UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5281
OPPENHEIMER CHAMPION INCOME FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
ROBERT G. ZACK, ESQ.
OPPENHEIMERFUNDS, INC.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: SEPTEMBER
Date of reporting period: 09/30/2006
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP FIVE HOLDINGS BY ISSUER
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Ford Motor Credit Co. 2.3%
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R.H. Donnelley Corp. 2.2
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General Motors Acceptance Corp. 1.8
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Mirant Americas LLC 1.1
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Qwest Corp. 1.0
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2006, and are based on the total market value of investments. For
more current Fund holdings, please visit www.oppenheimerfunds.com.
CREDIT ALLOCATION
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A 0.3%
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BBB 4.6
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BB 29.4
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B 46.3
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CCC 7.9
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Not Rated 11.2
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Other Securities 0.3
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2006, and are based on the total market value of investments.
Securities rated by any rating organization are included in the equivalent
Standard & Poor's rating category. Average credit quality and allocation include
rated securities and those not rated by a national rating organ-ization but
which the ratings given above have been assigned by the Manager for internal
purposes as being comparable, in the Manager's judgment, to securities rated by
a rating agency in the same category.
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8 | OPPENHEIMER CHAMPION INCOME FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED SEPTEMBER 30, 2006, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Over the 12-month period ended
September 30, 2006, the Fund's Class A shares (without sales charge) produced
modest total returns and trailed its primary benchmark, the Merrill Lynch High
Yield Master Index, while the Fund significantly outperformed its secondary
benchmark, the Lehman Brothers Credit Index. We attribute the Fund's limited
performance to its generally conservative positioning during a period that
benefited more aggressively-positioned investors. Additionally, performance
suffered due to the Fund's exposure to an active leveraged buyout market in
addition to other types of actions taken by company management teams that
benefited shareholders at the expense of bondholders. However, the Fund did
benefit from strong performance generated by a variety of higher-quality issues
across multiple market sectors.
During the reporting period, given the expectation that spreads were
likely to remain in a relatively narrow range, we maintained the Fund's neutral
position, with an underweighted exposure to the markets' more speculative
issues. This position served the Fund well in the closing months of 2005 when
investors sought out higher-quality issues. However, this generally conservative
positioning detracted from the Fund's performance beginning in the early months
of 2006 through the end of the period, as market sentiment reversed and tended
to favor more speculative issues once again. Nevertheless, the Fund's focus on
issue selectivity enabled it to continue delivering positive returns without
having to take on unnecessary risk.
The other detractor from performance resulted from the Fund's exposure to
an active leveraged buyout market, in addition to other types of actions taken
by company management teams that benefited shareholders at the expense of
bondholders. Top detractors from Fund performance included Station Casinos,
Inc., wholesale energy marketer Mirant Americas Generation LLC and for-profit
hospital operator HCA, Inc. The bonds of Station Casinos and Mirant declined as
a result of each company buying back large percentages of their outstanding
stock by using debt or selling assets. HCA's bonds suffered once the company
announced its record breaking $21 billion leveraged buyout by a group of private
investors, an action that subordinated the existing bondholders.
On the positive side, the Fund received contributions to performance from
its exposure to a variety of areas, including telecommunication services,
consumer discretionary, energy, utilities and an active mergers-and-acquisitions
environment crossing over many market sectors. Top holdings included Doane Pet
Care Co., a holding that proved quite lucrative for the Fund due, in part, to
the company making two acquisitions. The Fund's
9 | OPPENHEIMER CHAMPION INCOME FUND
FUND PERFORMANCE DISCUSSION
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positions in Doane Pet Care Co. were tendered at very attractive premiums, which
greatly aided performance. Another acquisition that benefited Fund performance,
through its exposure to bonds issued by Lucent Technologies, Inc., was that of
Lucent by Alcatel. Additionally, the Fund's overweighted exposure to movie
theater chain operators aided performance, as theaters benefited from increased
ticket sales. Top contributors in this area included AMC Entertainment, Inc. and
Carmike Cinemas, Inc. We exited our position in Carmike Cinemas, Inc., during
the reporting period.
The Fund was underweighted in the automobile industry, a position which
benefited performance given all of the volatility experienced in this area. We
moved assets away from highly leveraged suppliers into bonds issued by the
credit operations of Ford Motor Co. and General Motors Corp. (GM), Ford Motor
Credit Co. and General Motors Acceptance Corp., respectively. While we remain
concerned about the fundamental operations of the parent companies, Ford Motor
Co. and GM, we are confident that our exposure to the credit side of these
well-capitalized businesses is the best way, in our view, to gain access to this
well compensated area of the high-yield bond market. We believe these bonds have
a minimal risk of default.
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, 2006. In the case of Class A, Class B and Class C
shares, performance is measured over a ten fiscal year period. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001. In the case of Class Y shares, performance is measured from inception of
the Class on September 1, 2006. 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, Class C and Class N shares, and reinvestments
of all dividends and capital gains distributions.
The Fund's performance is compared to the performance of the Merrill Lynch
High Yield Master Index and the Lehman Brothers Credit Index. The Merrill Lynch
High Yield Master Index is an unmanaged 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. The
Lehman Brothers Credit 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. 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.
10 | OPPENHEIMER CHAMPION INCOME FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Champion Income Fund (Class A)
Lehman Brothers Credit Index
Merrill Lynch High Yield Master Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Champion Lehman Brothers Merrill Lynch High
Income Fund (Class A) Credit Index Yield Master Index
09/30/1996 $ 9,525 $10,000 $10,000
12/31/1996 $ 9,903 $10,348 $10,393
03/31/1997 $ 9,914 $10,244 $10,502
06/30/1997 $10,385 $10,665 $11,001
09/30/1997 $10,855 $11,083 $11,431
12/31/1997 $11,083 $11,407 $11,726
03/31/1998 $11,567 $11,581 $12,053
06/30/1998 $11,547 $11,879 $12,255
09/30/1998 $10,802 $12,310 $11,817
12/31/1998 $11,131 $12,384 $12,156
03/31/1999 $11,624 $12,296 $12,287
06/30/1999 $11,702 $12,104 $12,370
09/30/1999 $11,574 $12,138 $12,215
12/31/1999 $11,863 $12,142 $12,347
03/31/2000 $11,736 $12,316 $12,124
06/30/2000 $11,919 $12,468 $12,200
09/30/2000 $11,969 $12,850 $12,366
12/31/2000 $11,349 $13,282 $11,879
03/31/2001 $11,860 $13,850 $12,617
06/30/2001 $11,531 $13,997 $12,457
09/30/2001 $10,869 $14,534 $11,954
12/31/2001 $11,534 $14,664 $12,616
03/31/2002 $11,577 $14,625 $12,863
06/30/2002 $11,027 $15,048 $12,073
09/30/2002 $10,598 $15,723 $11,692
12/31/2002 $11,117 $16,207 $12,472
03/31/2003 $11,752 $16,596 $13,332
06/30/2003 $12,846 $17,392 $14,622
09/30/2003 $13,207 $17,367 $14,991
12/31/2003 $13,998 $17,453 $15,867
03/31/2004 $14,256 $18,025 $16,222
06/30/2004 $14,257 $17,408 $16,079
09/30/2004 $14,713 $18,139 $16,825
12/31/2004 $15,287 $18,369 $17,575
03/31/2005 $15,084 $18,175 $17,323
06/30/2005 $15,380 $18,824 $17,789
09/30/2005 $15,544 $18,635 $17,951
12/31/2005 $15,693 $18,728 $18,073
03/31/2006 $16,080 $18,510 $18,589
06/30/2006 $16,031 $18,438 $18,616
09/30/2006 $16,496 $19,268 $19,365
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year 1.08% 5-Year 7.65% 10-Year 5.13%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER
INFORMATION.
11 | OPPENHEIMER CHAMPION INCOME FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Champion Income Fund (Class B)
Lehman Brothers Credit Index
Merrill Lynch High Yield Master Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Champion Lehman Brothers Merrill Lynch High
Income Fund (Class B) Credit Index Yield Master Index
09/30/1996 $10,000 $10,000 $10,000
12/31/1996 $10,377 $10,348 $10,393
03/31/1997 $10,369 $10,244 $10,502
06/30/1997 $10,841 $10,665 $11,001
09/30/1997 $11,310 $11,083 $11,431
12/31/1997 $11,524 $11,407 $11,726
03/31/1998 $12,006 $11,581 $12,053
06/30/1998 $11,964 $11,879 $12,255
09/30/1998 $11,169 $12,310 $11,817
12/31/1998 $11,489 $12,384 $12,156
03/31/1999 $11,975 $12,296 $12,287
06/30/1999 $12,032 $12,104 $12,370
09/30/1999 $11,880 $12,138 $12,215
12/31/1999 $12,144 $12,142 $12,347
03/31/2000 $12,000 $12,316 $12,124
06/30/2000 $12,153 $12,468 $12,200
09/30/2000 $12,181 $12,850 $12,366
12/31/2000 $11,536 $13,282 $11,879
03/31/2001 $12,023 $13,850 $12,617
06/30/2001 $11,679 $13,997 $12,457
09/30/2001 $10,986 $14,534 $11,954
12/31/2001 $11,636 $14,664 $12,616
03/31/2002 $11,658 $14,625 $12,863
06/30/2002 $11,083 $15,048 $12,073
09/30/2002 $10,637 $15,723 $11,692
12/31/2002 $11,158 $16,207 $12,472
03/31/2003 $11,795 $16,596 $13,332
06/30/2003 $12,893 $17,392 $14,622
09/30/2003 $13,256 $17,367 $14,991
12/31/2003 $14,050 $17,453 $15,867
03/31/2004 $14,308 $18,025 $16,222
06/30/2004 $14,309 $17,408 $16,079
09/30/2004 $14,767 $18,139 $16,825
12/31/2004 $15,343 $18,369 $17,575
03/31/2005 $15,139 $18,175 $17,323
06/30/2005 $15,436 $18,824 $17,789
09/30/2005 $15,601 $18,635 $17,951
12/31/2005 $15,751 $18,728 $18,073
03/31/2006 $16,139 $18,510 $18,589
06/30/2006 $16,090 $18,438 $18,616
09/30/2006 $16,556 $19,268 $19,365
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year 0.37% 5-Year 7.60% 10-Year 5.17%
12 | OPPENHEIMER CHAMPION INCOME FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Champion Income Fund (Class C)
Lehman Brothers Credit Index
Merrill Lynch High Yield Master Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Champion Lehman Brothers Merrill Lynch High
Income Fund (Class C) Credit Index Yield Master Index
09/30/1996 $10,000 $10,000 $10,000
12/31/1996 $10,378 $10,348 $10,393
03/31/1997 $10,370 $10,244 $10,502
06/30/1997 $10,843 $10,665 $11,001
09/30/1997 $11,312 $11,083 $11,431
12/31/1997 $11,532 $11,407 $11,726
03/31/1998 $12,006 $11,581 $12,053
06/30/1998 $11,966 $11,879 $12,255
09/30/1998 $11,170 $12,310 $11,817
12/31/1998 $11,489 $12,384 $12,156
03/31/1999 $11,976 $12,296 $12,287
06/30/1999 $12,033 $12,104 $12,370
09/30/1999 $11,880 $12,138 $12,215
12/31/1999 $12,144 $12,142 $12,347
03/31/2000 $12,000 $12,316 $12,124
06/30/2000 $12,154 $12,468 $12,200
09/30/2000 $12,179 $12,850 $12,366
12/31/2000 $11,533 $13,282 $11,879
03/31/2001 $12,031 $13,850 $12,617
06/30/2001 $11,676 $13,997 $12,457
09/30/2001 $10,983 $14,534 $11,954
12/31/2001 $11,633 $14,664 $12,616
03/31/2002 $11,655 $14,625 $12,863
06/30/2002 $11,080 $15,048 $12,073
09/30/2002 $10,629 $15,723 $11,692
12/31/2002 $11,143 $16,207 $12,472
03/31/2003 $11,745 $16,596 $13,332
06/30/2003 $12,815 $17,392 $14,622
09/30/2003 $13,149 $17,367 $14,991
12/31/2003 $13,911 $17,453 $15,867
03/31/2004 $14,140 $18,025 $16,222
06/30/2004 $14,116 $17,408 $16,079
09/30/2004 $14,541 $18,139 $16,825
12/31/2004 $15,080 $18,369 $17,575
03/31/2005 $14,852 $18,175 $17,323
06/30/2005 $15,115 $18,824 $17,789
09/30/2005 $15,248 $18,635 $17,951
12/31/2005 $15,366 $18,728 $18,073
03/31/2006 $15,715 $18,510 $18,589
06/30/2006 $15,638 $18,438 $18,616
09/30/2006 $16,062 $19,268 $19,365
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year 4.35% 5-Year 7.90% 10-Year 4.85%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER CHAMPION INCOME FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Champion Income Fund (Class N)
Lehman Brothers Credit Index
Merrill Lynch High Yield Master Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Champion Lehman Brothers Merrill Lynch High
Income Fund (Class N) Credit Index Yield Master Index
03/01/2001 $10,000 $10,000 $10,000
03/31/2001 $ 9,680 $10,062 $ 9,868
06/30/2001 $ 9,412 $10,169 $ 9,743
09/30/2001 $ 8,871 $10,559 $ 9,349
12/31/2001 $ 9,419 $10,653 $ 9,867
03/31/2002 $ 9,437 $10,625 $10,060
06/30/2002 $ 8,983 $10,932 $ 9,442
09/30/2002 $ 8,630 $11,423 $ 9,144
12/31/2002 $ 9,051 $11,775 $ 9,754
03/31/2003 $ 9,560 $12,057 $10,427
06/30/2003 $10,428 $12,635 $11,436
09/30/2003 $10,710 $12,617 $11,725
12/31/2003 $11,340 $12,680 $12,410
03/31/2004 $11,536 $13,095 $12,687
06/30/2004 $11,526 $12,647 $12,575
09/30/2004 $11,896 $13,178 $13,158
12/31/2004 $12,347 $13,345 $13,745
03/31/2005 $12,158 $13,204 $13,548
06/30/2005 $12,384 $13,675 $13,913
09/30/2005 $12,518 $13,538 $14,039
12/31/2005 $12,626 $13,606 $14,135
03/31/2006 $12,911 $13,447 $14,538
06/30/2006 $12,860 $13,395 $14,560
09/30/2006 $13,221 $13,998 $15,145
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year 4.63% 5-Year 8.31% Since Inception (3/1/01) 5.13%
14 | OPPENHEIMER CHAMPION INCOME FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Champion Income Fund (Class Y)
Lehman Brothers Credit Index
Merrill Lynch High Yield Master Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Champion Lehman Brothers Merrill Lynch High
Income Fund (Class Y) Credit Index Yield Master Index
09/01/2006 $10,000 $10,000 $10,000
09/30/2006 $10,104 $10,112 $10,128
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 9/30/06
1-Year N/A 5-Year N/A Since Inception (9/1/06) 1.04%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE
10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 16 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER CHAMPION INCOME FUND
NOTES
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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. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 11/16/87. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 4.75%.
CLASS B shares of the Fund were first publicly offered on 10/2/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the 10-year return for Class B uses
Class A performance for the period after conversion. 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. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
CLASS Y shares of the Fund were first publicly offered on 9/1/06. Class Y shares
are offered only to certain institutional investors under special agreement with
the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER CHAMPION INCOME FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended September 30, 2006.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to exceptions
17 | OPPENHEIMER CHAMPION INCOME FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
18 | OPPENHEIMER CHAMPION INCOME FUND
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/06) (9/30/06) SEPTEMBER 30, 2006 1,2
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,025.90 $5.65
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.50 5.63
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,022.00 9.52
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.69 9.49
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,022.10 9.47
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.74 9.44
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,024.00 7.54
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.65 7.51
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD ENDED
(9/1/06) (9/30/06) SEPTEMBER 30, 2006 2,3
- --------------------------------------------------------------------------------
Class Y Actual $1,000.00 $1,010.40 $0.52
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.91 3.20
Hypothetical assumes 5% annual return before expenses.
1. Actual expenses paid for Classes A, B, C and N are equal to the Fund's
annualized expense ratio for that class, multiplied by the average account value
over the period, multiplied by 183/365 (to reflect the one-half year period).
2. Hypothetical expenses paid for all classes are equal to the Fund's annualized
expense ratio for that class, multiplied by the average account value over the
period, multiplied by 183/365 (to reflect the one-half year period).
3. Actual expenses paid for Class Y are equal to the Fund's annualized expense
ratio for that class, multiplied by the average account value over the period,
multiplied by 30/365 [to reflect the period from September 1, 2006 (inception of
offering) to September 30, 2006].
