<PAGE> 1
DEAR SHAREHOLDER:
Bond markets both here in the U.S. and abroad have continued to perform well
since our May 1995 letter. Leadership during the first half of the year,
however, was clearly held by the U.S.-- where steadily falling interest rates
and the expectation for low inflation sparked an outstanding rally. However,
more recently, we have seen a shift in leadership away from the domestic
markets towards overseas markets.
During the past 12 months, the Trust's total return at net asset value was
9.51%, with a dividend yield of 9.48% for the month ended October 31, 1995(1)
INVESTMENT BREAKDOWN:
OPPENHEIMER MULTI-SECTOR INCOME
TRUST AS OF 10/31/95(2)
[GRAPH]
- - U.S. corporate bonds & notes: 32.2%
- - U.S. Government Obligations:
Agency: 21.5%
- - Foreign government obligations: 18.8%
- - U.S. government obligations:
Treasury: 11.0%
- - Short-term securities: 7.6%
- - Foreign corporate bonds & notes: 6.1%
- - Equity securities: 1.6%
- - Structured notes: 1.2%
As we've stated previously, one of the key benefits of the Trust is its ability
to allocate assets strategically among U.S. government issues, foreign
fixed-income securities, and higher- yielding U.S. corporate bonds and, as
such, capitalize on world wide investment opportunities. At the same time,
allocating the Trust's assets among three distinct fixed-income sectors can
provide the diversification necessary to lower risk. As of the last writing,
over 70% of the portfolio was invested in domestic bonds--a strategy that
served the Trust well during the spring rally...especially our investment in
U.S. corporate bonds.(2)
Currently, 65% of the portfolio is invested in U.S. bonds, with 35% in U.S.
government bonds and 30% in corporate bonds. Within U.S. government bonds,
your managers favor short-term bonds because they typically offer most of the
income of longer-term bonds, but with lower price fluctuation during interest
rate changes. U.S. corporate bonds offer high income, but have returns that
tend to have a low correlation to U.S. government bonds; thus, they provide an
important level of diversification to the portfolio.
<PAGE> 2
In foreign markets, our focus is on government bonds in both developed and
emerging markets. Though European bonds have begun to close the gap with U.S.
bonds, they're still at premium yields compared to domestic bonds. And
emerging market bonds are benefiting from a stronger dollar and the level of
stability it offer dollar-linked markets. Of course, foreign investments are
always subject to greater expenses and risks, such as adverse currency
fluctuations. But over time the long-term returns may more than compensate for
temporary risk, especially when these investments are part of a diversified
portfolio.
High yields relative to both the U.S. and developed foreign markets, plus
renewed price stability, are compelling arguments for emerging market bonds.
Some of our largest foreign positions are in the United Kingdom, Mexico and
Brazil. Though their economies are different in many ways, their bond markets
share the characteristics we're looking for--high income and value.
Your managers feel confident that this is an excellent environment for
fixed-income investors worldwide. Interest rates and inflation are low
globally, which has led to prices that have been predominantly stable and
rising. And, despite some mixed signals recently, the American economy appears
to be maintaining a steady, sustainable growth rate, while the economies of
Europe and Latin America are improving.
In 1995, the U.S. was the clear winner. Next year it could be Europe or Asia.
Or even Latin America. We're confident that by being able to diversify
investments throughout the world, we will be positioned to participate in any
environment.
Thank you for your confidence in OppenheimerFunds, and we look forward to
helping you reach your financial goals in the future.
Sincerely,
/s/ DONALD W. SPIRO
--------------------
Donald W. Spiro
President
Oppenheimer Multi-Sector Income Trust
November 21, 1995
1. Total return is based on the change in net asset value per share from
10/31/94 to 10/31/95, without deducing any brokerage costs. Dividend
yield is determined by analyzing the October 1995 dividend of $0.078 and
dividing by the closing price on the New York Stock Exchange of $9.875 per
share on 10/27/95 (payment date). Past performance does not guarantee
future results.
2. Portfolio composition is subject to change. Chart is based on total
investments at market value rather than net assets.
