[photo of high tension wires]
Annual Report September 30, 1999
Oppenheimer
Champion Income Fund
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
High yield bonds regained lost ground in late 1998 and much of 1999, outpacing
most other types of fixed income instruments.
The Fund invested heavily in the telecommunications and cable industries, which
proved to be among the best-performing sectors in the high yield market.
Rising interest rates put a damper on fixed income markets in mid-1999.
Contents
1 President's Letter
3 An Interview
with Your Fund's
Managers
7 Fund Performance
12 Financial
Statements
47 Independent
Auditors' Report
48 Federal
Income Tax
Information
49 Officers and Trustees
- -------------------------------
Average Annual
Total Returns
For the 1-Year Period
Ended 9/30/99*
Class A
Without With
Sales Chg. Sales Chg.
- -------------------------------
7.15% 2.06%
Class B
Without With
Sales Chg. Sales Chg.
- -------------------------------
6.36% 1.50%
Class C
Without With
Sales Chg. Sales Chg.
- -------------------------------
6.35% 5.38%
- -------------------------------
- ---------------------
Not FDIC Insured.
No Bank Guarantee.
May Lose Value.
- ---------------------
* See page 10 for further details.
<PAGE>
PRESIDENT'S LETTER
Dear shareholder,
In many ways, the 1999 investment environment has, so far, unfolded as many
expected it would, producing both attractive opportunities and formidable
challenges for investors.
[Photo of James C. Swain] [Photo of Bridget A. Macaskill]
James C. Swain Bridget A. Macaskill
Chairman President
Oppenheimer Oppenheimer
Champion Income Champion Income
Fund Fund
On the economic front, early worries about the effects of global weakness
in the wake of last year's credit and currency crises have abated. Instead, as
many economies around the world begin to strengthen, concerns now center around
whether the U.S. economy may be growing too quickly. Throughout the year,
consumers in the United States have continued to spend and borrow heavily, more
than offsetting any temporary slowdown in the industrial and export sectors.
The economy's strength has not gone unnoticed by the nation's monetary
policymakers. In an effort to ward off emerging inflationary pressures, the
Federal Reserve Board increased short-term interest rates this past summer.
Market reaction to robust economic growth has been mixed. The U.S. bond
market has generally declined, as fixed income investors became increasingly
concerned about the effects of rising interest rates.
In the stock market, the performance of large-capitalization growth
stocks, which has driven the market's advance over the past few years, has begun
to moderate, and many previously out-of-favor value-oriented mid-cap and
small-cap stocks have rallied. At the same time, a healthy percentage of
actively managed, diversified portfolios have once again begun to outperform
unmanaged stock indices such as Standard & Poor's 500.
1 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
PRESIDENT'S LETTER
At OppenheimerFunds, we applaud the Fed's pre-emptive strike against inflation.
In our view, history has repeatedly demonstrated that most financial assets do
best in a low-inflation environment. What's more, we believe that the move to
higher interest rates should be temporary.
One recent development is quite troublesome to us however: the increasing
popularity of "day trading" among individuals seeking to make fast money in a
volatile stock market. In our opinion, day trading is not investing, it is
gambling. Experience proves that without extensive research and analysis,
attempting to time short-term price swings is a fool's errand. Instead, we
continue to encourage investors to maintain a long-term perspective that is
measured in years, not days.
Finally, while we remain alert to the potential impact of the Y2K issue,
we are encouraged by the progress made in addressing the matter. At
OppenheimerFunds, our shareholder accounting systems are already Y2K compliant,
and we have successfully participated in all required industrywide tests. We
intend to continue retesting our systems in order to help further protect
against any potential problems. After all, whether in our computer accounting
systems or the financial markets, managing risk is an important part of what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
October 21, 1999
2 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
Q How did the Fund perform during the one-year period that ended September 30,
1999?
A. We are generally pleased with Oppenheimer Champion Income Fund's performance.
Despite a challenging period in which fixed income markets experienced an
unusually high level of volatility, the Fund succeeded in providing investors
with a positive total rate of return.
[Photo of Portfolio Management Team]
Portfolio Management
Team (l to r)
David Negri
Thomas Reedy
Why were fixed income markets so volatile during the period?
When the period began in October 1998, fixed income markets were caught in the
midst of an unprecedented flight to quality. Concern over widespread economic
difficulties in emerging markets and the potential for slower U.S. economic
growth made investors reluctant to invest in corporate debt securities. Instead,
investors turned to the relative safety of U.S. Treasury instruments, which
performed much more strongly than other types of bonds.
In November and December 1998, with the U.S economy demonstrating continued
strength and emerging markets showing signs of recovery, corporate bond prices
rebounded strongly. By early 1999, corporate bonds had strengthened considerably
relative to Treasuries. During the first half of the year, low rates of
inflation and robust U.S. growth provided a supportive environment for most
corporate debt instruments, especially those providing high yields.
3 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
However, strong U.S. growth also prompted the Federal Reserve Board (the Fed) to
raise interest rates late in the period in an effort to prevent the economy from
overheating. Since bond prices generally react inversely to interest rates, the
Fed's actions put a damper on fixed income markets.
How did you manage the Fund in light of these conditions?
By the beginning of October 1998, we had already sold most of the Fund's
emerging market bonds, as well as the bonds of commodity businesses likely to be
hurt by falling global demand for raw materials. By investing the proceeds in
U.S. Treasuries and maintaining a larger-than-normal cash reserve, we buffered
the Fund from the market declines that continued through early October.
As markets rebounded, we reduced our Treasury holdings and began putting
the Fund's cash to work. Specifically, we took advantage of compelling
opportunities among high yield corporate instruments, many of which performed
strongly during the first few months of 1999. Later in the period, as interest
rate hikes became increasingly likely, we adopted a slightly more defensive
position by selling some of our lower rated securities which ultimately
increased the overall quality of the Fund's portfolio.
[callout]
"Since most companies appear well prepared for the arrival of the year 2000, we
view any short-term Y2K concerns as minor."
4 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
What industries contributed most to the Fund's performance?
We began this fiscal year with approximately 21% of assets invested in the
telecommunications and cable industries, a higher-than-average allocation to
this fast-growing sector. The lion's share of investments we made during the
year went to these same sectors. Investments in bonds issued by cable service
providers, such as NTL, Inc., and Diamond Cable Communications plc, and cellular
communications companies, such as Omnipoint Corp., proved to be among the Fund's
strongest performers. Energy was another profitable sector for the Fund, since
the value of our holdings rose along with oil and natural gas prices beginning
in March 1999. We also earned gains by reinvesting in basic industries, such as
paper and steel, which benefited from stronger global demand as the global
economic recovery gathered strength in 1999.
At the same time, we succeeded in limiting the Fund's exposure to many of
the weakest performing sectors within the fixed income market during the year.
For example, we held relatively few positions in the healthcare sector, which
has suffered from concerns regarding the impact of regulatory and competitive
pressures on company revenues. And despite our investments in
telecommunications, we avoided investments in the poor performing sub-sector of
satellite telephony, which has required massive capital investment while
providing little revenue thus far.
- ---------------------------------
Average Annual
Total Returns
For the Periods Ended 9/30/99(1)
Class A
1-Year 5-Year 10-Year
- ---------------------------------
2.06% 7.62% 10.63%
Class B Since
1-Year 5-Year Inception
- ---------------------------------
1.50% N/A 6.88%
Class C Since
1-Year 5-Year Inception
- ---------------------------------
5.38% 7.84% 6.89%
- ---------------------------------
Standardized Yields(2)
For the 30 Days Ended 9/30/99
Since
Inception
- ---------------------------------
Class A 9.73%
- ---------------------------------
Class B 9.45
- ---------------------------------
Class C 9.45
- ---------------------------------
1. See page 10 for further details.
2. Standardized yield is based on net investment income for the 30-day period
ended September 30, 1999. Falling share prices will tend to artificially raise
yields.
5 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
What is your outlook for the coming months?
We believe conditions remain positive for bond investors. The U.S. economy
appears to be on track for continued growth, although perhaps at a slower rate.
Inflation seems likely to remain in check. Such conditions have historically
been very favorable for the high yield bond market because companies are
generally able to earn good revenues, maintain positive cash flows and pay their
debt obligations. In addition, since most companies appear well prepared for the
arrival of the year 2000, we view any short-term Y2K concerns as minor.
We remain dedicated to our strict investment discipline, striving to
provide high income and growth potential from a portfolio of diversified
securities. That's what makes Oppenheimer Champion Income Fund part of The Right
Way to Invest.
Credit Allocation(3)
[pie chart]
AA 1.7%
BBB 3.7
BB 11.7
B 59.6
CCC 6.3
CC 0.4
C 0.1
Other Securities 16.5
Top 5 Holdings by Issuer(3)
- ----------------------------------------------------------
NTL, Inc. 3.1%
- ----------------------------------------------------------
Deutsche Bank AG 1.7
- ----------------------------------------------------------
Telewest Communications plc 1.5
- ----------------------------------------------------------
NEXTLINK Communications, Inc. 1.4
- ----------------------------------------------------------
Intermedia Communications, Inc. 1.2
- ----------------------------------------------------------
3. Portfolio is subject to change. Percentages are as of September 30, 1999, and
are dollar-weighted based on total market value of investments. Securities rated
by any rating organization are included in the equivalent Standard & Poor's
rating category. Average credit quality includes securities rated by national
ratings organizations as well as unrated securities (7.87% of total investments
as of September 30, 1999) which have ratings assigned by the Manager in
categories equivalent to those of ratings organizations.
6 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
FUND PERFORMANCE
How has the Fund performed? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended September 30, 1999, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index and a narrower market index.
Management's discussion of performance. The fiscal year that ended September 30,
1999, opened with corporate bond prices falling while U.S. Treasury prices rose,
driven by economic difficulties in emerging markets and fears of global
recession. We cushioned the Fund from much of the impact of this shift by
reducing exposure to emerging markets and global commodities, and by increasing
the Fund's Treasury holdings and cash reserves. When global economies began to
recover in late 1998, led by the continued strength of the United States, we
shifted the Fund's assets back into high yield corporate securities. The Fund
benefited most strongly from our investments in the telecommunications and cable
industries. We also enhanced total return with holdings in energy and basic
industries during the second half of the period, and by avoiding poor performing
sectors such as healthcare. In mid-1999, when rising interest rates put a damper
on fixed income markets, we sold some of our lower rated securities to increase
the overall quality of the Fund's portfolio. The Fund's portfolio holdings,
allocations and strategies are subject to change.
