<PAGE> 1
SEMIANNUAL REPORT MARCH 31, 1998
OPPENHEIMER
CHAMPION
INCOME FUND
[PHOTO]
[OPPENHEIMER FUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Manager
10 Statement of
Investments
30 Statement of
Assets and
Liabilities
32 Statement of
Operations
33 Statements of
Changes in
Net Assets
34 Financial Highlights
37 Notes to Financial
Statements
47 Officers and
Trustees
48 Information and
Services
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
- - 5-STAR MORNINGSTAR: The Fund's Class A shares have maintained 5-star
Morningstar rankings for the 3-, 5- and 10-year periods ended March 31, 1998,
among 1,403 (3-year), 831 (5-year), and 329 (10-year) fixed-income funds.(1)
- - HIGH-YIELD BONDS continued to perform strongly, bolstered by a healthy U.S.
economy, which has yet to reflect the impact of the Asian economic crisis.
- - TELECOMMUNICATIONS COMPANIES, which are heavy issuers of high-yield debt,
remained the top performing industry in the portfolio.
- - THE FUND PICKED UP EXTRA YIELD by investing in bonds with slightly lower
credit quality, although we believe that the extra risk is offset through broad
diversification.
CUMULATIVE TOTAL RETURNS
For the 6-Month Period
Ended 3/31/98
<TABLE>
<CAPTION>
CLASS A
Without With
Sales Chg.(2) Sales Chg.(3)
<S> <C>
6.56% 1.50%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
Without With
Sales Chg.(2) Sales Chg.(3)
<S> <C>
6.15% 1.15%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
Without With
Sales Chg.(2) Sales Chg.(3)
<S> <C>
6.13% 5.13%
</TABLE>
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, Inc., 3/31/98. 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 the 90-day U.S. Treasury bill returns, respectively. Overall star
ranking is subject to change monthly. Top 10% are ranked 5 stars, next 22.5%
are 4 stars, middle 35% are 3 stars, next 22.5% are 2 stars and bottom 10% are
1 star.
2. Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
3. Class A return includes the current maximum initial sales charge of 4.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class C return includes the contingent deferred sales charge of 1%. 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. This performance is not annualized.
2 Oppenheimer Champion Income Fund
<PAGE> 3
[PHOTO]
JAMES C. SWAIN
Chairman
Oppenheimer
Champion Income Fund
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Champion Income Fund
DEAR SHAREHOLDER,
- ------------------------------------------------------------------------------
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to
its lowest level in 30 years and inflation has also fallen to a record low. In
fact, long-term interest rates have fallen to their lowest level since the
government began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch farther and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline.
While lower prices may sound like positive news, in reality it isn't: When
prices fall too low, it erodes the value of those goods to the producer. That
is, when economic conditions force a decrease in the price of goods, companies
have to sell more of those items in order to make the same amount of profit,
which translates into greater difficulties for corporations seeking to improve
their bottom lines.
At OppenheimerFunds, we do not believe we will see a period of deflation in
the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan
and guide your investments accordingly.
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
April 21, 1998
3 Oppenheimer Champion Income Fund
<PAGE> 4
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 3/31/98(1)
<TABLE>
<CAPTION>
CLASS A
1 year 5 year 10 year
<S> <C> <C>
11.13% 10.06% 12.23%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
Since
1 year 5 year Inception
<S> <C> <C>
10.79% N/A 11.66%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
Since
1 year 5 year Inception
<S> <C> <C>
14.77% N/A 9.64%
</TABLE>
CUMULATIVE TOTAL RETURN
For the 5-Year Period Ended 3/31/98(1)
CLASS A
61.48% $16,148(4)
STANDARDIZED YIELDS(5)
For the 30 Days Ended 3/31/98
CLASS A
6.69%
CLASS B
6.27%
CLASS C
6.27%
PERFORMANCE UPDATE
- -------------------------------------------------------------------------------
With interest rates remaining low, investors have continued to search for bonds
that offer higher yields. During the six-month period ended March 31, 1998,
Oppenheimer Champion Income Fund's Class A shares produced a cumulative return
of 6.56%, without sales charges. (2) In addition, the Fund's Class A shares
have maintained 5-star Morningstar ranking for the 3-, 5- and 10-year periods
ended March 31, 1998, among 1,403 (3-year), 831 (5-year), and 329 (10-year)
fixed-income funds.(3)
GROWTH OF $10,000
Over five years(4)
(without sales charges)
<TABLE>
<CAPTION>
Oppenheimer Champion Merrill Lynch High
Income Fund Class A shares Yield Bond Master Index
<S> <C>
$ 10,000 $ 10,000
10,399.2 10,496.6
10,663.4 10,660.1
11,033 11,112
10,828.9 10,991.5
10,703.4 11,049.1
10,849.4 11,132.1
10,904.4 11,098.4
11,562.2 11,461.5
12,295.8 11,957.7
12,655 12,255.4
13,075.7 12,728.9
13,266.1 13,105.4
13,448.1 13,337.1
13,972.7 13,883.1
14,522.3 14,434.8
14,674.5 14,450.6
15,371.1 15,137
15,972.7 15,809.4
16,384.8 16,154.1
16,841.5 16,859.6
</TABLE>
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 3%
(since inception on 10/2/95). Class C returns for the one-year period 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.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
4 Oppenheimer Champion Income Fund
<PAGE> 5
CREDIT ALLOCATION(6)
<TABLE>
<S> <C>
AAA 3.0%
A 6.3
BBB 2.1
BB 15.0
B 56.5
CCC 4.6
C 0.5
Other 12.0
</TABLE>
PORTFOLIO REVIEW
- -----------------------------------------------------------------------------
Oppenheimer Champion Income Fund is for investors looking for high income and
growth potential for their portfolio.
WHAT WE LOOK FOR
- - Improvement in RELATIVE CASH FLOWS and liquidity to meet financial
obligations.
- - Corporate sectors that are currently UNDERVALUED.
- - Changes in the BUSINESS CYCLE that might affect corporate profits.
- - Sectors or industries that help provide DIVERSIFICATION BENEFITS to the
portfolio.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS BY ISSUER(6)
....................................................................
<S> <C>
Nextel Communications, Inc. 2.3%
....................................................................
Intermedia Communications, Inc. 1.4%
....................................................................
Qwest Communications International, Inc. 1.2%
....................................................................
Algoma Steel, Inc. 1.0%
....................................................................
EchoStar Communications, Inc. 1.0%
....................................................................
</TABLE>
3. Source: Morningstar, Inc., 3/31/98. 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 the 90-day U.S. Treasury bill returns, respectively. Overall star
ranking is subject to change monthly. Top 10% are ranked 5 stars, next 22.5%
are 4 stars, middle 35% are 3 stars, next 22.5% are 2 stars and bottom 10% are
1 star. Past performance does not guarantee future results.
4. Results of a hypothetical $10,000 investment in Class A shares on March 31,
1993. 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.
5. Standardized yield is based on net investment income for the 30-day period
ended 3/31/98. Falling net asset values will tend to artificially raise yields.
6. Portfolio data is as of 3/31/98, and is subject to change. Portfolio data is
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 includes securities rated by national ratings
organizations as well as unrated securities (currently 17.0% of total
investments) which have ratings assigned by the manager in categories
equivalent to those of ratings organizations.
5 Oppenheimer Champion Income Fund
<PAGE> 6
"WE ANTICIPATE THAT THE NET ECONOMIC IMPACT FROM ASIA WILL BE A SLIGHT SLOWING
OF U.S. GROWTH"
AN INTERVIEW WITH YOUR FUND'S MANAGER
- -------------------------------------------------------------------------------
HOW DID THE FUND PERFORM DURING THE PERIOD?
Oppenheimer Champion Income Fund, which invests primarily in high-yield bonds
issued by growing companies, turned in a strong performance. For the six months
ended March 31, 1998, the Fund's Class A shares produced a cumulative total
return, without sales charges, of 6.56%. (1) Two factors had a positive impact
on performance: We enhanced the Fund's yield by investing in companies with
slightly lower credit ratings; and we took advantage of the late 1997 sell-off
in emerging markets.
HOW DID THE ECONOMIC CRISIS IN ASIA IMPACT U.S. HIGH-YIELD BONDS AS A GROUP?
So far, there has been relatively little impact. Most companies that issue
high-yield bonds are typically small- to mid-size domestic companies with very
little international exposure. They are not usually dependent upon exports, nor
do they have to worry about competition from inexpensive imported goods. We
anticipate that the net economic impact from Asia will be a slight slowing of
U.S. growth, but certainly not a catastrophic impact, and probably not enough
to hurt the high-yield market. That said, there are certain industries such as
steel, paper and chemicals that we have been cautious of for some time
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
6 Oppenheimer Champion Income Fund
<PAGE> 7
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
David Negri (Portfolio Manager)
Ralph Stellmacher
and we think the Asian crisis has served to exacerbate some of these negative
trends. These industries are characterized by a surplus of global supply and
weakening demand for their products. Fortunately, the Fund is not heavily
invested in these economically cyclical industries.
HOW DID THE FUND'S STRATEGY CHANGE DURING THE PERIOD?
We lowered the Fund's credit quality very slightly to take advantage of several
total return opportunities in high-yield and emerging markets. The average
credit rating of the bonds in the portfolio, as determined by Standard & Poor's
Corporation, a national credit rating agency, fell slightly from about a BB- to
about a B+. However, the portfolio diversification was increased, which usually
helps to reduce volatility.
WHAT ARE SOME OF YOUR FAVORITE AREAS OF THE PORTFOLIO?
We've continued to see very good growth in the telecommunications industry. As
a result, we added to our holdings of Nextel Communications, a company that
specializes in cellular telephone technology with operations throughout the
U.S. In addition to consumer products, Nextel also focuses on industrial
markets, such as trucking, taxis/limousines and utilities. Another favorite in
the telecommunications industry is Qwest Communications, a reseller of
long-distance capacity. As part of Qwest's operations, they may install a fiber
optic line between two parts of the country where AT&T, MCI or Sprint has
little capacity.
7 Oppenheimer Champion Income Fund
<PAGE> 8
"THE ASIAN CRISIS ACTUALLY BENEFITED THE PORTFOLIO BY KEEPING INFLATION
EXTREMELY LOW..."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- -------------------------------------------------------------------------------
These larger companies may choose to lease capacity from Qwest, which has
developed a profitable niche by installing and leasing such capacity.
In healthcare, we invested in a major distributor of products ranging from
chemicals, solvents, cleaning devices, special syringes, and thousands of other
products used in hospitals and research laboratories. The company offers a very
broad product line and a high level of service including very rapid delivery.
We think the company's credit rating could easily be upgraded, which would
likely result in bond price appreciation.
We increased our holdings in the air transport industry. In addition to a
strong U.S. economy, the airline industry as a whole is benefiting from falling
fuel costs.