<PAGE> 3
STATEMENT OF INVESTMENTS October 31, 1995
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
U.S. GOVERNMENT SECTOR -- 11.2%
TREASURY -- 11.2%
U.S. Treasury Bonds:
8.125%, 8/15/19 (2).............................................. $ 7,893,000 $ 9,501,199
8.75%, 5/15/20................................................... 4,000,000 5,132,500
8.875%, 8/15/17.................................................. 8,020,000 10,313,213
U.S. Treasury Nts., 8%, 5/15/01.................................... 7,300,000 8,039,125
------------
Total U.S. Government Sector (Cost $30,938,107).................... 32,986,037
------------
</TABLE>
<TABLE>
<CAPTION>
Units
--------------
<S> <C> <C>
CONVERTIBLE SECTOR -- 1.1%
RIGHTS, WARRANTS AND CERTIFICATES -- 0.3%
American Telecasting, Inc. Wts., Exp. 6/99......................... 4,750 15,438
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A.............. 40,300 403
Litigation Trust................................................. 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/00 (3)........................... 25,000 25,000
Federated Department Stores, Inc. Wts.:
Cl. C, Exp. 12/99................................................ 26,963 182,000
Cl. D, Exp. 12/01................................................ 26,963 185,371
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99..................... 1,000 10,000
Gaylord Container Corp. Wts., Exp. 7/96............................ 50,625 363,867
OSI Specialties Corp. Wts., 4/99 (4)............................... 500 3,250
Purity Supreme, Inc. Wts., Exp. 8/97 (3)........................... 7,797 156
SD Warren Co. Wts., Exp. 12/06 (4)................................. 20,000 140,000
Terex Corp. Rts., Exp. 7/96 (4).................................... 186 9
------------
926,783
------------
</TABLE>
3
<PAGE> 4
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
-------------- ------------
<S> <C> <C>
PREFERRED STOCKS -- 0.8%
California Federal Bank, 10.625% Non-Cum., Series B................ 1,995 $ 215,460
First Nationwide Bank, 11.50% Non-Cum. ............................ 10,000 1,135,000
SD Warren Co., 14% Sr. Exchangeable Preferred Stock (4)............ 20,000 650,000
SDW Holdings Corp., Units (each unit consists of ten shares of sr.
exchangeable preferred stock and one cl. B warrant to purchase
one share of common stock) (4)(5)(6)............................. 1,875 543,750
------------
2,544,210
------------
Total Convertible Sector (Cost $2,732,855)......................... 3,470,993
------------
CORPORATE SECTOR -- 31.8%
COMMON STOCKS -- 0.4%
Capital Gaming International, Inc. (6)............................. 7,198 1,539
Gaylord Container Corp. (6)........................................ 20,000 152,500
Grand Union Co. (6)................................................ 40,000 430,000
Hollywood Casino Corp. (6)......................................... 40,000 245,000
Kash 'N Karry Food Stores, Inc. (6)................................ 10,000 220,000
Triangle Wire & Cable, Inc. (3)(6)................................. 84,444 168,888
------------
1,217,927
------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount(1)
--------------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- 31.4%
BASIC INDUSTRY -- 3.9%
Chemicals -- 0.2%
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03................ $ 500,000 532,500
------------
Metals/Mining -- 1.3%
Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03........ 1,000,000 1,072,850
Kaiser Aluminum & Chemical Corp., 9.875% Sr. Nts., 2/15/02......... 2,000,000 2,055,000
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05.......... 530,000 597,575
------------
3,725,425
------------
</TABLE>
4
<PAGE> 5
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Paper -- 2.1%
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01.................. $ 500,000 $ 515,000
Repap Wisconsin, Inc.:
9.25% First Priority Sr. Sec. Nts., 2/1/02....................... 2,250,000 2,182,500
9.875% Second Priority Sr. Nts., 5/1/06.......................... 750,000 727,500
Riverwood International Corp., 11.25% Sr. Sub. Nts., 6/15/02....... 650,000 695,500
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04......................... 1,150,000 1,282,250
Stone Container Corp., 10.75% First Mtg. Nts., 10/1/02............. 750,000 787,500
------------
6,190,250
------------
Steel -- 0.3%
WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02............ 1,000,000 962,500
------------
CONSUMER RELATED -- 8.4%
Consumer Products -- 0.9%
Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 10.591%, 5/27/98 (14).................................. 1,250,000 998,438
Revlon Consumer Products Corp., 10.50% Sr. Sub. Nts.,
Series B, 2/15/03................................................ 500,000 516,875
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 (4)................ 500,000 481,875
Selmer Co., Inc., 11% Sr. Sub. Nts., 5/15/05....................... 500,000 492,500
------------
2,489,688
------------
Food/Beverages/Tobacco -- 0.7%
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03............. 1,000,000 1,002,500
Di Giorgio Corp., 12% Sr. Nts., 2/15/03............................ 750,000 579,375
Specialty Foods Corp., 11.125% Sr. Nts., Series A, 10/1/02 (4)..... 500,000 477,500
------------
2,059,375
------------
Healthcare -- 2.0%
AmeriSource Corp., 11.25% Sr. Debs., 7/15/05 (7)................... 250,000 271,250
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04............... 1,000,000 1,087,500
Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02......... 1,500,000 1,650,000