Those annualized expense ratios based on the 6-month period ended September 30,
2006 for Classes A, B, C and N, and for the period from September 1, 2006
(inception of offering) to September 30, 2006 for Class Y are as follows:
CLASS EXPENSE RATIOS
- ---------------------------------
Class A 1.11%
- ---------------------------------
Class B 1.87
- ---------------------------------
Class C 1.86
- ---------------------------------
Class N 1.48
- ---------------------------------
Class Y 0.63
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Transfer Agent that can be terminated at any time, without advance
notice. The "Financial Highlights" tables in the Fund's financial statements,
included in this report, also show the gross expense ratios, without such
waivers or reimbursements.
- --------------------------------------------------------------------------------
19 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS September 30, 2006
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--0.0%
- ----------------------------------------------------------------------------------------------------------------
Goldman Sachs Asset Management CBO Ltd., Sub. Collateralized Bond
Obligations, Series 1A, Cl. D, 0.125%, 6/13/11 1,2 $ 2,258,663 $ 33,880
- ----------------------------------------------------------------------------------------------------------------
NC Finance Trust, CMO Pass-Through Certificates,
Series 1999-I, Cl. ECFD, 1.762%, 1/25/29 1 437,665 91,910
----------------
Total Asset-Backed Securities (Cost $1,969,073) 125,790
- ----------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--0.1%
- ----------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I Trust, Commercial Mtg. Pass-Through Certificates,
Series 1997-XL1, Cl. G, 7.695%, 10/3/30 (Cost $1,176,874) 1,200,000 1,041,446
- ----------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--87.6%
- ----------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--32.9%
- ----------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS--1.4%
Collins & Aikman Floorcoverings, Inc., 9.75% Sr. Sub. Nts., Series B, 2/15/10 1,300,000 1,300,000
- ----------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The):
7.857% Nts., 8/15/11 3,250,000 3,176,875
9% Sr. Unsec. Nts., 7/1/15 2,450,000 2,499,000
- ----------------------------------------------------------------------------------------------------------------
Keystone Automotive Operations, Inc., 9.75% Sr. Unsec. Sub. Nts., 11/1/13 1 900,000 850,500
- ----------------------------------------------------------------------------------------------------------------
Stoneridge, Inc., 11.50% Sr. Nts., 5/1/12 1,900,000 1,847,750
- ----------------------------------------------------------------------------------------------------------------
Tenneco Automotive, Inc., 10.25% Sr. Sec. Nts., Series B, 7/15/13 2,200,000 2,398,000
- ----------------------------------------------------------------------------------------------------------------
United Components, Inc., 9.375% Sr. Sub. Nts., 6/15/13 1,350,000 1,343,250
- ----------------------------------------------------------------------------------------------------------------
Visteon Corp.:
7% Sr. Unsec. Nts., 3/10/14 2,400,000 2,160,000
8.25% Sr. Unsec. Nts., 8/1/10 3,300,000 3,234,000
----------------
18,809,375
- ----------------------------------------------------------------------------------------------------------------
AUTOMOBILES--5.1%
Ford Motor Co., 7.45% Bonds, 7/16/31 1,100,000 855,250
- ----------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
5.625% Nts., 10/1/08 4,350,000 4,174,995
5.80% Sr. Unsec. Nts., 1/12/09 1,100,000 1,047,761
7.375% Nts., 10/28/09 18,300,000 17,795,945
9.957% Nts., 4/15/12 2 6,990,000 7,323,731
- ----------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
6.875% Nts., 9/15/11 16,650,000 16,578,905
7.25% Nts., 3/2/11 1,100,000 1,107,319
8% Bonds, 11/1/31 5,300,000 5,556,902
- ----------------------------------------------------------------------------------------------------------------
General Motors Corp.:
7.20% Nts., 1/15/11 6,650,000 6,159,563
8.375% Sr. Unsec. Debs., 7/15/33 2,250,000 1,957,500
- ----------------------------------------------------------------------------------------------------------------
Hertz Corp.:
8.875% Sr. Nts., 1/1/14 3 400,000 421,000
10.50% Sr. Sub. Nts., 1/1/16 3 3,780,000 4,176,900
----------------
67,155,771
20 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
DISTRIBUTORS--0.1%
SGS International, Inc., 12% Sr. Unsec. Sub. Nts., 12/15/13 $ 1,920,000 $ 1,948,800
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES--0.1%
Education Management LLC/Education Management Corp.,
10.25% Sr. Sub. Nts., 6/1/16 3 1,850,000 1,900,875
- ----------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--7.2%
American Casino & Entertainment Properties LLC, 7.85% Sr. Sec. Nts., 2/1/12 1,750,000 1,785,000
- ----------------------------------------------------------------------------------------------------------------
Aztar Corp., 9% Sr. Unsec. Sub. Nts., 8/15/11 1,900,000 1,992,625
- ----------------------------------------------------------------------------------------------------------------
Boyd Gaming Corp., 8.75% Sr. Sub. Nts., 4/15/12 2,900,000 3,059,500
- ----------------------------------------------------------------------------------------------------------------
CCM Merger, Inc., 8% Unsec. Nts., 8/1/13 3 3,220,000 3,107,300
- ----------------------------------------------------------------------------------------------------------------
Domino's, Inc., 8.25% Sr. Unsec. Sub. Nts., 7/1/11 2,131,000 2,248,205
- ----------------------------------------------------------------------------------------------------------------
French Lick Resorts & Casino LLC, 10.75% First Mtg. Nts., 4/15/14 3 3,935,000 3,590,688
- ----------------------------------------------------------------------------------------------------------------
Gaylord Entertainment Co.:
6.75% Sr. Unsec. Unsub. Nts., 11/15/14 1,650,000 1,586,063
8% Sr. Nts., 11/15/13 1,400,000 1,431,500
- ----------------------------------------------------------------------------------------------------------------
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/13 3 3,875,000 4,107,500
- ----------------------------------------------------------------------------------------------------------------
Intrawest Corp., 7.50% Sr. Unsec. Nts., 10/15/13 2,000,000 2,157,500
- ----------------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc.:
7% Sr. Unsec. Sub. Nts., 3/1/14 2,650,000 2,530,750
9% Sr. Sub. Nts., 3/15/12 2,400,000 2,517,000
- ----------------------------------------------------------------------------------------------------------------
Mandalay Resort Group:
9.375% Sr. Sub. Nts., 2/15/10 1,041,000 1,117,774
10.25% Sr. Unsec. Sub. Nts., Series B, 8/1/07 4,000,000 4,150,000
- ----------------------------------------------------------------------------------------------------------------
MGM Mirage, Inc.:
6.625% Sr. Unsec. Nts., 7/15/15 1,000,000 965,000
6.75% Sr. Unsec. Nts., 4/1/13 845,000 834,438
8.375% Sr. Unsec. Sub. Nts., 2/1/11 5,350,000 5,604,393
9.75% Sr. Unsec. Sub. Nts., 6/1/07 1,000,000 1,028,750
- ----------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13 1,250,000 1,228,125
6.375% Sr. Sub. Nts., 7/15/09 1,200,000 1,197,000
6.875% Sr. Unsec. Sub. Nts., 2/15/15 1,750,000 1,715,000
7.125% Sr. Unsec. Sub. Nts., 8/15/14 800,000 800,000
8% Sr. Sub. Nts., 4/1/12 5,000,000 5,200,000
- ----------------------------------------------------------------------------------------------------------------
NCL Corp., 10.625% Sr. Unsub. Nts., 7/15/14 2,250,000 2,188,125
- ----------------------------------------------------------------------------------------------------------------
Park Place Entertainment Corp.:
7.875% Sr. Sub. Nts., 3/15/10 3,000,000 3,135,000
9.375% Sr. Unsec. Sub. Nts., 2/15/07 3,350,000 3,391,875
- ----------------------------------------------------------------------------------------------------------------
Penn National Gaming, Inc.:
6.75% Sr. Unsec. Sub. Nts., 3/1/15 45,000 44,044
6.875% Sr. Sub. Nts., 12/1/11 200,000 202,000
- ----------------------------------------------------------------------------------------------------------------
Pinnacle Entertainment, Inc., 8.25% Sr. Unsec. Sub. Nts., 3/15/12 6,250,000 6,359,375
- ----------------------------------------------------------------------------------------------------------------
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/14 3 1,595,000 1,708,644
- ----------------------------------------------------------------------------------------------------------------
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08 1,4,9 3,900,000 --
21 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE Continued
Six Flags, Inc.:
9.625% Sr. Nts., 6/1/14 $ 2,646,000 $ 2,368,170
9.75% Sr. Nts., 4/15/13 1,200,000 1,086,000
- ----------------------------------------------------------------------------------------------------------------
Station Casinos, Inc.:
6.50% Sr. Unsec. Sub. Nts., 2/1/14 3,550,000 3,341,438
6.875% Sr. Unsec. Sub. Nts., 3/1/16 1,230,000 1,159,275
- ----------------------------------------------------------------------------------------------------------------
Trump Entertainment Resorts, Inc., 8.50% Sec. Nts., 6/1/15 3,400,000 3,268,250
- ----------------------------------------------------------------------------------------------------------------
Universal City Development Partners Ltd., 11.75% Sr. Nts., 4/1/10 2,700,000 2,922,750
- ----------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc., 6.75% Sr. Sub. Nts., 2/15/14 2,700,000 2,652,750
- ----------------------------------------------------------------------------------------------------------------
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14 6,100,000 5,947,500
----------------
93,729,307
- ----------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.9%
Beazer Homes USA, Inc.:
6.875% Sr. Unsec. Nts., 7/15/15 800,000 728,000
8.375% Sr. Nts., 4/15/12 2,800,000 2,800,000
- ----------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 9.75% Sr. Sub. Nts., 9/15/10 600,000 659,779
- ----------------------------------------------------------------------------------------------------------------
K. Hovnanian Enterprises, Inc.:
6.50% Sr. Nts., 1/15/14 800,000 736,000
7.75% Sr. Unsec. Sub. Nts., 5/15/13 2,500,000 2,300,000
8.875% Sr. Sub. Nts., 4/1/12 1,600,000 1,576,000
- ----------------------------------------------------------------------------------------------------------------
KB Home:
8.625% Sr. Sub. Nts., 12/15/08 1,550,000 1,596,299
9.50% Sr. Unsec. Sub. Nts., 2/15/11 1,950,000 2,001,188
- ----------------------------------------------------------------------------------------------------------------
Meritage Homes Corp., 6.25% Sr. Unsec. Nts., 3/15/15 800,000 684,000
- ----------------------------------------------------------------------------------------------------------------
Sealy Mattress Co., 8.25% Sr. Sub. Nts., 6/15/14 265,000 271,625
- ----------------------------------------------------------------------------------------------------------------
Standard Pacific Corp.:
6.25% Sr. Unsec. Unsub. Nts., 4/1/14 1,600,000 1,400,000
7.75% Sr. Nts., 3/15/13 1,300,000 1,235,000
9.25% Sr. Sub. Nts., 4/15/12 2,000,000 1,940,000
- ----------------------------------------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 1,500,000 1,541,250
- ----------------------------------------------------------------------------------------------------------------
WCI Communities, Inc., 9.125% Sr. Sub. Nts., 5/1/12 1,900,000 1,710,000
- ----------------------------------------------------------------------------------------------------------------
William Lyon Homes, Inc., 10.75% Sr. Nts., 4/1/13 3,700,000 3,422,500
----------------
24,601,641
- ----------------------------------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--0.3%
Leslie's Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13 3,230,000 3,197,700
- ----------------------------------------------------------------------------------------------------------------
Steinway Musical Instruments, Inc., 7% Sr. Nts., 3/1/14 3 715,000 704,275
----------------
3,901,975
- ----------------------------------------------------------------------------------------------------------------
MEDIA--14.1%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 4,9 1,740,000 1,065,750
22 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
MEDIA Continued
Adelphia Communications Corp.: Continued
8.125% Sr. Nts., Series B, 7/15/03 4,9 $ 2,870,000 $ 1,786,575
10.25% Sr. Unsec. Sub. Nts., 6/15/11 4,9 1,300,000 848,250
10.875% Sr. Unsec. Nts., 10/1/10 4,9 2,700,000 1,680,750
- ----------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12 1,500,000 1,518,750
- ----------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc.:
8% Sr. Unsec. Sub. Nts., 3/1/14 2,100,000 1,984,500
9.50% Sr. Unsec. Sub. Nts., 2/1/11 609,000 611,284
- ----------------------------------------------------------------------------------------------------------------
American Media Operations, Inc.:
8.875% Sr. Unsec. Sub. Nts., 1/15/11 3,450,000 3,044,625
10.25% Sr. Unsec. Sub. Nts., Series B, 5/1/09 2,450,000 2,290,750
- ----------------------------------------------------------------------------------------------------------------
Block Communications, Inc., 8.25% Sr. Nts., 12/15/15 3 1,665,000 1,631,700
- ----------------------------------------------------------------------------------------------------------------
Charter Communications Holdings II LLC/Charter Communications
Holdings II Capital Corp.:
10.25% Sr. Unsec. Nts., 9/15/10 900,000 922,500
10.25% Sr. Unsec. Nts., Series B, 9/15/10 3,505,000 3,575,100
- ----------------------------------------------------------------------------------------------------------------
Charter Communications Operating LLC/Charter Communications
Operating Capital Corp., 8.375% Sr. Nts., Second Lien, 4/30/14 3 10,300,000 10,518,875
- ----------------------------------------------------------------------------------------------------------------
Cinemark USA, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/13 1,400,000 1,459,500
- ----------------------------------------------------------------------------------------------------------------
Cinemark, Inc., 0%/9.75% Sr. Unsec. Disc. Nts., 3/15/14 5 6,100,000 4,895,250
- ----------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
7.25% Sr. Nts., 4/15/12 3 2,950,000 2,953,688
7.625% Sr. Unsec. Debs., 7/15/18 1,400,000 1,440,250
7.625% Sr. Unsec. Unsub. Nts., Series B, 4/1/11 2,485,000 2,562,656
- ----------------------------------------------------------------------------------------------------------------
Dex Media East LLC/Dex Media East Finance Co.,
9.875% Sr. Unsec. Nts., 11/15/09 3,500,000 3,705,625
- ----------------------------------------------------------------------------------------------------------------
Dex Media West LLC/Dex Media West Finance Co.:
8.50% Sr. Nts., 8/15/10 2,200,000 2,282,500
9.875% Sr. Sub. Nts., 8/15/13 4,213,000 4,571,105
- ----------------------------------------------------------------------------------------------------------------
Dex Media, Inc.:
0%/9% Unsec. Disc. Nts., 11/15/13 5 1,100,000 932,250
8% Unsec. Nts., 11/15/13 4,700,000 4,688,250
- ----------------------------------------------------------------------------------------------------------------
DirecTV Holdings LLC/DirecTV Financing Co., Inc.:
6.375% Sr. Unsec. Nts., 6/15/15 2,700,000 2,551,500
8.375% Sr. Unsec. Nts., 3/15/13 4,700,000 4,893,875
- ----------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp.:
6.625% Sr. Unsec. Nts., 10/1/14 7,850,000 7,486,938
7% Sr. Nts., 10/1/13 3,6 1,615,000 1,586,738
7.125% Sr. Nts., 2/1/16 3 2,000,000 1,942,500
- ----------------------------------------------------------------------------------------------------------------
Emmis Operating Co., 6.875% Sr. Unsec. Sub. Nts., 5/15/12 1,150,000 1,154,313
- ----------------------------------------------------------------------------------------------------------------
Entercom Radio LLC/Entercom Capital, Inc., 7.625% Sr. Unsec. Sub. Nts., 3/1/14 1,500,000 1,471,875
- ----------------------------------------------------------------------------------------------------------------
Granite Broadcasting Corp., 9.75% Sr. Sec. Nts., 12/1/10 1,299,000 1,208,070
- ----------------------------------------------------------------------------------------------------------------
Gray Television, Inc., 9.25% Sr. Sub. Nts., 12/15/11 1,750,000 1,839,688
23 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
MEDIA Continued
Lamar Media Corp.:
6.625% Sr. Unsec. Sub. Nts., 8/15/15 $ 2,657,000 $ 2,560,684
7.25% Sr. Unsec. Sub. Nts., 1/1/13 1,000,000 1,011,250
- ----------------------------------------------------------------------------------------------------------------
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13 2,525,000 2,367,188
