75,850 91,483
--------- --------
$ 112,278 $138,883
========= ========
</TABLE>
8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
9. Interest or dividend is paid in kind.
10. Securities with an aggregate market value of $5,612,175 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
11. Non-income producing--issuer is in default of interest payment.
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. When-issued security to be delivered and settled after September 30, 1997.
14. Represents the current interest rate for an increasing rate security.
15. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
16. Non-income producing security.
17. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate as defined in the
Investment Company Act of 1940, at or during the period ended September 30,
1997. The aggregate fair value of securities of affiliated companies held by the
Fund as of September 30, 1997 amounts to $3,315,000. Transactions during the
period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Shares Gross Gross Shares
September 30, 1996 Additions Reductions September 30, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CGA Group Ltd., Preferred -- 130,000 -- 130,000
- ----------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 -- 130,000 -- 130,000
</TABLE>
18. Security is linked to the Goldman Sachs Commodity Index. The Index is
composed of the future price of twenty-two different commodities in five main
commodity groups (energy, agriculture, livestock, industrial metals and precious
metals) in rough proportion to the value of their production in the world
economy. See accompanying Notes to Financial Statements.
29 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities September 30, 1997
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $863,318,315) $900,570,372
Affiliated companies (cost $3,250,000) 3,315,000
- --------------------------------------------------------------------------------
Cash 1,930,504
- --------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 37,363
- --------------------------------------------------------------------------------
Receivables:
Investments sold 17,369,373
Interest, dividends and principal paydowns 16,077,906
Shares of beneficial interest sold 5,294,494
Closed forward foreign currency exchange contracts 1,159,565
- --------------------------------------------------------------------------------
Other 23,419
- --------------------------------------------------------------------------------
Total assets 945,777,996
================================================================================
Liabilities
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 235,460
- --------------------------------------------------------------------------------
Options written, at value (premiums received $112,278)--
see accompanying statement--Note 7 138,883
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $10,971,376 purchased
on a when-issued basis)--Note 1 19,382,141
Dividends 1,928,708
Shares of beneficial interest redeemed 1,109,525
Distribution and service plan fees 530,097
Daily variation on futures contracts--Note 6 274,925
Transfer and shareholder servicing agent fees 104,888
Closed forward foreign currency exchange contracts 79,608
Trustees' fees 1,006
Other 251,950
- --------------------------------------------------------------------------------
Total liabilities 24,037,191
================================================================================
Net Assets $921,740,805
============
================================================================================
Composition of Net Assets
Paid-in capital $872,574,225
- --------------------------------------------------------------------------------
Undistributed net investment income 175,879
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions 12,115,500
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 36,875,201
- --------------------------------------------------------------------------------
Net assets $921,740,805
============
30 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $502,210,711 and 37,214,869 shares of beneficial
interest outstanding) $13.49
Maximum offering price per share (net asset value plus
sales charge of 4.75% of offering price) $14.16
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $238,505,199 and 17,691,067 shares of beneficial
interest outstanding) $13.48
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $181,024,895 and 13,427,703 shares of beneficial
interest outstanding) $13.48
See accompanying Notes to Financial Statements.
31 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended September 30, 1997
- --------------------------------------------------------------------------------
================================================================================
Investment Income
Interest (net of foreign withholding taxes of $770) $ 69,563,389
- -------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $50) 1,198,645
------------
Total income 70,762,034
================================================================================
Expenses
Management fees--Note 4 4,685,210
- -------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,040,495
Class B 1,507,042
Class C 1,431,592
- -------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,009,816
- -------------------------------------------------------------------------------
Shareholder reports 244,008
- -------------------------------------------------------------------------------
Custodian fees and expenses 107,158
- -------------------------------------------------------------------------------
Registration and filing fees:
Class A 41,887
Class B 31,884
Class C 16,395
- -------------------------------------------------------------------------------
Legal and auditing fees 22,141
- -------------------------------------------------------------------------------
Insurance expenses 6,725
- -------------------------------------------------------------------------------
Trustees' fees and expenses 5,941
- -------------------------------------------------------------------------------
Other 21,876
------------
Total expenses 10,172,170
================================================================================
Net Investment Income 60,589,864
================================================================================
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments 13,944,362
Closing of futures contracts 2,522,348
Closing and expiration of options written 552,133
Foreign currency transactions (3,633,073)
------------
Net realized gain 13,385,770
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 20,815,559
Translation of assets and liabilities denominated in
foreign currencies (581,174)
------------
Net change 20,234,385
------------
Net realized and unrealized gain 33,620,155
- -------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 94,210,019
============
See accompanying Notes to Financial Statements.