Tenet Healthcare Corp., 10.125% Sr. Sub. Nts., 3/1/05.............. 1,500,000 1,623,750
Total Renal Care, Inc., Units (each unit consists of $1,000
principal amount of 0%/12% sr. sub. disc. nts., 8/15/04 and nine
shares of non-voting Cl. B common stock) (5)(8).................. 1,150,000 1,155,750
------------
5,788,250
------------
</TABLE>
5
<PAGE> 6
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Hotel/Gaming -- 3.5%
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00
(3).............................................................. $ 550,000 $ 434,500
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04......................... 500,000 542,500
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts., 10.901%,
6/15/98 (14)..................................................... 500,000 388,125
Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg. Nts.,
3/15/04.......................................................... 500,000 495,625
Boyd Gaming Corp., 10.75% Sr. Sub. Nts., 9/1/03.................... 750,000 793,125
Capital Gaming International, Inc. Promissory Nts. (6)............. 5,500 --
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00 (3)(6).................................................. 200,000 178,000
Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02... 1,250,000 1,262,500
HMH Properties, Inc., 9.50% Sr. Sec. Nts., 5/15/05 (4)............. 1,000,000 1,007,500
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., 11/15/02
(4).............................................................. 500,000 526,250
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 (4)....... 1,500,000 1,470,000
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03................ 1,700,000 1,644,750
Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01......... 850,000 799,000
Trump Taj Mahal Funding, Inc., 11.35% Debs., Series A, 11/15/99.... 1,000,000 859,685
------------
10,401,560
------------
Restaurants -- 0.5%
Carrols Corp., 11.50% Sr. Nts., 8/15/03............................ 500,000 500,000
Flagstar Corp., 10.75% Sr. Nts., 9/15/01........................... 500,000 466,250
Foodmaker, Inc., 9.25% Sr. Nts., 3/1/99............................ 500,000 463,750
------------
1,430,000
------------
Textile/Apparel -- 0.8%
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03... 1,000,000 945,000
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05........... 1,500,000 1,507,500
------------
2,452,500
------------
ENERGY -- 2.5%
Chesapeake Energy Corp., 10.50% Sr. Nts., 6/1/02................... 500,000 507,500
Crown Central Petroleum Corp., 10.875% Sr. Nts., 2/1/05............ 500,000 523,750
Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01....... 1,000,000 1,052,500
Giant Industries, Inc., 9.75% Sr. Sub. Nts., 11/15/03.............. 250,000 255,000
Kelley Oil & Gas Corp., 13.50% Sr. Nts., 6/15/99................... 850,000 726,750
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02............ 1,000,000 1,137,500
</TABLE>
6
<PAGE> 7
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
ENERGY (CONTINUED)
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05........................................ $ 750,000 $ 828,750
9.375% Sub. Debs., 2/1/06........................................ 400,000 380,000
Santa Fe Energy Resources, Inc., 11% Sr. Sub. Debs., 5/15/04....... 1,000,000 1,075,000
United Meridian Corp., 10.375% Sr. Sub. Nts., 10/15/05............. 700,000 719,250
------------
7,206,000
------------
FINANCIAL SERVICES -- 1.1%
Diversified Financial -- 0.6%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98...................... 750,000 671,250
Olympic Financial Ltd., 13% Sr. Nts., 5/1/00....................... 1,000,000 1,095,000
------------
1,766,250
------------
Insurance -- 0.5%
American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04........... 790,000 825,550
Chartwell Re Corp., 10.25% Sr. Nts., 3/1/04........................ 500,000 502,500
------------
1,328,050
------------
HOUSING RELATED -- 1.2%
Building Materials -- 0.9%
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03........................ 1,000,000 945,000
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01............. 1,500,000 1,657,500
------------
2,602,500
------------
Homebuilders/Real Estate -- 0.3%
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03.............................. 500,000 487,500
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts.,
4/1/02........................................................... 500,000 518,750
------------
1,006,250
------------
MANUFACTURING -- 1.5%
Aerospace/Electronics/Computers -- 0.5%
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01....................... 500,000 517,500
Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97 (9)............. 1,000,000 1,025,000
------------
1,542,500
------------
Automotive -- 1.0%
Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B,
8/1/04........................................................... 1,350,000 1,434,375
Foamex LP/JPS Automotive Corp., 0%/14% Sr. Disc. Nts.,
Series B, 7/1/04 (8)............................................. 1,000,000 562,500
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01........... 1,000,000 1,015,000
------------
3,011,875
------------
</TABLE>
7
<PAGE> 8
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Capital Goods -- 0.0%
Farley, Inc., Zero Coupon Sub. Debs., 14.167%, 12/30/12 (14)....... $ 198,000 $ 19,107
------------
MEDIA -- 4.6%
Broadcasting -- 1.5%
New World Communications Group Holding Corp., Zero Coupon Sr. Disc.