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each Class of shares of the
Fund held until September 30, 1999. In the case of Class A shares, performance
is measured over a 10-year period. In the case of Class B shares, performance is
measured from inception of the class on October 2, 1995. In the case of Class C
shares, performance is measured from inception of the class on December 1, 1993.
The Fund's performance reflects the deduction of the maximum initial sales
charge on Class A shares, the applicable contingent deferred sales charge on
Class B and Class C shares, and reinvestments of all dividends and capital gains
distributions.
The Fund's performance is compared to the performance of Lehman Brothers
Corporate Bond Index and the Merrill Lynch High Yield Master Index. The Lehman
Brothers Corporate Bond Index is an unmanaged index of publicly issued
nonconvertible investment grade corporate debt of U.S. issuers, widely
recognized as a measure of the U.S. fixed rate corporate bond market. The
Merrill Lynch High Yield Master Index is an index of below-investment-grade
(ratings are generally comparable to below BBB of S&P) U.S. corporate issuers.
It is widely recognized as a measure of the U.S. corporate high yield bond
market.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
in the graphs that follow shows the effect of taxes. The Fund's performance
reflects the effects of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's performance, it
must be noted that the Fund's investments are not limited to the securities in
the indices.
7 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Champion Income Fund (Class A), Lehman Brothers Corporate Bond
Index, and Merrill Lynch High Yield Master Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Champion Income Fund Class A Lehman Brothers Corporate Bond Index Merrill Lynch High Yield
Master Index
<S> <C> <C> <C>
9.30.89 9525 10000 10000
9823 10619 9455
9.30.91 12340 12428 12039
14799 14237 14779
9.30.93 17157 15971 16977
18120 15255 17273
9.30.95 19948 17847 20146
22598 18694 22246
9.30.97 25752 20719 25430
25627 23013 26287
9.30.99 27459 22692 27174
</TABLE>
Average Annual Total Return of Class A Shares of the Fund at 9/30/99(1)
1-Year 2.06% 5-Year 7.62% 10-Year 10.63%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Champion Income Fund (Class B), Lehman Brothers Corporate Bond
Index, and Merrill Lynch High Yield Master Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Champion Income Fund Class B Lehman Brothers Corporate Bond Index Merrill Lynch High Yield
Master Index
<S> <C> <C>
10.2.95 10000 10000 10000
9.30.96 11220 10475 11041
9.30.97 12690 11609 12622
9.30.98 12531 12894 13047
9.30.99 13045 12714 13487
</TABLE>
Average Annual Total Return of Class B Shares of the Fund at 9/30/99(1)
1-Year 1.50% Life 6.88%
8 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Champion Income Fund (Class C), Lehman Brothers Corporate Bond
Index, and Merrill Lynch High Yield Master Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Champion Income Fund Class C Lehman Brothers Corporate Bond Index Merrill Lynch High Yield
Master Index
<S> <C> <C> <C>
12.1.93 10000 10000 10000
9.30.94 10112 9622 9932
9.30.95 11038 11256 11585
9.30.96 12410 11791 12791
9.30.97 14039 13068 14622
9.30.98 13864 14514 15115
9.30.99 14744 14312 15625
</TABLE>
Average Annual Total Return of Class C Shares of the Fund at 9/30/99(1)
1-Year 5.38% 5-Year 7.84% Life 6.89%
The performance information for both indices in the graphs begins on 9/30/89 for
Class A, 9/29/95 for Class B and 11/30/93 for Class C.
1. See page 10 for further details.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
9 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
NOTES
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. The Fund's
performance may from time to time be subject to substantial short-term changes,
particularly during periods of market or interest rate volatility. For updates
on the Fund's performance, please contact your financial advisor, call us at
1.800.525.7048 or visit our website, www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
Class A shares were first publicly offered on 11/16/87. The average annual total
returns are shown net of the applicable 4.75% maximum initial sales charge.
Class B shares of the Fund were first publicly offered on 10/2/95. The average
annual total returns are shown net of the applicable 4% and 3% contingent
deferred sales charges, respectively, for the one-year period and the life of
the class. The ending account value in the graph is net of the applicable 3%
contingent deferred sales charge. Class B shares are subject to an annual 0.75%
asset-based sales charge.
Class C shares of the Fund were first publicly offered on 12/1/93. The average
annual total returns are shown net of the applicable 1% contingent deferred
sales charge for the one-year period. Class C shares are subject to an annual
0.75% asset-based sales charge.
An explanation of the different performance calculations is in the Fund's
prospectus.
10 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
Financials
11 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS September 30, 1999
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage-Backed Obligations--1.9%
- -----------------------------------------------------------------------------------------------------------------------
AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg.
Pass-Through Certificates, Series 1997-C1, Cl. H, 7%, 6/17/29(2) $ 360,000 $ 241,875
- -----------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(3) 1,500,000 980,156
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 3,800,000 2,592,313
- -----------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. E, 6.72%, 12/25/03(2,3) 622,000 534,531
- -----------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1998-C1, Cl. F, 6%, 5/17/40(2) 3,000,000 1,728,750
- -----------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997, Cl. E, 8.227%, 2/25/11(2,3) 4,000,000 2,767,500
- -----------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Collateralized Mtg. Obligations,
Series 1997-C2, Cl. F, 6.75%, 4/16/29 2,000,000 1,314,375
- -----------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group LP, Collateralized Bond Obligations, Sub. Bonds,
Series 1A, Cl. D, 12.54%, 6/13/01 2,000,000 1,915,000
- -----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1997-RR, Cl. D, 7.671%, 4/30/39(2) 2,000,107 1,511,956
Series 1997-RR, Cl. F, 7.649%, 4/30/39(2) 5,000,269 2,702,489
Series 1997-XL1, Cl. G, 7.695%, 10/3/30(2) 1,200,000 1,000,125
- -----------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(2) 600,000 468,938
- -----------------------------------------------------------------------------------------------------------------------
NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I,
Cl. ECFD, 8.75%, 12/25/28(2) 2,275,808 2,221,758
- -----------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 420,700 412,878
Series 1995-C1, Cl. F, 6.90%, 2/25/27 195,143 177,779
- -----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1,
Cl. E, 9.184%, 1/20/06 704,000 661,760
- -----------------------------------------------------------------------------------------------------------------------
Salomon, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1998-A1, 5%, 12/25/00(2) 164,398 158,336
- -----------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through Certificates, Series 1997-LLI,
Cl. F, 7.30%, 4/12/12(2) 3,000,000 2,225,625
Multiclass Pass-Through Certificates, Series 1999-1, 10%, 8/25/28 4,148,897 4,130,746
-----------
Total Mortgage-Backed Obligations (Cost $33,263,480) 27,746,890
</TABLE>
12 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign Government Obligations--1.0%
- -----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 2.828%, 4/1/07(3) [ARP] 6,206,863 $ 4,129,830
- -----------------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Bonds, Series PBA1, 2.828%, 4/1/07(3) [ARP] 2,828,444 1,758,377
- -----------------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Interest Arrears Bonds, 6.50%, 7/28/11(3) 4,400,000 3,129,500
- -----------------------------------------------------------------------------------------------------------------------
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 1,000,000 600,000
- -----------------------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5.50%, 12/23/23(4) 1,750,000 1,060,938
- -----------------------------------------------------------------------------------------------------------------------
Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(3) 1,000,000 725,000
- -----------------------------------------------------------------------------------------------------------------------
Panama (Republic of) Past Due Interest Debs., 5.819%, 7/17/16(3) 2,245,816 1,611,373
- -----------------------------------------------------------------------------------------------------------------------
Perusahaan Listr, 17% Nts., 8/21/01(2) [IDR] 1,000,000,000 62,837
- -----------------------------------------------------------------------------------------------------------------------
Philippines (Republic of) Debs., 6%, 12/1/09(3) 840,000 768,600
- -----------------------------------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon, 3/17/1999(2,5) [IDR] 1,000,000,000 32,914
-----------
Total Foreign Government Obligations (Cost $13,945,796) 13,879,369
- -----------------------------------------------------------------------------------------------------------------------
Loan Participations--0.5%
- -----------------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 6.812%, 9/4/06(2,3) 1,561,090 1,163,013
- -----------------------------------------------------------------------------------------------------------------------
Central Bank of Indonesia Gtd. Nts.:
Series 2 yr., 5.906%, 8/25/00(2,3) 1,000,000 890,000
Series 2 yr., 8.906%, 8/25/00(2,3) 2,250,000 2,002,500
Series 3 yr., 9.156%, 8/25/01(2,3) 2,000,000 1,690,000
Series 4 yr., 9.406%, 8/25/02(2,3) 500,000 407,500
- -----------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 5.906%, 1/1/09(2,3) 972,619 824,294
-----------
Total Loan Participations (Cost $6,389,000) 6,977,307
- -----------------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes--76.8%
- -----------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.9%
Amtran, Inc.:
9.625% Nts., 12/15/05 1,800,000 1,728,000
10.50% Sr. Nts., 8/1/04 3,400,000 3,366,000
- -----------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.375% Sr. Unsec. Nts., 11/15/06 4,750,000 4,488,750
10.75% Sr. Nts., 8/1/05 60,000 60,300
- -----------------------------------------------------------------------------------------------------------------------
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 3,160,000 3,104,700
- -----------------------------------------------------------------------------------------------------------------------
Constellation Finance LLC, 9.80% Airline Receivable
Asset-Backed Nts., Series 1997-1, 9.80%, 1/1/01(2) 3,500,000 3,281,250
- -----------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts., Series B, 9/30/08 3,450,000 3,432,750
- -----------------------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 5,750,000 4,916,250
- -----------------------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(2) 1,685,265 1,747,620
- -----------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 1,000,000 975,000
-----------
27,100,620
13 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Chemicals--3.2%
Brunner Mond Group plc, 12.50% Sr. Unsec. Sub. Nts., 7/15/08 [GBP] 4,425,000 $ 4,044,581
- -----------------------------------------------------------------------------------------------------------------------
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 2,520,000 2,104,200
- -----------------------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09(6) 3,000,000 2,955,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09 [EUR] 4,000,000 4,196,100
Zero Coupon Sr. Disc. Nts., 13.09%, 12/31/09(6,7) 10,750,000 2,902,500
- -----------------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 9.875% Sec. Nts., Series B, 5/1/07 4,000,000 3,985,000
- -----------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 9,205,000 9,596,212
- -----------------------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 50,000 37,750
- -----------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 1,900,000 1,463,000
- -----------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 960,000 916,800
- -----------------------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts., Series B, 8/1/07 3,995,000 3,965,037
- -----------------------------------------------------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/088 700,000 122,500
- -----------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 170,000 97,750
11.75% Sr. Unsec. Sub. Nts., 8/15/06 5,750,000 3,593,750
12.375% Sec. Nts., 7/15/06(6) 2,700,000 2,538,000
- -----------------------------------------------------------------------------------------------------------------------
ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(6) 4,000,000 4,035,000
-----------
46,553,180