WHAT OTHER CHANGES HAVE YOU MADE TO THE PORTFOLIO?
Although this is a high-yield bond fund, we are permitted to own a small
percentage of common and preferred stock, which we have increased during the
period. We perform extensive credit research on these companies and if we like
the debt of a company, then we believe we should probably look at the
companies' preferred and common stock as well. For example, in addition to
owning Nextel bonds, we have added Nextel preferred stock because it pays a
higher yield than the bonds. The reason that preferred stock pays a higher
yield is that preferred stock is "subordinate" to debt, which means that
bondholders are paid first in the unlikely event that the company gets into
trouble.
8 Oppenheimer Champion Income Fund
<PAGE> 9
"...AND BY DELAYING ANY NEEDED ACTION BY THE FEDERAL RESERVE BOARD TO RAISE
INTEREST RATES."
We've also increased our weighting in emerging markets, primarily Latin
America, which had a large sell-off in the fourth quarter during the peak of
uncertainty over Asia. We saw that as a buying opportunity, because Latin
America's economies are more tied to the U.S. and Europe than to Asia. Most of
the Fund's increased investments were in the sovereign debt of Argentina,
Brazil and Mexico, which are all denominated in dollars.
WHAT IS YOUR OUTLOOK FOR THE MARKET?
It's quite positive. The fundamental economic situation in the U.S. continues
to look very good, with moderate growth, low inflation and stable interest
rates. The Federal Reserve Board appears to be staying on the sidelines,
leaving short-term interest rates alone. The Asian crisis actually benefited
the portfolio by keeping inflation extremely low and by delaying any action by
the Federal Reserve Board to raise interest rates. That gave us increased
confidence that the U.S. business cycle would be extended throughout the end of
1997 well into 1998. However, like stock market investors, we are concerned
about the level of corporate profits, which are growing slower in 1998 than in
recent years. We are concerned because the value of high-yield bonds are
sensitive to profit growth and the general health of the economy. However, we
do not expect an economic contraction this year and believe that investors may
be able to earn very high yields from a diversified portfolio of bonds issued
by growing companies.
9 Oppenheimer Champion Income Fund
<PAGE> 10
STATEMENT OF INVESTMENTS March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--3.5%
- ----------------------------------------------------------------------------------------------------------------
Amresco Commercial Mortgage Funding I Corp., Multiclass Mtg.
Pass-Through Certificates:
Series 1997-C1, Cl. G, 7%, 6/17/29(2) $ 360,000 $ 331,650
Series 1997-C1, Cl. H, 7%, 6/17/29(2) 360,000 320,962
- ----------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(3) 2,250,000 2,170,547
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(3) 3,750,000 3,513,281
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(3) 1,500,000 1,370,859
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 3,600,000 3,162,375
- ----------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. E, 7.76%, 12/25/03(3) 622,000 634,067
- ----------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates:
Series 1997-C1, Cl. F, 7.50%, 6/20/13(2) 600,000 588,960
Series 1997-C1, Cl. G, 7.50%, 6/20/14(2) 810,000 756,864
Series 1997-C1, Cl. H, 7.50%, 8/20/14(2) 600,000 483,360
Series 1997-C2, Cl. F, 7.46%, 1/17/35 2,000,000 1,911,800
Series 1997-C2, Cl. H, 7.46%, 1/17/35 1,400,000 1,139,600
- ----------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, 8.099%, 2/25/11(2) (3) 4,000,000 3,417,200
- ----------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
Collateralized Mtg. Obligations, Series 1997-C2, Cl. F,
6.75%, 4/16/29 2,000,000 1,710,625
Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1,
Cl. X, 8.517%, 7/15/27(4) 38,596,990 3,835,576
- ----------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. E, 7.442%, 2/15/28(2) (3) 1,513,000 1,458,627
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(2) 840,000 778,575
Series 1997-RR, Cl. D, 7.74%, 4/30/39 2,000,000 1,946,875
Series 1997-RR, Cl. F, 7.74%, 4/30/39 5,000,000 4,050,781
Series 1997-XL1, Cl. G, 7.695%, 10/3/30(2) (3) 1,200,000 1,180,500
- ----------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2) 600,000 569,625
- ----------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 437,503 442,280
Series 1995-C1, Cl. F, 6.90%, 2/25/27 274,726 259,724
- ----------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1,
Cl. E, 9.184%, 1/20/06 704,000 742,500
- ----------------------------------------------------------------------------------------------------------------
Salomon, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1998-A1, 5%, 12/25/20 400,000 384,000
- ----------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl. F, 7.30%, 4/12/12(2) 3,000,000 2,862,188
-----------
Total Mortgage-Backed Obligations (Cost $38,730,634) 40,023,401
</TABLE>
10 Oppenheimer Champion Income Fund
<PAGE> 11
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS--6.2%
- ----------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds:
9.75%, 9/19/27 $ 1,500,000 $ 1,490,625
Bonos de Consolidacion de Deudas, 8.375%, 12/20/03 3,000,000 3,003,750
Bonos de Consolidacion de Deudas, Series I, 3.154%, 4/1/07(3)(ARP) 6,284,875 4,645,441
- ----------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Sr. Unsec. Unsub. Bonds, 11%, 10/9/06 2,740,000 3,063,662
- ----------------------------------------------------------------------------------------------------------------
Banco Hipotecario Nacional (Argentina) Medium-Term Nts.,
10.625%, 8/7/06 1,000,000 1,053,750
- ----------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, Series RG, 6.75%, 4/15/12(3) 6,430,000 5,160,075
- ----------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible Interest Bonds,
6.688%, 4/15/06(3) 7,056,000 6,368,040
- ----------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.563%, 7/28/24(3) 1,325,000 1,093,125
- ----------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Debs., 6.625%, 2/27/15(3) 498,475 324,009
- ----------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds, 6.625%, 2/28/25(3) 1,515,000 1,117,312
- ----------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Par Bonds, 3.50%, 2/28/25(3) 3,170,000 1,719,725
- ----------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Past Due Interest Bonds, 6.625%, 2/27/15(3) 1,615,595 1,050,137
- ----------------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Bonds, Series DEF,
5%, 12/23/23(5) 1,750,000 1,218,437
- ----------------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Collateralized Par Bonds,
Series DEF, 5%, 12/23/23(5) (6) 1,750,000 1,218,437
- ----------------------------------------------------------------------------------------------------------------
Ivory Coast (Government of) Past Due Interest Bonds,
2%, 12/29/49(5) (7) 5,635,000 2,443,301
- ----------------------------------------------------------------------------------------------------------------
Nigeria (Federal Republic of) Promissory Nts., Series RC,
5.092%, 1/5/10 1,354,267 981,567
- ----------------------------------------------------------------------------------------------------------------
Panama (Government of) Bonds, 8.875%, 9/30/27 885,000 888,319
- ----------------------------------------------------------------------------------------------------------------
Panama (Government of) Past Due Interest Debs.,
6.563%, 7/17/16(3) 1,499,716 1,278,508
- ----------------------------------------------------------------------------------------------------------------
Peru (Republic of) Front-Loaded Interest Reduction
Bonds, 3.25%, 3/7/17(3) 5,940,000 3,749,625
- ----------------------------------------------------------------------------------------------------------------
Perusahaan Listr, 17%, 8/21/01(2)(IDR) 1,000,000,000 77,457
- ----------------------------------------------------------------------------------------------------------------
Philippines (Republic of) Bonds, 8.75%, 10/7/16 520,000 498,550
- ----------------------------------------------------------------------------------------------------------------
Poland (Republic of) Disc. Bonds, 6.937%, 10/27/24(3) 1,000,000 982,500
- ----------------------------------------------------------------------------------------------------------------
Poland (Republic of) Par Bonds, 3%, 10/27/24(5) 25,000 15,945
- ----------------------------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon,
9.09%, 3/17/99(2) (8) (9)(IDR) 1,000,000,000 11,561
- ----------------------------------------------------------------------------------------------------------------
Russia (Government of) Debs., Series 19 yr., 6.719%, 12/15/15(3) 5,036,000 3,607,035
- ----------------------------------------------------------------------------------------------------------------
Russia (Government of) Interest Nts., 6.719%, 12/15/15(3) 790,000 556,950
- ----------------------------------------------------------------------------------------------------------------
United Mexican States Bonds, 11.50%, 5/15/26 4,900,000 5,978,000
- ----------------------------------------------------------------------------------------------------------------
United Mexican States Collateralized Fixed Rate Par Bonds:
Series A, 6.25%, 12/31/19 3,500,000 2,975,000
Series W-A, 6.25%, 12/31/19 2,000,000 1,700,000
Series W-B, 6.25%, 12/31/19 6,960,000 5,916,000
- ----------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Bonds, 9.25%, 9/15/27 1,340,000 1,226,100
</TABLE>
11 Oppenheimer Champion Income Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Venezuela (Republic of) Disc. Bonds, Series DL,
6.813%, 12/18/07(3) $ 475,786 $ 434,750
- ----------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Front-Loaded Interest Reduction
Bonds, Series A, 6.75%, 3/31/07(3) 4,523,800 4,161,896
- ----------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Sr. Unsec. Unsub. Nts.,
Series REGS, 9.125%, 6/18/07 100,000 100,688
-----------
Total Foreign Government Obligations (Cost $69,136,547) 70,110,277
================================================================================================================
LOAN PARTICIPATIONS--0.3%
- ----------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche 1, 6.688%, 9/4/06(3) 1,561,090 1,217,651
- ----------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 7.375%, 3/4/00(3) 1,040,727 980,235
- ----------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 6.656%, 1/1/09(2) (3) 1,788,000 1,613,670
-----------
Total Loan Participations (Cost $3,674,751) 3,811,556
================================================================================================================
CORPORATE BONDS AND NOTES--67.2%
- ----------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--6.3%
- ----------------------------------------------------------------------------------------------------------------
CHEMICALS--2.2%
ClimaChem, Inc., 10.75% Gtd. Sr. Unsec. Nts., 12/1/07(6) 1,400,000 1,487,500
- ----------------------------------------------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07 600,000 630,000
- ----------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07(6) 1,615,000 1,602,887
- ----------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 9,205,000 10,217,550
- ----------------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Gtd. Nts., 10/15/07 50,000 50,437
- ----------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 1,975,000 2,029,312
- ----------------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50%
Sr. Sub. Nts., 8/1/07(6) 3,925,000 4,121,250
- ----------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 170,000 173,825
11.75% Sr. Unsec. Sub. Nts., 8/15/06(10) 4,215,000 4,383,600
-----------
24,696,361
- ----------------------------------------------------------------------------------------------------------------
CONTAINERS--0.4%
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(2) 1,500,000 1,665,000
- ----------------------------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 2,300,000 2,472,500
-----------
4,137,500
- ----------------------------------------------------------------------------------------------------------------
METALS/MINING--0.7%
Centaur Mining & Exploration Ltd., 11% Gtd. Sr.