Nts., Series B, 11.907%, 6/15/99 (14)............................ 1,250,000 843,750
Paxson Communications Corp., 11.625% Sr. Sub. Nts.,
10/1/02 (4)...................................................... 500,000 492,500
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05......... 1,600,000 1,652,000
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01.... 1,300,000 1,417,000
------------
4,405,250
------------
Cable Television -- 2.5%
American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts.,
6/15/04 (8)...................................................... 1,022,000 666,855
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05.............. 300,000 302,250
Cablevision Industries Corp., 10.75% Sr. Nts., 1/30/02............. 500,000 545,625
Century Communications Corp., 9.50% Sr. Nts., 3/1/05............... 1,000,000 1,012,500
Comcast Corp., 10.625% Sr. Sub. Debs., 7/15/12..................... 500,000 550,000
Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13............. 800,000 844,000
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B,
11/1/03 (9)...................................................... 625,000 584,375
International CableTel, Inc., 0%/10.875% Sr. Deferred Coupon Nts.,
10/15/03 (8)..................................................... 1,000,000 682,500
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp., 0%/13.50%
Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04 (8).................. 250,000 175,000
People's Choice TV Corp., Units (each unit consists of $1,000
principal amount of 0%/13.125% sr. disc. nts., 6/1/04 and one
warrant to purchase 1.427 shares of common stock) (5)(8)......... 250,000 139,375
PriCellular Wireless Corp., 0%/12.25% Sr. Sub. Disc. Nts., 10/1/03
(8).............................................................. 1,700,000 1,258,000
Wireless One, Inc., Units (each unit consists of $1,000 principal
amount of 13% sr. nts. and three warrants to purchase one share
of common stock at $11.55) (5)................................... 650,000 674,375
------------
7,434,855
------------
</TABLE>
8
<PAGE> 9
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Diversified Media -- 0.5%
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts.,
8/1/03 (8)....................................................... $ 2,000,000 $ 1,605,000
------------
Publishing/Printing -- 0.1%
Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs.,
Series B, 3/1/05 (8)............................................. 500,000 315,000
------------
OTHER -- 0.6%
Environmental -- 0.1%
Envirotest Systems Corp., 9.125% Sr. Nts., 3/15/01................. 500,000 392,500
------------
Services -- 0.5%
Protection One Alarm Monitoring, Inc., Units (each unit consists of
ten $1,000 principal amount of 0%/13.625% sr. sub. disc. nts.,
6/30/95 and 32 warrants, each warrant entitles holder to purchase
1 share of Protection One, Inc. common stock) (4)(5)............. 2,000,000 1,430,000
------------
RETAIL -- 3.9%
Drug Stores -- 0.5%
Duane Reade, 12% Sr. Nts., Series B, 9/15/02....................... 750,000 691,875
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03.................... 750,000 798,750
------------
1,490,625
------------
Specialty Retailing -- 1.2%
Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts.,
Series B, 9/1/03................................................. 1,000,000 932,500
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01................ 750,000 746,250
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03................ 850,000 837,250
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 (4)..... 1,000,000 1,075,000
------------
3,591,000
------------
Supermarkets -- 2.2%
Grand Union Co., 12% Sr. Nts., 9/1/04.............................. 3,100,000 2,999,250
Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03 (7)....... 899,600 884,569
Penn Traffic Co., 9.625% Sr. Sub. Nts., 4/15/05.................... 3,000,000 2,190,000
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04...................... 500,000 503,750
------------
6,577,569
------------
</TABLE>
9
<PAGE> 10
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
TRANSPORTATION -- 0.9%
Railroads -- 0.6%
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03 (8)..................................... $ 2,500,000 $ 1,637,500
------------
Shipping -- 0.3%
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04.......... 900,000 922,500
------------
UTILITIES -- 2.8%
Electric Utilities -- 0.1%
DeepTech International, Inc., 12% Sr. Sec. Nts., 12/15/00.......... 300,000 264,750
------------
Telecommunications -- 2.7%
Cellular Communications International, Inc., Units (each unit
consists of $1,000 principal amount of zero coupon sr. disc.