- -----------------------------------------------------------------------------------------------------------------------
Consumer Durables--0.4%
Holmes Products Corp.:
9.875% Sr. Sub. Nts., Series C, 11/15/07 1,000,000 905,000
9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 2,575,000 2,330,375
- -----------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(2) 1,865,000 2,077,796
-----------
5,313,171
- -----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--2.5%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs., 7/1/09(8) 1,350,000 519,750
10.50% Sr. Unsec. Nts., 7/1/08 2,800,000 2,506,000
- -----------------------------------------------------------------------------------------------------------------------
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05 3,000,000 885,000
- -----------------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 4,400,000 4,477,000
- -----------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06 5,300,000 1,934,500
- -----------------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 4,300,000 2,816,500
- -----------------------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 1,100,000 1,023,000
- -----------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 8.625% Sr. Unsec. Sub. Nts., 2/1/08 7,765,000 6,386,712
- -----------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06 5,800,000 5,350,500
14 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Non-Durables Continued
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 18.75%, 3/15/01(7) $2,660,000 $ 1,449,700
- -----------------------------------------------------------------------------------------------------------------------
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 6,000,000 6,120,000
- -----------------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 2,815,000 2,688,325
- -----------------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 805,000 792,925
-----------
36,949,912
- -----------------------------------------------------------------------------------------------------------------------
Energy--4.4%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(6) 2,500,000 2,212,500
- -----------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 3,330,000 3,088,575
9.625% Sr. Unsec. Nts., Series B, 5/1/05 4,200,000 4,042,500
- -----------------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 3,625,000 2,990,625
- -----------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 825,000 688,875
- -----------------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 1,250,000 1,150,000
- -----------------------------------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(6) 3,800,000 2,379,750
- -----------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B, 2/15/07(5) 2,550,000 2,154,750
9.50% Sr. Sub. Nts., 11/1/06(5,12) 1,000,000 845,000
- -----------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 0%/14.125% Sr. Disc. Nts., 5/1/06(8) 8,775,000 3,027,375
- -----------------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(6) 6,750,000 5,838,750
- -----------------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08(12) 1,985,000 1,141,375
- -----------------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners LP/Leviathan Financial Corp.,
10.375% Sr. Sub. Nts., 6/1/09(6) 2,150,000 2,203,750
- -----------------------------------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(5) 3,250,000 1,316,250
- -----------------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 3,150,000 2,472,750
- -----------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 5,000,000 4,837,500
- -----------------------------------------------------------------------------------------------------------------------
Parker Drilling Co., 9.75% Sr. Unsec. Nts., Series D, 11/15/06 1,500,000 1,455,000
- -----------------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07(2) 1,330,000 1,276,800
- -----------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06(6) 5,000,000 5,300,000
- -----------------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 6,300,000 3,181,500
- -----------------------------------------------------------------------------------------------------------------------
RBF Finance Co.:
11% Sr. Sec. Nts., 3/15/06 5,000,000 5,287,500
11.375% Sr. Sec. Nts., 3/15/09 2,000,000 2,120,000
- -----------------------------------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 1,050,000 1,092,000
- -----------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07(12) 2,905,000 2,861,425
- -----------------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc.:
0%/11.375% Sr. Disc. Nts., 2/15/09(8) 800,000 452,000
0%/9.875% Sr. Disc. Nts., 2/15/08(8) 2,350,000 1,410,000
-----------
64,826,550
15 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financial--0.9%
AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 $ 2,900,000 $ 1,783,500
- -----------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 578,000 499,970
- -----------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI, 14% Sub. Nts., 6/10/02(2) 14,217 14,022
- -----------------------------------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Sr. Nts., 10/31/03(2,5) 600,000 --
- -----------------------------------------------------------------------------------------------------------------------
Parametric RE Ltd., 9.434% Nts., 11/19/07(3,6) 600,000 614,250
- -----------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 24% Nts., 6/19/03(5) [IDR] 6,314,400,000 98,249
- -----------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 8,995,000 8,387,837
- -----------------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 1,700,000 1,279,250
-----------
12,677,078
- -----------------------------------------------------------------------------------------------------------------------
Food & Drug--1.9%
AmeriKing, Inc., 10.75% Sr. Nts., 12/1/06 3,101,000 2,775,395
- -----------------------------------------------------------------------------------------------------------------------
Family Restaurants, Inc.:
9.75% Sr. Nts., 2/1/02 6,690,000 3,227,925
10.875% Sr. Sub. Disc. Nts., 2/1/04 400,000 207,000
- -----------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 5,320,000 4,947,600
- -----------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(8) 6,420,000 6,323,700
- -----------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 12.625% Sub. Nts., 6/15/02 5,210,000 5,144,875
- -----------------------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07(2) 2,875,000 3,148,125
- -----------------------------------------------------------------------------------------------------------------------
Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 1,260,000 1,354,500
-----------
27,129,120
- -----------------------------------------------------------------------------------------------------------------------
Food/Tobacco--2.1%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 900,000 852,750
- -----------------------------------------------------------------------------------------------------------------------
Canadaigua Brands, Inc., 8.50% Sr. Unsec. Sub. Nts., 3/1/09 1,500,000 1,402,500
- -----------------------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 3,885,000 3,749,025
- -----------------------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(8) 2,251,000 1,710,760
- -----------------------------------------------------------------------------------------------------------------------
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06(12) 4,655,000 4,759,737
- -----------------------------------------------------------------------------------------------------------------------
New World Pasta Co., 9.25% Sr. Nts., 2/15/09 4,800,000 4,344,000
- -----------------------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 8,065,000 7,339,150
- -----------------------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(5) 1,000,000 215,000
- -----------------------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 4,025,000 3,220,000
- -----------------------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09(6) 3,250,000 3,168,750
-----------
30,761,672
16 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Forest Products/Containers--2.6%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 $3,000,000 $ 2,940,000
8.25% Sr. Unsec. Sub. Nts., 8/1/08 2,100,000 2,042,250
- -----------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 3,000,000 2,835,000
- -----------------------------------------------------------------------------------------------------------------------
Mail-Well Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08(2) 3,335,000 3,184,925
- -----------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Sub. Nts., 4/1/09(6) 1,250,000 1,268,750
- -----------------------------------------------------------------------------------------------------------------------
Repap Enterprises (New Brunswick), 9% First Priority Sr. Sec. Nts., 6/1/04 750,000 720,000
- -----------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 2,500,000 2,175,000
- -----------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 4,550,000 4,538,625
- -----------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.875% Sr. Sub. Nts., 4/1/08 4,000,000 3,760,000
- -----------------------------------------------------------------------------------------------------------------------
SD Warren Co.:
12% Sr. Sub. Nts., Series B, 12/15/04 3,450,000 3,657,000
14% Unsec. Nts., 12/15/06(9) 5,946,703 6,690,041
- -----------------------------------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 800,000 820,000
- -----------------------------------------------------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 4,085,000 3,737,775
-----------
38,369,366
- -----------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--5.2%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(8) 750,000 380,625
- -----------------------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 1,675,000 1,436,312
- -----------------------------------------------------------------------------------------------------------------------
Aztar Corp., 8.875% Sr. Unsec. Sub. Nts., 5/15/07 3,750,000 3,543,750
- -----------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95 57,500 --
- -----------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00(2,5) 100,000 --
- -----------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 2,100,000 1,895,250
- -----------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 2,030,000 2,298,975
- -----------------------------------------------------------------------------------------------------------------------
Coast Hotel & Casinos, Inc., 9.50% Sr. Unsec. Sub. Nts., 4/1/09 1,750,000 1,653,750
- -----------------------------------------------------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 2,000,000 2,000,000
- -----------------------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 4,000,000 3,720,000
- -----------------------------------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 2,800,000 2,338,000
- -----------------------------------------------------------------------------------------------------------------------
Harveys Casino Resorts, 10.625% Sr. Unsec. Sub. Nts., 6/1/06 150,000 154,500
- -----------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 5,000,000 4,650,000
- -----------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sec. Nts., 5/1/07(6) 3,600,000 3,636,000
- -----------------------------------------------------------------------------------------------------------------------
Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 4,500,000 4,365,000
- -----------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 5,895,000 5,887,631
- -----------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 6,995,000 6,750,175
- -----------------------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 3,900,000 3,597,750
17 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gaming/Leisure Continued
Jupiters Ltd., 8.50% Sr. Nts., 3/1/06(2) $3,725,000 $ 3,576,000
- -----------------------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 2,000,000 1,815,000
- -----------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 4,800,000 4,734,000
- -----------------------------------------------------------------------------------------------------------------------
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(5,6) 3,900,000 955,500
- -----------------------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(8) 1,970,000 1,260,800
9.25% Sr. Nts., 4/1/06 1,595,000 1,515,250
9.75% Sr. Nts., 6/15/07 5,000,000 4,875,000
- -----------------------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 1,900,000 1,819,250
- -----------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
10.125% Sr. Sub. Nts., 3/15/06 3,000,000 3,090,000
9.75% Sr. Sub. Nts., 4/15/07 3,400,000 3,468,000
-----------
75,416,518
- -----------------------------------------------------------------------------------------------------------------------
Healthcare--1.8%
Charles River Labs ONC, Units (each unit consists of $1,000
principal amount of 13.50% sr. sub. nts., 10/1/09 and one warrant to
purchase 3.942 shares of common stock)(2,10) 4,500,000 4,567,500