32 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended September 30,
1997 1996
=========================================================================================================
<S> <C> <C>
Operations
Net investment income $ 60,589,864 $ 37,363,248
- ---------------------------------------------------------------------------------------------------------
Net realized gain 13,385,770 2,827,552
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 20,234,385 12,310,743
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 94,210,019 52,501,543
=========================================================================================================
Dividends and Distributions to Shareholders Dividends from net investment
income:
Class A (37,216,010) (27,408,362)
Class B (11,933,911) (2,625,608)
Class C (11,440,006) (7,329,215)
=========================================================================================================
Beneficial Interest Transactions Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 123,701,684 93,320,881
Class B 148,822,899 80,797,723
Class C 61,390,727 44,878,194
=========================================================================================================
Net Assets
Total increase 367,535,402 234,135,156
- ---------------------------------------------------------------------------------------------------------
Beginning of period 554,205,403 320,070,247
- ---------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $175,879 and $27,701, respectively) $ 921,740,805 $ 554,205,403
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
33 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------------------------------
Year Ended September 30,
1997 1996 1995 1994 1993
======================================================================================================
Per Share Operating Data:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.92 $12.47 $12.32 $12.90 $12.26
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.15 1.15 1.05 1.10 1.22
Net realized and unrealized gain (loss) .57 .44 .14 (.38) .64
------ ------ ------ ------ ------
Total income from
investment operations 1.72 1.59 1.19 .72 1.86
- ------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.15) (1.14) (1.04) (1.10) (1.22)
Dividends in excess of net
investment income -- -- -- (.01) --
Distributions in excess of net realized gain -- -- -- (.19) --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.15) (1.14) (1.04) (1.30) (1.22)
Net asset value, end of period $13.49 $12.92 $12.47 $12.32 $12.90
====== ====== ====== ====== ======
======================================================================================================
Total Return, at Net Asset Value(4) 13.96% 13.28% 10.09% 5.61% 15.92%
======================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $502,211 $359,208 $255,139 $160,505 $104,465
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $425,258 $305,638 $204,917 $135,431 $73,334
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.75% 8.97% 8.45% 8.49% 9.52%
Expenses 1.10% 1.17% 1.18% 1.22% 1.24%
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 136.0% 95.0% 72.5% 108.0% 116.2%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to September 30,
1994.
2. For the period from October 2, 1995 (inception of offering) to September 30,
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.
34 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Class C
- ------------------------ -----------------------------------------
Year Ended September 30, Year Ended September 30,
1997 1996(2) 1997 1996 1995 1994(1)
====================================================================
$12.91 $12.47 $12.91 $12.46 $12.32 $13.13
- --------------------------------------------------------------------
1.05 1.03 1.05 1.06 .95 .75
.57 .44 .57 .44 .13 (.60)
------ ------ ------ ------ ------ ------
1.62 1.47 1.62 1.50 1.08 .15
- --------------------------------------------------------------------
(1.05) (1.03) (1.05) (1.05) (.94) (.77)
-- -- -- -- -- --(3)
-- -- -- -- -- (.19)
------ ------ ------ ------ ------ ------
(1.05) (1.03) (1.05) (1.05) (.94) (.96)
$13.48 $12.91 $13.48 $12.91 $12.46 $12.32
====== ====== ====== ====== ====== ======
====================================================================
13.10% 12.20% 13.12% 12.44% 9.16% 1.11%
====================================================================
$238,505 $82,052 $181,025 $112,945 $64,932 $27,743
- --------------------------------------------------------------------
$151,197 $33,189 $143,363 $89,416 $43,584 $13,693
- --------------------------------------------------------------------
7.89% 7.90%(5) 7.98% 8.19% 7.63% 7.24%(5)
1.86% 1.97%(5) 1.86% 1.93% 1.95% 1.94%(5)
- --------------------------------------------------------------------
136.0% 95.0% 136.0% 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 September 30, 1997 were $1,199,169,080 and $888,395,377, respectively.
See accompanying Notes to Financial Statements.
35 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Champion Income Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment objective is to seek a high level of
current income primarily through investing in a diversified portfolio of high
yield fixed income securities. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class
C shares. Class A shares are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent deferred sales charge. All 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 that class and exclusive voting rights with respect to
matters affecting that 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 an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments.
36 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Fund's net asset value to the extent the Fund
makes such purchases while remaining substantially fully invested. As of
September 30, 1997, the Fund had entered into outstanding when-issued or forward
commitments of $10,971,376.