nts., 8/15/00 and one warrant to purchase 1.126 shares of common
stock) (5)....................................................... 2,500,000 1,425,000
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (8).......... 2,000,000 1,560,000
Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375%
Sr. Sub. Disc. Nts., 10/1/00 (8)................................. 2,000,000 1,710,000
In-Flight Phone Corp., Units (each unit consists of $1,000
principal amount of 0%/14% sr. disc. nts., series A, 5/15/02 and
one warrant to purchase one share of common stock) (4)(5)(8)..... 900,000 360,000
IntelCom Group (USA), Inc. (ICG) and IntelCom Group, Inc., Units
(each unit consists of ten 0%/13.50% sr. disc. nts., 9/15/05 of
ICG and 33 warrants to purchase an equal number of common shares
of IntelCom at an exercise price equal to $12.51 per share)
(4)(5)(8)........................................................ 1,250,000 706,250
MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04 (8).... 700,000 542,500
PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01
(8).............................................................. 2,000,000 1,700,000
------------
8,003,750
------------
Total Corporate Sector (Cost $92,473,078).......................... 93,802,806
------------
</TABLE>
10
<PAGE> 11
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
INTERNATIONAL SECTOR -- 32.0%
FOREIGN CERTIFICATES OF DEPOSIT -- 5.4%
Bank Pacific CD, Zero Coupon, 17.947%, 3/5/96 (10)(14) (IDR)....... 1,000,000,000 $ 412,373
Citibank, 11.75% CD, 11/8/95 (10) (CLP)............................ 2,483,246,287 5,988,775
CS First Boston, Inc. CD,
15.75%, 6/11/96 (4)(10) (IDR).................................... 4,448,000,000 1,958,608
12.50%, 12/21/95 (4)(10) (ARA)................................... 1,500,000 1,500,191
Indonesia (Republic of) Bank Negara CD, Zero Coupon, 15.909%,
6/17/96 (10)(14) (IDR)........................................... 4,000,000,000 1,582,563
Thai Military Bank Ltd. CD:
11%, 11/30/95 (10) (THB)......................................... 75,000,000 2,980,919
11%, 12/15/95 (10) (THB)......................................... 20,000,000 794,912
10%, 1/31/96 (10) (THB).......................................... 20,000,000 794,671
------------
16,013,012
------------
FOREIGN CORPORATE BONDS AND NOTES -- 6.2%
BASIC INDUSTRY -- 0.9%
Paper -- 0.9%
APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05... 500,000 512,500
QUNO Corp., 9.125% Sr. Nts., 5/15/05............................... 1,500,000 1,507,500
Repap New Brunswick, Inc., 9.25% First Priority Sr. Sec. Nts.,
7/15/00 (9)...................................................... 600,000 600,000
------------
2,620,000
------------
CONSUMER RELATED -- 0.6%
Textile/Apparel -- 0.6%
PT Polysindo Eka Perkasa:
13% Sr. Nts., 6/15/01............................................ 1,000,000 1,045,000
Zero Coupon Promissory Nts., 17.899%, 10/23/96 (14) (IDR)........ 2,000,000,000 704,535
------------
1,749,535
------------
FINANCIAL SERVICES -- 2.7%
Banks & Thrifts -- 1.9%
Banco Bamerindus do Brasil SA:
10.50% Debs., 6/23/97............................................ 500,000 475,000
11% Unsub. Unsec. Nts., 11/24/97................................. 1,800,000 1,710,000
Banco Ganadero SA, Zero Coupon:
Nts., 9.928%, 7/1/96 (4)(14)..................................... 1,000,000 938,636
Sr. Unsub. Unsec. Nts., 9.928%, 6/15/96 (4)(14).................. 500,000 471,338
</TABLE>
11
<PAGE> 12
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Banks & Thrifts (Continued)
Banco Mexicano SA, 8% Sr. Unsub. Unsec. Exchangeable Medium-Term
Nts., 11/4/98.................................................... $ 1,000,000 $ 861,250
Morgan Stanley Group, 14.25% Indian Rupee Indexed Nts.,
6/26/96 (INR).................................................... 15,705,000 459,210
Rabobank Nederland, 11.05% Sr. Unsec. Debs., 12/12/97 (ITL)........ 1,175,000,000 742,598
------------
5,658,032
------------
Diversified Financial -- 0.8%
Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98.................. 1,250,000 1,043,750
KfW International Finance, Inc., 11.625% Gtd. Nts., 11/27/98
(ITL)............................................................ 2,175,000,000 1,393,356
------------
2,437,106
------------
MEDIA -- 1.4%
Cable Television -- 1.1%
Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04 (8)......... 1,250,000 854,688
Diamond Cable Communications PLC, 0%/13.25% Sr. Disc. Nts., 9/30/04
(8).............................................................. 750,000 513,750
TeleWest Communications PLC, 0%/11% Sr. Disc. Debs., 10/1/07 (8)... 2,000,000 1,170,000
Videotron Holdings PLC, 0%/11% Sr. Disc. Nts., 8/15/05 (8)......... 1,000,000 596,250
------------
3,134,688
------------
Entertainment/Film -- 0.3%
Imax Corp., 7% Sr. Nts., 3/1/01 (11)............................... 1,000,000 967,500
------------
OTHER -- 0.6%