Nts., 12/1/07(6) 2,325,000 2,418,000
- ----------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub.
Nts., 2/1/08(6) 750,000 781,875
- ----------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07(6) 4,370,000 4,588,500
-----------
7,788,375
</TABLE>
12 Oppenheimer Champion Income Fund
<PAGE> 13
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER--1.2%
Four M Corp., 12% Sr. Nts., Series B, 6/1/06(2) $ 645,000 $ 683,700
- ----------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 4,160,000 4,409,600
- ----------------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 3,450,000 3,868,312
- ----------------------------------------------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 4,085,000 4,268,825
-----------
13,230,437
- ----------------------------------------------------------------------------------------------------------------
STEEL--1.8%
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 9,083,000 10,854,185
- ----------------------------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 4,270,000 4,718,350
- ----------------------------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07(6) 2,035,000 2,111,312
- ----------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 2,450,000 2,489,812
-----------
20,173,659
- ----------------------------------------------------------------------------------------------------------------
CONSUMER RELATED--11.4%
- ----------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--1.9%
Chattem, Inc., 8.875% Sr. Sub. Nts., 4/1/08(6) 800,000 813,000
- ----------------------------------------------------------------------------------------------------------------
Coleman Escrow Corp., Zero Coupon Sr. First Priority Disc. Nts.,
11%, 5/15/01(9) 4,900,000 3,920,000
- ----------------------------------------------------------------------------------------------------------------
Holmes Products Corp., 9.875% Gtd. Nts., 11/15/07(6) 2,575,000 2,678,000
- ----------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 8.625% Sr. Nts., 2/1/08(6) 2,800,000 2,842,000
- ----------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
11.43%, 3/15/01(9) 5,890,000 4,513,212
- ----------------------------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 4,360,000 4,926,800
- ----------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 1,865,000 2,188,503
-----------
21,881,515
- ----------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--1.8%
Cott Corp., 9.375% Sr. Nts., 7/1/05 3,885,000 4,030,687
- ----------------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., 12/15/07(6) (11) 3,450,000 2,294,250
- ----------------------------------------------------------------------------------------------------------------
Eagle Family Foods, Inc., 8.75% Sr. Sub. Nts., 1/15/08(6) 650,000 653,250
- ----------------------------------------------------------------------------------------------------------------
Gorges/Quick-to-Fix Foods, Inc., 11.50% Sr. Sub. Nts.,
Series B, 12/1/06 250,000 265,000
- ----------------------------------------------------------------------------------------------------------------
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 4,655,000 5,178,687
- ----------------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., 2/1/05(6) 740,000 754,800
- ----------------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Sub. Nts., 3/15/10(6) 1,000,000 1,037,500
- ----------------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Sub. Nts., 2/15/08(6) 1,250,000 1,250,000
- ----------------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sub. Nts., 11/15/07(6) 3,775,000 3,982,625
- ----------------------------------------------------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07 860,000 915,900
-----------
20,362,699
- ----------------------------------------------------------------------------------------------------------------
HEALTHCARE--1.5%
Fresenius Medical Care Capital Trust II, 7.875% Gtd. Nts., 2/1/08(6) 4,050,000 4,039,875
- ----------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust III, 7.375% Gtd. Nts.,
2/1/08(6)(DEM) 2,425,000 1,341,604
</TABLE>
13 Oppenheimer Champion Income Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (CONTINUED)
Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07 $5,985,000 $ 6,388,987
10.25% Sr. Sub. Nts., 4/30/06 2,850,000 3,092,250
- ----------------------------------------------------------------------------------------------------------------
Pharmerica, Inc., 8.375% Sr. Sub. Nts., 4/1/08(6) 750,000 753,750
- ----------------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(6) 1,925,000 2,011,625
-----------
17,628,091
- ----------------------------------------------------------------------------------------------------------------
HOTEL/GAMING--4.6%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(6) (11) 750,000 451,875
- ----------------------------------------------------------------------------------------------------------------
Apoca, Inc., 9.25% Sr. Sub. Nts., 3/15/08(6) 900,000 906,750
- ----------------------------------------------------------------------------------------------------------------
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series B, 11/15/00(2) (8) 275,000 161,563
- ----------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(8) 7,500 --
- ----------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00(2)(8) 100,000 17,500
- ----------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 2,100,000 2,178,750
- ----------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 2,030,000 2,364,950
- ----------------------------------------------------------------------------------------------------------------
Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02 2,705,000 2,948,450
- ----------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 5,915,000 6,402,987
- ----------------------------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05(6) 2,800,000 2,856,000
- ----------------------------------------------------------------------------------------------------------------
Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 150,000 167,250
- ----------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 5,895,000 6,388,706
- ----------------------------------------------------------------------------------------------------------------
Majestic Star Casino LLC (The), 12.75% Sr. Sec. Nts., 5/15/03 1,000,000 1,085,000
- ----------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50%
Sr. Sec. Nts., Series B, 11/15/02 2,340,000 2,995,200
- ----------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
9.50% Gtd. Sr. Sub. Nts., 4/15/07 3,490,000 3,769,200
10.625% Sr. Sub. Nts., 7/15/05 1,825,000 1,993,812
- ----------------------------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 5,240,000 6,196,300
- ----------------------------------------------------------------------------------------------------------------
Signature Resorts, Inc., 9.75% Sr. Sub. Nts., 10/1/07 2,905,000 2,934,050
- ----------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
9.625% Sr. Sub. Nts., 6/1/03 300,000 312,000
10.125% Sr. Sub. Nts., 3/15/06 2,350,000 2,637,875
- ----------------------------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City
Funding, Inc., 11.25% First Mtg. Nts., 5/1/06 1,350,000 1,393,875
- ----------------------------------------------------------------------------------------------------------------
Venetian Casino Resort LLC/Las Vegas Sands, Inc.,
12.25% Mtg. Nts., 11/15/04(6) 3,500,000 3,648,750
-----------
51,810,843
- ----------------------------------------------------------------------------------------------------------------
LEISURE--0.7%
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(6) 3,900,000 3,822,000
- ----------------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(7) (11) 1,650,000 1,049,812
9.25% Sr. Nts., 4/1/06 1,275,000 1,302,094
</TABLE>
14 Oppenheimer Champion Income Fund
<PAGE> 15
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE (CONTINUED)
Six Flags Entertainment Corp., 8.75% Sr. Nts., 4/1/06 $1,900,000 $ 1,935,625
-----------
8,109,531
- ----------------------------------------------------------------------------------------------------------------
RESTAURANTS--0.7%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 3,101,000 3,318,070
- ----------------------------------------------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts., 8/15/03 3,360,000 3,561,600
- ----------------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 993,000 1,015,342
9.75% Sr. Sub. Nts., 6/1/02 165,000 170,775
-----------
8,065,787
- ----------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--0.2%
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03(2) 950,000 1,007,000
- ----------------------------------------------------------------------------------------------------------------
Galey & Lord, Inc., 9.125% Sr. Sub. Nts., 3/1/08(6) 100,000 101,750
- ----------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 805,000 869,400
-----------
1,978,150
- ----------------------------------------------------------------------------------------------------------------
ENERGY--4.9%
- ----------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 9.125% Sr. Unsec. Nts., 4/15/06 2,530,000 2,555,300
- ----------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 4,200,000 4,273,500
- ----------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 825,000 911,625
- ----------------------------------------------------------------------------------------------------------------
Dailey International, Inc., 9.50% Sr. Unsec. Nts., 2/15/08(6) 1,750,000 1,771,875
- ----------------------------------------------------------------------------------------------------------------
Denbury Resources, Inc., 9% Sr. Sub. Nts., 3/1/08 1,250,000 1,251,562
- ----------------------------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(2) (7) 3,800,000 3,800,000
- ----------------------------------------------------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B, 2/15/07 3,550,000 3,505,625
9.50% Sr. Sub. Nts., 11/1/06 4,965,000 5,176,012
- ----------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 12.25% Sr. Nts., Series B, 9/1/04 6,500,000 6,142,500
- ----------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Nts., 2/15/08(6) 2,125,000 2,103,750
- ----------------------------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 2,000,000 1,920,000
- ----------------------------------------------------------------------------------------------------------------
Parker Drilling Co., 9.75% Gtd. Nts., 11/15/06(6) 1,600,000 1,708,000
- ----------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 4,855,000 4,017,512
- ----------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 1,530,000 1,595,025
- ----------------------------------------------------------------------------------------------------------------
Pool Energy Services Co., 8.625% Sr. Sub. Nts., 4/1/08(6) 725,000 730,437
- ----------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 5,500,000 5,403,750
- ----------------------------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 1,050,000 1,113,000
- ----------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 5,665,000 5,820,787
- ----------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc.:
0%/9.875% Sr. Disc. Nts., 2/15/08(6) (11) 2,350,000 1,468,750
0%/11.375% Sr. Disc. Nts., 2/15/09(6) (11) 800,000 476,000
-----------
55,745,010
</TABLE>
15 Oppenheimer Champion Income Fund
<PAGE> 16
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES--1.7%
- ----------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--0.0%
Bank Plus Corp., 12% Sr. Nts., 7/18/07 $ 578,000 $ 656,030
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.3%
Amresco, Inc.:
9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 1,065,000 1,086,300
10% Sr. Sub. Nts., Series 97-A, 3/15/04 1,800,000 1,845,000
- ----------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(2) 153,668 154,053
- ----------------------------------------------------------------------------------------------------------------
Emergent Group, Inc., 10.75% Sr. Nts., Series B, 9/15/04 1,660,000 1,581,150
- ----------------------------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03(2) (8) 600,000 --
- ----------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 625,000 715,625
- ----------------------------------------------------------------------------------------------------------------
Parametric RE Ltd., 10.206% Nts., 11/15/07(2) (3) 600,000 612,000
- ----------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
Zero Coupon Nts., Series 2, 7/15/98(16)(IDR) 1,314,400,000 30,391
Zero Coupon Promissory Nts., 7/15/98(2) (16)(IDR) 5,000,000,000 115,607
- ----------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust:
9.75% Sr. Sec. Nts., 4/1/08(6) 3,930,000 3,976,669
11.625% Sr. Sec. Nts., Series B, 4/1/02 2,375,000 2,523,437
- ----------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Gtd. Debs., 1/1/28(6) 1,700,000 1,772,250
-----------
14,412,482
- ----------------------------------------------------------------------------------------------------------------
INSURANCE--0.4%
Residential Reinsurance, 11.698% Nts., 12/15/98(3) 1,500,000 1,522,575
- ----------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 2,553,000 2,744,475
-----------
4,267,050
- ----------------------------------------------------------------------------------------------------------------
HOUSING RELATED--1.6%
- ----------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--0.7%
Building Materials Corp. of America, 8.625% Sr. Nts.,
Series B, 12/15/06 2,755,000 2,872,087
- ----------------------------------------------------------------------------------------------------------------
Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07 675,000 698,625
- ----------------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.25% Sr. Nts., Series B, 3/15/07 4,070,000 4,242,975
-----------
7,813,687
- ----------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE--0.9%
First Place Tower, Inc., Units (each unit consists of one
$10 principal amount of 8.50% cv. sub. debs., 12/15/15 and
40 common shares)(12)(CAD) 225,830 613,353
- ----------------------------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Gtd. Sr. Nts., 3/1/04(2) 830,000 910,925
- ----------------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 3,180,000 3,307,200
- ----------------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Nts., Series B, 9/1/07 5,040,000 5,229,000
-----------
10,060,478
</TABLE>
16 Oppenheimer Champion Income Fund
<PAGE> 17
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING--6.9%