- --------------------------------------------------------------------------------
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 September 30, 1997, securities with an
aggregate market value of $278,625, representing 0.03% 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 foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments
is separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
37 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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 its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. Accordingly,
during the year ended September 30, 1997, amounts have been reclassified to
reflect an increase in undistributed net investment income of $148,241.
Accumulated net realized gain on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. 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.
38 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
Year Ended Year Ended
September 30, 1997 September 30, 1996(1)
----------------------- -----------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
Class A:
Sold 16,568,069 $217,572,287 13,390,615 $170,144,406
Dividends and distributions
reinvested 1,893,564 24,892,342 1,445,851 18,398,126
Redeemed (9,055,154) (118,762,945) (7,492,035) (95,221,651)
---------- ------------ --------- ------------
Net increase 9,406,479 $123,701,684 7,344,431 $ 93,320,881
========== ============ ========= ============
- -------------------------------------------------------------------------------
Class B:
Sold 12,465,577 $163,647,329 6,824,247 $ 86,737,093
Dividends and distributions
reinvested 557,270 7,333,434 132,964 1,694,762
Redeemed (1,689,558) (22,157,864) (599,433) (7,634,132)
---------- ------------ --------- ------------
Net increase 11,333,289 $148,822,899 6,357,778 $ 80,797,723
========== ============ ========= ============
- -------------------------------------------------------------------------------
Class C:
Sold 6,567,675 $ 86,149,589 4,628,427 $ 58,715,116
Dividends and distributions
reinvested 618,611 8,129,826 401,746 5,108,872
Redeemed (2,510,331) (32,888,688) (1,490,391) (18,945,794)
---------- ------------ --------- ------------
Net increase 4,675,955 $ 61,390,727 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.
39 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
3. Unrealized Gains and Losses on Investments
At September 30, 1997, net unrealized appreciation on investments and options
written of $37,290,452 was composed of gross appreciation of $40,303,937, and
gross depreciation of $3,013,485.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 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 year ended September 30, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $2,874,912, of which
$777,402 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 $5,694,296 and $768,684, respectively, of which
$155,336 and $13,612, respectively, was paid to an affiliated broker/dealer.
During the year ended September 30, 1997, OFDI received contingent deferred
sales charges of $227,303 and $57,602, 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 shareholder 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 maintaining accounts
of their customers that hold Class A shares. During the year ended September 30,
1997, OFDI paid $46,803 to an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses.
40 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The Fund has adopted a 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 year ended September 30, 1997, OFDI paid $1,489 to an
affiliated broker/dealer as reimbursement for Class B personal service and
maintenance expenses and retained $1,406,074 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 September 30, 1997, OFDI had
incurred unreimbursed expenses of $8,892,028 for Class B.
The Fund has adopted a 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 year ended September 30, 1997, OFDI paid
$11,594 to an affiliated broker/dealer as reimbursement for Class C personal
service and maintenance expenses and retained $625,907 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 September 30, 1997,
OFDI had incurred unreimbursed expenses of $2,190,010 for Class C.
41 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
5. Forward Contracts
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign
currency risks. They may also be used to tactically shift portfolio currency
risk. The Fund generally enters into forward contracts as a hedge upon the
purchase or sale of a security denominated in a foreign currency. In addition,
the Fund may enter into such contracts as a hedge against changes in foreign
currency exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the
forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
reported in the Statement of Assets and Liabilities. Realized gains and losses
are reported with all other foreign currency gains and losses in the Fund's
Statement of Operations.
Risks include the potential inability of the counterparty to meet
the terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At September 30, 1997, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Contract Valuation as of
Expiration Amount September 30, Unrealized Unrealized
Date (000s) 1997 Appreciation Depreciation
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Contracts to Purchase
Indonesian Rupiah (IDR) 10/1/97 1,263,142 IDR $ 387,467 $ -- $ 11,630
Turkish Lira (TRL) 10/1/97 138,742,800 TRL 796,183 -- 915
------- --------
-- 12,545
------- --------
Contracts to Sell
Canadian Dollar (CAD) 1/21/98 4,170 CAD 3,036,440 5,118 --
German Mark (DEM) 11/17/97-
12/19/97 20,690 DEM 11,802,759 -- 182,078
Hungarian Forint (HUF) 10/2/97 153,809 HUF 788,340 1,235 --
Japanese Yen (JPY) 11/12/97 222,000 JPY 1,854,148 31,010 --
Mexican Peso (MXP) 10/22/97 12,475 MXP 1,592,044 -- 2,661
South African Rand (ZAR) 10/27/97 20,368 ZAR 4,337,389 -- 38,176
------- --------
37,363 222,915
------- --------
Total Appreciation and Depreciation $37,363 $235,460
======= ========
</TABLE>
42 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 September 30, 1997, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Contracts to Purchase Date Contracts September 30, 1997 Depreciation
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Standard & Poor's 500 12/97 60 $28,635,000 $139,850
U.S. Treasury Bonds, 30 yr. 12/97 200 23,056,250 83,656
--------
$223,506
========
</TABLE>
43 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
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.