- ----------------------------------------------------------------------------------------------------------------
Marquee Holdings, Inc., 0%/12% Sr. Disc. Nts., 8/15/14 5 5,200,000 4,004,000
- ----------------------------------------------------------------------------------------------------------------
Mediacom Broadband LLC, 8.50% Sr. Nts., 10/15/15 3,6 3,690,000 3,685,388
- ----------------------------------------------------------------------------------------------------------------
Mediacom Broadband LLC/Mediacom Broadband Corp.,
8.50% Sr. Nts., 10/15/15 625,000 624,219
- ----------------------------------------------------------------------------------------------------------------
Mediacom LLC/Mediacom Capital Corp., 9.50% Sr. Unsec. Nts., 1/15/13 1,746,000 1,794,015
- ----------------------------------------------------------------------------------------------------------------
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/14 2,100,000 1,863,750
6.875% Sr. Unsec. Sub. Nts., 10/1/13 1,800,000 1,674,000
- ----------------------------------------------------------------------------------------------------------------
Nielsen Finance LLC/Nielsen Finance Co.:
0%/12.50% Sr. Sub. Disc. Nts., 8/1/16 3,5 3,060,000 1,809,225
10% Sr. Nts., 8/1/14 3 6,280,000 6,523,350
- ----------------------------------------------------------------------------------------------------------------
NTL Cable plc, 9.125% Sr. Nts., 8/15/16 1,020,000 1,058,250
- ----------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.757% Sr. Sec. Nts., 1/15/13 1,2 3,105,000 3,143,813
- ----------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8% Sr. Nts., 5/15/13 2,900,000 2,646,250
8.875% Sr. Unsec. Nts., 5/15/11 1,946,000 1,911,945
- ----------------------------------------------------------------------------------------------------------------
Quebecor World Capital Corp., 8.75% Sr. Nts., 3/15/16 3 1,180,000 1,141,650
- ----------------------------------------------------------------------------------------------------------------
R.H. Donnelley Corp.:
6.875% Sr. Disc. Nts., Series A-1, 1/15/13 8,600,000 7,890,500
6.875% Sr. Disc. Nts., Series A-2, 1/15/13 7,080,000 6,495,900
6.875% Sr. Nts., 1/15/13 5,600,000 5,138,000
8.875% Sr. Unsec. Nts., Series A-3, 1/15/16 8,550,000 8,614,125
- ----------------------------------------------------------------------------------------------------------------
R.H. Donnelley Financial Corp. I, 10.875% Sr. Sub. Nts., 12/15/12 3 3,100,000 3,425,500
- ----------------------------------------------------------------------------------------------------------------
Radio One, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 7/1/11 1,950,000 2,001,188
- ----------------------------------------------------------------------------------------------------------------
Rainbow National Services LLC, 8.75% Sr. Nts., 9/1/12 3 2,500,000 2,687,500
- ----------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8% Sr. Unsec. Sub. Nts., 3/15/12 9,450,000 9,627,188
8.75% Sr. Sub. Nts., 12/15/11 1,250,000 1,309,375
- ----------------------------------------------------------------------------------------------------------------
Sirius Satellite Radio, Inc., 9.625% Sr. Unsec. Nts., 8/1/13 1,650,000 1,621,125
- ----------------------------------------------------------------------------------------------------------------
Vertis, Inc.:
9.75% Sr. Sec. Nts., 4/1/09 2,950,000 2,990,563
10.875% Sr. Unsec. Nts., Series B, 6/15/09 700,000 707,000
- ----------------------------------------------------------------------------------------------------------------
Warner Music Group, 7.375% Sr. Sub. Bonds, 4/15/14 2,200,000 2,156,000
- ----------------------------------------------------------------------------------------------------------------
WMG Holdings Corp., 0%/9.50% Sr. Disc. Nts., 12/15/14 5 5,652,000 4,239,000
- ----------------------------------------------------------------------------------------------------------------
XM Satellite Radio, Inc.:
9.75% Sr. Nts., 5/1/14 3 1,650,000 1,592,250
9.75% Sr. Unsec. Nts., 5/1/14 1,000,000 960,000
----------------
184,380,171
24 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--0.8%
Bon-Ton Stores, Inc. (The), 10.25% Sr. Unsec. Unsub. Nts., 3/15/14 $ 3,900,000 $ 3,812,250
- ----------------------------------------------------------------------------------------------------------------
Neiman Marcus Group, Inc. (The):
9% Sr. Unsec. Nts., 10/15/15 4,585,000 4,894,488
10.375% Sr. Unsec. Sub. Nts., 10/15/15 1,040,000 1,128,400
----------------
9,835,138
- ----------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--1.2%
Asbury Automotive Group, Inc., 9% Sr. Sub. Nts., 6/15/12 2,500,000 2,571,875
- ----------------------------------------------------------------------------------------------------------------
Atlantic Broadband Finance LLC, 9.375% Sr. Unsec. Sub. Nts., 1/15/14 550,000 540,375
- ----------------------------------------------------------------------------------------------------------------
Boise Cascade LLC, 7.125% Sr. Unsec. Sub. Nts., 10/15/14 1,900,000 1,781,250
- ----------------------------------------------------------------------------------------------------------------
Gamestop Corp., 8% Sr. Unsec. Nts., 10/1/12 3,400,000 3,519,000
- ----------------------------------------------------------------------------------------------------------------
Linens `N Things, Inc., 11.132% Sr. Sec. Nts., 1/15/14 2,3 3,615,000 3,506,550
- ----------------------------------------------------------------------------------------------------------------
Petco Animal Supplies, Inc., 10.75% Sr. Sub. Nts., 11/1/11 1 3,000,000 3,180,000
- ----------------------------------------------------------------------------------------------------------------
Rent-A-Center, Inc., 7.50% Sr. Unsec. Sub. Nts., Series B, 5/1/10 1,100,000 1,111,000
----------------
16,210,050
- ----------------------------------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.7%
Invista, Inc., 9.25% Sr. Nts., 5/1/12 3 1,890,000 2,008,125
- ----------------------------------------------------------------------------------------------------------------
Levi Strauss & Co.:
9.75% Sr. Unsec. Unsub. Nts., 1/15/15 2,660,000 2,773,050
10.258% Sr. Unsec. Unsub. Nts., 4/1/12 2 1,520,000 1,573,200
- ----------------------------------------------------------------------------------------------------------------
Oxford Industries, Inc., 8.875% Sr. Nts., 6/1/11 1 1,250,000 1,281,250
- ----------------------------------------------------------------------------------------------------------------
Quiksilver, Inc., 6.875% Sr. Unsec. Nts., 4/15/15 1,735,000 1,652,588
----------------
9,288,213
- ----------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.7%
- ----------------------------------------------------------------------------------------------------------------
BEVERAGES--0.3%
Constellation Brands, Inc.:
7.25% Sr. Nts., 9/1/16 2,420,000 2,459,325
8.125% Sr. Sub. Nts., 1/15/12 2,000,000 2,077,500
----------------
4,536,825
- ----------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.6%
Jean Coutu Group (PJC), Inc. (The), 8.50% Sr. Sub. Nts., 8/1/14 3,650,000 3,531,375
- ----------------------------------------------------------------------------------------------------------------
Rite Aid Corp.:
8.125% Sr. Sec. Nts., 5/1/10 2,600,000 2,619,500
9.50% Sr. Sec. Nts., 2/15/11 1,600,000 1,662,000
----------------
7,812,875
- ----------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--1.3%
Del Monte Corp.:
6.75% Sr. Unsec. Sub. Nts., 2/15/15 1,070,000 1,037,900
8.625% Sr. Sub. Nts., 12/15/12 3,600,000 3,793,500
25 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS Continued
Dole Food Co., Inc.:
7.25% Sr. Unsec. Nts., 6/15/10 $ 750,000 $ 699,375
8.625% Sr. Nts., 5/1/09 2,291,000 2,250,908
8.875% Sr. Unsec. Nts., 3/15/11 467,000 449,488
- ----------------------------------------------------------------------------------------------------------------
Hines Nurseries, Inc., 10.25% Sr. Unsec. Sub. Nts., 10/1/11 2,500,000 2,268,750
- ----------------------------------------------------------------------------------------------------------------
Smithfield Foods, Inc.:
7% Sr. Nts., 8/1/11 800,000 810,000
8% Sr. Nts., Series B, 10/15/09 2,400,000 2,520,000
- ----------------------------------------------------------------------------------------------------------------
United Biscuits Finance plc:
10.625% Sr. Sub. Nts., 4/15/11 [EUR] 1,000,000 1,341,760
10.75% Sr. Sub. Nts., 4/15/11 [GBP] 1,000,000 1,975,369
----------------
17,147,050
- ----------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.5%
Church & Dwight Co., Inc., 6% Sr. Unsec. Sub. Nts., 12/15/12 2,650,000 2,550,625
- ----------------------------------------------------------------------------------------------------------------
Nutro Products, Inc., 10.75% Sr. Sub. Nts., 4/15/14 3 1,205,000 1,295,375
- ----------------------------------------------------------------------------------------------------------------
Spectrum Brands, Inc., 7.375% Sr. Unsec. Sub. Nts., 2/1/15 4,050,000 3,260,250
----------------
7,106,250
- ----------------------------------------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.5%
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14 2,550,000 2,511,750
- ----------------------------------------------------------------------------------------------------------------
Playtex Products, Inc.:
8% Sr. Sec. Nts., 3/1/11 2,500,000 2,606,250
9.375% Sr. Unsec. Sub. Nts., 6/1/11 1,200,000 1,260,000
----------------
6,378,000
- ----------------------------------------------------------------------------------------------------------------
TOBACCO--0.5%
Reynolds American, Inc., 7.25% Sr. Sec. Nts., 6/1/13 3 5,805,000 6,002,533
- ----------------------------------------------------------------------------------------------------------------
ENERGY--8.8%
- ----------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.9%
Basic Energy Services, Inc., 7.125% Sr. Nts., 4/15/16 3 1,165,000 1,130,050
- ----------------------------------------------------------------------------------------------------------------
Dresser, Inc., 9.875% Sr. Unsec. Sub. Nts., 4/15/11 2 1,200,000 1,261,500
- ----------------------------------------------------------------------------------------------------------------
Hanover Compressor Co., 8.625% Sr. Unsec. Sub. Nts., 12/15/10 2,400,000 2,508,000
- ----------------------------------------------------------------------------------------------------------------
Hanover Equipment Trust, 8.50% Sr. Sec. Nts., Series A, 9/1/08 662,000 673,585
- ----------------------------------------------------------------------------------------------------------------
PHI, Inc., 7.125% Sr. Nts., 4/15/13 3 1,400,000 1,333,500
- ----------------------------------------------------------------------------------------------------------------
RathGibson, Inc., 11.25% Sr. Nts., 2/15/14 3 1,600,000 1,656,000
- ----------------------------------------------------------------------------------------------------------------
Universal Compression, Inc., 7.25% Sr. Unsec. Sub. Nts., 5/15/10 2,800,000 2,835,000
----------------
11,397,635
- ----------------------------------------------------------------------------------------------------------------
OIL & GAS--7.9%
Arch Western Finance LLC, 6.75% Sr. Nts., 7/1/13 2,650,000 2,557,250
- ----------------------------------------------------------------------------------------------------------------
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15 1,185,000 1,211,663
26 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
OIL & GAS Continued
Chesapeake Energy Corp.:
6.375% Sr. Unsec. Nts., 6/15/15 $ 3,550,000 $ 3,408,000
6.875% Sr. Unsec. Nts., 1/15/16 5,020,000 4,932,150
7.50% Sr. Nts., 6/15/14 900,000 914,625
- ----------------------------------------------------------------------------------------------------------------
Clayton Williams Energy, Inc., 7.75% Sr. Unsec. Nts., 8/1/13 495,000 447,975
- ----------------------------------------------------------------------------------------------------------------
Compton Petroleum Finance Corp., 7.625% Sr. Nts., 12/1/13 3,545,000 3,438,650
- ----------------------------------------------------------------------------------------------------------------
Copano Energy LLC, 8.125% Sr. Unsec. Nts., 3/1/16 720,000 732,600
- ----------------------------------------------------------------------------------------------------------------
El Paso Corp.:
7.75% Sr. Nts., 1/15/32 3,700,000 3,811,000
7.875% Sr. Unsec. Nts., 6/15/12 4,846,000 5,051,955
- ----------------------------------------------------------------------------------------------------------------
El Paso Energy Corp., 7.625% Nts., 7/15/11 1,800,000 1,854,000
- ----------------------------------------------------------------------------------------------------------------
El Paso Production Holding Co., 7.75% Sr. Unsec. Nts., 6/1/13 6,550,000 6,730,125
- ----------------------------------------------------------------------------------------------------------------
Forest Oil Corp., 7.75% Sr. Nts., 5/1/14 2,800,000 2,842,000
- ----------------------------------------------------------------------------------------------------------------
Foundation PA Coal Co., 7.25% Sr. Unsec. Nts., 8/1/14 2,000,000 2,020,000
- ----------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 6.625% Sr. Unsec. Nts., 10/1/11 1,500,000 1,507,500
- ----------------------------------------------------------------------------------------------------------------
Inergy LP/Inergy Finance Corp., 8.25% Sr. Unsec. Nts., 3/1/16 2,255,000 2,345,200
- ----------------------------------------------------------------------------------------------------------------
Massey Energy Co.:
6.625% Sr. Nts., 11/15/10 1,600,000 1,568,000
6.875% Sr. Unsec. Nts., 12/15/13 180,000 163,800
- ----------------------------------------------------------------------------------------------------------------
Newfield Exploration Co., 6.625% Sr. Unsec. Sub. Nts., 9/1/14 5,900,000 5,804,125
- ----------------------------------------------------------------------------------------------------------------
Pacific Energy Partners LP/Pacific Energy Finance Corp.,
6.25% Sr. Unsec. Nts., 9/15/15 485,000 480,150
- ----------------------------------------------------------------------------------------------------------------
Peabody Energy Corp., 6.875% Sr. Unsec. Nts., Series B, 3/15/13 2,500,000 2,475,000
- ----------------------------------------------------------------------------------------------------------------
Plains Exploration & Production Co., 7.125% Sr. Nts., 6/15/14 2,300,000 2,415,000
- ----------------------------------------------------------------------------------------------------------------
Pogo Producing Co.:
6.875% Sr. Unsec. Sub. Nts., 10/1/17 800,000 767,000
7.875% Sr. Sub. Nts., 5/1/13 3 1,135,000 1,161,956
- ----------------------------------------------------------------------------------------------------------------
Premcor Refining Group, Inc., 9.50% Sr. Nts., 2/1/13 2,400,000 2,615,995
- ----------------------------------------------------------------------------------------------------------------
Quicksilver Resources, Inc., 7.125% Sr. Sub. Nts., 4/1/16 3,260,000 3,105,150
- ----------------------------------------------------------------------------------------------------------------
Range Resources Corp.:
6.375% Sr. Sub. Nts., 3/15/15 2,155,000 2,058,025
7.375% Sr. Sub. Nts., 7/15/13 1,800,000 1,818,000
7.50% Sr. Sub. Nts., 5/15/16 4,520,000 4,565,200
- ----------------------------------------------------------------------------------------------------------------
Southern Natural Gas Co.:
7.35% Nts., 2/15/31 3,800,000 3,956,651
8% Sr. Unsub. Nts., 3/1/32 1,700,000 1,888,069
8.875% Sr. Nts., 3/15/10 1,800,000 1,896,597
- ----------------------------------------------------------------------------------------------------------------
Stone Energy Corp.:
6.75% Sr. Unsec. Sub. Nts., 12/15/14 1,080,000 1,085,400
8.25% Sr. Unsec. Sub. Nts., 12/15/11 3,200,000 3,256,000
- ----------------------------------------------------------------------------------------------------------------
Targa Resources, Inc., 8.50% Sr. Nts., 11/1/13 3 2,395,000 2,400,988
- ----------------------------------------------------------------------------------------------------------------
Teekay Shipping Corp., 8.875% Sr. Nts., 7/15/11 1,600,000 1,696,000
27 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
OIL & GAS Continued
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 $ 2,550,000 $ 2,698,400
- ----------------------------------------------------------------------------------------------------------------
Tesoro Corp.:
6.25% Sr. Nts., 11/1/12 3 905,000 876,719
6.625% Sr. Nts., 11/1/15 3 905,000 875,588
- ----------------------------------------------------------------------------------------------------------------
Transcontinental Gas Pipe Line Corp.:
6.40% Sr. Nts., 4/15/16 3 1,630,000 1,619,813