Services -- 0.6%
Acetex Corp., 9.75% Sr. Sec. Nts., 10/1/03 (4)..................... 1,750,000 1,802,500
------------
FOREIGN GOVERNMENT OBLIGATIONS -- 19.0%
Argentina -- 1.3%
Argentina (Republic of):
Medium-Term Nts., 8%, 8/9/97 (NLG)............................... 5,800,000 3,597,154
Sr. Unsec. Unsub. Bonds, 13.45%, 10/21/97 (ITL).................. 450,000,000 284,576
------------
3,881,730
------------
</TABLE>
12
<PAGE> 13
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Australia -- 1.4%
First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 22, 11.40%, 12/15/01 (AUD)................................ 3,877,320 $ 3,173,724
South Australia Government Finance Gtd. Bonds,
12.50%, 10/15/00 (AUD)........................................... 1,150,000 1,016,120
------------
4,189,844
------------
Brazil -- 1.3%
Banco do Estado de Sao Paulo SA Nts., 9.25%, 10/4/96............... 1,000,000 960,000
Banco Estado Minas Gerais, 8.25%, 2/10/00.......................... 1,000,000 820,000
Brazil (Federal Republic of) Eligible Interest Bonds, 6.812%,
4/15/06 (9)...................................................... 3,000,000 1,995,000
------------
3,775,000
------------
Bulgaria -- 0.8%
Bulgaria (Republic of) Interest Arrears Bonds, 6.75%, 7/28/11
(9).............................................................. 5,500,000 2,440,625
------------
Costa Rica -- 0.4%
Central Bank of Costa Rica Principal Bonds, Series A, 6.25%,
5/21/10.......................................................... 1,900,000 1,111,500
------------
Ecuador -- 0.2%
Ecuador (Republic of) Disc. Bonds, 6.812%, 2/28/25 (9)............. 1,500,000 750,000
------------
Great Britain -- 1.2%
United Kingdom Treasury Nts., 12.50%, 11/21/05 (GBP)............... 1,800,000 3,597,315
------------
Ireland -- 0.3%
National Treasury Management Agency (Irish Government) Bonds, 9%,
7/15/01 (IEP).................................................... 575,000 993,529
------------
Jamaica -- 0.2%
Jamaica (Government of) 1990 Refinancing Agreement Nts., Tranche A,
6.75%, 10/16/00 (3)(9)........................................... 875,000 783,125
------------
Jordan -- 0.1%
Hashemite Kingdom of Jordan Par Bonds, 4%, 12/23/23 (11)........... 500,000 233,750
------------
</TABLE>
13
<PAGE> 14
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Mexico -- 1.9%
Banco Nacional de Comercio Exterior SNC, Zero Coupon, 11.310%,
12/5/95 (4)(14).................................................. $ 1,500,000 $ 1,488,000
Banco Nacional de Obras y Servicios Publicos SA Nts., 10.75%,
8/16/96.......................................................... 500,000 504,375
United Mexican States:
Combined Facility 3, Loan Participation Agreement, Tranche A,
6.75%, 9/20/97 (3)(9).......................................... 413,723 287,020
Nacional Financiera SNC Nts., 13.60%, 4/2/98 (ESP)............... 100,000,000 803,681
Petroleos Mexicanos Gtd. Medium-Term Nts., 7.60%, 6/15/00........ 1,000,000 862,500
Petroleos Mexicanos Gtd. Sr. Unsec. Nts., 6.875%, 3/8/99 (9)..... 2,000,000 1,770,000
------------
5,715,576
------------
Morocco -- 1.5%
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.688%, 1/1/09 (9).................................... 6,000,000 3,626,250
Tranche B, 6.688%, 1/1/04 (9).................................... 1,000,000 676,250
------------
4,302,500
------------
New Zealand -- 1.6%
New Zealand (Republic of) Bonds, 10%, 7/15/97 (NZD)................ 6,800,000 4,669,442
------------
Norway -- 1.0%
Norwegian Government Gtd. Bonds, 9.50%, 10/31/02 (NOK)............. 15,700,000 2,905,074
------------
Panama -- 1.0%
Panama (Republic of) Debs., 7.25%, 5/10/02 (9)..................... 3,500,000 2,870,000
------------
Philippines -- 0.3%
Philippines (Republic of) Front-Loaded Interest Reduction Bonds,
Series B, 5%, 6/1/08 (11)........................................ 1,000,000 765,625
------------
Poland -- 0.6%
Poland (Republic of):
Disc. Bonds, 6.875%, 10/27/24 (9)................................ 2,000,000 1,532,500
Treasury Bills, Zero Coupon, 24.957%, 4/17/96 (14) (PLZ)......... 1,000,000 364,614
------------
1,897,114
------------
</TABLE>
14
<PAGE> 15
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Portugal -- 1.0%
Portugal (Republic of) Gtd. Bonds, Obrigicion do tes Medio Prazo,
11.875%, 2/23/00 (PTE)........................................... 410,000,000 $ 2,859,533
------------
Spain -- 2.0%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
12.25%, 3/25/00 (ESP)............................................ 683,000,000 5,904,248
------------
Sweden -- 0.9%
Sweden (Kingdom of) Bonds, Series 1028, 11%, 1/21/99 (SEK)......... 15,800,000 2,519,647
------------
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
------- ------ ---------
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED -- 0.1%
Brazil (Federal Republic of) Eligible Interest Bonds,