- ----------------------------------------------------------------------------------------------------------------
AEROSPACE--2.2%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05(13) $2,000,000 $ 2,195,000
- ----------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 3,400,000 3,655,000
- ----------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 60,000 64,500
12.25% Pass-Through Certificates, 12/1/02(2) 2,750,000 3,080,000
- ----------------------------------------------------------------------------------------------------------------
Constellation Finance LLC, 9.80% Airline Receivable
Asset-Backed Nts., Series 1997-1, 1/1/01(2) 3,500,000 3,570,000
- ----------------------------------------------------------------------------------------------------------------
Kitty Hawk, Inc., 9.95% Sr. Sec. Nts., 11/15/04(6) 2,415,000 2,499,525
- ----------------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Cl. B, 6/15/04(2) 1,914,626 1,978,192
- ----------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 1,000,000 1,053,750
- ----------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 1,100,678 1,183,229
- ----------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 5,775,000 6,092,625
-----------
25,371,821
- ----------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--2.0%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 2,440,000 2,537,600
- ----------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 6,480,000 7,322,400
- ----------------------------------------------------------------------------------------------------------------
Delco Remy International, Inc., 8.625% Sr. Nts., 12/15/07 750,000 778,125
- ----------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Sub. Nts., 7/15/07 4,000,000 4,250,000
11% Sr. Sub. Nts., 7/15/06 4,160,000 4,737,200
- ----------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 2,405,000 2,573,350
-----------
22,198,675
- ----------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--2.7%
Burke Industries, Inc., 10% Sr. Nts., 8/15/07 1,125,000 1,195,312
- ----------------------------------------------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 3,200,000 3,568,000
12.50% Debs., Series B, 7/15/07(14) 1,527,892 1,634,844
- ----------------------------------------------------------------------------------------------------------------
Columbus McKinnon Corp., 8.50% Sr. Sub. Nts., 4/1/08(6) 590,000 594,425
- ----------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 802,000 906,260
- ----------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Sub. Nts., 3/1/08(6) 1,500,000 1,533,750
- ----------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 2,275,000 2,366,000
- ----------------------------------------------------------------------------------------------------------------
Insilco Corp., 10.25% Sr. Unsec. Sub. Nts., 8/15/07(6) 3,770,000 3,977,350
- ----------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts.,
Series B, 6/1/05 3,720,000 4,147,800
- ----------------------------------------------------------------------------------------------------------------
Paragon Corp. Holdings, Inc., 9.625% Sr. Nts., 4/1/08(6) 850,000 843,625
- ----------------------------------------------------------------------------------------------------------------
Park-Ohio Industries, Inc., 9.25% Sr. Sub. Nts., 12/1/07 2,100,000 2,210,250
- ----------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 960,000 996,000
</TABLE>
17 Oppenheimer Champion Income Fund
<PAGE> 18
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS (CONTINUED)
Roller Bearing Co. of America, Inc., 9.625% Gtd. Sr. Sub. Nts.,
Series B, 6/15/07(2) $2,285,000 $ 2,376,400
- ----------------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Sub. Nts., 4/1/08(6) 1,000,000 1,007,500
- ----------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 1,710,000 1,778,400
- ----------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(2) 1,075,000 1,128,750
-----------
30,264,666
- ----------------------------------------------------------------------------------------------------------------
MEDIA--7.8%
- ----------------------------------------------------------------------------------------------------------------
BROADCASTING--2.0%
Allbritton Communications Co., 8.875% Sr. Sub. Nts., Series B, 2/1/08(6) 1,000,000 1,012,500
- ----------------------------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 1,990,000 2,109,400
- ----------------------------------------------------------------------------------------------------------------
Chancellor Radio Broadcasting Co.:
8.125% Sr. Sub. Nts., 12/15/07(6) 550,000 562,375
8.75% Sr. Sub. Nts., 6/15/07 2,100,000 2,205,000
- ----------------------------------------------------------------------------------------------------------------
Jacor Communications Co.:
8% Sr. Sub. Nts., 2/15/10 1,250,000 1,262,500
8.75% Gtd. Sr. Sub. Nts., Series B, 6/15/07 3,540,000 3,699,300
9.75% Gtd. Sr. Unsec. Sub. Nts., 12/15/06 500,000 547,500
- ----------------------------------------------------------------------------------------------------------------
NWCG Holdings Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 11.50%, 6/15/99(9) 1,030,000 973,350
- ----------------------------------------------------------------------------------------------------------------
Outlet Broadcasting, Inc., 10.875% Sr. Sub. Nts., 7/15/03 1,000,000 1,051,203
- ----------------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(5) 1,000,000 1,018,750
- ----------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 200,000 207,000
9% Gtd. Sr. Sub. Nts., 7/15/07 4,000,000 4,195,000
- ----------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.:
11% Sr. Nts., 3/15/04 650,000 713,375
12.50% Sr. Nts., 6/15/02 300,000 343,500
- ----------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 1,650,000 1,691,250
9% Sr. Sub. Nts., Series B, 1/15/06 1,200,000 1,242,000
-----------
22,834,003
- ----------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--3.4%
Adelphia Communications Corp.:
8.375% Sr. Nts., 2/1/08 2,250,000 2,266,875
9.25% Sr. Nts., 10/1/02 5,500,000 5,733,750
- ----------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp. Holdings, Inc.:
9.875% Sr. Sub. Nts., 5/15/06 2,710,000 2,981,000
9.875% Sr. Sub. Debs., 2/15/13 215,000 239,187
9.875% Sr. Sub. Debs., 4/1/23 1,100,000 1,223,750
- ----------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02 5,725,000 6,512,188
- ----------------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(2) 1,319,219 1,306,027
- ----------------------------------------------------------------------------------------------------------------
EchoStar II, 8.25% Bonds, 11/9/01(2) 1,254,314 1,241,771
</TABLE>
18 Oppenheimer Champion Income Fund
<PAGE> 19
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CABLE TELEVISION (CONTINUED)
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04(11) $4,475,000 $ 4,117,000
- ----------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 4,640,000 5,150,400
- ----------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc.:
8.75% Sr. Nts., 7/15/07CAD 2,070,000 1,433,628
8.875% Sr. Nts., 7/15/07 1,300,000 1,319,500
- ----------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/12.25% Sr. Sub. Disc. Nts., 2/15/07(6) (11) 2,155,000 1,530,050
10.875% Sr. Sub. Nts., 2/15/07(6) 1,385,000 1,481,950
- ----------------------------------------------------------------------------------------------------------------
United International Holdings, Inc.:
0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(6) (11) 1,260,000 796,950
0%/14% Sr. Disc. Nts., Series B, 5/15/06(11) 1,350,000 938,250
-----------
38,272,276
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA--1.2%
Chancellor Media Corp., 10.50% Sr. Sub. Nts., Series B, 1/15/07 1,075,000 1,209,375
- ----------------------------------------------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 700,000 763,000
- ----------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc, 9.675% Bonds, 3/15/08(6)(GBP) 3,000,000 5,011,245
- ----------------------------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 3,300,000 3,440,250
9.625% Sr. Sub. Nts., 12/1/06 3,270,000 3,564,300
-----------
13,988,170
- ----------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.5%
Ascent Entertainment Group, Inc., 0%/11.875% Sr. Sec. Disc. Nts.,
12/15/04(11) 1,205,000 716,975
- ----------------------------------------------------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01 1,700,000 1,785,000
- ----------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr. Sub. Nts., 2/1/08(6) 2,850,000 2,835,750
-----------
5,337,725
- ----------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--0.7%
Hollinger International Publishing, Inc.:
9.25% Gtd. Sr. Sub. Nts., 2/1/06 4,170,000 4,461,900
9.25% Gtd. Sr. Sub. Nts., 3/15/07 3,175,000 3,381,375
-----------
7,843,275
- ----------------------------------------------------------------------------------------------------------------
OTHER--3.2%
- ----------------------------------------------------------------------------------------------------------------
CONGLOMERATES--0.0%
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(11) 465,000 476,625
- ----------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL--0.3%
Allied Waste Industries, Inc., 0%/11.30% Sr. Disc. Nts., 6/1/07(11) 4,500,000 3,330,000
</TABLE>
19 Oppenheimer Champion Income Fund
<PAGE> 20
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES--2.9%
Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03(10) $6,500,000 $ 6,597,500
9.625% Sr. Sub. Nts., 3/15/07 2,570,000 2,711,350
- ----------------------------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(11) 2,025,000 1,655,438
- ----------------------------------------------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr. Nts., 12/1/07(6) 1,080,000 1,155,600
- ----------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 9% Sr. Sub. Nts., 2/1/08(6) 5,065,000 5,166,300
- ----------------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 4,930,000 5,065,575
- ----------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(11) 4,750,000 5,343,750
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 2,868,000 3,775,005
- ----------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Units (each unit consists of $1,000
principal amount of 0%/12.75% sr. disc. nts., 3/15/08 and one
warrant to purchase two shares of cl. C common stock)(6) (11) (12) 700,000 393,750
- ----------------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 692,000 802,720
-----------
32,666,988
- ----------------------------------------------------------------------------------------------------------------
RETAIL--2.0%
- ----------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--0.4%
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 900,000 976,500
- ----------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(2) 1,670,000 1,753,500
- ----------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 1,600,000 1,648,000
-----------
4,378,000
- ----------------------------------------------------------------------------------------------------------------
SUPERMARKETS--1.6%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 1,885,000 2,007,525
10.625% Sr. Sub. Nts., Series B, 7/31/07 7,050,000 7,543,500
- ----------------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 5,335,000 5,695,113
- ----------------------------------------------------------------------------------------------------------------
Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 1,260,000 1,345,050
- ----------------------------------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9% Sr. Unsec. Sub. Nts., 7/1/04 1,830,000 1,921,500
-----------
18,512,688
- ----------------------------------------------------------------------------------------------------------------
TECHNOLOGY--19.3%
- ----------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--10.6%
American Mobile Radio Corp., Units (each unit consists of
$1,000 principal amount of 12.75% sr. nts., 12/15/07 and one
warrant to purchase 3.75749 shares of common stock)(6) (12) 1,800,000 1,881,000
- ----------------------------------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07(2) 805,000 483,000
- ----------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(11) 3,799,000 2,032,465
- ----------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.:
0%/9.50% Bonds, 4/1/05(6) (11)(XEU) 9,625,000 7,004,139
6% Cv. Sub. Nts., 4/1/05(6) 800,000 1,030,000
</TABLE>
20 Oppenheimer Champion Income Fund
<PAGE> 21
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (CONTINUED)
Concentic Network Corp., Units (each unit consists of $1,000
principal amount of 12.75% sr. nts., 12/15/07 and one warrant
to purchase 6.34 shares of common stock)(6) (12) $ 2,320,000 $2,755,000
- ----------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc., Units (each unit consists of
$1,000 principal amount of 0%/13.50% sr. disc. nts., 3/15/08 and
one warrant to purchase 6.4792 common shares)(6) (11) (12) 7,000,000 3,710,000
- ----------------------------------------------------------------------------------------------------------------
Crown Castle International Corp., 0%/10.625% Sr. Disc. Nts.,
11/15/07(6) (11) 5,385,000 3,655,069
- ----------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., 11/15/05 2,100,000 2,210,250
- ----------------------------------------------------------------------------------------------------------------
Dial Call Communications, Inc., 0%/12.25% Sr. Disc. Nts., 4/15/04(11) 1,875,000 1,865,625
- ----------------------------------------------------------------------------------------------------------------
Dialog Corp. plc, 11% Sr. Sub. Nts., 11/15/07(6) 1,750,000 1,933,750
- ----------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 1,200,000 1,200,000
- ----------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 2,150,000 2,225,250
- ----------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(2) 1,665,000 957,375
- ----------------------------------------------------------------------------------------------------------------
ICG Communications, Inc., 0%/10% Sr. Disc. Nts., 2/15/08(6) (11) 840,000 548,100
- ----------------------------------------------------------------------------------------------------------------
Iridium LLC/Iridium Capital Corp.:
11.25% Sr. Nts., 7/15/05(6) 4,200,000 4,473,000
13% Sr. Nts., Series A, 7/15/05 3,225,000 3,620,063
- ----------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., 10/15/07(6) (11)(CAD) 6,405,000 2,837,399
0%/14% Sr. Disc. Nts., Series B, 6/1/06(11) 1,200,000 898,500
- ----------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc.