8.875% Sr. Unsub. Nts., Series B, 7/15/12 600,000 666,750
- ----------------------------------------------------------------------------------------------------------------
Whiting Petroleum Corp.:
7.25% Sr. Sub. Nts., 5/1/12 2,300,000 2,265,500
7.25% Sr. Unsec. Sub. Nts., 5/1/13 1,000,000 985,000
- ----------------------------------------------------------------------------------------------------------------
Williams Cos., Inc. (The):
7.125% Nts., 9/1/11 1,600,000 1,648,000
8.75% Unsec. Nts., 3/15/32 2,200,000 2,420,000
- ----------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.50% Nts., 12/1/08 1 800,000 796,000
----------------
103,833,569
- ----------------------------------------------------------------------------------------------------------------
FINANCIALS--2.8%
- ----------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--0.7%
Berry Plastics Holding Corp.:
8.875% Sr. Sec. Nts., 9/15/14 3 1,855,000 1,873,550
9.265% Sr. Sec. Nts., 9/15/14 2,3 1,855,000 1,873,550
- ----------------------------------------------------------------------------------------------------------------
DeCrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts.,
Series B, 9/30/08 1 3,450,000 2,604,750
- ----------------------------------------------------------------------------------------------------------------
E*TRADE Financial Corp.:
7.375% Sr. Unsec. Nts., 9/15/13 731,000 751,103
8% Sr. Nts., 6/15/11 2,070,000 2,152,800
----------------
9,255,753
- ----------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--0.3%
ABN Amro Bank NV (NY Branch), 5% Sec. Nts., 11/5/17 1,2 2,808,552 2,641,794
- ----------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 1 578,000 621,350
----------------
3,263,144
- ----------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE--0.0%
Ace Cash Express, Inc., 10.25% Sr. Nts., 10/1/14 3,6 460,000 468,050
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--1.0%
AAC Group Holding Corp., 0%/10.25% Sr. Unsec. Disc. Nts., 10/1/12 5 850,000 709,750
- ----------------------------------------------------------------------------------------------------------------
Affinia Group, Inc., 9% Sr. Unsec. Sub. Nts., 11/30/14 300,000 281,250
- ----------------------------------------------------------------------------------------------------------------
BCP Crystal US Holdings Corp., 9.625% Sr. Sub. Nts., 6/15/14 3,933,000 4,286,970
- ----------------------------------------------------------------------------------------------------------------
Crystal US Holdings 3 LLC/Crystal US Sub 3 Corp.,
0%/10.50% Sr. Unsec. Disc. Nts., Series B, 10/1/14 5 3,100,000 2,530,375
- ----------------------------------------------------------------------------------------------------------------
JSG Funding plc, 7.75% Sr. Unsec. Sub. Nts., 4/1/15 2,390,000 2,270,500
- ----------------------------------------------------------------------------------------------------------------
Nell AF Sarl, 8.375% Sr. Nts., 8/15/15 3 1,840,000 1,835,400
28 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Universal City Florida:
8.375% Sr. Unsec. Nts., 5/1/10 $ 650,000 $ 655,688
10.239% Sr. Unsec. Nts., 5/1/10 2 775,000 800,188
----------------
13,370,121
- ----------------------------------------------------------------------------------------------------------------
REAL ESTATE--0.7%
Felcor Lodging LP, 8.50% Sr. Nts., 6/1/11 2 3,540,000 3,765,675
- ----------------------------------------------------------------------------------------------------------------
Host Marriott LP:
6.375% Sr. Nts., Series O, 3/15/15 3,470,000 3,383,250
6.75% Sr. Nts., Series Q, 6/1/16 900,000 892,125
- ----------------------------------------------------------------------------------------------------------------
Ventas Realty LP/Ventas Capital Corp., 6.75% Sr. Nts., 4/1/17 1,395,000 1,410,694
----------------
9,451,744
- ----------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.1%
Bankunited Capital Trust, 10.25% Capital Securities, 12/31/26 1 750,000 791,250
- ----------------------------------------------------------------------------------------------------------------
HEALTH CARE--4.1%
- ----------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--0.1%
Angiotech Pharmaceuticals, Inc., 7.75% Sr. Sub. Nts., 4/1/14 3 1,175,000 1,122,125
- ----------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.2%
Inverness Medical Innovations, Inc., 8.75% Sr. Sub. Nts., 2/15/12 1,100,000 1,089,000
- ----------------------------------------------------------------------------------------------------------------
Universal Hospital Services, Inc., 10.125% Sr. Unsec. Nts., 11/1/11 1,700,000 1,793,500
----------------
2,882,500
- ----------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.6%
AmeriPath, Inc., 10.50% Sr. Unsec. Sub. Nts., 4/1/13 2,000,000 2,130,000
- ----------------------------------------------------------------------------------------------------------------
Community Health Systems, Inc., 6.50% Sr. Unsec. Sub. Nts., 12/15/12 2,800,000 2,691,500
- ----------------------------------------------------------------------------------------------------------------
DaVita, Inc.:
6.625% Sr. Unsec. Nts., 3/15/13 2,630,000 2,580,688
7.25% Sr. Unsec. Sub. Nts., 3/15/15 2,880,000 2,844,000
- ----------------------------------------------------------------------------------------------------------------
Extendicare Health Services, Inc.:
6.875% Sr. Sub. Nts., 5/1/14 1,000,000 1,075,000
9.50% Sr. Unsec. Sub. Nts., 7/1/10 2,200,000 2,318,250
- ----------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 2,800,000 2,856,000
- ----------------------------------------------------------------------------------------------------------------
Genesis HealthCare Corp., 8% Sr. Sub. Nts., 10/15/13 1 1,100,000 1,146,750
- ----------------------------------------------------------------------------------------------------------------
HCA, Inc.:
6.30% Sr. Unsec. Nts., 10/1/12 750,000 636,563
8.75% Sr. Nts., 9/1/10 4,600,000 4,657,500
- ----------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 10.75% Sr. Nts., 6/15/16 3 1,595,000 1,636,869
- ----------------------------------------------------------------------------------------------------------------
Omnicare, Inc.:
6.75% Sr. Sub. Nts., 12/15/13 45,000 43,988
6.875% Sr. Sub. Nts., 12/15/15 280,000 273,350
- ----------------------------------------------------------------------------------------------------------------
Psychiatric Solutions, Inc., 7.75% Sr. Unsec. Sub. Nts., 7/15/15 1,245,000 1,220,100
29 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES Continued
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15 $ 7,230,000 $ 6,127,425
- ----------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.:
6.375% Sr. Nts., 12/1/11 2,760,000 2,439,150
7.375% Nts., 2/1/13 146,000 132,313
9.875% Sr. Nts., 7/1/14 5,250,000 5,256,563
- ----------------------------------------------------------------------------------------------------------------
Triad Hospitals, Inc., 7% Sr. Sub. Nts., 11/15/13 310,000 302,638
- ----------------------------------------------------------------------------------------------------------------
US Oncology, Inc.:
9% Sr. Unsec. Nts., 8/15/12 1,700,000 1,768,000
10.75% Sr. Unsec. Sub. Nts., 8/15/14 1,300,000 1,430,000
- ----------------------------------------------------------------------------------------------------------------
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Disc. Nts., 10/1/15 5 5,400,000 3,915,000
----------------
47,481,647
- ----------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--0.2%
Valeant Pharmaceuticals International, Inc., 7% Sr. Nts., 12/15/11 1 2,800,000 2,653,000
- ----------------------------------------------------------------------------------------------------------------
INDUSTRIALS--7.9%
- ----------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.4%
Alliant Techsystems, Inc., 6.75% Sr. Sub. Nts., 4/1/16 2,350,000 2,320,625
- ----------------------------------------------------------------------------------------------------------------
BE Aerospace, Inc., 8.875% Sr. Unsec. Sub. Nts., 5/1/11 846,000 884,070
- ----------------------------------------------------------------------------------------------------------------
DRS Technologies, Inc.:
6.625% Sr. Nts., 2/1/16 1,925,000 1,900,938
6.875% Sr. Unsec. Sub. Nts., 11/1/13 1,000,000 992,500
7.625% Sr. Sub. Nts., 2/1/18 845,000 861,900
- ----------------------------------------------------------------------------------------------------------------
L-3 Communications Corp.:
5.875% Sr. Sub. Nts., 1/15/15 2,367,000 2,260,485
6.125% Sr. Unsec. Sub. Nts., 1/15/14 1,050,000 1,023,750
6.375% Sr. Unsec. Sub. Nts., Series B, 10/15/15 2,730,000 2,668,575
7.625% Sr. Sub. Nts., 6/15/12 1,850,000 1,914,750
- ----------------------------------------------------------------------------------------------------------------
TRW Automotive, Inc.:
9.375% Sr. Nts., 2/15/13 1,784,000 1,908,880
11% Sr. Sub. Nts., 2/15/13 1,493,000 1,634,835
----------------
18,371,308
- ----------------------------------------------------------------------------------------------------------------
AIRLINES--0.0%
ATA Holdings Corp., 13% Sr. Unsec. Nts., 2/1/09 1,4,9 6,825,000 --
- ----------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS--0.5%
Associated Materials, Inc., 9.75% Sr. Sub. Nts., 4/15/12 2,000,000 2,005,000
- ----------------------------------------------------------------------------------------------------------------
Goodman Global Holding Co., Inc., 7.875% Sr. Unsec. Sub. Nts., 12/15/12 1,300,000 1,244,750
- ----------------------------------------------------------------------------------------------------------------
Jacuzzi Brands, Inc., 9.625% Sr. Sec. Nts., 7/1/10 1,789,000 1,905,285
- ----------------------------------------------------------------------------------------------------------------
Nortek, Inc., 8.50% Sr. Unsec. Unsub. Nts., 9/1/14 2,000,000 1,900,000
----------------
7,055,035
- ----------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.4%
Allied Waste North America, Inc.:
7.25% Sr. Nts., 3/15/15 1,360,000 1,356,600
30 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES Continued
Allied Waste North America, Inc.: Continued
7.375% Sr. Sec. Nts., Series B, 4/15/14 $ 7,250,000 $ 7,177,500
9.25% Sr. Sec. Debs., Series B, 9/1/12 1,100,000 1,178,375
- ----------------------------------------------------------------------------------------------------------------
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05 1,4,9 1,500,000 --
- ----------------------------------------------------------------------------------------------------------------
Cenveo Corp., 7.875% Sr. Sub. Nts., 12/1/13 2,700,000 2,571,750
- ----------------------------------------------------------------------------------------------------------------
Corrections Corp. of America:
6.25% Sr. Unsec. Sub. Nts., 3/15/13 2,750,000 2,708,750
7.50% Sr. Nts., 5/1/11 1,350,000 1,387,125
- ----------------------------------------------------------------------------------------------------------------
FTI Consulting, Inc., 7.75% Sr. Unsec. Nts., 10/1/16 3,6 1,615,000 1,639,225
- ----------------------------------------------------------------------------------------------------------------
Mobile Services Group, Inc., 9.75% Sr. Nts., 8/1/14 3 340,000 350,200
----------------
18,369,525
- ----------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.5%
Belden & Blake Corp., 8.75% Sec. Nts., 7/15/12 2,150,000 2,219,875
- ----------------------------------------------------------------------------------------------------------------
Dayton Superior Corp., 13% Sr. Unsec. Sub. Nts., 6/15/09 1,100,000 1,039,500
- ----------------------------------------------------------------------------------------------------------------
General Cable Corp., 9.50% Sr. Nts., 11/15/10 2,000,000 2,150,000
- ----------------------------------------------------------------------------------------------------------------
UCAR Finance, Inc., 10.25% Sr. Nts., 2/15/12 1,000,000 1,055,000
----------------
6,464,375
- ----------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.3%
Covalence Specialty Materials Corp., 10.25% Sr. Sub. Nts., 3/1/16 3 3,020,000 2,944,500
- ----------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/13 900,000 841,500
----------------
3,786,000
- ----------------------------------------------------------------------------------------------------------------
MACHINERY--1.4%
Case New Holland, Inc.:
7.125% Sr. Unsec. Nts., 3/1/14 1,890,000 1,906,538
9.25% Sr. Nts., 8/1/11 1,500,000 1,597,500
- ----------------------------------------------------------------------------------------------------------------
Douglas Dynamics LLC, 7.75% Sr. Nts., 1/15/12 3 1,600,000 1,520,000
- ----------------------------------------------------------------------------------------------------------------
Greenbrier Cos., Inc., 8.375% Sr. Unsec. Nts., 5/15/15 2,020,000 2,060,400
- ----------------------------------------------------------------------------------------------------------------
Manitowoc Co., Inc. (The):
7.125% Sr. Nts., 11/1/13 1 600,000 594,000
10.50% Sr. Sub. Nts., 8/1/12 1 2,174,000 2,347,920
- ----------------------------------------------------------------------------------------------------------------
Milacron Escrow Corp., 11.50% Sr. Sec. Nts., 5/15/11 1 3,600,000 3,438,000
- ----------------------------------------------------------------------------------------------------------------
Trinity Industries, Inc., 6.50% Sr. Nts., 3/15/14 2,550,000 2,505,375
- ----------------------------------------------------------------------------------------------------------------
Wolverine Tube, Inc.:
7.375% Sr. Nts., 8/1/08 3 1,250,000 1,068,750
10.50% Sr. Nts., 4/1/09 1 600,000 531,000
----------------
17,569,483
- ----------------------------------------------------------------------------------------------------------------
ROAD & RAIL--1.1%
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.:
7.625% Sr. Nts., 5/15/14 2,100,000 2,047,500
31 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
ROAD & RAIL Continued
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.: Continued
7.75% Sr. Nts., 5/15/16 3 $ 1,165,000 $ 1,130,050
7.905% Sr. Nts., 5/15/14 2,3 465,000 458,025
- ----------------------------------------------------------------------------------------------------------------
Kansas City Southern Railway Co. (The), 7.50% Sr. Nts., 6/15/09 2,800,000 2,814,000
- ----------------------------------------------------------------------------------------------------------------
Stena AB:
7% Sr. Unsec. Nts., 12/1/16 275,000 260,563
7.50% Sr. Unsec. Nts., 11/1/13 2,783,000 2,748,213
9.625% Sr. Nts., 12/1/12 1 1,800,000 1,944,000
- ----------------------------------------------------------------------------------------------------------------
TDS Investor Corp., 11.875% Sr. Sub. Nts., 9/1/16 3 3,300,000 3,184,500
----------------
14,586,851
- ----------------------------------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--1.2%
Ashtead Capital, Inc., 9% Nts., 8/15/16 3 1,135,000 1,186,075
- ----------------------------------------------------------------------------------------------------------------
H&E Equipment Services, Inc., 8.375% Sr. Nts., 7/15/16 3 1,250,000 1,287,500
- ----------------------------------------------------------------------------------------------------------------
Interline Brands, Inc., 8.125% Sr. Sub. Nts., 6/15/14 1,855,000 1,887,463
- ----------------------------------------------------------------------------------------------------------------
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14 11,800,000 11,151,000
----------------
15,512,038
- ----------------------------------------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.1%
Horizon Lines LLC, 9% Nts., 11/1/12 1,339,000 1,385,865
- ----------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--3.7%
- ----------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.9%
Loral Skynet Corp., 14% Sr. Sec. Nts., 11/21/15 1,7 572,000 669,240
- ----------------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc., 6.45% Unsec. Debs., 3/15/29 10,100,000 9,039,500
- ----------------------------------------------------------------------------------------------------------------
Nortel Networks Ltd.:
9.731% Sr. Nts., 7/15/11 2,3 1,137,000 1,179,638
10.75% Sr. Nts., 7/15/16 3 1,300,000 1,397,500
- ----------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 12.50% Sr. Unsub. Disc. Nts., 1/15/07 4,9 3,315,000 33
----------------
12,285,911
- ----------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.4%
Seagate Technology HDD Holdings:
6.375% Sr. Nts., 10/1/11 2,320,000 2,320,000
6.80% Sr. Nts., 10/1/16 695,000 695,000
8% Sr. Nts., 5/15/09 1,700,000 1,768,017
----------------
4,783,017
- ----------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.6%
Flextronics International Ltd., 6.25% Sr. Sub. Nts., 11/15/14 850,000 828,750