6.812%, 4/15/06, Put Opt...................................... Jan. 96 $64.75 3,000 44,100
Morocco (Kingdom of) Loan Participation Agreement, Tranche A,
6.688%, 1/1/09, Put Opt....................................... Jan. 96 60.25 6,000 161,610
-------------
205,710
-------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount(1)
--------------
<S> <C> <C>
STRUCTURED INSTRUMENTS -- 1.3%
Canadian Imperial Bank, 10% Certificate of Deposit British Pound
Sterling Maximum Rate Linked Nts., 11/8/96 (indexed to the
3-month GBP LIBOR, multiplied by 9) (3).......................... $ 750,000 762,300
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
13.471%, 12/14/95 (indexed to the Nota Do Tesouro Nacional, Zero
Coupon, 12/13/95) (14)........................................... 1,500,000 1,477,392
Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts.,
11.245%, 2/15/96 (indexed to the Nota Do Tesouro Nacional, Zero
Coupon, 2/15/96) (14)............................................ 1,500,000 1,452,954
------------
3,692,646
------------
Total International Sector (Cost $94,485,900)...................... 94,445,906
------------
MORTGAGE-BACKED OBLIGATIONS -- 23.0%
GOVERNMENT AGENCY -- 21.8%
FHLMC/FNMA/Sponsored -- 9.6%
Federal Home Loan Mortgage Corp.:
Certificates of Participation, 12%, 5/1/10-6/1/15................ 3,050,721 3,453,450
</TABLE>
15
<PAGE> 16
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
FHLMC/FNMA/Sponsored (Continued)
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, 6.65%, 4/15/21..................... $ 4,700,000 $ 4,648,582
Gtd. Multiclass Mtg. Participation Certificates, 8%, 8/1/24........ 4,525,714 4,638,857
Federal National Mortgage Assn.:
11%, 7/1/16...................................................... 1,279,171 1,438,269
7.50%, 8/1/25.................................................... 3,179,759 3,212,543
Certificates of Participation, 13%, 6/1/15....................... 1,724,607 2,019,395
Interest-Only Stripped Mtg.-Backed Security, Trust 222, Cl. 2,
9.23%, 6/1/23 (12)............................................. 27,415,219 8,211,715
Interest-Only Stripped Mtg.-Backed Security, Trust 240, Cl. 2,
11.315%, 9/1/23 (12)........................................... 1,999,445 611,081
------------
28,233,892
------------
GNMA/Guaranteed -- 12.2%
Government National Mortgage Assn.:
12%, 11/20/13-9/20/15............................................ 941,201 1,070,024
6%, 11/15/25 (13)................................................ 8,500,000 8,515,938
7.50%, 8/15/25-9/15/25........................................... 12,228,164 12,362,654
8%, 5/15/24-9/15/24.............................................. 13,550,481 13,944,264
------------
35,892,880
------------
PRIVATE -- 1.2%
Commercial -- 1.2%
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1992-CHF, Cl. E, 8.25%, 12/25/20.......................... 3,735,857 3,594,011
------------
Total Mortgage-Backed Obligations (Cost $67,771,931)............... 67,720,783
------------
MONEY MARKET SECTOR -- 2.2%
Repurchase agreement with Zion First National Bank, 5.85%, dated
10/31/95, to be repurchased at $6,601,073 on 11/1/95,
collateralized by U.S. Treasury Nts., 4.375%-7.25%,
8/15/96-5/15/97, with a value of $6,741,230 (Cost $6,600,000).... 6,600,000 6,600,000
------------
Total Investments, at Value (Cost $295,001,871).................... 101.3% 299,026,525
Liabilities in Excess of Other Assets.............................. (1.3) (3,898,202)
-------------- ------------
Net Assets......................................................... 100.0% $295,128,323
============== ============
</TABLE>
16
<PAGE> 17
STATEMENT OF INVESTMENTS October 31, 1995 (Continued)
Oppenheimer Multi-Sector Income Trust
(1) Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C>
ARA -- Argentine Austral
AUD -- Australian Dollar
CLP -- Chilean Peso
ESP -- Spanish Peseta
GBP -- British Pound Sterling
IDR -- Indonesian Rupiah
IEP -- Irish Punt
INR -- Indian Rupee
ITL -- Italian Lira
NLG -- Netherlands Guilder
NOK -- Norwegian Krone
NZD -- New Zealand Dollar
PLZ -- Polish Zloty
PTE -- Portuguese Escudo
SEK -- Swedish Krona
THB -- Thai Baht
</TABLE>
(2) A sufficient amount of liquid assets has been designated to cover
outstanding written call options, as follows:
<TABLE>
<CAPTION>
FACE AMOUNT MARKET
SUBJECT TO EXPIRATION EXERCISE PREMIUM VALUE
CALL DATE PRICE RECEIVED SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Call Option on Bulgaria (Republic of) Interest Arrears
Bonds, 6.75%, 7/28/11.................................... $5,500,000 1/22/96 $45.00 $78,650 $ 64,350
Call Option on Spain (Kingdom of) Gtd. Bonds, Bonos y
Obligacion del Estado, 12.25%, 3/25/00................... 271,000,000ESP 11/24/95 105.47ESP 12,797 17,069
------- ---------
$91,447 $ 81,419
======= =========
</TABLE>
(3) Identifies issue considered to be illiquid -- See Note 6 of Notes to
Financial Statements.