Nts., 6/1/06(11) 725,000 572,750
- ----------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(11) 12,360,000 8,049,450
0%/11.50% Sr. Disc. Nts., 9/1/03(11) 385,000 390,775
0%/10.65% Sr. Disc. Nts., 9/15/07(11) 6,305,000 4,240,113
- ----------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 2,750,000 3,042,188
11.625% Sr. Nts., Series A, 8/15/06 2,600,000 2,876,250
- ----------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr.
Nts., 8/15/04 2,150,000 2,520,875
- ----------------------------------------------------------------------------------------------------------------
Orbital Imaging Corp., Units (each unit consists of $1,000 principal
amount of 11.625% sr. nts., 3/1/05 and one warrant to purchase
8.7516 ordinary shares)(6) (12) 1,250,000 1,371,875
- ----------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(11) 3,315,000 2,602,275
- ----------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Disc. Nts., 3/15/08(6) (11) 2,900,000 1,812,500
- ----------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50% Sr.
Disc. Nts., Series A, 8/1/07(6) (11) 5,575,000 3,902,500
- ----------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07 3,650,000 4,124,500
- ----------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(11) 3,060,000 3,258,900
10.75% Sr. Nts., 11/1/04 4,065,000 4,613,775
14% Sr. Sub. Disc. Nts., 11/15/01 460,000 508,300
</TABLE>
21 Oppenheimer Champion Income Fund
<PAGE> 22
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (CONTINUED)
Satelites Mexicanos SA, 10.125% Sr. Nts., 11/1/04(6) $2,250,000 $ 2,345,625
- ----------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Disc. Nts., 3/1/08(6) (11) 8,455,000 5,009,588
- ----------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.:
0%/12.50% Sr. Disc. Nts., 8/15/06(11) 2,695,000 2,263,800
11% Sr. Nts., 8/15/06 1,600,000 1,846,000
- ----------------------------------------------------------------------------------------------------------------
Teletrac, Inc., 14% Sr. Nts., 8/1/07 330,000 321,750
- ----------------------------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 4,010,000 4,160,375
- ----------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 2,275,000 2,633,313
- ----------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II:
9.50% Sr. Nts., 2/1/04 300,000 290,250
14% Sr. Nts., 11/1/04 655,000 731,144
- ----------------------------------------------------------------------------------------------------------------
Verio, Inc., 10.375% Sr. Nts., 4/1/05(6) 2,500,000 2,612,500
- ----------------------------------------------------------------------------------------------------------------
WAM!Net, Inc., Units (each unit consists of $1,000 principal
amount of 0%/13.25% sr. disc. nts., 3/1/05 and three warrants to
purchase 6.03 shares of common stock)(6) (11) (12) 6,840,000 4,206,600
- ----------------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 1,440,000 1,504,800
- ----------------------------------------------------------------------------------------------------------------
Zilog, Inc., 9.50% Sr. Nts., 3/1/05(6) 3,325,000 3,233,563
-----------
120,366,319
- ----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY--8.7%
Allegiance Telecom, Inc., Units (each unit consists of $1,000
principal amount of 0%/11.75% sr. disc. nts., 2/15/08 and one
warrant to purchase .003422 shares of common stock)(6) (11) (12) 1,620,000 941,625
- ----------------------------------------------------------------------------------------------------------------
American Communications Services, Inc., 13.75% Sr. Nts., 7/15/07 1,760,000 2,103,200
- ----------------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc.:
0%/9.27% Sr. Disc. Nts., 8/15/07(11) 1,440,000 1,029,600
8.375% Sr. Nts., 8/15/07(CAD) 1,165,000 851,495
- ----------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(11) 400,000 320,000
8.875% Sr. Nts., 11/30/07(DEM) 1,880,000 1,118,239
10.125% Sr. Nts., 11/30/07(GBP) 2,330,000 4,233,476
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)(11) (12) 3,185,000 3,017,788
- ----------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc.
Debs., 11/15/07(11) 1,350,000 1,127,250
- ----------------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. nts., 4/1/08 and four warrants to
purchase 10.8 shares of common stock)(6) (7) (12) 1,600,000 1,612,000
- ----------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc:
0%/10.75% Sr. Disc. Nts., 2/15/07(11) 1,800,000 1,287,000
0%/11.75% Sr. Disc. Nts., 12/15/05(11) 9,015,000 7,234,538
- ----------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(6) 800,000 824,000
- ----------------------------------------------------------------------------------------------------------------
Facilicom International, 10.50% Sr. Nts., 1/15/08(6) 3,920,000 4,096,400
- ----------------------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Disc. Nts., 2/15/08(6) (11) 5,675,000 3,334,063
</TABLE>
22 Oppenheimer Champion Income Fund
<PAGE> 23
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS/TECHNOLOGY (CONTINUED)
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(6) (11) $ 407,000 $ 324,583
- ----------------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(11) 6,320,000 5,277,200
- ----------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(11) 400,000 326,000
0%/13.50% Sr. Disc. Nts., 9/15/05(11) 3,755,000 3,248,075
- ----------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/11.25% Sr. Disc. Nts., Series B, 7/15/07(11) 1,610,000 1,207,500
8.50% Sr. Nts., 1/15/08 5,275,000 5,551,938
8.875% Sr. Nts., 11/1/07 3,015,000 3,226,050
- ----------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., Units (each unit consists of
$1,000 principal amount of 0%/12.50% sr. disc. nts., 2/15/08
and one warrant to purchase .21875 ordinary shares)(6) (11) 6,360,000 3,768,300
- ----------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts., 3/1/07(11) 325,000 248,625
8.375% Sr. Nts., 3/15/08(6) 340,000 351,050
9.25% Sr. Nts., 7/15/07 710,000 765,025
- ----------------------------------------------------------------------------------------------------------------
Metronet Communications Corp., 0%/10.75% Sr. Disc.
Nts., 11/1/07(11) 1,890,000 1,233,225
- ----------------------------------------------------------------------------------------------------------------
Netia Holdings BV:
0%/11% Gtd. Sr. Disc. Nts., 11/1/07(11)(DEM) 2,250,000 831,886
0%/11.25% Nts., 11/1/07(6) (11) 3,600,000 2,457,000
- ----------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08(6) 1,950,000 2,018,250
9.625% Sr. Nts., 10/1/07 6,205,000 6,608,325
- ----------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.75% Unsec. Unsub. Sr. Nts., Series REGS, 4/1/08(11)(GBP) 2,400,000 2,521,950
10% Sr. Nts., 2/15/07 2,440,000 2,647,400
- ----------------------------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(6) 200,000 248,000
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)(6) (11) (12) 3,500,000 3,342,500
- ----------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.:
0%/8.29% Sr. Disc. Nts., 2/1/08(6) (11) 5,530,000 3,926,300
0%/9.47% Sr. Disc. Nts., 10/15/07(11) 9,510,000 7,013,625
- ----------------------------------------------------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(11)(DEM) 1,100,000 367,666
0%/10% Bonds, Series REGS, 3/15/08(6) (11)(DEM) 4,600,000 1,537,510
0%/10.125% Sr. Disc. Nts., 3/1/08(6) (11) 3,325,000 2,111,375
- ----------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07(11) 2,000,000 1,735,000
9.875% Sr. Nts., 7/1/06 825,000 946,688
- ----------------------------------------------------------------------------------------------------------------
Teligent, Inc., 0%/11.50% Sr. Disc. Nts., 3/1/08(6) (11) 415,000 242,775
- ----------------------------------------------------------------------------------------------------------------
UNIFI Communications, Inc., 14% Sr. Nts., 3/1/04(2) 2,500,000 1,500,000
-----------
98,714,495
</TABLE>
23 Oppenheimer Champion Income Fund
<PAGE> 24
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--1.8%
- ----------------------------------------------------------------------------------------------------------------
RAILROADS--0.5%
TFM SA de CV, 10.25% Gtd. Sr. Nts., 6/15/07 $1,440,000 $ 1,512,000
- ----------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr.