- ----------------------------------------------------------------------------------------------------------------
RBS Global & Rexnord Corp.:
9.50% Sr. Nts., 8/1/14 1 2,270,000 2,315,400
11.75% Sr. Sub. Nts., 8/1/16 1 3,405,000 3,524,175
- ----------------------------------------------------------------------------------------------------------------
Sanmina-SCI Corp.:
6.75% Unsec. Sub. Nts., 3/1/13 920,000 871,700
32 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS Continued
Sanmina-SCI Corp.: Continued
8.125% Sr. Sub. Nts., 3/1/16 $ 800,000 $ 788,000
- ----------------------------------------------------------------------------------------------------------------
Solectron Global Finance Ltd., 8% Sr. Unsec. Sub. Nts., 3/15/16 370,000 368,150
----------------
8,696,175
- ----------------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.0%
Exodus Communications, Inc., 10.75% Sr. Nts., 12/15/09 1,4,9 [EUR] 3,386,201 --
- ----------------------------------------------------------------------------------------------------------------
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10 1,4,9 1,521,315 --
- ----------------------------------------------------------------------------------------------------------------
PSINet, Inc., 10.50% Sr. Unsec. Nts., 12/1/06 1,4,9 [EUR] 3,250,000 --
----------------
--
- ----------------------------------------------------------------------------------------------------------------
IT SERVICES--1.1%
DI Finance/DynCorp International LLC,
9.50% Sr. Unsec. Sub. Nts., Series B, 2/15/13 2,423,000 2,519,920
- ----------------------------------------------------------------------------------------------------------------
iPayment Holdings, Inc., 9.75% Sr. Sub. Nts., 5/15/14 1 2,085,000 2,137,125
- ----------------------------------------------------------------------------------------------------------------
Iron Mountain, Inc.:
7.75% Sr. Sub. Nts., 1/15/15 1,200,000 1,206,000
8.625% Sr. Unsec. Sub. Nts., 4/1/13 1,600,000 1,644,000
- ----------------------------------------------------------------------------------------------------------------
SunGard Data Systems, Inc.:
9.125% Sr. Unsec. Nts., 8/15/13 1,250,000 1,300,000
10.25% Sr. Unsec. Sub. Nts., 8/15/15 5,140,000 5,319,900
----------------
14,126,945
- ----------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.7%
Advanced Micro Devices, Inc., 7.75% Sr. Unsec. Nts., 11/1/12 4,483,000 4,561,453
- ----------------------------------------------------------------------------------------------------------------
Amkor Technology, Inc., 7.75% Sr. Nts., 5/15/13 4,800,000 4,422,000
----------------
8,983,453
- ----------------------------------------------------------------------------------------------------------------
MATERIALS--9.7%
- ----------------------------------------------------------------------------------------------------------------
CHEMICALS--2.1%
Equistar Chemicals LP/Equistar Funding Corp.:
10.125% Sr. Unsec. Nts., 9/1/08 146,000 155,308
10.625% Sr. Unsec. Nts., 5/1/11 4,000,000 4,310,000
- ----------------------------------------------------------------------------------------------------------------
Georgia Gulf Corp., 10.75% Sr. Sub. Nts., 10/15/16 3,690,000 3,634,650
- ----------------------------------------------------------------------------------------------------------------
Huntsman International LLC:
8.375% Sr. Sub. Nts., 1/1/15 2,3 930,000 943,950
10.125% Sr. Unsec. Sub. Nts., 7/1/09 2,065,000 2,106,300
- ----------------------------------------------------------------------------------------------------------------
Huntsman LLC:
11.50% Sr. Unsec. Nts., 7/15/12 2 1,325,000 1,513,813
11.625% Sr. Unsec. Nts., 10/15/10 95,000 105,450
- ----------------------------------------------------------------------------------------------------------------
IMC Global, Inc.:
10.875% Sr. Unsec. Nts., 8/1/13 1 146,000 163,520
10.875% Sr. Unsec. Nts., Series B, 6/1/08 115,000 123,194
33 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
CHEMICALS Continued
Ineos Group Holdings plc, 8.50% Nts., 2/15/16 3 $ 1,485,000 $ 1,421,888
- ----------------------------------------------------------------------------------------------------------------
Innophos, Inc., 8.875% Sr. Unsec. Sub. Nts., 8/15/14 810,000 807,975
- ----------------------------------------------------------------------------------------------------------------
KI Holdings, Inc., 0%/9.875% Sr. Unsec. Sub. Disc. Nts., 11/15/14 5 1,300,000 962,000
- ----------------------------------------------------------------------------------------------------------------
Lyondell Chemical Co.:
8% Sr. Unsec. Nts., 9/15/14 3,480,000 3,540,900
8.25% Sr. Unsec. Nts., 9/15/16 1,855,000 1,892,100
9.50% Sec. Nts., 12/15/08 86,000 88,903
9.50% Sr. Sec. Nts., 12/15/08 412,000 425,905
10.50% Sr. Sec. Nts., 6/1/13 1,150,000 1,270,750
11.125% Sr. Sec. Nts., 7/15/12 1,000,000 1,095,000
- ----------------------------------------------------------------------------------------------------------------
Rockwood Specialties Group, Inc.:
7.50% Sr. Sub. Nts., 11/15/14 1,000,000 990,000
10.625% Sr. Unsec. Sub. Nts., 5/15/11 692,000 743,900
- ----------------------------------------------------------------------------------------------------------------
Tronox Worldwide LLC/Tronox Finance Corp., 9.50% Sr. Unsec. Nts., 12/1/12 3 1,015,000 1,046,719
----------------
27,342,225
- ----------------------------------------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.3%
NTK Holdings, Inc., 0%/10.75% Sr. Disc. Nts., 3/1/14 5 6,095,000 4,236,025
- ----------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING--3.7%
Ball Corp., 6.625% Sr. Nts., 3/15/18 2,350,000 2,314,750
- ----------------------------------------------------------------------------------------------------------------
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15 1,920,000 1,953,600
- ----------------------------------------------------------------------------------------------------------------
Graham Packaging Co., Inc., 9.875% Sr. Unsec. Sub. Nts., 10/15/14 7,800,000 7,702,500
- ----------------------------------------------------------------------------------------------------------------
Graphic Packaging International Corp.:
8.50% Sr. Nts., 8/15/11 3,100,000 3,185,250
9.50% Sr. Sub. Nts., 8/15/13 1,200,000 1,233,000
- ----------------------------------------------------------------------------------------------------------------
Jefferson Smurfit Corp.:
7.50% Sr. Unsec. Unsub. Nts., 6/1/13 600,000 556,500
8.25% Sr. Unsec. Nts., 10/1/12 4,387,000 4,222,488
- ----------------------------------------------------------------------------------------------------------------
MDP Acquisitions plc, 9.625% Sr. Nts., 10/1/12 2,800,000 2,968,000
- ----------------------------------------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc.:
7.75% Sr. Sec. Nts., 5/15/11 900,000 929,250
8.25% Sr. Unsec. Nts., 5/15/13 2,446,000 2,519,380
8.75% Sr. Sec. Nts., 11/15/12 4,000,000 4,240,000
8.875% Sr. Sec. Nts., 2/15/09 4,132,000 4,266,290
- ----------------------------------------------------------------------------------------------------------------
Pliant Corp., 11.85% Sr. Sec. Nts., 6/15/09 4,7 1,572,095 1,760,746
- ----------------------------------------------------------------------------------------------------------------
Solo Cup Co., 8.50% Sr. Sub. Nts., 2/15/14 2,575,000 2,237,031
- ----------------------------------------------------------------------------------------------------------------
Stone Container Corp.:
8.375% Sr. Nts., 7/1/12 800,000 772,000
9.75% Sr. Unsec. Nts., 2/1/11 1,976,000 2,045,160
- ----------------------------------------------------------------------------------------------------------------
Tekni-Plex, Inc., 10.875% Sr. Sec. Nts., 8/15/12 3 755,000 849,375
- ----------------------------------------------------------------------------------------------------------------
TriMas Corp., 9.875% Sr. Unsec. Sub. Nts., 6/15/12 5,400,000 5,022,000
----------------
48,777,320
34 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
METALS & MINING--2.1%
AK Steel Corp.:
7.75% Sr. Unsec. Nts., 6/15/12 $ 2,096,000 $ 2,051,460
7.875% Sr. Unsec. Nts., 2/15/09 500,000 500,625
- ----------------------------------------------------------------------------------------------------------------
Century Aluminum Co., 7.50% Sr. Unsec. Nts., 8/15/14 3,200,000 3,216,000
- ----------------------------------------------------------------------------------------------------------------
Gibraltar Industries, Inc., 8% Sr. Unsec. Sub. Nts., Series B, 12/1/15 1 2,530,000 2,517,350
- ----------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 13% Unsec. Sub. Nts., 2/1/08 1,4,9 433,000 --
- ----------------------------------------------------------------------------------------------------------------
IPSCO, Inc., 8.75% Sr. Nts., 6/1/13 850,000 909,500
- ----------------------------------------------------------------------------------------------------------------
Ispat Inland ULC, 9.75% Sr. Sec. Nts., 4/1/14 3,830,000 4,319,378
- ----------------------------------------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 9.75% Sr. Sec. Nts., 6/1/12 2,500,000 2,678,125
- ----------------------------------------------------------------------------------------------------------------
Koppers Industry, Inc., 9.875% Sr. Sec. Nts., 10/15/13 1,738,000 1,890,075
- ----------------------------------------------------------------------------------------------------------------
Northwest Pipeline Corp., 8.125% Sr. Nts., 3/1/10 850,000 888,250
- ----------------------------------------------------------------------------------------------------------------
Novelis, Inc., 8.25% Sr. Nts., 2/15/15 2,3 4,090,000 3,905,950
- ----------------------------------------------------------------------------------------------------------------
Steel Dynamics, Inc., 9.50% Sr. Nts., 3/15/09 1,500,000 1,554,375
- ----------------------------------------------------------------------------------------------------------------
United States Steel Corp.:
9.75% Sr. Nts., 5/15/10 1,430,000 1,533,675
10.75% Sr. Nts., 8/1/08 1,299,000 1,411,039
----------------
27,375,802
- ----------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--1.5%
Abitibi-Consolidated Co. of Canada, 8.375% Sr. Unsec. Sub. Nts., 4/1/15 2,150,000 1,967,250
- ----------------------------------------------------------------------------------------------------------------
Abitibi-Consolidated, Inc.:
8.55% Nts., 8/1/10 1,250,000 1,246,875
8.85% Unsec. Bonds, 8/1/30 1,500,000 1,267,500
- ----------------------------------------------------------------------------------------------------------------
Appleton Papers, Inc., 8.125% Sr. Nts., 6/15/11 1,400,000 1,407,000
- ----------------------------------------------------------------------------------------------------------------
Buckeye Technologies, Inc., 8.50% Sr. Nts., 10/1/13 1,000,000 1,007,500
- ----------------------------------------------------------------------------------------------------------------
Catalyst Paper Corp., 8.625% Sr. Unsec. Nts., Series D, 6/15/11 500,000 493,750
- ----------------------------------------------------------------------------------------------------------------
Domtar, Inc., 7.125% Nts., 8/15/15 2,050,000 1,916,750
- ----------------------------------------------------------------------------------------------------------------
Inland Fiber Group LLC, 9.625% Sr. Unsec. Nts., 11/15/07 1,4,9 4,700,000 2,937,500
- ----------------------------------------------------------------------------------------------------------------
JSG Holding plc, 11.50% Sr. Nts., 10/1/15 3,7 [EUR] 872,173 1,130,847
- ----------------------------------------------------------------------------------------------------------------
Mercer International, Inc., 9.25% Sr. Nts., 2/15/13 850,000 778,813
- ----------------------------------------------------------------------------------------------------------------
Norske Skog Canada Ltd., 7.375% Sr. Unsec. Nts., 3/1/14 2,200,000 2,035,000
- ----------------------------------------------------------------------------------------------------------------
Verso Paper Holdings LLC/Verson Paper, Inc.:
9.235%, Sr. Sec. Nts., 8/1/14 2,3 1,365,000 1,385,475
11.375% Sr. Sub. Nts., 8/1/16 3 1,365,000 1,361,588
----------------
18,935,848
- ----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--8.4%
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--4.2%
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13 3 10,500,000 10,263,750
- ----------------------------------------------------------------------------------------------------------------
Intelsat Bermuda Ltd., 11.25% Sr. Nts., 6/15/16 3 665,000 709,888
- ----------------------------------------------------------------------------------------------------------------
Intelsat Subsidiary Holding Co. Ltd.:
8.25% Sr. Nts., 1/15/13 2 5,250,000 5,341,875
35 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Intelsat Subsidiary Holding Co. Ltd.: Continued
8.625% Sr. Nts., 1/15/15 2 $ 145,000 $ 148,988
- ----------------------------------------------------------------------------------------------------------------
Level 3 Financing, Inc., 10.75% Sr. Unsec. Unsub. Nts., 10/15/11 750,000 788,438
- ----------------------------------------------------------------------------------------------------------------
Nordic Telephone Co. Holdings ApS, 8.875% Sr. Nts., 5/1/16 3 1,150,000 1,214,688
- ----------------------------------------------------------------------------------------------------------------
PanAmSat Corp.:
9% Sr. Nts., 6/15/16 3 885,000 915,975
9% Sr. Unsec. Nts., 8/15/14 2,730,000 2,832,375
- ----------------------------------------------------------------------------------------------------------------
Pratama Datakom Asia BV, 12.75% Gtd. Nts., 7/15/05 1,4,9 4,000,000 180,000
- ----------------------------------------------------------------------------------------------------------------
Qwest Capital Funding, Inc.:
7.25% Unsec. Unsub. Nts., 2/15/11 1,800,000 1,809,000
7.90% Unsec. Nts., 8/15/10 571,000 589,558
- ----------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 7.25%
Sr. Unsec. Sub. Nts., 2/15/11 2 1,100,000 1,105,500
- ----------------------------------------------------------------------------------------------------------------
Qwest Corp.:
7.50% Sr. Nts., 10/1/14 3 2,255,000 2,339,563
8.875% Unsec. Unsub. Nts., 3/15/12 2 9,900,000 10,852,875
- ----------------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 1,4,9 2,250,000 --
- ----------------------------------------------------------------------------------------------------------------
Time Warner Telecom Holdings, Inc., 9.25% Sr. Unsec. Unsub. Nts., 2/15/14 6,075,000 6,424,313
- ----------------------------------------------------------------------------------------------------------------
Valor Telecommunications Enterprises LLC, 7.75% Sr. Unsec. Sub. Nts., 2/15/15 1,120,000 1,198,400
- ----------------------------------------------------------------------------------------------------------------
Windstream Corp.:
8.125% Sr. Nts., 8/1/13 3 1,705,000 1,817,956
8.625% Sr. Nts., 8/1/16 3 6,105,000 6,562,875
- ----------------------------------------------------------------------------------------------------------------
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10 1,4,9 4,500,000 --
----------------
55,096,017
- ----------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--4.2%
Alamosa Delaware, Inc.:
8.50% Sr. Nts., 1/31/12 2,050,000 2,193,500
11% Sr. Unsec. Nts., 7/31/10 146,000 160,235
- ----------------------------------------------------------------------------------------------------------------
American Cellular Corp., 10% Sr. Nts., Series B, 8/1/11 4,070,000 4,283,675
- ----------------------------------------------------------------------------------------------------------------
American Tower Corp., 7.50% Sr. Nts., 5/1/12 1 4,400,000 4,543,000
- ----------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., Sr. Unsec. Disc. Nts., 10/1/07 1,4,9 4,749,000 --
- ----------------------------------------------------------------------------------------------------------------
Centennial Cellular Operating Co. LLC/Centennial Communications Corp.,
10.125% Sr. Nts., 6/15/13 5,550,000 5,924,625
- ----------------------------------------------------------------------------------------------------------------
Centennial Communications Corp., 10% Sr. Unsec. Nts., 1/1/13 1,000,000 1,017,500
- ----------------------------------------------------------------------------------------------------------------
Dobson Cellular Systems, Inc., 8.375% Sr. Sec. Nts., 11/1/11 1,480,000 1,544,750
- ----------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
8.875% Sr. Nts., 10/1/13 1,697,000 1,690,636
9.757% Sr. Unsec. Nts., 10/15/12 2 730,000 748,250
- ----------------------------------------------------------------------------------------------------------------
IWO Holdings, Inc., 9.257% Sr. Sec. Nts., 1/15/12 2 710,000 733,075