- -----------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 4,350,000 3,996,562
- -----------------------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc.:
8.75% Sr. Nts., 11/15/08(6) 3,345,000 3,098,306
8.75% Sr. Nts., 11/15/08(2) 3,000,000 2,778,756
- -----------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07 2,000,000 310,000
10.25% Sr. Sub. Nts., 4/30/06 1,955,000 303,025
- -----------------------------------------------------------------------------------------------------------------------
King Pharmaceuticals, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/15/09 4,500,000 4,657,500
- -----------------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(6) 1,750,000 1,745,625
- -----------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 1,500,000 1,376,250
- -----------------------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09(6) 3,200,000 3,192,000
-----------
26,025,524
- -----------------------------------------------------------------------------------------------------------------------
Housing--1.2%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 200,000 191,000
- -----------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 3,500,000 3,150,000
- -----------------------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 2,000,000 1,850,000
- -----------------------------------------------------------------------------------------------------------------------
Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07 675,000 661,500
- -----------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
8.875% Sr. Unsec. Nts., Series B, 8/1/08 2,000,000 1,890,000
9.125% Sr. Nts., Series B, 9/1/07(11) 5,840,000 5,635,600
9.25% Sr. Nts., Series B, 3/15/07 4,070,000 3,968,250
-----------
17,346,350
18 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Information Technology--2.6%
Amkor Technology, Inc.:
9.25% Sr. Nts., 5/1/06(6) $5,000,000 $ 4,987,500
10.50% Sr. Sub. Nts., 5/1/09(6) 5,000,000 4,887,500
- -----------------------------------------------------------------------------------------------------------------------
Cherokee International LLC, 10.50% Sr. Sub. Nts., 5/1/09(6) 5,000,000 4,625,000
- -----------------------------------------------------------------------------------------------------------------------
Chippac International Ltd., 12.75% Sr. Sub. Nts., 8/1/09(6) 2,750,000 2,777,500
- -----------------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 1,925,000 1,790,250
- -----------------------------------------------------------------------------------------------------------------------
Dialog Corp. plc, 11% Sr. Sub. Nts., Series B, 11/15/07 1,750,000 1,535,625
- -----------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 1,200,000 1,140,000
- -----------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 2,150,000 2,031,750
- -----------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor Corp., 10.375% Sr. Sub. Nts., 10/1/07(6) 5,900,000 5,885,250
- -----------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc.:
9% Sr. Unsec. Sub. Nts., 2/1/08(12) 4,190,000 3,928,125
9% Sr. Unsec. Sub. Nts., 2/1/08(12) 910,000 853,125
- -----------------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 2,275,000 2,548,000
- -----------------------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 1,440,000 1,216,800
-----------
38,206,425
- -----------------------------------------------------------------------------------------------------------------------
Manufacturing--2.0%
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 2,800,000 2,639,000
- -----------------------------------------------------------------------------------------------------------------------
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 1,560,000 1,466,400
- -----------------------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 1,125,000 815,625
- -----------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 802,000 669,670
- -----------------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 1,500,000 1,342,500
- -----------------------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 1,150,000 638,250
- -----------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 2,000,000 1,750,000
- -----------------------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07(2) 3,390,000 3,339,150
- -----------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 3,720,000 3,840,900
- -----------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 3,000,000 2,895,000
- -----------------------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 1,000,000 745,000
- -----------------------------------------------------------------------------------------------------------------------
Park-Ohio Industries, Inc., 9.25% Sr. Sub. Nts., 12/1/07 2,100,000 1,995,000
- -----------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 3,385,000 3,131,125
- -----------------------------------------------------------------------------------------------------------------------
Terex Corp.:
8.875% Sr. Unsec. Sub. Nts., 4/1/08 1,000,000 945,000
8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 2,000,000 1,910,000
- -----------------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03 1,075,000 1,096,500
-----------
29,219,120
19 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media/Entertainment: Broadcasting--2.0%
Allbritton Communications Co., 8.875% Sr. Sub. Nts., Series B, 2/1/08 $ 1,000,000 $ 960,000
- -----------------------------------------------------------------------------------------------------------------------
CBS Radio, Inc., 11.375% Unsec. Sub. Debs., 1/15/09(9) 1,174,400 1,321,200
- -----------------------------------------------------------------------------------------------------------------------
Chancellor Media Corp., 9% Sr. Unsec. Sub. Nts., 10/1/08 9,400,000 9,564,500
- -----------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 7,500,000 7,143,750
- -----------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 4,185,000 4,352,400
- -----------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(4) 1,000,000 1,030,000
- -----------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 9% Sr. Unsec. Sub. Nts., 7/15/07(12) 2,500,000 2,393,750
- -----------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc.:
11% Sr. Nts., 3/15/04 650,000 702,000
12.50% Sr. Nts., 6/15/02 300,000 339,000
- -----------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07(12) 1,650,000 1,621,125
-----------
29,427,725
- -----------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--3.3%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 1,640,000 1,500,600
8.125% Sr. Nts., Series B, 7/15/03 6,000,000 5,865,000
- -----------------------------------------------------------------------------------------------------------------------
Bresnan Communications, Inc.:
0%/9.25% Sr. Disc. Nts., 2/1/09(8) 4,350,000 2,881,875
8% Sr. Nts., 2/1/09 1,100,000 1,080,750
- -----------------------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter
Communication Holdings Capital Corp.:
0%/9.92% Sr. Disc. Nts., 4/1/11(6,8) 8,350,000 5,020,437
8.25% Sr. Nts., 4/1/07(6) 2,000,000 1,877,500
8.625% Sr. Nts., 4/1/09(6) 1,750,000 1,662,500
- -----------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 2/15/13 215,000 225,212
9.875% Sr. Sub. Nts., 5/15/06 1,710,000 1,791,225
- -----------------------------------------------------------------------------------------------------------------------
Diva Systems Corp., 0%/12.625% Sr. Disc. Nts., Series B, 3/1/08(8) 2,000,000 630,000
- -----------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 15,000,000 14,925,000
- -----------------------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(2) 717,875 717,875
- -----------------------------------------------------------------------------------------------------------------------
EchoStar II, 8.25% Sinking Fund Bonds, 11/9/01(2) 786,390 786,390
- -----------------------------------------------------------------------------------------------------------------------
Falcon Holding Group LP:
0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(8) 4,720,000 3,374,800
8.375% Sr. Unsec. Debs., Series B, 4/15/10 1,800,000 1,786,500
- -----------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(8) 5,510,000 3,354,212
-----------
47,479,876
20 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media/Entertainment: Diversified Media--2.1%
Ackerley Group, Inc., 9% Sr. Unsec. Sub. Nts., Series B, 1/15/09 $ 5,250,000 $ 5,059,688
- -----------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 4,100,000 3,362,000
- -----------------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc:
0%/10.75% Bonds, 3/15/08(8) [GBP] 1,250,000 844,036
9.625% Bonds, 3/15/08 [GBP] 3,000,000 3,458,490
- -----------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10 4,000,000 2,660,000
9.50% Sr. Unsec. Sub. Nts., 6/1/08 1,000,000 685,000
- -----------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 6,350,000 6,064,250
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 3,900,000 3,666,000
- -----------------------------------------------------------------------------------------------------------------------
TV Guide, Inc., 8.125% Sr. Unsec. Sub. Nts., 3/1/09 2,500,000 2,368,750
- -----------------------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Unsec. Sub. Nts., 2/15/09 3,000,000 2,835,000
-----------
31,003,214
- -----------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--17.6%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(8) 12,275,000 8,040,125
- -----------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(8) 900,000 733,500
7.625% Bonds, 7/31/08 [DEM] 9,725,000 5,158,625
8.875% Sr. Nts., 11/30/07 [DEM] 1,880,000 1,054,420
10.125% Sr. Nts., 11/30/07 [GBP] 2,330,000 3,971,582
Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts.,
12/15/06 and one warrant to purchase 7.8 ordinary shares)(8,10) 3,185,000 2,635,588
- -----------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07(8) 1,350,000 1,228,500
- -----------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 2,225,000 2,258,375
- -----------------------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 1,600,000 1,204,000
- -----------------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(8) 10,850,000 5,642,000
- -----------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc:
0%/10.75% Sr. Disc. Nts., 2/15/07(8) 1,800,000 1,413,000
0%/11.75% Sr. Disc. Nts., 12/15/05(8) 10,665,000 9,545,175
- -----------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 800,000 800,000
- -----------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07 1,400,000 1,183,000
- -----------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
11.25% Sr. Nts., 7/1/08(6) 3,000,000 3,067,500
11.25% Sr. Nts., 7/1/08 1,155,000 1,180,988
- -----------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(8) 2,750,000 1,416,250
- -----------------------------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(8) 2,745,000 1,592,100
- -----------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 3,510,000 3,632,850
- -----------------------------------------------------------------------------------------------------------------------
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05 4,000,000 3,540,000
- -----------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(6,8) 407,000 373,423
21 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media/Entertainment: Telecommunications Continued
GST Telecommunications, Inc./GST Network Funding Corp., Inc.,
0%/10.50% Sr. Disc. Nts., 5/1/08(6,8) $ 1,000,000 $ 485,000
- -----------------------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(8) 785,000 633,888
- -----------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc., 12% Sr. Sub. Nts., 11/1/07 6,000,000 6,060,000
- -----------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(8) 400,000 306,000
- -----------------------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(8) 415,000 232,400
- -----------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(8) 5,000,000 2,500,000
8.50% Sr. Nts., Series B, 1/15/08 3,920,000 3,371,200
8.60% Sr. Unsec. Nts., Series B, 6/1/08 2,000,000 1,725,000
8.875% Sr. Nts., 11/1/07 2,690,000 2,373,925
- -----------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(8) 9,135,000 4,978,575
- -----------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., 13.50% Sr. Nts., 5/15/09(2) 1,300,000 1,280,500
- -----------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(8) 9,800,000 5,549,250
9.125% Sr. Unsec. Nts., 5/1/08 2,000,000 1,817,500
- -----------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc., 12.25% Sr. Unsec. Nts., 4/15/08(2) 700,000 423,500
- -----------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 8.125% Sr. Unsec. Nts., 2/15/09 2,800,000 2,618,000
- -----------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08 6,000,000 5,820,000
- -----------------------------------------------------------------------------------------------------------------------
Netia Holdings BV:
0%/11% Sr. Disc. Nts., 11/1/07(8) [DEM] 2,250,000 762,677
0%/11.25% Sr. Disc. Nts., Series B, 11/1/07(8) 3,600,000 2,268,000
- -----------------------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.125% Sr. Nts., 6/15/09(6) 4,500,000 4,511,250