Disc. Nts., Series B, 12/15/03(11) 4,391,000 4,006,788
-----------
5,518,788
- ----------------------------------------------------------------------------------------------------------------
SHIPPING--0.9%
Alpha Shipping plc, 9.50% Sr. Nts., 2/15/08(6) 570,000 547,200
- ----------------------------------------------------------------------------------------------------------------
Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 715,000 782,925
- ----------------------------------------------------------------------------------------------------------------
Hvide Marine, Inc., 8.375% Sr. Nts., 2/15/08(6) 1,100,000 1,078,000
- ----------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(6) 3,715,000 3,937,900
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(6) (12) 2,605,000 2,976,213
- ----------------------------------------------------------------------------------------------------------------
Trico Marine Services, Inc., 8.50% Gtd. Sr. Nts., Series C, 8/1/05(6) 700,000 707,000
-----------
10,029,238
- ----------------------------------------------------------------------------------------------------------------
TRUCKING--0.4%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., Series B, 7/1/07 2,930,000 3,076,500
- ----------------------------------------------------------------------------------------------------------------
Road King Infrastructure Finance (1997) Ltd., 9.50% Gtd. Unsec.
Unsub. Bonds, 7/15/07(2) 300,000 239,295
- ----------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(2) 1,115,970 852,323
-----------
4,168,118
- ----------------------------------------------------------------------------------------------------------------
UTILITIES--0.3%
- ----------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.3%
Calpine Corp., 10.50% Sr. Nts., 5/15/06(2) 315,000 348,075
- ----------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 2,350,000 2,693,688
- ----------------------------------------------------------------------------------------------------------------
3,041,763
-----------
Total Corporate Bonds and Notes (Cost $730,655,590) 760,131,318
SHARES
================================================================================================================
COMMON STOCKS--4.9%
- ----------------------------------------------------------------------------------------------------------------
Airtouch Communications, Inc.(15) 45,000 2,202,188
- ----------------------------------------------------------------------------------------------------------------
American Radio Systems Corp.(15) 125,000 7,929,687
- ----------------------------------------------------------------------------------------------------------------
Bank United Corp., Cl. A 10,000 500,000
- ----------------------------------------------------------------------------------------------------------------
Boyd Gaming Corp.(15) 35,000 251,562
- ----------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc.(15) 20,000 1,360,000
- ----------------------------------------------------------------------------------------------------------------
Circus Circus Enterprises, Inc.(15) 30,000 630,000
- ----------------------------------------------------------------------------------------------------------------
Coinstar, Inc.(15) 14,175 129,347
- ----------------------------------------------------------------------------------------------------------------
Concentric Network Corp.(15) 25,000 487,500
- ----------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., Cl. A(15) 10,000 220,000
- ----------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(2) 75 82,687
</TABLE>
24 Oppenheimer Champion Income Fund
<PAGE> 25
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
El Paso Electric Co.(15) 56,400 $ 482,925
- ----------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(2) (15) 2,261 11,305
- ----------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc.(15) 105,000 1,791,562
- ----------------------------------------------------------------------------------------------------------------
Grand Union Co.(15) 1,767 718
- ----------------------------------------------------------------------------------------------------------------
Greate Bay Casino Corp.(15) 1,678 1,678
- ----------------------------------------------------------------------------------------------------------------
Grupo Iusacell SA, ADR(15) 20,000 412,500
- ----------------------------------------------------------------------------------------------------------------
Harveys Casino Resorts 50,000 1,418,750
- ----------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp. 110,000 3,506,250
- ----------------------------------------------------------------------------------------------------------------
Hollinger International, Inc. 35,000 581,875
- ----------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., Cl. A(15) 10,000 18,750
- ----------------------------------------------------------------------------------------------------------------
Host Marriott Corp.(15) 110,000 2,083,125
- ----------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(15) 433 34,478
- ----------------------------------------------------------------------------------------------------------------
LCI International, Inc.(15) 30,000 1,155,000
- ----------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A(15) 15,000 506,250
- ----------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., Cl. A(15) 20,000 642,500
- ----------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp.(15) 10,000 277,500
- ----------------------------------------------------------------------------------------------------------------
Omnipoint Corp.(2) (15) 50,000 1,401,250
- ----------------------------------------------------------------------------------------------------------------
Optel, Inc.(2) (15) 3,815 38
- ----------------------------------------------------------------------------------------------------------------
Orbital Sciences Corp.(15) 40,000 1,795,000
- ----------------------------------------------------------------------------------------------------------------
Panamerican Beverages, Inc., Cl. A 25,000 1,003,125
- ----------------------------------------------------------------------------------------------------------------
Price Communications Corp.(15) 10,000 160,000
- ----------------------------------------------------------------------------------------------------------------
PriCellular Corp., Cl. A(15) 50,000 637,500
- ----------------------------------------------------------------------------------------------------------------
Protection One, Inc. 55,000 735,625
- ----------------------------------------------------------------------------------------------------------------
PsiNet, Inc.(15) 35,000 389,375
- ----------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.(15) 50,000 1,943,750
- ----------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.(15) 60,000 1,556,250
- ----------------------------------------------------------------------------------------------------------------
Rostelecom Sponsored ADR(15) 30,000 596,250
- ----------------------------------------------------------------------------------------------------------------
Siena Holdings, Inc.(15) 16,299 20,374
- ----------------------------------------------------------------------------------------------------------------
Southwest Airlines Co. 29,650 876,528
- ----------------------------------------------------------------------------------------------------------------
Sovereign Bancorp, Inc. 46,000 836,625
- ----------------------------------------------------------------------------------------------------------------
Sprint Corp. 45,000 3,045,938
- ----------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.(15) 160,000 2,360,000
- ----------------------------------------------------------------------------------------------------------------
Tele-Communications, Inc. (New), TCI Group, Series A(15) 70,000 2,176,563
- ----------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA, Sponsored ADR 40,000 5,192,500
- ----------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA, Sponsored ADR 15,000 845,625
- ----------------------------------------------------------------------------------------------------------------
Tricon Global Restaurants, Inc.(15) 40,000 1,202,500
- ----------------------------------------------------------------------------------------------------------------
Vimpel-Communications, Sponsored ADR(15) 30,000 1,335,000
- ----------------------------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc.(15) 25,000 631,250
-----------
Total Common Stocks (Cost $47,553,996) 55,459,203
</TABLE>
25 Oppenheimer Champion Income Fund
<PAGE> 26
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
================================================================================================================
<S> <C> <C>
PREFERRED STOCKS--6.8%
- ----------------------------------------------------------------------------------------------------------------
American Communications Services, Inc., 12.75% Preferred Stock(2) (15) 2,610 $ 3,040,650
- ----------------------------------------------------------------------------------------------------------------
American Radio Systems Corp., 11.375% Cum. Exchangeable
Preferred, Series B(2) 11,744 1,388,728
- ----------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable Preferred
Stock, Non-Vtg.(2) (15) 80,080 2,182,180
- ----------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Gtd. Bonds, 12/31/26(2) 750,000 802,500
- ----------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp. Holdings, Inc.:
8.50% Preferred Stock, Series I 28,900 1,484,737
11.125% Preferred Stock, Series M(14) 5,048 577,996
- ----------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A(2) (15) (17) 130,000 3,250,000
- ----------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Preferred Stock(2) (14) 2,560 2,681,600
- ----------------------------------------------------------------------------------------------------------------
Doane Products Co., 14.25% Sr. Exchangeable Preferred Stock,
Non-Vtg.(2) 100,000 4,025,000
- ----------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 12.25% Preferred Stock(6) 2,500 2,731,250
- ----------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., Preferred Stock(2) (15) 15,000 858,750
- ----------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr. Preferred Stock, Series C(2) (14) 110,000 357,500
- ----------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable Preferred Stock, Series B(2) (14) 3,115 3,434,287
- ----------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Preferred Stock, Series A(2) (14) 17,777 1,977,691
- ----------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale California, l2% Non-Cum.
Exchangeable Perpetual Preferred Stock, Series A(2) 30 795
- ----------------------------------------------------------------------------------------------------------------
Golden State Bancorp, 8.75% Cv. Preferred Stock, Series A 24,200 2,214,300
- ----------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 7.50% Preferred Stock, Series A(2) (14) 2,816,000 2,674,918
- ----------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable Preferred Stock 2,623 3,232,848
- ----------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
13.50% Exchangeable Preferred Stock, Series B(2) (14) 1,995 2,473,800
Depositary Shares representing one one-hundredth 7% Cum.
Cv. Jr. Preferred Stock, Series E, Non-Vtg.(6) 61,150 2,186,113
- ----------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. exchangeable preferred stock
and one warrant to purchase 30 shares of common stock)(6) (12) (15) 300 316,500
- ----------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings Co., 11.25% Nts., 3/1/08(6) (14) 25,000 2,606,250
- ----------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Preferred Stock(6) (15) 4,000 4,240,000
- ----------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr. Exchangeable Preferred(14) 82,821 5,238,428
- ----------------------------------------------------------------------------------------------------------------
Prime Retail, Inc.:
8.50% Cv. Preferred Stock, Series B 31,440 762,420
10.50% Cum. Preferred Stock, Series A, Non-Vtg.(2) 12,500 340,625
- ----------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Preferred Stock(6) 54,950 5,426,313
9.20% Preferred Stock, Series F(2) 22,500 2,328,750
- ----------------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable Preferred Stock,
Series B, Non-Vtg.(2) (15) 118,300 5,885,425
</TABLE>
26 Oppenheimer Champion Income Fund
<PAGE> 27
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
================================================================================================================
<S> <C> <C>
PREFERRED STOCKS (CONTINUED)
SF Holdings Group, Inc., Units (each unit consists of one share of
preferred stock and 37 cl. C shares of common stock)(2) (12) (15) 100 $ 918,750
- ----------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625% Cum., Series E, Non-Vtg.(14) 7,441 889,200
- ----------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 14.25% Cum. Sr. Exchangeable
Preferred Stock, Non-Vtg.(2)(14) 3,556 3,742,690
- ----------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv. Preferred Stock, Series B 3,250 94,250
9.20% Sr. Preferred Stock 83,700 2,218,050
-----------
Total Preferred Stocks (Cost $72,591,805) 76,583,294
UNITS
================================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES--0.2%
- ----------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(2) 725 127,691
- ----------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts.:
Exp. 6/99(2) 5,500 742
Exp. 8/00(2) 850 9
- ----------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(2) 19,829 198
- ----------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00(2) 190 1
- ----------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(2) 12,500 3,125
- ----------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 10/07(6) 2,899 11,958
- ----------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(2) 5,120 205,440
- ----------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(2) (17) 130,000 65,000
- ----------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/05(2) 1,320 6,290
- ----------------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 1,174 9,099
- ----------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(2) 89,486 895
Exp. 9/04(2) 91,000 193,375
- ----------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(2) 265 18,550
- ----------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(2) 17,655 602,477
- ----------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 1,600 --
- ----------------------------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited Partners' Interest 1,985 --
- ----------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(2) 8,000 224,200
- ----------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc. Wts., Exp. 1/07(2) 2,565 30,487
- ----------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/07(2) 19,178 270,793
- ----------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(2) 28,000 357,000
Exp. 6/05(2) 15,200 193,800
- ----------------------------------------------------------------------------------------------------------------
Teletrac, Inc. Wts., Exp. 8/07(2) 330 16,500
- ----------------------------------------------------------------------------------------------------------------
Trizec Hahn Corp. Wts., Exp. 7/99 1,985 9,003
- ----------------------------------------------------------------------------------------------------------------
UNIFI Communications, Inc. Wts., Exp. 3/07(2) 2,500 1,250
- ----------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/20 5,355 --
- ----------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/02(2) 49,200 55,350
-----------
Total Rights, Warrants and Certificates (Cost $272,127) 2,403,233
</TABLE>
27 Oppenheimer Champion Income Fund
<PAGE> 28
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
================================================================================================================
<S> <C> <C>
STRUCTURED INSTRUMENTS--10.0%
- ----------------------------------------------------------------------------------------------------------------
Bear Stearns High Yield Composite Index Linked Nts.:
9%, 6/5/98 $ 4,000,000 $ 4,103,600
9%, 8/10/98 4,500,000 4,646,700
9%, 8/25/98 2,250,000 2,274,075
- ----------------------------------------------------------------------------------------------------------------
Goldman Sachs Group LP, Taiwanese Dollar Linked Nts.,
5.75%, 6/12/98 450,000 456,480
- ----------------------------------------------------------------------------------------------------------------
Lehman High Yield Index Nts.:
7.96%, 8/5/98 3,000,000 3,008,700
7.988%, 6/5/98 10,000,000 10,085,000
7.988%, 7/6/98 5,400,000 5,444,820
8.438%, 8/5/98 4,000,000 3,992,240
9%, 7/8/98 16,600,000 16,392,500
- ----------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, Leveraged Nts. on The
Emerging Markets Bond Index:
8%, 7/31/98 12,000,000 12,687,696
9.50%, 10/29/98 10,000,000 10,103,100
Zero Coupon, Series 2, 9.50%, 6/30/98(9) 8,687,483 9,071,131
Zero Coupon, 9.50%, 6/30/98(9) 8,691,961 9,079,631
Zero Coupon, 8%, 6/5/98(9) 8,000,000 8,458,984
- ----------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust, Sr. Nts.:
5/31/02 (representing a basket of reference loans and a total
return swap between Chase Manhattan Bank and the Trust)(2)(7) 5,000,000 5,000,000
7.648%, 4/28/02 (representing a basket of reference loans and a
total return swap between Chase Manhattan Bank and the Trust)(2)(3) 8,000,000 8,673,585
--------------
Total Structured Instruments (Cost $111,137,193) 113,478,242
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,073,752,643) 99.1% 1,122,000,524
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.9 9,999,588
----------- --------------
NET ASSETS 100.0% $1,132,000,112
=========== ==============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C>
ARP --Argentine Peso GBP --British Pound Sterling
CAD --Canadian Dollar IDR --Indonesian Rupiah
DEM --German Mark XEU --European Currency Units
</TABLE>
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. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to
changes in prepayment rates than traditional mortgage-backed securities (for
example, GNMA pass-throughs). Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing and amount of future
cash flows.