- ----------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15 10,120,000 10,451,723
- ----------------------------------------------------------------------------------------------------------------
Nextel Partners, Inc., 8.125% Sr. Nts., 7/1/11 2,150,000 2,268,250
36 | OPPENHEIMER CHAMPION INCOME FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
Rogers Wireless, Inc.:
6.375% Sec. Nts., 3/1/14 $ 2,300,000 $ 2,302,875
7.50% Sec. Nts., 3/15/15 2,450,000 2,627,625
8% Sr. Sub. Nts., 12/15/12 850,000 907,375
- ----------------------------------------------------------------------------------------------------------------
Rural Cellular Corp.:
9.75% Sr. Sub. Nts., 1/15/10 7,396,000 7,479,205
9.875% Sr. Nts., 2/1/10 1,800,000 1,885,500
- ----------------------------------------------------------------------------------------------------------------
UbiquiTel Operating Co., 9.875% Sr. Nts., 3/1/11 2,200,000 2,398,000
- ----------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 10% Sr. Sec. Nts., 6/15/12 1,500,000 1,657,500
----------------
54,817,299
- ----------------------------------------------------------------------------------------------------------------
UTILITIES--5.6%
- ----------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.2%
Edison Mission Energy:
7.50% Sr. Nts., 6/15/13 3 1,140,000 1,157,100
7.75% Sr. Nts., 6/15/16 3 1,645,000 1,673,788
- ----------------------------------------------------------------------------------------------------------------
Midwest Generation LLC, 8.75% Sr. Sec. Nts., 5/1/34 9,400,000 10,081,500
- ----------------------------------------------------------------------------------------------------------------
MSW Energy Holdings LLC/MSW Energy Finance Co. II, Inc.,
7.375% Sr. Sec. Nts., Series B, 9/1/10 3,000,000 3,015,000
- ----------------------------------------------------------------------------------------------------------------
MSW Energy Holdings LLC/MSW Energy Finance Co., Inc.,
8.50% Sr. Sec. Nts., 9/1/10 1,400,000 1,449,000
- ----------------------------------------------------------------------------------------------------------------
Reliant Energy, Inc., 6.75% Sr. Sec. Nts., 12/15/14 1,900,000 1,816,875
- ----------------------------------------------------------------------------------------------------------------
Reliant Resources, Inc.:
9.25% Sr. Sec. Nts., 7/15/10 946,000 986,205
9.50% Sr. Sec. Nts., 7/15/13 5,550,000 5,785,875
- ----------------------------------------------------------------------------------------------------------------
Sierra Pacific Resources, 6.75% Sr. Unsec. Nts., 8/15/17 2,479,000 2,492,441
----------------
28,457,784
- ----------------------------------------------------------------------------------------------------------------
ENERGY TRADERS--3.0%
AES Corp. (The):
7.75% Sr. Unsec. Unsub. Nts., 3/1/14 900,000 940,500
8.75% Sr. Sec. Nts., 5/15/13 3,8 3,200,000 3,448,000
- ----------------------------------------------------------------------------------------------------------------
AES Red Oak LLC:
8.54% Sr. Sec. Bonds, Series A, 11/30/19 1,615,002 1,728,052
9.20% Sr. Sec. Bonds, Series B, 11/30/29 1,500,000 1,665,000
- ----------------------------------------------------------------------------------------------------------------
Dynegy Holdings, Inc.:
6.875% Sr. Unsec. Unsub. Nts., 4/1/11 2,913,000 2,851,099
8.375% Sr. Unsec. Nts., 5/1/16 940,000 961,150
8.75% Sr. Nts., 2/15/12 1,002,000 1,043,333
- ----------------------------------------------------------------------------------------------------------------
Mirant Americas Generation LLC:
8.30% Sr. Unsec. Nts., 5/1/11 10,550,000 10,615,938
8.50% Sr. Unsec. Nts., 10/1/21 300,000 292,500
9.125% Sr. Unsec. Nts., 5/1/31 2,700,000 2,760,750
- ----------------------------------------------------------------------------------------------------------------
Mirant Mid-Atlantic LLC, 8.625% Sec. Pass-Through Certificates,
Series A, 6/30/12 2,966,663 3,146,517
37 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
ENERGY TRADERS Continued
NRG Energy, Inc., 7.375% Sr. Nts., 2/1/16 $ 10,455,000 $ 10,415,794
----------------
39,868,633
- ----------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.1%
SEMCO Energy, Inc., 7.125% Sr. Nts., 5/15/08 1,000,000 999,193
- ----------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--0.3%
CMS Energy Corp.:
7.50% Sr. Nts., 1/15/09 1,146,000 1,186,110
7.75% Sr. Nts., 8/1/10 1,300,000 1,371,500
- ----------------------------------------------------------------------------------------------------------------
NorthWestern Corp., 5.875% Sr. Sec. Nts., 11/1/14 1,630,000 1,611,588
----------------
4,169,198
----------------
Total Corporate Bonds and Notes (Cost $1,164,600,290) 1,148,766,712
SHARES
- ----------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--0.9%
- ----------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg. 1,7,9 137,443 --
- ----------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., 6% Cv., Series F (converts into Dobson
Communications Corp., Cl. A common stock), Non-Vtg. 3 2,657 445,048
- ----------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg. 1,9 15,000 --
- ----------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg. 1,7,9 3,727 --
- ----------------------------------------------------------------------------------------------------------------
ION Media Networks, Inc.:
14.25% Cum., Non-Vtg. 1,7,9 685 5,716,352
9.75% Cv., Series AI 1,7,9 1 4,927
- ----------------------------------------------------------------------------------------------------------------
Loral Skynet Corp., 12% Cum., Series A, Non-Vtg. 1,7 5,048 1,012,124
- ----------------------------------------------------------------------------------------------------------------
PTV, Inc., 10% Cum., Series A, Non-Vtg. 160 472
- ----------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum., Series B, Non-Vtg. 1,7 855 1,040,963
- ----------------------------------------------------------------------------------------------------------------
Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A 1 26,250 3,707,813
----------------
Total Preferred Stocks (Cost $17,635,087) 11,927,699
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS--2.6%
- ----------------------------------------------------------------------------------------------------------------
American Tower Corp. 9 69,066 2,520,909
- ----------------------------------------------------------------------------------------------------------------
ATA Holdings Corp. 1,9 18,563 278,445
- ----------------------------------------------------------------------------------------------------------------
Cebridge Connections Holding LLC 1,9 105,953 --
- ----------------------------------------------------------------------------------------------------------------
Charles River Laboratories International, Inc. 9 19,200 833,472
- ----------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp. 25,000 724,500
- ----------------------------------------------------------------------------------------------------------------
Citigroup, Inc. 1,339 66,508
- ----------------------------------------------------------------------------------------------------------------
CMS Energy Corp. 9 20,000 288,800
- ----------------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A 9 30,000 1,105,500
- ----------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc. 9 132,227 197,018
- ----------------------------------------------------------------------------------------------------------------
Dobson Communications Corp., Cl. A 9 131,073 920,132
- ----------------------------------------------------------------------------------------------------------------
Eagle Materials, Inc. 1,941 65,373
38 | OPPENHEIMER CHAMPION INCOME FUND
VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS Continued
- ----------------------------------------------------------------------------------------------------------------
El Paso Corp. 110,000 $ 1,500,400
- ----------------------------------------------------------------------------------------------------------------
Exelon Corp. 10,000 605,400
- ----------------------------------------------------------------------------------------------------------------
Globix Corp. 9 45,871 213,300
- ----------------------------------------------------------------------------------------------------------------
Health Care Select Sector SPDR Fund 10,000 332,000
- ----------------------------------------------------------------------------------------------------------------
ICO Global Communication Holdings Ltd. 9 79,703 466,263
- ----------------------------------------------------------------------------------------------------------------
iPCS, Inc. 9 23,291 1,247,233
- ----------------------------------------------------------------------------------------------------------------
Kaiser Aluminum Corp. 9 17,468 774,531
- ----------------------------------------------------------------------------------------------------------------
Leap Wireless International, Inc. 9 13,600 659,464
- ----------------------------------------------------------------------------------------------------------------
Liberty Global, Inc., Series A 9 27,503 707,927
- ----------------------------------------------------------------------------------------------------------------
Liberty Global, Inc., Series C 9 27,892 698,974
- ----------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. 9 35,743 940,756
- ----------------------------------------------------------------------------------------------------------------
Manitowoc Co., Inc. (The) 12,650 566,594
- ----------------------------------------------------------------------------------------------------------------
Materials Select Sector SPDR Trust 35,000 1,107,400
- ----------------------------------------------------------------------------------------------------------------
Morgan Stanley 4,000 291,640
- ----------------------------------------------------------------------------------------------------------------
NOVA Chemicals Corp. 15,000 460,650
- ----------------------------------------------------------------------------------------------------------------
NTL, Inc. 271,778 6,911,315
- ----------------------------------------------------------------------------------------------------------------
Orbital Sciences Corp. 9 10,765 202,059
- ----------------------------------------------------------------------------------------------------------------
Pilgrim's Pride Corp., Cl. B 27,000 738,450
- ----------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., Cl. A 9 16,249 418,412
- ----------------------------------------------------------------------------------------------------------------
Prandium, Inc. 1,9,10 323,326 2,587
- ----------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd. 1,9 288,828 --
- ----------------------------------------------------------------------------------------------------------------
Quicksilver Resources, Inc. 9 35,000 1,116,500
- ----------------------------------------------------------------------------------------------------------------
Smithfield Foods, Inc. 9 47,000 1,269,940
- ----------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc. 1,9 6,023 78,901
- ----------------------------------------------------------------------------------------------------------------
Sun Microsystems, Inc. 9 50,000 248,500
- ----------------------------------------------------------------------------------------------------------------
Technology Select Sector SPDR Fund 50,000 1,100,000
- ----------------------------------------------------------------------------------------------------------------
Teco Energy, Inc. 50,000 782,500
- ----------------------------------------------------------------------------------------------------------------
TVMAX Holdings, Inc. 1,9 50,000 50,000
- ----------------------------------------------------------------------------------------------------------------
United Rentals, Inc. 9 92,000 2,139,000
- ----------------------------------------------------------------------------------------------------------------
Verizon Communications, Inc. 11,696 434,272
- ----------------------------------------------------------------------------------------------------------------
Viatel Holding (Bermuda) Ltd. 1,9 14,411 576
- ----------------------------------------------------------------------------------------------------------------
Western Forest Products, Inc. 9 395,470 580,247
- ----------------------------------------------------------------------------------------------------------------
WRC Media Corp. 1,9 8,794 88
- ----------------------------------------------------------------------------------------------------------------
XO Holdings, Inc. 9 15,064 73,477
----------------
Total Common Stocks (Cost $37,504,771) 33,720,013
39 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
UNITS SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ----------------------------------------------------------------------------------------------------------------
ASAT Finance LLC Wts., Exp. 11/1/06 1,9 2,000 $ --
- ----------------------------------------------------------------------------------------------------------------
ATA Holdings Corp. Wts., Exp. 2/28/11 9 1,533 11,384
- ----------------------------------------------------------------------------------------------------------------
COLO.com, Inc. Wts., Exp. 3/15/10 1,9 3,300 --
- ----------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07 1,9 2,320 --
- ----------------------------------------------------------------------------------------------------------------
DeCrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 1,9 3,450 --
- ----------------------------------------------------------------------------------------------------------------
Diva Systems Corp. Wts., Exp. 3/1/08 1,9 6,000 --
- ----------------------------------------------------------------------------------------------------------------
iPCS, Inc. Wts., Exp. 6/15/10 1,9 3,600 --
- ----------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08 1,9 1,390 --
- ----------------------------------------------------------------------------------------------------------------
Ntelos, Inc. Wts., Exp. 8/15/10 1,9 5,000 --
- ----------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc. Wts., Exp. 9/19/10 9 100,000 33,000
- ----------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc. Wts., Exp. 12/19/08 9 9,778 7
- ----------------------------------------------------------------------------------------------------------------
XO Communications, Inc.:
Series A Wts., Exp. 1/16/10 9 30,137 27,123
Series B Wts., Exp. 1/16/10 9 22,601 13,561
Series C Wts., Exp. 1/16/10 9 22,601 8,588
----------------
Total Rights, Warrants and Certificates (Cost $361,186) 93,663
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--0.3%
- ----------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., High Yield Targeted Return Index Securities,
Series 2006-1, 7.548%, 5/1/16 1,11 (Cost $3,939,493) $ 3,900,000 3,967,587
- ----------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--7.3%
- ----------------------------------------------------------------------------------------------------------------
Undivided interest of 11.96% in joint repurchase agreement (Principal
Amount/Value $800,621,000, with a maturity value of $800,954,592) with Cantor
Fitzgerald & Co./Cantor Fitzgerald Securities, 5%, dated 9/29/06, to be
repurchased at $95,772,889 on 10/2/06, collateralized by U.S. Treasury Bonds,
5.25%-8.75%, 5/15/16-2/15/29, with a value of $802,318,218 and
U.S. Treasury Bills, 12/28/06, with a value of $14,820,750 (Cost $95,733,000) 95,733,000 95,733,000
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,322,919,774) 98.8% 1,295,375,910
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.2 15,414,911
---------------------------------
NET ASSETS 100.0% $ 1,310,790,821
=================================
40 | OPPENHEIMER CHAMPION INCOME FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
EUR Euro
GBP British Pound Sterling
1. Illiquid or restricted security. The aggregate value of illiquid or
restricted securities as of September 30, 2006 was $63,538,840, which represents
4.85% of the Fund's net assets, of which $2,587 is considered restricted. See
Note 8 of accompanying Notes.
2. Represents the current interest rate for a variable or increasing rate
security.
3. 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 $151,832,673 or 11.58% of the Fund's net
assets as of September 30, 2006.
4. Issue is in default. See Note 1 of accompanying Notes.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
6. When-issued security or forward commitment to be delivered and settled after
September 30, 2006. See Note 1 of accompanying Notes.
7. Interest or dividend is paid-in-kind, where applicable.
8. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts. The aggregate
market value of such securities is $1,912,563. See Note 6 of accompanying Notes.