- -----------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 1,700,000 1,585,250
9.625% Sr. Nts., 10/1/07 6,673,000 6,339,350
10.75% Sr. Unsec. Nts., 11/15/08 5,700,000 5,742,750
10.75% Sr. Unsec. Nts., 6/1/09 1,000,000 1,007,500
- -----------------------------------------------------------------------------------------------------------------------
NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08 1,950,000 1,998,750
- -----------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.75% Sr. Unsec. Unsub. Nts., Series B, 4/1/08(8) [GBP] 3,765,000 4,061,379
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(8) 11,000,000 7,507,500
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(8) 2,055,000 1,376,850
0%/9.75% Sr. Nts., 4/15/09(8) [GBP] 16,125,000 15,170,265
7% Cv. Unsec. Sub. Nts., 12/15/08 5,000,000 8,500,000
10% Sr. Nts., Series B, 2/15/07 2,940,000 3,013,500
11.50% Sr. Unsec. Nts., Series B, 10/1/08 5,000,000 5,418,750
- -----------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(2) 10,140,000 7,148,700
- -----------------------------------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc., 9% Cv. Sub. Nts., 6/1/06(6) 200,000 93,000
- -----------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc., 14% Sr. Disc. Nts., 6/1/04(2) 3,500,000 2,607,500
- -----------------------------------------------------------------------------------------------------------------------
Pratama Datakom Asia BV, 12.75% Gtd. Nts., 7/15/05(2) 4,000,000 730,000
- -----------------------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 7,000,000 6,728,750
- -----------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.,
0%/9.47% Sr. Disc. Nts., 10/15/07(8,11) 5,500,000 4,303,750
22 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media/Entertainment: Telecommunications Continued
RSL Communications plc, 10.50% Gtd. Sr. Nts., 11/15/08 $ 4,000,000 $ 3,660,000
- -----------------------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(8) 5,525,000 4,958,688
0%/9.25% Sr. Nts., 4/15/09(6,8) 8,000,000 4,880,000
0%/9.875% Sr. Nts., 4/15/09(6,8) [GBP] 7,200,000 7,114,608
11.25% Sr. Nts., 11/1/08 4,910,000 5,278,250
- -----------------------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 3,950,000 3,989,500
- -----------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV:
10.875% Sr. Nts., 8/1/09(6) 11,250,000 11,418,750
10.875% Sr. Nts., 8/1/09(6) [EUR] 250,000 267,748
- -----------------------------------------------------------------------------------------------------------------------
US Xchange LLC, 15% Sr. Unsec. Nts., 7/1/08 1,185,000 1,213,144
- -----------------------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 3,135,000 3,127,163
11.25% Sr. Unsec. Nts., 12/1/08 5,800,000 5,959,500
13.50% Sr. Unsec. Nts., 6/15/04 700,000 766,500
- -----------------------------------------------------------------------------------------------------------------------
Versatel Telecom International BV:
11.875% Sr. Nts., 7/15/09 3,200,000 3,032,653
11.875% Sr. Nts., 7/15/09 [EUR] 1,600,000 1,618,800
- -----------------------------------------------------------------------------------------------------------------------
Viatel, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 4/15/08(8) 250,000 138,750
11.25% Sr. Sec. Nts., 4/15/08 3,450,000 3,208,500
- -----------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(2,8) 5,745,000 3,418,275
- -----------------------------------------------------------------------------------------------------------------------
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(6) 2,700,000 2,659,500
------------
257,431,539
- -----------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--6.4%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 700,000 495,250
- -----------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(8) 4,749,000 1,875,855
- -----------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.75% Sr. Sub. Nts., 12/15/08 3,200,000 3,344,000
- -----------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(8) 5,800,000 3,335,000
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(8) 5,635,000 3,944,500
9% Sr. Nts., 5/15/11 3,250,000 3,063,125
- -----------------------------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(8) 2,525,000 1,262,500
- -----------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 900,000 945,000
- -----------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(5) 1,665,000 10,406
- -----------------------------------------------------------------------------------------------------------------------
ICO Global Communications (Holdings) Ltd., Units
(each unit consists of $1,000 principal amount of 15% sr. nts.,
8/1/05 and one warrant to purchase 19.85 shares of common stock)(5,10) 1,325,000 258,375
- -----------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 1,600,000 1,372,000
- -----------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., Series B, 10/15/07(2,8) [CAD] 4,405,000 1,925,970
0%/12% Sr. Unsec. Disc. Nts., 6/1/09(8) 5,500,000 3,341,250
0%/14% Sr. Disc. Nts., Series B, 6/1/06(8) 3,300,000 2,772,000
23 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media/Entertainment: Wireless Communications Continued
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(8) $ 2,000,000 $ 1,430,000
- -----------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts., 9/15/07(8) 4,195,000 3,125,275
0%/9.75% Sr. Disc. Nts., 10/31/07(8) 2,000,000 1,425,000
0%/9.95% Sr. Disc. Nts., 2/15/08(8) 2,650,000 1,861,625
9.75% Sr. Disc. Nts., 8/15/04 1,700,000 1,723,375
- -----------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(6) 4,200,000 4,347,000
11.625% Sr. Nts., 8/15/06 7,275,000 7,529,625
11.625% Sr. Nts., Series A, 8/15/06 3,000,000 3,105,000
- -----------------------------------------------------------------------------------------------------------------------
Orange plc, 8% Sr. Nts., 8/1/08 12,500,000 12,093,750
- -----------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 2,890,000 2,557,650
- -----------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(8) 3,315,000 1,541,475
- -----------------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(8) 6,445,000 3,705,875
- -----------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
11.75% Sr. Sub. Nts., 7/15/07 3,650,000 4,005,875
9.125% Sr. Sec. Nts., Series B, 12/15/06 3,500,000 3,578,750
- -----------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 3,000,000 3,090,000
- -----------------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(8) 9,635,000 5,202,900
- -----------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc.:
0%/11.25% Sr. Disc. Nts., 4/15/09(6,8) 4,500,000 2,250,000
0%/12% Sr. Disc. Nts., 7/15/08(6,8) 4,100,000 2,316,500
- -----------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 655,000 579,675
-----------
93,414,581
- -----------------------------------------------------------------------------------------------------------------------
Metals/Minerals--2.2%
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 5,925,000 5,480,625
9.125% Sr. Nts., 12/15/06 1,000,000 1,000,000
- -----------------------------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Nts., 4/1/09(6) 2,800,000 2,660,000
- -----------------------------------------------------------------------------------------------------------------------
Centaur Mining & Exploration Ltd., 11% Sr. Nts., 12/1/07 2,325,000 2,220,375
- -----------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 2,700,000 2,551,500
- -----------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 750,000 701,250
- -----------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 2,065,000 2,065,000
- -----------------------------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(8) 6,100,000 2,043,500
- -----------------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 3,945,000 3,649,125
- -----------------------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 5,100,000 5,049,000
- -----------------------------------------------------------------------------------------------------------------------
Republic Technologies International/RTI Capital Corp., Units
(each unit consists of $1,000 principal amount of 13.75% sr. nts., 7/15/09
and one warrant to purchase Cl. D common stock at $0.01 per share)(10) 4,200,000 4,011,000
-----------
31,431,375
24 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail--1.1%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 $2,288,000 $ 2,245,100
- -----------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 6,470,000 5,208,350
- -----------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 3,500,000 3,202,500
- -----------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 1,025,000 966,063
- -----------------------------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 4,100,000 3,608,000
- -----------------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 1,600,000 1,604,000
-----------
16,834,013
- -----------------------------------------------------------------------------------------------------------------------
Service--5.5.%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 4,400,000 3,872,000
10% Sr. Sub. Nts., 8/1/09(6) 5,000,000 4,600,000
- -----------------------------------------------------------------------------------------------------------------------
American Plumbing & Mechanical, Inc.,
11.625% Gtd. Sr. Sub. Nts., 10/15/08(6) 4,500,000 4,027,500
- -----------------------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(6) 6,000,000 6,217,500
- -----------------------------------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(8) 1,000,000 1,045,000
- -----------------------------------------------------------------------------------------------------------------------
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 1,080,000 742,500
- -----------------------------------------------------------------------------------------------------------------------
Formica Corp., 10.875% Sr. Sub. Nts., 3/1/09(6) 5,000,000 4,575,000
- -----------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 2,900,000 2,943,500
- -----------------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09(6) 2,000,000 2,017,500
- -----------------------------------------------------------------------------------------------------------------------
Integrated Electric Services, Inc., 9.375% Sr. Sub. Nts., Series B, 2/1/09 2,400,000 2,364,000
- -----------------------------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Sub. Nts., 4/1/09(6) 3,150,000 2,992,500
- -----------------------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 3,550,000 3,363,625
- -----------------------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 3,270,000 3,319,050
- -----------------------------------------------------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds, Series 1A, Cl. C2, 8/13/10(2) 7,500,000 6,075,000
- -----------------------------------------------------------------------------------------------------------------------
Panolam Industries International, Inc., 11.50% Sr. Sub. Nts., 2/15/09(2) 4,000,000 4,020,000
- -----------------------------------------------------------------------------------------------------------------------
Premier Graphics, Inc., 11.50% Sr. Unsec. Nts., 12/1/05(2) 3,500,000 3,255,000
- -----------------------------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 2,868,000 1,989,675
13.625% Sr. Sub. Disc. Nts., 6/30/05 2,700,000 2,470,500
- -----------------------------------------------------------------------------------------------------------------------
Protection One, Inc., 7.375% Gtd. Sr. Unsec. Nts., 8/15/05 2,000,000 1,570,000
- -----------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc., 10.25% First Mtg. Nts., 4/1/09(6) 3,250,000 2,925,000
- -----------------------------------------------------------------------------------------------------------------------
Tembec Industries, Inc., 8.625% Sr. Nts., 6/30/09 3,000,000 2,955,000
- -----------------------------------------------------------------------------------------------------------------------
United Rentals, Inc.:
9% Sr. Unsec. Sub. Nts., Series B, 4/1/09 1,750,000 1,658,125
9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 5,750,000 5,534,375
- -----------------------------------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 692,000 747,360
- -----------------------------------------------------------------------------------------------------------------------
URS Corp., 12.25% Sr. Sub. Nts., 5/1/09(6) 4,000,000 4,100,000
-----------
79,379,710
25 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Transportation--2.9%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05(12) $ 2,000,000 $ 1,955,000
- -----------------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 5,600,000 4,956,000
- -----------------------------------------------------------------------------------------------------------------------
Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 1,505,000 1,602,825
- -----------------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06(12) 1,700,000 1,640,500
- -----------------------------------------------------------------------------------------------------------------------