5. Represents the current interest rate for an increasing rate security.
28 Oppenheimer Champion Income Fund
<PAGE> 29
- --------------------------------------------------------------------------------
6. 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 $211,202,176 or 18.66% of the Fund's net
assets as of March 31, 1998.
7. When-issued security to be delivered and settled after March 31, 1998.
8. Non-income producing--issuer is in default of interest payment.
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
10. Securities with an aggregate market value of $5,753,100 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
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. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
14. Interest or dividend is paid in kind.
15. Non-income producing security.
16. Issuer is in default.
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 March 31, 1998.
The aggregate fair value of securities of affiliated companies held by the Fund
as of March 31, 1998 amounts to $3,315,000. Transactions during the period in
which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
SHARES SHARES
SEPTEMBER 30, GROSS GROSS MARCH 31,
1997 ADDITIONS REDUCTIONS 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CGA Group Ltd., Preferred Stock, Series A 130,000 -- -- 130,000
- -----------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 130,000 -- -- 130,000
</TABLE>
See accompanying Notes to Financial Statements.
29 Oppenheimer Champion Income Fund
<PAGE> 30
STATEMENT OF ASSETS AND LIABILITIES March 31, 1998 (Unaudited)
<TABLE>
==========================================================================================
<S> <C>
ASSETS
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $1,070,502,643) $1,118,685,524
Affiliated companies (cost $3,250,000) 3,315,000
- ------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 128,968
- ------------------------------------------------------------------------------------------
Receivables:
Investments sold 20,192,284
Interest, dividends and principal paydowns 17,457,828
Shares of beneficial interest sold 5,833,986
Closed forward foreign currency exchange contracts 37,763
Daily variation on futures contracts--Note 6 5,413
- ------------------------------------------------------------------------------------------
Other 7,870
--------------
Total assets 1,165,664,636
==========================================================================================
LIABILITIES
Bank overdraft 2,152,542
- ------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 178,880
- ------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $13,706,333 purchased
on a when-issued basis)--Note 1 25,612,255
Dividends 2,599,425
Shares of beneficial interest redeemed 1,808,390
Distribution and service plan fees 652,968
Daily variation on futures contracts--Note 6 215,350
Closed forward foreign currency exchange contracts 182,408
Transfer and shareholder servicing agent fees 167,293
Other 95,013
--------------
Total liabilities 33,664,524
==========================================================================================
NET ASSETS $1,132,000,112
==============
==========================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $1,074,511,853
- ------------------------------------------------------------------------------------------
Undistributed net investment income 27,638
- ------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions 9,687,632
- ------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 47,772,989
--------------
Net assets $1,132,000,112
==============
</TABLE>
30 Oppenheimer Champion Income Fund
<PAGE> 31
<TABLE>
==============================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $581,514,328 and 42,792,454 shares of beneficial interest outstanding) $13.59
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $14.27
- ----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$334,095,910 and 24,606,648 shares of beneficial interest outstanding) $13.58
- ----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$216,389,874 and 15,936,183 shares of beneficial interest outstanding) $13.58
</TABLE>
See accompanying Notes to Financial Statements.
31 Oppenheimer Champion Income Fund
<PAGE> 32
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1998 (Unaudited)
<TABLE>
==============================================================================================
<S> <C>
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $17,899) $45,311,292
- ----------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $49) 1,836,837
-----------
Total income 47,148,129
==============================================================================================
EXPENSES
Management fees--Note 4 3,221,951
- ----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 657,030
Class B 1,405,622
Class C 974,268
- ----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 700,234
- ----------------------------------------------------------------------------------------------
Shareholder reports 136,742
- ----------------------------------------------------------------------------------------------
Custodian fees and expenses 114,081
- ----------------------------------------------------------------------------------------------
Registration and filing fees 45,035
- ----------------------------------------------------------------------------------------------
Legal and auditing fees 10,464
- ----------------------------------------------------------------------------------------------
Insurance expenses 3,790
- ----------------------------------------------------------------------------------------------
Trustees' fees and expenses 3,098
- ----------------------------------------------------------------------------------------------
Other 7,666
-----------
Total expenses 7,279,981
==============================================================================================
NET INVESTMENT INCOME 39,868,148
==============================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 14,348,882
Closing of futures contracts--Note 6 (1,660,282)
Closing and expiration of options written--Note 7 109,323
-----------
Net realized gain 12,797,923
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 12,047,149
Translation of assets and liabilities denominated in foreign currencies (1,149,361)
-----------
Net change 10,897,788
-----------
Net realized and unrealized gain 23,695,711
==============================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $63,563,859
===========
</TABLE>
See accompanying Notes to Financial Statements.
32 Oppenheimer Champion Income Fund
<PAGE> 33
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30,
(UNAUDITED) 1997
==================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 39,868,148 $ 60,589,864
- --------------------------------------------------------------------------------------------------
Net realized gain 12,797,923 13,385,770
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 10,897,788 20,234,385
-------------- ------------
Net increase in net assets resulting from operations 63,563,859 94,210,019
==================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (22,244,837) (37,216,010)
Class B (10,508,825) (11,933,911)
Class C (7,262,727) (11,440,006)
- --------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (8,100,044) --
Class B (4,232,563) --
Class C (2,893,184) --
==================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 75,105,607 123,701,684
Class B 93,046,039 148,822,899
Class C 33,785,982 61,390,727
==================================================================================================
NET ASSETS
Total increase 210,259,307 367,535,402
- --------------------------------------------------------------------------------------------------
Beginning of period 921,740,805 554,205,403
-------------- ------------
End of period (including undistributed net investment
income of $27,638 and $175,879, respectively) $1,132,000,112 $921,740,805
============== ============
</TABLE>
See accompanying Notes to Financial Statements.
33 Oppenheimer Champion Income Fund
<PAGE> 34
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------
SIX MONTHS
ENDED
MARCH 31, 1998 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995
=============================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $13.49 $12.92 $12.47 $12.32
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .55 1.15 1.15 1.05
Net realized and unrealized gain (loss) .30 .57 .44 .14
------ ------ ------ ------
Total income from
investment operations .85 1.72 1.59 1.19
- ---------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.55) (1.15) (1.14) (1.04)
Dividends in excess of net
investment income -- -- -- --
Distributions in excess of net
realized gain (.20) -- -- --
------ ------ ------ ------
Total dividends and distributions
to shareholders (.75) (1.15) (1.14) (1.04)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $13.59 $13.49 $12.92 $12.47
====== ====== ====== ======
=============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 6.56% 13.96% 13.28% 10.09%
=============================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $581,514 $502,211 $359,208 $255,139
- ---------------------------------------------------------------------------------------------
Average net assets (in thousands) $540,463 $425,249 $305,638 $204,917
- ---------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.21%(5) 8.75% 8.97% 8.45%
Expenses 1.08%(5) 1.10% 1.17% 1.18%
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 76.5% 136.0% 95.0% 72.5%
</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 March 31,
1996.
3. Less than $.005 per share.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
34 Oppenheimer Champion Income Fund
<PAGE> 35
<TABLE>
<CAPTION>
CLASS B
- --------------------- ---------------------------------------
SIX MONTHS
ENDED
MARCH 31, 1998 YEAR ENDED SEPTEMBER 30
1994 1993 (UNAUDITED) 1997 1996(2)
================================================================
<S> <C> <C> <C> <C>
$12.90 $12.26 $13.48 $12.91 $12.47
1.10 1.22 .50 1.05 1.03
(.38) .64 .30 .57 .44
- ---------- -------- -------- -------- --------
.72 1.86 .80 1.62 1.47
- -----------------------------------------------------------
(1.10) (1.22) (.50) (1.05) (1.03)
(.01) -- -- -- --
(.19) -- (.20) -- --
- ---------- -------- -------- -------- --------
(1.30) (1.22) (.70) (1.05) (1.03)
- -----------------------------------------------------------
$12.32 $12.90 $13.58 $13.48 $12.91
========== ======== ======== ======== ========
===========================================================
5.61% 15.92% 6.15% 13.10% 12.20%
===========================================================
$160,505 $104,465 $334,096 $238,505 $82,052
- -----------------------------------------------------------
$135,431 $ 73,334 $282,417 $151,190 $33,189
- -----------------------------------------------------------
8.49% 9.52% 7.45%(5) 7.89% 7.90%(5)
1.22% 1.24% 1.83%(5) 1.86% 1.97%(5)
- -----------------------------------------------------------
108.0% 116.2% 76.5% 136.0% 95.0%
</TABLE>
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended March 31, 1998 were $696,139,191 and $828,706,530,
respectively.