9. Non-income producing security.
10. 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, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
SEPTEMBER 30, 2005 ADDITIONS REDUCTIONS SEPTEMBER 30, 2006
- ----------------------------------------------------------------------------------------------------------
Prandium, Inc. 323,326 -- -- 323,326
VALUE DIVIDEND
SEE NOTE 1 INCOME
- ----------------------------------------------------------------------------------------------------------
Prandium, Inc. $ 2,587 $ --
11. Interest rate represents a weighted average rate comprised of the interest
rates of the underlying securities.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2006
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $1,319,116,474) $1,295,373,323
Affiliated companies (cost $3,803,300) 2,587
---------------
1,295,375,910
- ------------------------------------------------------------------------------------------------------
Cash 3,633,626
- ------------------------------------------------------------------------------------------------------
Unrealized appreciation on swap contracts 36,241
- ------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 24,023,527
Investments sold 8,678,812
Shares of beneficial interest sold 830,333
Futures margins 33,535
Other 39,375
---------------
Total assets 1,332,651,359
- ------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 19,272
- ------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $7,467,863 purchased on a
when-issued basis or forward commitment) 14,912,134
Shares of beneficial interest redeemed 4,045,896
Dividends 1,590,493
Distribution and service plan fees 812,055
Transfer and shareholder servicing agent fees 256,350
Shareholder communications 136,438
Trustees' compensation 34,528
Other 53,372
---------------
Total liabilities 21,860,538
- ------------------------------------------------------------------------------------------------------
NET ASSETS $1,310,790,821
===============
- ------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 140,688
- ------------------------------------------------------------------------------------------------------
Additional paid-in capital 1,759,932,859
- ------------------------------------------------------------------------------------------------------
Accumulated net investment loss (4,176,079)
- ------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (416,986,029)
- ------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of assets
and liabilities denominated in foreign currencies (28,120,618)
---------------
NET ASSETS $1,310,790,821
===============
42 | OPPENHEIMER CHAMPION INCOME FUND
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$886,222,653 and 95,087,263 shares of beneficial interest outstanding) $ 9.32
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 9.78
- ------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$202,567,266 and 21,760,041 shares of beneficial interest outstanding) $ 9.31
- ------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $187,917,286
and 20,184,642 shares of beneficial interest outstanding) $ 9.31
- ------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $31,626,019
and 3,392,067 shares of beneficial interest outstanding) $ 9.32
- ------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $2,457,597 and 263,758 shares of beneficial interest outstanding) $ 9.32
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2006
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $9,668) $ 107,293,368
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $929) 2,091,022
- ------------------------------------------------------------------------------------------------------
Portfolio lending fees 589
- ------------------------------------------------------------------------------------------------------
Other income 25,469
---------------
Total investment income 109,410,448
- ------------------------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------------------------
Management fees 8,447,721
- ------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 2,214,667
Class B 2,421,272
Class C 1,989,872
Class N 151,741
- ------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,963,993
Class B 522,785
Class C 416,898
Class N 132,699
- ------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 215,353
Class B 67,488
Class C 48,697
Class N 4,779
- ------------------------------------------------------------------------------------------------------
Trustees' compensation 25,705
- ------------------------------------------------------------------------------------------------------
Custodian fees and expenses 9,473
- ------------------------------------------------------------------------------------------------------
Administration service fees 1,500
- ------------------------------------------------------------------------------------------------------
Other 103,886
---------------
Total expenses 18,738,529
Less reduction to custodian expenses (5,207)
Less waivers and reimbursements of expenses (26,495)
---------------
Net expenses 18,706,827
- ------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 90,703,621
44 | OPPENHEIMER CHAMPION INCOME FUND
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ 17,323,113
Closing and expiration of futures contracts (129,388)
Foreign currency transactions 540,375
Swap contracts (28,144)
---------------
Net realized gain 17,705,956
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (30,483,715)
Translation of assets and liabilities denominated in foreign currencies 222,609
Futures contracts (612,792)
Swap contracts 16,969
---------------
Net change in unrealized depreciation (30,856,929)
- ------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 77,552,648
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45 | OPPENHEIMER CHAMPION INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2006 2005
- ------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------
Net investment income $ 90,703,621 $ 101,101,785
- ------------------------------------------------------------------------------------------------------
Net realized gain 17,705,956 33,093,674
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (30,856,929) (49,017,251)
-------------------------------------
Net increase in net assets resulting from operations 77,552,648 85,178,208
- ------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (61,866,761) (64,721,997)
Class B (14,733,818) (20,887,065)
Class C (12,141,825) (13,686,675)
Class N (1,974,952) (1,853,700)
Class Y (6,663) --
- ------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial
interest transactions:
Class A (42,302,136) (56,369,214)
Class B (91,948,073) (125,249,481)
Class C (28,968,855) (25,083,758)
Class N 1,406,198 1,866,894
Class Y 2,452,992 --
- ------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------
Total decrease (172,531,245) (220,806,788)
- ------------------------------------------------------------------------------------------------------
Beginning of period 1,483,322,066 1,704,128,854
-------------------------------------
End of period (including accumulated net investment loss of
$4,176,079 and $4,517,953, respectively) $1,310,790,821 $1,483,322,066
=====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46 | OPPENHEIMER CHAMPION INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.40 $ 9.50 $ 9.17 $ 8.05 $ 9.00
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .64 1 .62 1 .69 .78 .77
Net realized and unrealized gain (loss) (.08) (.09) .33 1.12 (.95)
---------------------------------------------------------------------------
Total from investment operations .56 .53 1.02 1.90 (.18)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.64) (.63) (.69) (.78) (.77)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.32 $ 9.40 $ 9.50 $ 9.17 $ 8.05
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.12% 5.65% 11.40% 24.62% (2.49)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 886,223 $ 936,925 $ 1,003,748 $ 876,600 $ 659,017
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 904,474 $ 992,935 $ 953,063 $ 783,469 $ 718,443
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 6.84% 6.52% 7.28% 8.98% 8.57%
Total expenses 1.11% 4 1.08% 4 1.07% 4,5 1.08% 4 1.14% 4
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 53% 58% 68% 62%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47 | OPPENHEIMER CHAMPION INCOME FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.39 $ 9.49 $ 9.16 $ 8.04 $ 8.99
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .57 1 .55 1 .61 .71 .70
Net realized and unrealized gain (loss) (.09) (.10) .34 1.12 (.95)
---------------------------------------------------------------------------
Total from investment operations .48 .45 .95 1.83 (.25)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.56) (.55) (.62) (.71) (.70)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.31 $ 9.39 $ 9.49 $ 9.16 $ 8.04
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.33% 4.87% 10.58% 23.71% (3.23)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 202,567 $ 297,056 $ 425,072 $ 479,887 $ 432,009
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 242,063 $ 362,813 $ 463,835 $ 449,354 $ 508,625
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 6.09% 5.75% 6.57% 8.27% 7.85%
Total expenses 1.87% 4 1.82% 4 1.81% 4,5 1.84% 4 1.89% 4
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 53% 58% 68% 62%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48 | OPPENHEIMER CHAMPION INCOME FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.39 $ 9.49 $ 9.16 $ 8.04 $ 8.99
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .57 1 .55 1 .62 .71 .70
Net realized and unrealized gain (loss) (.08) (.10) .33 1.12 (.95)
---------------------------------------------------------------------------
Total from investment operations .49 .45 .95 1.83 (.25)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.57) (.55) (.62) (.71) (.70)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.31 $ 9.39 $ 9.49 $ 9.16 $ 8.04
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.34% 4.86% 10.59% 23.71% (3.23)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 187,917 $ 218,850 $ 246,301 $ 240,077 $ 180,131
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 199,183 $ 237,000 $ 249,356 $ 208,876 $ 200,233
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 6.09% 5.77% 6.55% 8.23% 7.83%
Total expenses 1.86% 4 1.82% 4 1.82% 4,5 1.84% 4 1.89% 4
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 53% 58% 68% 62%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49 | OPPENHEIMER CHAMPION INCOME FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.41 $ 9.51 $ 9.17 $ 8.05 $ 9.00
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .60 1 .58 1 .67 .75 .73
Net realized and unrealized gain (loss) (.09) (.09) .32 1.11 (.93)
------------------------------------------------------------------------
Total from investment operations .51 .49 .99 1.86 (.20)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.60) (.59) (.65) (.74) (.75)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.32 $ 9.41 $ 9.51 $ 9.17 $ 8.05
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.62% 5.23% 11.07% 24.10% (2.71)%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 31,626 $ 30,491 $ 29,008 $ 13,658 $ 6,126
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 30,578 $ 30,252 $ 22,249 $ 9,534 $ 3,398
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 6.46% 6.12% 6.78% 8.47% 8.04%
Total expenses 1.57% 1.55% 1.54% 1.71% 1.36%
Expenses after payments and waivers and
reduction to custodian expenses 1.48% 1.48% 1.48% 1.50% 1.36%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 53% 58% 68% 62%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50 | OPPENHEIMER CHAMPION INCOME FUND
CLASS Y PERIOD ENDED SEPTEMBER 30, 2006 1
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.28
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .05 2
Net realized and unrealized gain .05
-------------
Total from investment operations .10
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.06)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 9.32
=============
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 1.04%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 2,458
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,058
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 7.65%
Total expenses 0.63% 5
- --------------------------------------------------------------------------------
Portfolio turnover rate 64%
1. For the period from September 1, 2006 (inception of offering) to September
30, 2006.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
51 | OPPENHEIMER CHAMPION INCOME FUND
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 an open-end management investment company.
The Fund's investment objective is to seek a high level of current income by
investing in a diversified portfolio of high-yield, lower-rated, fixed-income
securities that the Fund's investment Manager, OppenheimerFunds, Inc. (the
Manager), believes do not involve undue risk. The Fund's secondary objective is
to seek capital growth when consistent with its primary objective.
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase. The Fund assesses a 2% fee on the proceeds of
fund shares that are redeemed (either by selling or exchanging to another
Oppenheimer fund) within 30 days of their purchase. The fee, which is retained
by the Fund, is accounted for as an addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ(R) are valued based on the
closing price provided by NASDAQ prior to the time when the Fund's assets are
valued. In the absence of a sale, the security is valued at the last sale price
on the prior trading day, if it is within the spread of the closing "bid" and
"asked" prices, and if not, at the closing bid price. Securities traded on
foreign exchanges are valued based on the last sale price on the principal
exchange on which the security is traded, as identified by the portfolio pricing
service, prior to the time when the Fund's
52 | OPPENHEIMER CHAMPION INCOME FUND
assets are valued. In the absence of a sale, the security is valued at the
official closing price on the principal exchange. Corporate, government and
municipal debt instruments having a remaining maturity in excess of sixty days
and all mortgage-backed securities will be valued at the mean between the "bid"
and "asked" prices. Futures contracts traded on a commodities or futures
exchange will be valued at the final settlement price or official closing price
on the principal exchange as reported by such principal exchange at its trading
session ending at, or most recently prior to, the time when the Fund's assets
are valued. Securities (including restricted securities) for which market
quotations are not readily available are valued at their fair value. Foreign and
domestic securities whose values have been materially affected by what the
Manager identifies as a significant event occurring before the Fund's assets are
valued but after the close of their respective exchanges will be fair valued.
Fair value is determined in good faith using consistently applied procedures
under the supervision of the Board of Trustees. Short-term "money market type"
debt securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying Statement of Operations. The Fund records a realized gain or loss
when a structured note is sold or matures. As of September 30, 2006, the market
value of these securities comprised 0.3% of the Fund's net assets and resulted
in unrealized cumulative gains of $28,094.
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of September 30, 2006, the Fund had purchased
$7,467,863 of securities issued on a when-issued basis or forward commitment.
53 | OPPENHEIMER CHAMPION INCOME FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and 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, 2006, securities with an
aggregate market value of $10,259,604, representing 0.78% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
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.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions that may have off-balance sheet market risk. Off-balance
sheet market risk exists when the maximum potential loss on a particular
financial instrument is greater than the value of such financial instrument, as
reflected in the Fund's Statement of Assets and Liabilities.
54 | OPPENHEIMER CHAMPION INCOME FUND
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
DEPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
------------------------------------------------------------------------
$266,894 $-- $412,339,938 $32,766,202
1. As of September 30, 2006, the Fund had $412,339,938 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of September 30, 2006,
details of the capital loss carryforwards were as follows:
EXPIRING
----------------------
2009 $ 18,608,810
2010 94,306,197
2011 235,839,091
2012 63,585,840
------------
TOTAL $412,339,938
============
2. During the fiscal year ended September 30, 2006, the Fund utilized
$13,962,954 of capital loss carryforward to offset capital gains realized in
that fiscal year.
3. During the fiscal year ended September 30, 2005, the Fund utilized
$17,433,702 of capital loss carryforward to offset capital gains realized in
that fiscal year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for September 30, 2006. Net assets of
the Fund were unaffected by the reclassifications.
55 | OPPENHEIMER CHAMPION INCOME FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
INCREASE TO
REDUCTION TO ACCUMULATED NET
ACCUMULATED NET REALIZED LOSS
INVESTMENT LOSS ON INVESTMENTS
--------------------------------------------------
$362,272 $362,272
The tax character of distributions paid during the years ended September 30,
2006 and September 30, 2005 was as follows:
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
-------------------------------------------------------
Distributions paid from:
Ordinary income $90,724,019 $101,149,437
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of September 30, 2006 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities $ 1,328,159,863
Federal tax cost of other investments (23,746,310)
----------------
Total federal tax cost $ 1,304,413,553
================
Gross unrealized appreciation $ 40,994,626
Gross unrealized depreciation (73,760,828)
----------------
Net unrealized depreciation $ (32,766,202)
================
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
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. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
56 | OPPENHEIMER CHAMPION INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED SEPTEMBER 30, 2006 1 YEAR ENDED SEPTEMBER 30, 2005
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
CLASS A
Sold 21,546,013 $ 200,623,875 24,627,065 $ 235,353,302
Dividends and/or
distributions reinvested 5,028,376 46,855,564 5,248,018 50,011,508
Redeemed (31,114,635) (289,781,575) 2 (35,858,021) (341,734,024) 3
--------------------------------------------------------------------
Net decrease (4,540,246) $ (42,302,136) (5,982,938) $ (56,369,214)
====================================================================
57 | OPPENHEIMER CHAMPION INCOME FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED SEPTEMBER 30, 2006 1 YEAR ENDED SEPTEMBER 30, 2005
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
CLASS B
Sold 2,544,044 $ 23,641,811 2,850,533 $ 27,211,982
Dividends and/or
distributions reinvested 1,111,324 10,345,244 1,502,236 14,305,437
Redeemed (13,518,843) (125,935,128) 2 (17,506,366) (166,766,900) 3
--------------------------------------------------------------------
Net decrease (9,863,475) $ (91,948,073) (13,153,597) $(125,249,481)
====================================================================
- -------------------------------------------------------------------------------------------------
CLASS C
Sold 2,559,430 $ 23,814,120 3,564,757 $ 34,027,468
Dividends and/or
distributions reinvested 910,879 8,478,500 992,150 9,443,866
Redeemed (6,582,386) (61,261,475) 2 (7,204,308) (68,555,092) 3
--------------------------------------------------------------------
Net decrease (3,112,077) $ (28,968,855) (2,647,401) $ (25,083,758)
====================================================================
- -------------------------------------------------------------------------------------------------
CLASS N
Sold 1,272,088 $ 11,857,346 1,157,531 $ 11,075,703
Dividends and/or
distributions reinvested 202,316 1,885,311 188,577 1,796,398
Redeemed (1,323,345) (12,336,459) 2 (1,156,093) (11,005,207) 3
--------------------------------------------------------------------
Net increase 151,059 $ 1,406,198 190,015 $ 1,866,894
====================================================================
- -------------------------------------------------------------------------------------------------
CLASS Y
Sold 265,490 $ 2,469,044 -- $ --
Dividends and/or
distributions reinvested 715 6,663 -- --
Redeemed (2,447) (22,715) 2 -- --
--------------------------------------------------------------------
Net increase 263,758 $ 2,452,992 -- $ --
====================================================================
1. For the year ended September 30, 2006, for Class A, B, C and N shares, and
for the period from September 1, 2006 (inception of offering) to September 30,
2006 for Class Y shares.
2. Net of redemption fees of $12,977, $3,473, $2,858, $439 and $15 for Class A,
Class B, Class C, Class N and Class Y, respectively.
3. Net of redemption fees of $29,150, $10,651, $6,958 and $888 for Class A,
Class B, Class C and Class N, respectively.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended September 30, 2006, were as
follows:
PURCHASES SALES
- ---------------------------------------------------------
Investment securities $764,054,383 $959,807,134
58 | OPPENHEIMER CHAMPION INCOME FUND
- --------------------------------------------------------------------------------
4. 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 at an
average annual rate as shown in the following table:
FEE SCHEDULE
-------------------------------------------------------
Up to $250 million of net assets 0.70%
Next $250 million of net assets 0.65
Next $500 million of net assets 0.60
Next $500 million of net assets 0.55
Over $1.5 billion of net assets 0.50
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended September 30, 2006, the Fund paid
$3,040,427 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each plan. If either the Class B, Class C or
Class N plan is terminated by the Fund or by the shareholders of a
59 | OPPENHEIMER CHAMPION INCOME FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
class, the Board of Trustees and its independent trustees must determine whether
the Distributor shall be entitled to payment from the Fund of all or a portion
of the service fee and/or asset-based sales charge in respect to shares sold
prior to the effective date of such termination. The Distributor's aggregate
uncompensated expenses under the plan at September 30, 2006 for Class B, Class C
and Class N shares were $20,607,614, $8,922,390 and $532,538, respectively. Fees
incurred by the Fund under the plans are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the following table for the period
indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------------------
September 30, 2006 $605,573 $3,663 $582,925 $13,118 $13,126
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended September 30, 2006,
OFS waived $26,495 for Class N shares. This undertaking may be amended or
withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency 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 contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. 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 prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized
60 | OPPENHEIMER CHAMPION INCOME FUND
gains and losses are reported with all other foreign currency gains and losses
in the Statement of Operations.
As of September 30, 2006, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
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. Realized gains and losses are
reported in the Statement of Operations at the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
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, 2006, the Fund had outstanding futures contracts as follows:
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE CONTRACTS SEPTEMBER 30, 2006 DEPRECIATION
- -----------------------------------------------------------------------------------------------
CONTRACTS TO SELL
Standard & Poor's 500 E-Mini 12/15/06 353 $23,746,310 $594,505
61 | OPPENHEIMER CHAMPION INCOME FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. TOTAL RETURN SWAP CONTRACTS
A total return swap is an agreement under which a set of future cash flows is
exchanged between two counterparties. One cash flow stream will typically be
based on a reference interest rate or index and the other on the total return of
a reference asset such as a security, a basket of securities, or an index. The
total return includes appreciation or depreciation on the reference asset, plus
any interest or dividend payments. Payments under the swap are based on an
agreed upon principal amount but since this principal amount is not exchan-ged,
it represents neither an asset nor a liability to either counterparty, and is
referred to as notional. Total return swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related to
the change in the valuation of the notional amount of the swap is combined with
the amount due to (owed by) the Fund at termination or settlement and disclosed
separately on the Statement of Assets and Liabilities. The net change in this
amount is included on the Statement of Operations. The Fund also records any
periodic payments received from (paid to) the counterparty, including at
termination, under such contracts as realized gain (loss) on the Statement of
Operations. The primary risks associated with total return swaps are credit
risks (if the counterparty fails to meet its obligations) and market risk (if
there is no liquid market for the agreement or unfavorable changes occur in the
reference asset).