Dura Operating Corp.:
9% Sr. Sub. Nts., 5/1/09(6) 5,200,000 4,836,000
9% Sr. Sub. Nts., 5/1/09(6) [EUR] 2,200,000 2,173,133
- -----------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 4,160,000 4,295,200
- -----------------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(6) 3,150,000 3,039,750
- -----------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07(2) 2,405,000 2,032,225
- -----------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc., Units (each unit consists of $1,000
principal amount of 12% first priority ship mtg. sr. sec. nts.,
7/15/05 and one warrant to purchase five shares of common stock)(10) 2,500,000 1,200,000
- -----------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(2) 3,715,000 1,764,625
Units (each unit consists of $1,000 principal amount of 12% second priority
ship mtg nts., 6/30/07 and 7.66 warrants)(6,10) 2,605,000 494,950
- -----------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 1,000,000 925,000
- -----------------------------------------------------------------------------------------------------------------------
TFM SA de CV, 10.25% Sr. Nts., 6/15/07 1,440,000 1,256,400
- -----------------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08(2) 1,035,326 1,035,327
- -----------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 5,775,000 4,648,875
- -----------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(8) 4,391,000 4,281,225
- -----------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(2) 878,541 459,038
-----------
42,596,073
- -----------------------------------------------------------------------------------------------------------------------
Utility--1.0%
CalEnergy Co., Inc., 7.52% Sr. Unsec. Nts., 9/15/08 12,000,000 11,840,124
- -----------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 2,350,000 2,558,121
- -----------------------------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 0%/8.50% Sr. Unsec. Nts., Series H, 7/1/10(8) 1,000,000 738,796
--------------
15,137,041
--------------
Total Corporate Bonds and Notes (Cost $1,217,742,309) 1,120,029,753
26 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Preferred Stocks--6.0%
- -----------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(9) 112,958 $1,835,567
- -----------------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Gtd. Bonds, 12/31/26(2) 750,000 714,375
- -----------------------------------------------------------------------------------------------------------------------
Capstar Communications, Inc., 12.625%
Cum. Exchangeable, Series E, Non-Vtg.(2,9) 4,638 548,443
- -----------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(2,9,13) 160,595 4,014,875
- -----------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 7% Cv., Non-Vtg.(6) 71,000 2,343,000
- -----------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable(9) 3,026 1,808,035
- -----------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(2,9) 2,589 2,388,352
- -----------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
8.50% Cum. Cv., Series I, Non-Vtg 28,900 3,132,037
11.125% Cum., Series M(9) 5,952 638,352
- -----------------------------------------------------------------------------------------------------------------------
Doane Products Co., 14.25% Exchangeable, Non-Vtg.(2) 100,000 4,450,000
- -----------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable(9) 2,994 2,761,965
13% Sr. Exchangeable(9,14) 7,222 6,987,285
- -----------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(9) 616 201,740
- -----------------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable,
Series B, 3/1/08, Non-Vtg.(14) 15,000 723,750
- -----------------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., $8.50 Cv. Sr., Series C, Non-Vtg.(2) 49,409 123,522
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale California, 12%
Non-Cum. Exchangeable Perpetual, Series A(2) 30 488
- -----------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 10.50% Sr. Exchangeable, 12/1/08(9) 20,000 2,115,000
- -----------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(9) 3,237 3,147,983
- -----------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
7% Cv.(6) 200,000 3,850,000
13.50% Exchangeable, Series B(9) 2,434 2,196,685
Depositary Shares Representing one one-hundredth
7% Cum. Cv. Jr., Series E, Non-Vtg.(6) 61,150 1,337,656
- -----------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc.:
13% Preferred, Non-Vtg.(6,9) 60 56,250
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)(2,9,10) 300 285,375
- -----------------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable
Exchangeable Preferred Stock, Non-Vtg.(2,9) 29,481 1,098,167
- -----------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(2,9) 4,913 4,827,023
- -----------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(2,9) 103,501 5,149,175
- -----------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 12.375% Sr. Exchangeable(6,9) 8,000 866,000
27 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Preferred Stocks Continued
- -----------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(9) 321 $ 3,442,725
- -----------------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg 54,950 4,959,238
9.20% Exchangeable, Series F, Non-Vtg 22,500 2,098,125
- -----------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 13.875% Cum., Non-Vtg.(9) 8,097 7,712,393
- -----------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(9) 4,584 4,687,140
- -----------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(9) 100 282,500
13.75% Exchangeable(6,9) 17 48,025
- -----------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable, Non-Vtg.(6,9) 4,371 4,605,941
- -----------------------------------------------------------------------------------------------------------------------
Star Gas Partners, LP 2,139 34,625
- -----------------------------------------------------------------------------------------------------------------------
Supermarkets General Holdings Corp., $3.52 Exchangeable(2,9,14) 22,624 774,872
- -----------------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv., Series B, Non-Vtg 3,250 80,438
9.20% Sr 83,700 1,297,350
-----------
Total Preferred Stocks (Cost $97,303,776) 87,624,472
- -----------------------------------------------------------------------------------------------------------------------
Common Stocks--1.0%
- -----------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp.(14) 3,000 176,437
- -----------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp.(14) 7,000 509,250
- -----------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.(14) 20,000 374,375
- -----------------------------------------------------------------------------------------------------------------------
ECM Fund, LPI(2,14) 75 65,719
- -----------------------------------------------------------------------------------------------------------------------
Equitable Bag, Inc.(2,14) 2,261 2,261
- -----------------------------------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(14) 1,880 6,580
- -----------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc.(14) 5,000 124,063
- -----------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc.(14) 5,000 77,813
- -----------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(14) 15,255 331,796
- -----------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(2,14) 8,121 141,305
- -----------------------------------------------------------------------------------------------------------------------
ITC DeltaCom, Inc.(14) 20,000 550,000
- -----------------------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(14) 5,000 359,375
- -----------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., Cl. A(14) 15,000 638,438
- -----------------------------------------------------------------------------------------------------------------------
MediaOne Group, Inc.(14) 5,000 341,562
- -----------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA(14) 15,000 426,563
- -----------------------------------------------------------------------------------------------------------------------
Nuevo Grupo Iusacell SA de CV, ADR V(14) 53,735 510,483
- -----------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.(14) 5,000 279,375
- -----------------------------------------------------------------------------------------------------------------------
Optel, Inc.(14) 3,815 38
- -----------------------------------------------------------------------------------------------------------------------
Panamerican Beverages, Inc., Cl. A 40,000 662,500
- -----------------------------------------------------------------------------------------------------------------------
Park Place Entertainment Corp.(14) 15,000 187,500
28 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks Continued
- -----------------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd.(2,14) 288,828 $ 974,794
- -----------------------------------------------------------------------------------------------------------------------
Price Communications Corp.(14) 149,999 3,759,372
- -----------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.(14) 20,000 591,250
- -----------------------------------------------------------------------------------------------------------------------
RSL Communications Ltd., Cl. A(14) 5,000 91,250
- -----------------------------------------------------------------------------------------------------------------------
SBA Communications Corp.(14) 20,000 217,500
- -----------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(14) 3,700 37
- -----------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(14) 20,000 610,000
- -----------------------------------------------------------------------------------------------------------------------
Siena Holdings, Inc.(14) 16,299 21,393
- -----------------------------------------------------------------------------------------------------------------------
Sprint Corp. (Fon Group) 5,000 271,250
- -----------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.(14) 10,000 232,500
- -----------------------------------------------------------------------------------------------------------------------
Teligent, Inc.(14) 5,000 248,437
- -----------------------------------------------------------------------------------------------------------------------
Weatherford International, Inc. 30,000 960,000
- -----------------------------------------------------------------------------------------------------------------------
WinStar Communications, Inc.(14) 15,000 585,938
-----------
Total Common Stocks (Cost $11,007,394) 14,329,154
<CAPTION>
Units
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rights, Warrants and Certificates--0.4%
- -----------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 8/10/00(2) 850 8
- -----------------------------------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust, Exp. 1/31/00(2) 19,829 198
- -----------------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/15/00(2) 190 1
- -----------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/15/00(2) 12,500 --
- -----------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(6) 1,649 6,390
- -----------------------------------------------------------------------------------------------------------------------
Central Bank of Nigeria Wts., Exp. 11/15/20 1,000 --
- -----------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/31/49(2,13) 130,000 39,000
- -----------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 1,320 22,763
- -----------------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07(2) 2,320 453,850
- -----------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08 6,400 77,600
- -----------------------------------------------------------------------------------------------------------------------
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 3,450 --
- -----------------------------------------------------------------------------------------------------------------------
Diva Systems Corp. Wts., Exp. 3/1/08(2) 6,000 48,000
- -----------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc. Wts., Exp. 11/1/05 725 50,609
- -----------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(2) 2,750 192,844
- -----------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/1/02 1,174 7,778
- -----------------------------------------------------------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/1/05(2) 4,175 501,000
- -----------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 58,176 69,084
- -----------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 1/23/03 58,503 --
- -----------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 1/23/03(2) 30,983 310
29 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<CAPTION>
Market Value
Units See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rights, Warrants and Certificates Continued
- -----------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 5/1/05(2) 69,612 $ 6,961
- -----------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 9/1/04(2) 91,000 96,733
- -----------------------------------------------------------------------------------------------------------------------
Grand Union Co. Wts., Exp. 8/17/03 94 170