Securities designated to cover outstanding call options are noted
in the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist. Written option activity for the year ended September 30, 1997 was as
follows:
Call Options Put Options
------------------------ ---------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- --------------------------------------------------------------------------------
Options outstanding at
September 30, 1996 11,000 $ 74,680 -- $ --
Options written 225,772,004 1,835,436 759,470 18,996
Options closed or expired (222,011,754) (1,744,785) (759,250) (17,808)
Options exercised (3,766,400) (53,053) (220) (1,188)
------------ ---------- -------- -------
Options outstanding at
September 30, 1997 4,850 $ 112,278 -- $ --
============ ========== ======== =======
44 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
8. Illiquid and Restricted Securities
At September 30, 1997, investments in 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
periodically) 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 September 30, 1997 was $80,067,003, which
represents 8.69% of the Fund's net assets, of which $4,939,984 is considered
restricted.
Information concerning restricted securities is as follows:
Valuation
Acquisition Cost Per Unit as of
Security Date Per Unit September 30, 1997
- -------------------------------------------------------------------------------
Bonds
Arizona Charlie's, Inc.,
12% First Mtg. Nts.,
Series B, 11/15/00 11/18/93 100.00% 53.50%
- -------------------------------------------------------------------------------
Capitol Queen & Casino, Inc.,
12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 87.50 17.50
- -------------------------------------------------------------------------------
ECM Fund, L.P.I.,
14% Sub. Nts.,
6/10/02 7/28/92 100.50 110.25
Stocks and Warrants
Becker Gaming, Inc.
Wts., Exp. 11/00 11/18/93 $ 2.00 $ .25
- -------------------------------------------------------------------------------
CGA Group Ltd., Preferred 6/17/97 25.00 25.00
- -------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .50
- -------------------------------------------------------------------------------
ECM Fund, L.P.I 4/14/92 1,000.00 1,002.50
- -------------------------------------------------------------------------------
Omnipoint Corp. 1/26/96 16.00 20.07
- -------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 20.07
45 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
9. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other OppenheimerFunds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended
September 30, 1997.
46 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Champion Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Champion Income Fund as of
September 30, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended September 30, 1997
and 1996, and the financial highlights for the period October 1, 1992 to
September 30, 1997. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at September 30, 1997 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the financial position of
Oppenheimer Champion Income Fund at September 30, 1997, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1997
47 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1998, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended September
30, 1997 which are not designated as capital gain distributions should be
multiplied by 0.58% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
48 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 Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of
Oppenheimer Champion Income Fund. This report must be
preceded or accompanied by a Prospectus of Oppenheimer
Champion Income Fund. For material information
concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
49 Oppenheimer Champion Income Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==========================================================================================
Real Asset Funds
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Real Asset Fund Gold & Special Minerals Fund
==========================================================================================
Stock Funds
- ------------------------------------------------------------------------------------------
Developing Markets Fund Quest Small Cap Value Fund Global Fund
Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund
International Growth Fund Quest Capital Value Fund Disciplined Value Fund
Discovery Fund Growth Fund Quest Value Fund
==========================================================================================
Stock & Bond Funds
- ------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==========================================================================================
Bond Funds
- ------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==========================================================================================
Municipal Funds
- ------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==========================================================================================
Money Market Funds(4)
- ------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==========================================================================================
LifeSpan
- ------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds
are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center,
New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
50 Oppenheimer Champion Income Fund
<PAGE>
<PAGE>
Information and services
- --------------------------------------------------------------------------------
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, or visit us at our website at www.oppenheimerfunds.com--
we're here to help.
Internet
24-hr access to account information
- --------------------------
www.oppenheimerfunds.com
- --------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- --------------------------
1-800-525-7048
- --------------------------
Account Transactions
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- --------------------------
1-800-852-8457
- --------------------------
PhoneLink
24-hr automated information
and automated transactions
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1-800-533-3310
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for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
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OppenheimerFunds
Information Hotline
24 hours a day, timely and insightful messages on the economy and issues
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[LOGO] OppenheimerFunds(SM)
Distributor, Inc.
RA0190.001.0997 November 28, 1997