As of September 30, 2006, the Fund had entered into the following total return
swap agreements:
RECEIVED UNREALIZED
SWAP NOTIONAL BY THE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT PAID BY THE FUND FUND DATES (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------
One-Month
USD BBA LIBOR
-spread plus total Total Return
return, of custom
if negative, equity
Goldman Sachs of custom basket,
International $ 32,800 equity basket. if positive. 10/9/07 $(19,272)
- -------------------------------------------------------------------------------------------------------
Total Return Total Return
Morgan of custom of custom
Stanley & Co equity basket, equity basket,
International Ltd. 262,000 if negative. if positive. 9/11/07 36,241
---------
$ 16,969
=========
Abbreviations are as follows:
BBA LIBOR British Bankers' Association London-Interbank Offered Rate
- --------------------------------------------------------------------------------
8. ILLIQUID OR RESTRICTED SECURITIES
As of September 30, 2006, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale,
62 | OPPENHEIMER CHAMPION INCOME FUND
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 will not invest 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. Securities that are
illiquid or restricted are marked with the applicable footnote on the Statement
of Investments. Information concerning restricted securities is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATES COST SEPTEMBER 30, 2006 DEPRECIATION
- ---------------------------------------------------------------------------------------
Prandium, Inc. 3/19/99-7/18/02 $3,803,300 $2,587 $3,800,713
- --------------------------------------------------------------------------------
9. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. If the borrower defaults on its obligation
to return the securities loaned because of insolvency or other reasons, the Fund
could experience delays and cost in recovering the securities loaned or in
gaining access to the collateral. The Fund continues to receive the economic
benefit of interest or dividends paid on the securities loaned in the form of a
substitute payment received from the borrower. As of September 30, 2006, the
Fund had no securities on loan.
- --------------------------------------------------------------------------------
10. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
September 30, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.
63 | OPPENHEIMER CHAMPION INCOME FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. RECENT ACCOUNTING PRONOUNCEMENTS Continued
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value
Measurements. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. As of September
30, 2006, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
- --------------------------------------------------------------------------------
11. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
- --------------------------------------------------------------------------------
12. SUBSEQUENT EVENT
On October 12, 2006, the Fund acquired all of the net assets of Oppenheimer High
Yield Fund, pursuant to an Agreement and Plan of Reorganization approved by the
Oppenheimer High Yield Fund shareholders on October 6, 2006. The Fund issued (at
64 | OPPENHEIMER CHAMPION INCOME FUND
an exchange ratio of 1.002190 for Class A, 0.987734 for Class B, 1.000555 for
Class C, 1.004023 for Class N and 0.994003 for Class Y of the Fund to one share
of Oppenheimer High Yield Fund) 108,025,333; 17,042,821; 12,784,836; 1,906,127
and 14,000,558 shares of beneficial interest for Class A, Class B, Class C,
Class N and Class Y, respectively, valued at $1,011,117,121, $159,350,375,
$119,538,213, $17,841,351 and $131,045,225 in exchange for the net assets,
resulting in combined Class A net assets of $1,902,537,798, Class B net assets
of $357,014,957, Class C net assets of $307,592,608, Class N net assets of
$49,937,524 and Class Y net assets of $133,635,056 on October 12, 2006. The net
assets acquired included net unrealized depreciation of $16,053,542 and an
unused capital loss carryforward of $602,679,762, potential utilization subject
to tax limitations. The ex-change qualified as a tax-free reorganization for
federal income tax purposes.
65 | OPPENHEIMER CHAMPION INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER CHAMPION INCOME FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Champion Income Fund, including the statement of investments, as of
September 30, 2006, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. 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 the standards of the Public
Company Accounting Oversight Board (United States). 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.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2006, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Champion Income Fund as of September 30, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
November 15, 2006
66 | OPPENHEIMER CHAMPION INCOME FUND
FEDERAL INCOME TAX INFORMATION Unaudited
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In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Fund during the fiscal year ended September
30, 2006 which are not designated as capital gain distributions should be
multiplied by 1.9% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended September 30, 2006 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $1,711,364 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2007, shareholders of record
will receive information regarding the percentage of distributions that are
eligible for lower individual income tax rates.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended September 30, 2006, $82,785,649 or 91.25% of the ordinary
distributions paid by the Fund qualifies as an interest related dividend.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
67 | OPPENHEIMER CHAMPION INCOME FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
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The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
68 | OPPENHEIMER CHAMPION INCOME FUND
TRUSTEES AND OFFICERS Unaudited
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NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD;
FUND, LENGTH OF SERVICE, AGE NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, CO
TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, President, Colorado Christian University (since 2006); Chairman of the following
Chairman of the Board of private mortgage banking companies: Cherry Creek Mortgage Company (since 1991),
Trustees (since 2003), Trustee Centennial State Mortgage Company (since 1994), and The El Paso Mortgage Company (since
(since 2000) 1993); Chairman of the following private companies: Ambassador Media Corporation (since
Age: 69 1984) and Broadway Ventures (since 1984); Director of the following: Helmerich & Payne,
Inc. (oil and gas drilling/production company) (since 1992), Campus Crusade for Christ
(since 1991) and The Lynde and Harry Bradley Foundation, Inc. (non-profit organization)
(since 2002); former Chairman of the following: Transland Financial Services, Inc.
(private mortgage banking company) (1997-2003), Great Frontier Insurance (insurance
agency) (1995-2000), Frontier Real Estate, Inc. (residential real estate brokerage)
(1994-2000) and Frontier Title (title insurance agency) (1995-2000); former Director of
the following: UNUMProvident (insurance company) (1991-2004), Storage Technology
Corporation (computer equipment company) (1991-2003) and International Family
Entertainment (television channel) (1992-1997); U.S. Senator (January 1979-January
1991). Oversees 37 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner of private equity
Trustee (since 1993) funds) (until February 2001); Chairman, President and Chief Executive Officer of A.G.
Age: 75 Edwards Capital, Inc. (until March 2000); Director of A.G. Edwards & Sons, Inc.
(brokerage company) (until 2000) and A.G. Edwards Trust Company (investment adviser)
(until 2000); Vice Chairman and Director of A.G. Edwards, Inc. (until March 1999); Vice
Chairman of A.G. Edwards & Sons, Inc. (until March 1999); Chairman of A.G. Edwards
Trust Company (until March 1999) and A.G.E. Asset Management (investment adviser)
(until March 1999). Oversees 37 portfolios in the OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset Management Corporation (December
Trustee (since 1998) 1991-April 1999); President, Treasurer and Director of Centennial Capital Corporation
Age: 70 (June 1989-April 1999); Chief Executive Officer and Director of MultiSource Services,
Inc. (March 1996-April 1999); Mr. Bowen held several positions with the Manager and
with subsidiary or affiliated companies of the Manager (September 1987-April 1999).
Oversees 37 portfolios in the OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical site) (since
Trustee (since 2000) June 2000); Director of Genetic ID, Inc. (biotech company) (March 2001-May 2002);
Age: 68 Partner at PricewaterhouseCoopers LLP (accounting firm) (July 1974-June 1999); Chairman
of Price Waterhouse LLP Global Investment Management Industry Services Group
(accounting firm) (July 1994-June 1998). Oversees 37 portfolios in the OppenheimerFunds
complex.
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director of
Trustee (since 1990) Northwestern Energy Corp. (public utility corporation) (since November 2004); Director
Age: 64 of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky Mountain Elk
Foundation (non-profit organization) (February 1998-February 2003 and since February
2005); Chairman and Director (until October 1996) and President and Chief Executive
Officer (until October 1995) of the Manager; President, Chief Executive Officer and
Director of the following: Oppenheimer
69 | OPPENHEIMER CHAMPION INCOME FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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JON S. FOSSEL, Acquisition Corp. ("OAC") (parent holding company of the Manager), Shareholders
Continued Services, Inc. and Shareholder Financial Services, Inc. (until October 1995). Oversees
37 portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado UpLIFT (charitable organization) (since September 1984). Mr.
Trustee (since 1996) Freedman held several positions with the Manager and with subsidiary or affiliated
Age: 66 companies of the Manager (until October 1994). Oversees 37 portfolios in the
OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational organization)
Trustee (since 2002) (since February 2000); Board Member of Middlebury College (educational organization)
Age: 60 (since December 2005); Director of The California Endowment (philanthropic
organization) (since April 2002); Director (February 2002-2005) and Chairman of
Trustees (since 2006) of the Community Hospital of Monterey Peninsula; Director
(October 1991-2005) and Vice Chairman (since 2006) of American Funds' Emerging Markets
Growth Fund, Inc. (mutual fund); President of ARCO Investment Management Company
(February 1991-April 2000); Member of the investment committees of The Rockefeller
Foundation (since 2001) and The University of Michigan (since 2000); Advisor at Credit
Suisse First Boston's Sprout venture capital unit (venture capital fund) (1994-January
2005); Trustee of MassMutual Institutional Funds (investment company) (1996-June 2004);
Trustee of MML Series Investment Fund (investment company) (April 1989-June 2004);
Member of the investment committee of Hartford Hospital (2000-2003); and Advisor to
Unilever (Holland) pension fund (2000-2003). Oversees 37 portfolios in the
OppenheimerFunds complex.
ROBERT J. MALONE, Director of Jones International University (educational organization) (since August
Trustee (since 2002) 2005); Chairman, Chief Executive Officer and Director of Steele Street State Bank
Age: 62 (commercial banking) (since August 2003); Director of Colorado UpLIFT (charitable
organization) (since 1986); Trustee of the Gallagher Family Foundation (non-profit
organization) (since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S.
Bancorp and formerly Colorado National Bank) (July 1996-April 1999); Director of
Commercial Assets, Inc. (real estate investment trust) (1993-2000); Director of Jones
Knowledge, Inc. (2001-July 2004); and Director of U.S. Exploration, Inc. (oil and gas
exploration) (1997-February 2004). Oversees 37 portfolios in the OppenheimerFunds
complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds)
Trustee (since 2000) (investment company) (since 1996) and MML Series Investment Fund (investment company)
Age: 64 (since 1996); Trustee (since 1987) and Chairman (1994-2005) of the Investment Committee
of the Worcester Polytech Institute (private university); President and Treasurer of
the SIS Funds (private charitable fund) (since January 1999); Chairman of SIS & Family
Bank, F.S.B. (formerly SIS Bank) (commercial bank) (January 1999-July 1999); and
Executive Vice President of Peoples Heritage Financial Group, Inc. (commercial bank)
(January 1999-July 1999). Oversees 39 portfolios in the OppenheimerFunds complex.
70 | OPPENHEIMER CHAMPION INCOME FUND
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE
TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN
INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS
AN INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS
AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President (since
Trustee, President and September 2000) of the Manager; President and director or trustee of other Oppenheimer
Principal Executive Officer funds; President and Director of OAC and of Oppenheimer Partnership Holdings, Inc.
(since 2001) (holding company subsidiary of the Manager) (since July 2001); Director of
Age: 57 OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since November 2001);
Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial
Services, Inc. (transfer agent subsidiaries of the Manager) (since July 2001);
President and Director of OppenheimerFunds Legacy Program (charitable trust program
established by the Manager) (since July 2001); Director of the following investment
advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc.,
Centennial Asset Management Corporation, Trinity Investment Management Corporation and
Tremont Capital Management, Inc. (since November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc. (since July 2001); President (since
November 2001) and Director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company (OAC's
parent company) (since February 1997); Director of DLB Acquisition Corporation (holding
company parent of Babson Capital Management LLC) (since June 1995); Member of the
Investment Company Institute's Board of Governors (since October 3, 2003); Chief
Operating Officer of the Manager (September 2000-June 2001); President and Trustee of
MML Series Investment Fund and MassMutual Select Funds (open-end investment companies)
(November 1999-November 2001); Director of C.M. Life Insurance Company (September
1999-August 2000); President, Chief Executive Officer and Director of MML Bay State
Life Insurance Company (September 1999-August 2000); Director of Emerald Isle Bancorp
and Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June
1989-June 1998). Oversees 92 portfolios in the OppenheimerFunds complex.
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OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
OF THE FUND KOURKOULAKOS, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225
LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN,
SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH
OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT,
DEATH OR REMOVAL.
DIMITRIOS KOURKOULAKOS, Vice President of the Manager (since December 2001); High Yield Analyst (1998-2001)
Vice President and Portfolio and a Securities Analyst (1995-1998) of the Manager. An officer of 3 portfolios in the
Manager (since 2001) OppenheimerFunds complex.
Age: 40
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March 2004);
Vice President and Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Chief Compliance Officer Corporation and Shareholder Services, Inc. (since June 1983); Vice President and
(since 2004) Director of Internal Audit of the Manager (1997-February 2004). An officer of 92
Age: 56 portfolios in the OppenheimerFunds complex.
71 | OPPENHEIMER CHAMPION INCOME FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the
Treasurer and following: HarbourView Asset Management Corporation, Shareholder Financial Services,
Principal Financial and Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and
Accounting Officer Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI Private Investments,
(since 1999) Inc. (since March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc
Age: 47 (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and
OppenheimerFunds Legacy Program (since June 2003); Treasurer and Chief Financial
Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May
2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial Asset
Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March 1995-March 1999). An officer of 92
portfolios in the OppenheimerFunds complex.
BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002); Manager/Financial Product
Assistant Treasurer Accounting of the Manager (November 1998-July 2002). An officer of 92 portfolios in the
(since 2004) OppenheimerFunds complex.
Age: 36
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial
Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004); Manager of
(since 2005) Compliance of Berger Financial Group LLC (May 2001-March 2003); Director of Mutual Fund
Age: 36 Operations at American Data Services, Inc. (September 2000-May 2001). An officer of 92
portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March 2002) of
Vice President and Secretary the Manager; General Counsel and Director of the Distributor (since December 2001);
(since 2001) General Counsel of Centennial Asset Management Corporation (since December 2001);
Age: 58 Senior Vice President and General Counsel of HarbourView Asset Management Corporation
(since December 2001); Secretary and General Counsel of OAC (since November 2001);
Assistant Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and
Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President,
General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder
Services, Inc. (since December 2001); Senior Vice President, General Counsel and
Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001);
Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc. (since
November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003);
Senior Vice President (May 1985-December 2003), Acting General Counsel (November
2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the
Manager; Assistant Secretary of the following: Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 92 portfolios in the OppenheimerFunds complex.
72 | OPPENHEIMER CHAMPION INCOME FUND
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First Vice
Assistant Secretary President (April 2001-April 2004), Associate General Counsel (December 2000-April
(since 2004) 2004), Corporate Vice President (May 1999-April 2001) and Assistant General Counsel
Age: 38 (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber
Incorporated). An officer of 92 portfolios in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
(since 2001) (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
Age: 41 Management Corporation (since October 2003); Vice President and Assistant Secretary of
Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy
Program and Shareholder Financial Services, Inc. (since December 2001); Assistant
Counsel of the Manager (August 1994-October 2003). An officer of 92 portfolios in the
OppenheimerFunds complex.
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since September 2004);
Assistant Secretary First Vice President (2000-September 2004), Director (2000-September 2004) and Vice
(since 2004) President (1998-2000) of Merrill Lynch Investment Management. An officer of 92
Age: 42 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE, UPON
REQUEST, BY CALLING 1.800.525.7048.
73 | OPPENHEIMER CHAMPION INCOME FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that Edward L. Cameron,
the Chairman of the Board's Audit Committee, and George C. Bowen, a member of
the Board's Audit Committee, are audit committee financial experts and that
Messrs. Cameron and Bowen are "independent" for purposes of this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $32,000 in fiscal 2006 and $30,500 in fiscal 2005.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $40,000 for fiscal 2006 and no such fees for fiscal 2005 to
the registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services include: IRS private letter ruling
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2006 and $6,667 in fiscal 2005 to the
registrant.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years to the registrant's investment adviser or any entity controlling,
controlled by, or under common control with the adviser that provides ongoing
services to the registrant.
Such services include: Audit of the tax provision for certain structured
instruments.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $6,541 in fiscal 2006 and no such fees in fiscal 2005.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such fees include compliance review.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $46,541 in fiscal 2006 and $6,667 in fiscal
2005 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) No such services were rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of 08/31/2006, the registrant's principal executive officer and
principal financial officer found the registrant's disclosure controls and
procedures to provide reasonable assurances that information required to be
disclosed by the registrant in the reports that it files under the Securities
Exchange Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal financial
officer, to allow timely decisions regarding required disclosure, and (b) is
recorded, processed, summarized and reported, within the time periods specified
in the rules and forms adopted by the U.S. Securities and Exchange Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Champion Income Fund
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: 11/15/2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: 11/15/2006
By: /S/ BRIAN W. WIXTED
----------------------------
Brian W. Wixted
Principal Financial Officer
Date: 11/15/2006