- -----------------------------------------------------------------------------------------------------------------------
Hyperion Telecommunications Inc. Wts., Exp. 4/15/01 265 33,158
- -----------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 17,655 126,761
- -----------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 1,600 --
- -----------------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(2) 3,390 --
- -----------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(2) 7,885 20,209
- -----------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(2) 1,390 1,390
- -----------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(2) 2,565 31,101
- -----------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(2) 3,200 4,400
- -----------------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/29/00(2) 8,000 447,000
- -----------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc. Wts., Exp. 6/1/06(2) 3,500 175
- -----------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc., 14% Sr. Disc. Nts. Wts., Exp. 3/31/03(2) 3,500 175
- -----------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc., 9% Cv. Sub. Nts. Wts., Exp. 3/31/03(2) 200 10
- -----------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/1/03(2) 28,000 350,000
- -----------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/30/05(2) 15,200 76,000
- -----------------------------------------------------------------------------------------------------------------------
R&B Falcon Corp. Wts., Exp. 5/1/09(2) 7,800 1,950,000
- -----------------------------------------------------------------------------------------------------------------------
Rocky Mountain Internet, Inc. Wts., Exp. 7/3/03(2) 12,145 78,948
- -----------------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/1/02(2) 49,200 12,940
- -----------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(6) 17,235 385,633
----------
Total Rights, Warrants and Certificates (Cost $530,865) 5,091,199
<CAPTION>
Face
Amount(1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Structured Instruments--2.7%
- -----------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch), Russian OFZ Linked Nts.:
15%, 2/23/00(2) [RUR] 20,402,000 286,849
25%, 9/17/03 [RUR] 1,966,960 29,619
- -----------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indian Rupee/Japanese Yen Linked Nts.,
Zero Coupon, 12.51%, 10/9/01(7) 6,684,000 4,870,631
- -----------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Lehman Brothers High Yield Index Linked Nts.:
8.60%, 2/14/00 10,000,000 9,896,000
8.70%, 4/6/00 10,000,000 10,000,000
- -----------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 7.063%, 4/28/02
(representing a basket of reference loans and a total return
swap between Chase Manhattan Bank and the Trust)(2,3) 16,600,000 15,100,148
-----------
Total Structured Instruments (Cost $44,181,740) 40,183,247
30 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements--9.0%
- -----------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 5.29%,
dated 9/30/99, to be repurchased at $131,919,382 on 10/1/99,
collateralized by U.S. Treasury Nts., 5.125%-8%, 10/31/99-2/15/07,
with a value of $83,883,099, U.S. Treasury Bonds, 5.25%-11.75%,
2/15/01-11/15/28, with a value of $50,738,137 (Cost $131,900,000) $131,900,000 $ 131,900,000
- -----------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,556,264,360)
99.3% 1,447,761,391
- -----------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.7 10,529,002
-------------------------------------
Net Assets 100.0% $1,458,290,393
=====================================
</TABLE>
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP Argentine Peso
CAD Canadian Dollar
DEM German Mark
EUR Euro
GBP British Pound Sterling
IDR Indonesian Rupiah
RUR Russian Ruble
2. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Represents the current interest rate for an increasing rate security.
5. Non-income producing--issuer is in default.
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 $181,709,625 or 12.46% of the Fund's net
assets as of September 30, 1999.
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
9. Interest or dividend is paid in kind.
10. 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.
11. Securities with an aggregate market value of $7,005,750 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
12. A sufficient amount of securities has been designated to cover outstanding
foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
13. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended September 30,
1999. The aggregate fair value of securities of affiliated companies held by the
Fund as of September 30, 1999, amounts to $4,053,875. Transactions during the
period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Shares Shares
Sept. 30, Gross Gross Sept. 30,
1998 Additions Reductions 1999
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CGA Group Ltd., Preferred Stock, Series A 130,000 30,595 -- 160,595
CGA Group Ltd. Wts., Exp. 12/31/49 130,000 -- -- 130,000
</TABLE>
14. Non-income producing security.
31 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES September 30, 1999
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C>
Assets
- ------------------------------------------------------------------------------------------------
Investments, at value (cost $1,556,264,360)--see accompanying statement $1,447,761,391
- ------------------------------------------------------------------------------------------------
Cash 200,908
- ------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 28,090,672
Shares of beneficial interest sold 5,132,291
Investments sold 2,271,340
Other 6,571
--------------
Total assets 1,483,463,173
- ------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency exchange contracts--Note 5 2,077,124
- ------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 14,482,477
Dividends 3,948,972
Shares of beneficial interest redeemed 2,784,397
Distribution and service plan fees 874,620
Closed foreign currency exchange contracts 323,607
Transfer and shareholder servicing agent fees 219,357
Daily variation on futures contracts--Note 6 183,000
Trustees' compensation 774
Other 278,452
--------------
Total liabilities 25,172,780
- ------------------------------------------------------------------------------------------------
Net Assets $1,458,290,393
==============
- ------------------------------------------------------------------------------------------------
Composition of Net Assets
- ------------------------------------------------------------------------------------------------
Paid-in capital $1,573,032,768
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 1,878,917
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (6,193,014)
- ------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (110,428,278)
--------------
Net assets $1,458,290,393
==============
</TABLE>
32 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C>
Net Asset Value Per Share
- ----------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$675,394,682 and 57,024,323 shares of beneficial interest outstanding) $11.84
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $12.43
- ----------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $530,619,150
and 44,850,303 shares of beneficial interest outstanding) $11.83
- ----------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $252,276,561
and 21,322,561 shares of beneficial interest outstanding) $11.83
</TABLE>
See accompanying Notes to Financial Statements.
33 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended September 30, 1999
<TABLE>
- ----------------------------------------------------------------------------------------------
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------
Interest $128,140,828
- ----------------------------------------------------------------------------------------------
Dividends 9,300,058
------------
Total income 137,440,886
- ----------------------------------------------------------------------------------------------
Expenses
- ----------------------------------------------------------------------------------------------
Management fees--Note 4 8,385,597
- ----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,606,437
Class B 4,746,595
Class C 2,461,363
- ----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,978,856
- ----------------------------------------------------------------------------------------------
Shareholder reports 453,030
- ----------------------------------------------------------------------------------------------
Registration and filing fees 88,140
- ----------------------------------------------------------------------------------------------
Custodian fees and expenses 55,753
- ----------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 38,965
- ----------------------------------------------------------------------------------------------
Trustees' compensation 13,715
- ----------------------------------------------------------------------------------------------
Other 64,983
------------
Total expenses 19,893,434
Less expenses paid indirectly--Note 1 (45,248)
------------
Net expenses 19,848,186
- ----------------------------------------------------------------------------------------------
Net Investment Income 117,592,700
- ----------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments 8,425,778
Closing of futures contracts (11,611,486)
Foreign currency transactions 883,607
------------
Net realized loss (2,302,101)
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (29,118,486)
Translation of assets and liabilities denominated in foreign currencies (2,491,130)
------------
Net change (31,609,616)
------------
Net realized and unrealized loss (33,911,717)
- ----------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 83,680,983
============
</TABLE>
See accompanying Notes to Financial Statements.
34 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended September 30, 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
- ---------------------------------------------------------------------------------------------------------------------
Net investment income $ 117,592,700 $ 86,285,917
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (2,302,101) 6,948,507
- ---------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (31,609,616) (115,693,863)
----------------------------------------
Net increase (decrease) in net assets resulting from
operations 83,680,983 (22,459,439)
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
- ---------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (58,066,835) (44,685,298)
Class B (39,188,529) (23,050,424)
Class C (20,334,122) (14,921,590)
- ---------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (1,752,073)
Class B -- (1,189,487)
Class C -- (687,045)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (4,624,645) (8,099,904)
Class B (3,298,134) (4,232,404)
Class C (1,792,486) (2,892,893)
- ---------------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 123,346,795 131,249,208
Class B 157,938,895 189,452,940
Class C 35,263,745 66,892,330
- ---------------------------------------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------------
Total increase 272,925,667 263,623,921
- ---------------------------------------------------------------------------------------------------------------------
Beginning of period 1,185,364,726 921,740,805
----------------------------------------
End of period (including undistributed net investment
income of $1,878,917 and $654,557, respectively) $1,458,290,393 $1,185,364,726
========================================
</TABLE>
See accompanying Notes to Financial Statements.
35 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Year Ended September 30, 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.18 $13.49 $12.92 $12.47 $12.32
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.10 1.09 1.15 1.15 1.05
Net realized and unrealized gain (loss) (.25) (1.11) .57 .44 .14
----------------------------------------------------------------------
Total income (loss) from
investment operations .85 (.02) 1.72 1.59 1.19
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.10) (1.05) (1.15) (1.14) (1.04)
Tax return of capital distribution -- (.04) -- -- --
Distributions from net realized gain (.09) (.20) -- -- --
----------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.19) (1.29) (1.15) (1.14) (1.04)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.84 $12.18 $13.49 $12.92 $12.47
======================================================================
- ------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(1) 7.15% (0.49)% 13.96% 13.28% 10.09%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $675,395 $572,354 $502,211 $359,208 $255,139
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $644,839 $567,689 $425,258 $305,638 $204,917
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.01% 8.18% 8.75% 8.97% 8.45%
Expenses 1.06% 1.06%(3) 1.10%(3) 1.17%(3) 1.18%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 47% 100% 136% 95% 73%
</TABLE>
1. Assumes a $1,000 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.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $883,397,326 and $572,497,228, respectively.
See accompanying Notes to Financial Statements.