35 Oppenheimer Champion Income Fund
<PAGE> 36
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------
SIX MONTHS ENDED
MARCH 31,
1998 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994(1)
========================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $13.48 $12.91 $12.46 $12.32 $13.13
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .50 1.05 1.06 .95 .75
Net realized and unrealized gain (loss) .30 .57 .44 .13 (.60)
------ ------ ------ ------ ------
Total income from
investment operations .80 1.62 1.50 1.08 .15
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.50) (1.05) (1.05) (.94) (.77)
Dividends in excess of net
investment income -- -- -- -- --(3)
Distributions in excess of net
realized gain (.20) -- -- -- (.19)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.70) (1.05) (1.05) (.94) (.96)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.58 $13.48 $12.91 $12.46 $12.32
====== ====== ====== ====== ======
========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 6.13% 13.12% 12.44% 9.16% 1.11%
========================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $216,390 $181,025 $112,945 $64,932 $27,743
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $195,582 $143,359 $ 89,416 $43,584 $13,693
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.45%(5) 7.98% 8.19% 7.63% 7.24%(5)
Expenses 1.83%(5) 1.86% 1.93% 1.95% 1.94%(5)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 76.5% 136.0% 95.0% 72.5% 108.0%
</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 March 31,
1996.
3. Less than $.005 per share.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended March 31, 1998 were $696,139,191 and $828,706,530,
respectively.
See accompanying Notes to Financial Statements.
36 Oppenheimer Champion Income Fund
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
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 by investing in a diversified portfolio of high yield,
lower-rated, fixed income securities believed by the Manager not to involve
undue risk. 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.
37 Oppenheimer Champion Income Fund
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STRUCTURED NOTES. The Fund invests in foreign currency-linked structured notes
whereby the market value and redemption price are linked to foreign currency
exchange rates. The structured notes may be leveraged, which increases the
notes' volatility relative to the face of the security. Fluctuations in values
of the securities are recorded as unrealized gains and losses in the
accompanying financial statements. During the six months ended March 31, 1998,
the market value of these securities comprised an average of 7% of the Fund's
net assets, and resulted in realized and unrealized gains of $1,557,362.
- --------------------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for
securities that have been purchased by the Fund on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains, in a segregated account with its custodian, assets with a
market value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of March 31, 1998,
the Fund had entered into outstanding when-issued or forward commitments of
$13,706,333.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and
risk of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of
securities whose issuers subsequently default. At March 31, 1998, securities
with an aggregate market value of $336,622, 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.
38 Oppenheimer Champion Income Fund
<PAGE> 39
================================================================================
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price at the time of purchase. If
the seller of the agreement defaults and the value of the collateral declines,
or if the seller enters an insolvency proceeding, realization of the value of
the collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes primarily because of paydown gains and losses and the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from 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.
39 Oppenheimer Champion Income Fund
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life
of the respective securities, in accordance with federal income tax
requirements. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends-in-kind are
recognized as income on the ex-dividend date, at the current market value of
the underlying security. Interest on payment-in-kind debt instruments is
accrued as income at the coupon rate and a market adjustment is made
periodically.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, 1998 YEAR ENDED SEPTEMBER 30, 1997
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 9,558,642 $128,880,556 16,568,069 $ 217,572,287
Dividends and distributions
reinvested 1,562,923 20,937,648 1,893,564 24,892,342
Redeemed (5,543,980) (74,712,597) (9,055,154) (118,762,945)
---------- ------------ ---------- -------------
Net increase 5,577,585 $ 75,105,607 9,406,479 $ 123,701,684
========== ============ ========== =============
- -------------------------------------------------------------------------------------------------
Class B:
Sold 7,707,735 $103,774,280 12,465,577 $ 163,647,329
Dividends and distributions
reinvested 691,938 9,262,373 557,270 7,333,434
Redeemed (1,484,092) (19,990,614) (1,689,558) (22,157,864)
---------- ------------ ---------- -------------
Net increase 6,915,581 $ 93,046,039 11,333,289 $ 148,822,899
========== ============ ========== =============
- -------------------------------------------------------------------------------------------------
Class C:
Sold 3,686,690 $ 49,664,827 6,567,675 $ 86,149,589
Dividends and distributions
reinvested 557,999 7,471,051 618,611 8,129,826
Redeemed (1,736,209) (23,349,896) (2,510,331) (32,888,688)
---------- ------------ ---------- ------------
Net increase 2,508,480 $ 33,785,982 4,675,955 $ 61,390,727
========== ============ ========== ============
</TABLE>
40 Oppenheimer Champion Income Fund
<PAGE> 41
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At March 31, 1998, net unrealized appreciation on investments of $48,247,881
was composed of gross appreciation of $56,662,433, and gross depreciation of
$8,414,552.
================================================================================
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 average annual net assets in excess
of $1 billion.
For the six months ended March 31, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $1,665,673, of
which $479,544 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 $3,527,270 and $417,735, respectively,
of which $97,468 and $8,353, respectively, was paid to an affiliated
broker/dealer. During the six months ended March 31, 1998, OFDI received
contingent deferred sales charges of $248,882 and $32,954, 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 maintenance of
accounts of their customers that hold Class A shares. During the six months
ended March 31, 1998, OFDI paid $34,407 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
41 Oppenheimer Champion Income Fund
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Fund has adopted a Distribution and Service Plan for Class B shares to
compensate OFDI for its 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 for it's services rendered in distributing
Class B. 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.
Each fee is computed on the average annual net assets of Class B shares,
determined as of the close of each regular business day. During the six months
ended March 31, 1998, OFDI paid $2,521 to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and retained
$1,255,078 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 distributing shares before the Plan was
terminated. As of March 31, 1998, OFDI had incurred excess distribution and
servicing costs of $11,942,658 for Class B.
The Fund has adopted a Distribution and Service Plan for Class C
shares to reimburse OFDI for its 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 for its services rendered in
distributing Class C. 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. Each fee is computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. During the six months
ended March 31, 1998, OFDI paid $7,252 to an affiliated broker/dealer as
reimbursement for Class C personal service and maintenance expenses and retained
$487,778 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 distributing shares before the Plan was terminated. As
of March 31, 1998, OFDI had incurred excess distribution and servicing costs of
$2,594,745 for Class C.
42 Oppenheimer Champion Income Fund
<PAGE> 43
================================================================================
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 March 31, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
EXPIRATION CONTRACT VALUATION AS OF UNREALIZED UNREALIZED
DATE AMOUNT (000S) MARCH 31, 1998 APPRECIATION DEPRECIATION
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
CONTRACTS TO SELL
- -----------------
British Pound Sterling (GBP) 7/15/98 7,000 GBP $11,677,660 $ -- $169,811
Canadian Dollar (CAD) 5/26/98 8,015 CAD 5,667,382 -- 9,069
European Currency Unit (XEU) 7/15/98 6,080 XEU 6,558,778 69,914 --
German Mark (DEM) 7/15/98 7,319 DEM 3,981,193 59,054 --
-------- --------
Total Unrealized Appreciation and Depreciation $128,968 $178,880
======== ========
</TABLE>
43 Oppenheimer Champion Income Fund
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
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 (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Fund each day. The variation margin
payments are equal to the daily changes in the contract value and are recorded
as unrealized gains and losses. The Fund recognizes a realized gain or loss
when the contract is closed or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
At March 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUATION AS OF UNREALIZED
EXPIRATION DATE CONTRACTS MARCH 31, 1998 DEPRECIATION
===============================================================================================================
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
- ---------------------
U.S. Treasury 20 yr. 6/19/98 10 $ 1,202,500 $ 13,438
--------
CONTRACTS TO SELL
- -----------------
NASDAQ 100 6/18/98 15 1,856,250 79,850
Russell 2000 6/18/98 5 1,217,500 18,500
Standard & Poor's 500 6/18/98 105 29,150,625 317,187
--------
415,537
--------
$428,975
========
</TABLE>
44 Oppenheimer Champion Income Fund
<PAGE> 45
================================================================================
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 six months ended March 31, 1998 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
--------------------- -----------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at
September 30, 1997 4,850 $ 112,278 -- $ --
Options written 1,296 103,160 980 67,950
Options closed or expired (466) (79,510) (980) (67,950)
Options exercised (5,680) (135,928) -- --
------- ---------- -------- ---------
Options outstanding at
March 31, 1998 -- -- -- --
======= ========== ======== =========
</TABLE>
45 Oppenheimer Champion Income Fund
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
8. ILLIQUID AND RESTRICTED SECURITIES
At March 31, 1998, 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 March 31, 1998 was $107,671,665, which represents
9.51% of the Fund's net assets, of which $6,542,607 is considered restricted.
Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
VALUATION
ACQUISITION PER UNIT AS OF
SECURITY DATE COST PER UNIT MARCH 31, 1998
================================================================================================================================
<S> <C> <C> <C>
BONDS
- -----
Arizona Charlie's, Inc., 12% First Mtg. Nts.,
Series B, 11/15/00 11/18/93 102.83% 58.75%
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 95.74 17.50
ECM Fund L.P.I., 14% Sub. Nts., 6/10/02 4/14/92 100.50 100.25
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08 3/19/98 101.00 107.50
STOCKS AND WARRANTS
- -------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93 $ 2.00 $ .25
CGA Group Ltd., Preferred Stock, Series A 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 1,102.50
Omnipoint Corp. 1/26/96 16.00 28.03
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 28.03
</TABLE>
================================================================================
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 Oppenheimer funds 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 six months
ended March 31, 1998.
46 Oppenheimer Champion Income Fund
<PAGE> 47
OPPENHEIMER CHAMPION INCOME FUND
<TABLE>
==============================================================================================
<S> <C>
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, Trustee, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
David P. Negri, 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.
The financial statements included herein have been taken
from the records of the Fund without examination of the
independent auditors. This is a copy of a report to
shareholders of Oppenheimer Champion Income Fund. This
report must be preceded or accompanied by a Prospectus of
Oppenheimer Champion Income Fund. For material information
concerning the Fund, see the Prospectus. Shares of Oppenheimer
funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or
any other agency, and involve investment risks, including
possible loss of the principal amount invested.
</TABLE>
47 Oppenheimer Champion Income Fund
<PAGE> 48
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RS0190.001.0398 May 29, 1998