36 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
Class B Year Ended September 30, 1999 1998 1997 1996(5)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.17 $13.48 $12.91 $12.47
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.01 .99 1.05 1.03
Net realized and unrealized gain (loss) (.25) (1.11) .57 .44
-----------------------------------------------------
Total income (loss) from investment operations .76 (.12) 1.62 1.47
- ------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.01) (.95) (1.05) (1.03)
Tax return of capital distribution -- (.04) -- --
Distributions from net realized gain (.09) (.20) -- --
-----------------------------------------------------
Total dividends and distributions to shareholders (1.10) (1.19) (1.05) (1.03)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.83 $12.17 $13.48 $12.91
=====================================================
- ------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(1) 6.36% (1.25)% 13.10% 12.20%
- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $530,619 $388,572 $238,505 $82,052
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $475,049 $326,804 $151,197 $33,189
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 8.25% 7.42% 7.89% 7.90%
Expenses 1.81% 1.81%(3) 1.86%(3) 1.97%(3)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 47% 100% 136% 95%
</TABLE>
1. Assumes a $1,000 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.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $883,397,326 and $572,497,228, respectively.
5. For the period from October 2, 1995 (inception of offering) to September 30,
1996.
See accompanying Notes to Financial Statements.
37 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class C Year Ended September 30, 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.17 $13.48 $12.91 $12.46 $12.32
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.01 .99 1.05 1.06 .95
Net realized and unrealized gain (loss) (.25) (1.11) .57 .44 .13
---------------------------------------------------------------------
Total income (loss) from investment operations .76 (.12) 1.62 1.50 1.08
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.01) (.95) (1.05) (1.05) (.94)
Tax return of capital distribution -- (.04) -- -- --
Distributions from net realized gain (.09) (.20) -- -- --
---------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.10) (1.19) (1.05) (1.05) (.94)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.83 $12.17 $13.48 $12.91 $12.46
=====================================================================
- -------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(1) 6.35% (1.25)% 13.12% 12.44% 9.16%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $252,277 $224,439 $181,025 $112,945 $64,932
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $246,416 $210,338 $143,363 $89,416 $43,584
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 8.25% 7.42% 7.98% 8.19% 7.63%
Expenses 1.81% 1.81%(3) 1.86%(3) 1.93%(3) 1.95%(3)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 47% 100% 136% 95% 73%
</TABLE>
1. Assumes a $1,000 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.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $883,397,326 and $572,497,228, respectively.
5. For the period from October 2, 1995 (inception of offering) to September 30,
1996.
See accompanying Notes to Financial Statements.
38 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer Champion Income Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment objective is to seek a high level of
current income primarily by investing in a diversified portfolio of high yield,
lower-rated, fixed income securities believed by the Fund's investment 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 on investments up to $1 million.
Class B and Class C shares may be subject to a contingent deferred sales charge
(CDSC). All classes of shares have identical rights to earnings, assets and
voting privileges, except that each class has its own expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. Classes A, B and C have separate distribution and/or
service plans. 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.
- --------------------------------------------------------------------------------
Securities 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign 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.
39 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
Structured Notes. The Fund invests in foreign currency-linked structured notes
whose 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 value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of September 30, 1999, the market value of these
securities comprised 3.84% of the Fund's net assets and resulted in realized and
unrealized losses of $5,602,997. The Fund also hedges a portion of the foreign
currency exposure generated by these securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
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. As of September 30, 1999, securities with an
aggregate market value of $5,886,445, representing 0.40% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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.
40 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
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 to shareholders. Therefore, no federal
income or excise tax provision is required.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended September 30, 1999, amounts have been reclassified to reflect a
decrease in paid-in capital of $41,231, an increase in undistributed net
investment income of $1,221,146, and an increase in accumulated net realized
loss on investments of $1,179,915.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of 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 options
written 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.
41 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
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>
Year Ended September 30, 1999 Year Ended September 30, 1998
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Sold 27,319,607 $335,115,751 19,832,167 $263,900,806
Dividends and/or
distributions reinvested 3,639,977 44,482,979 2,859,050 37,768,272
Redeemed (20,932,674) (256,251,935) (12,908,673) (170,419,870)
------------------------------------------------------------
Net increase 10,026,910 $123,346,795 9,782,544 $131,249,208
============================================================
- ----------------------------------------------------------------------------------------
Class B
Sold 19,729,277 $241,233,572 17,351,158 $230,121,700
Dividends and/or
distributions reinvested 2,215,843 27,048,739 1,359,478 17,905,868
Redeemed (9,032,360) (110,343,416) (4,464,160) (58,574,628)
------------------------------------------------------------
Net increase 12,912,760 $157,938,895 14,246,476 $189,452,940
============================================================
- ----------------------------------------------------------------------------------------
Class C
Sold 8,758,433 $107,076,757 8,603,599 $114,157,872
Dividends and/or
distributions reinvested 1,257,082 15,358,557 1,025,732 13,534,307
Redeemed (7,141,459) (87,171,569) (4,608,529) (60,799,849)
------------------------------------------------------------
Net increase 2,874,056 $35,263,745 5,020,802 $66,892,330
============================================================
</TABLE>
================================================================================
3. Unrealized Gains And Losses on Securities
As of September 30, 1999, net unrealized depreciation on securities of
$108,502,969 was composed of gross appreciation of $26,480,929, and gross
depreciation of $134,983,898.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. 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% of
the first $250 million of average annual net assets of the Fund, 0.65% of the
next $250 million, 0.60% of the next $500 million and 0.55% of average annual
net assets in excess of $1 billion. The Fund's management fee for the year ended
September 30, 1999, was 0.61% of average annual net assets for each class of
shares.
42 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
- --------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
- --------------------------------------------------------------------------------
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End on Class A on Class B on Class C
Sales Charges Sales Charges Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
September 30, 1999 $3,331,908 $935,204 $266,601 $7,660,279 $838,706
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
September 30, 1999 $1,326 $1,275,390 $85,716
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares. The Distributor makes payments to plan recipients quarterly at an annual
rate not to exceed 0.25% of the average annual net assets consisting of Class A
shares of the Fund. For the fiscal year ended September 30, 1999, payments under
the Class A Plan totaled $1,606,437, all of which was paid by the Distributor to
recipients. That included $96,674 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
43 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management Fees and Other Transactions with Affiliates Continued
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales charge
to the Distributor for distributing shares before the plan was terminated. The
plans allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended September 30, 1999,
were as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $4,746,595 $4,076,366 $20,529,106 3.87%
Class C Plan 2,461,363 1,306,578 3,992,706 1.58
</TABLE>
===============================================================================
5. Foreign Currency Contracts
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuations. Risks to the Fund include
the potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
44 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
The Fund may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of September 30, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Contract Valuation as of Unrealized
Contract Description Expiration Date Amount (000s) Sept. 30, 1999 Depreciation
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Sell
British Pound Sterling (GBP) 12/1/99 GBP 11,700 $19,270,967 $ 989,862
British Pound Sterling (GBP) 12/2/99 GBP 12,300 20,259,590 1,073,435
Canadian Dollar (CAD) 12/1/99 CAD 2,925 1,993,107 13,827
----------
Total Unrealized Depreciation $2,077,124
==========
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to 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 may recognize 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
and/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.
As of September 30, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Contract Description Date Contracts Sept. 30, 1999 Appreciation
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Sell
Standard & Poor's 500 12/99 40 $12,982,000 $139,125
</TABLE>
45 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
7. Illiquid or Restricted Securities
As of September 30, 1999, 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 also 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 limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of September 30, 1999, was
$134,563,809, which represents 9.23% of the Fund's net assets, of which
$7,835,044 is considered restricted. Information concerning restricted
securities is as follows:
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit Sept. 30, 1999
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
Capital Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 95.74% --%
- -------------------------------------------------------------------------------------------------------------
ECM Fund, LPI, 14% Sub. Nts., 6/10/02 7/28/92 100.50 98.62
- -------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 8/13/96 105.75 111.41
- -------------------------------------------------------------------------------------------------------------
Trans World Airlines Lease, 14% Equipment Trust, 7/2/08 3/19/98 101.00 100.00
Stocks and Warrants
Becker Gaming, Inc. Wts., Exp. 11/15/00 11/18/93 $ 2.00 $ --
- -------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred Stock, Series A 6/17/97 25.00 25.00
- -------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/31/49 6/17/97 -- 0.30
- -------------------------------------------------------------------------------------------------------------
ECM Fund, LPI 4/14/92 1,000.00 876.25
- -------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. 9/29/98-12/29/98 15.09 17.40
- -------------------------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/29/00 11/29/95 -- 55.88
</TABLE>
================================================================================
8. 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 year ended September 30,
1999.
46 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
To the Board of Trustees and Shareholders of
Oppenheimer Champion Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Champion Income Fund as of
September 30, 1999, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended September 30, 1999
and 1998 and the financial highlights for the period October 1, 1994, to
September 30, 1999. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Champion
Income Fund as of September 30, 1999, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Denver, Colorado
October 21, 1999
47 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2000, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report information to the
Internal Revenue Service.
Distributions of $0.1849, $0.1770 and $0.1770 per share were paid to Class
A, Class B and Class C shareholders, respectively, on December 31, 1998, of
which $0.0928 was designated as a "capital gain distribution" for federal income
tax purposes. Whether received in stock or in cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended September 30,
1999, which are not designated as capital gain distributions should be
multiplied by 7.25% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local regulations, we recommend that
you consult your tax advisor for specific guidance.
48 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
OPPENHEIMER CHAMPION INCOME FUND
================================================================================
Officers and Trustees James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
David P. Negri, Vice President
Thomas P. Reedy, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of
Oppenheimer Champion Income Fund. This report must
be preceded or accompanied by a Prospectus of
Oppenheimer Champion Income Fund. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount invested.
49 OPPENHEIMER CHAMPION INCOME FUND
<PAGE>
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
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Internet
24-hr access to account information and transactions
www.oppenheimerfunds.com
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General Information
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
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Telephone Transactions
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
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PhoneLink
24-hr automated information and automated transactions
1.800.533.3310
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Telecommunications Device for the Deaf (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
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OppenheimerFunds Information Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
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Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
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[Logo] OppenheimerFunds(R)
RA0190.001.0999 November 29, 1999 Distributor, Inc.