(4) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $17,523,157 or 5.94% of the Fund's
net assets, at October 31, 1995.
(5) Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
(6) Non-income producing security.
(7) Interest or dividend is paid in kind.
(8) Denotes a step bond: a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
(9) Represents the current interest rate for a variable rate security.
(10) Indexed instrument for which the principal amount and/or interest due at
maturity is affected by the relative value of a foreign currency.
(11) Represents the current interest rate for an increasing rate security.
(12) Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities
typically decline in price as interest rates decline. Most other fixed
income securities increase in price when interest rates decline. The
principal amount of the underlying pool represents the notional amount on
which current interest is calculated. The price of these securities is
typically more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest
rates disclosed represent current yields based upon the current cost basis
and estimated timing and amount of future cash flows.
(13) When-issued security to be delivered and settled after October 31, 1995.
(14) For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
See accompanying Notes to Financial Statements.
17
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES October 31, 1995
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $295,001,871) -- see accompanying statement................. $299,026,525
Net unrealized appreciation on forward foreign currency exchange contracts -- Note 7.... 350,436
Receivables:
Interest and principal paydowns....................................................... 6,686,995
Investments sold...................................................................... 5,452,532
Other................................................................................... 143,783
------------
Total assets........................................................................ 311,660,271
------------
LIABILITIES:
Bank overdraft.......................................................................... 568,379
Options written, at value (premiums received $91,447) -- Note 4......................... 81,419
Payables and other liabilities:
Investments purchased................................................................. 15,357,437
Dividends............................................................................. 244,262
Deferred trustees' fees -- Note 1..................................................... 113,074
Management and administrative fees -- Note 5.......................................... 60,548
Transfer agent and accounting services fees........................................... 15,161
Other................................................................................. 91,668
------------
Total liabilities................................................................... 16,531,948
------------
NET ASSETS.............................................................................. $295,128,323
============
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest.............................................. $ 291,161
Additional paid-in capital.............................................................. 315,440,767
Overdistributed net investment income................................................... (113,075)
Accumulated net realized loss from investment, written option and foreign currency
transactions.......................................................................... (24,865,208)
Net unrealized appreciation on investments, written options and translation of assets
and liabilities denominated in foreign currencies..................................... 4,374,678
------------
NET ASSETS -- Applicable to 29,116,068 shares of beneficial interest outstanding........ $295,128,323
============
NET ASSET VALUE PER SHARE............................................................... $10.14
=======
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 19
STATEMENT OF OPERATIONS For the Year Ended October 31, 1995
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $193,536)................................. $30,316,133
Dividends............................................................................... 160,706
-----------
Total income................................................................... 30,476,839
-----------
EXPENSES:
Management fees -- Note 5............................................................... 1,877,737
Administrative fees -- Note 5........................................................... 577,765
Shareholder reports..................................................................... 150,863
Custodian fees and expenses............................................................. 142,278
Transfer agent and accounting service fees -- Note 5.................................... 66,926
Legal and auditing fees................................................................. 46,702
Trustees' fees and expenses............................................................. 44,903
Registration and filing fees............................................................ 33,875
Other................................................................................... 77,493
-----------
Total expenses................................................................. 3,018,542
-----------
NET INVESTMENT INCOME................................................................... 27,458,297
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN
CURRENCY:
Net realized gain (loss) on:
Investments........................................................................... (9,572,176)
Closing of futures contracts.......................................................... 69,120
Closing and expiration of options written -- Note 4................................... (86,336)
Foreign currency transactions......................................................... (258,123)
-----------
Net realized loss.............................................................. (9,847,515)
-----------
Net change in unrealized appreciation or depreciation on:
Investments and options written....................................................... 10,663,948
Translation of assets and liabilities denominated in foreign currencies............... (2,066,211)
-----------
Net change..................................................................... 8,597,737
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY... (1,249,778)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $26,208,519
===========
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE> 20
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................... $ 27,458,297 $ 28,123,352
Net realized loss on investments, options written and foreign currency
transactions........................................................... (9,847,515) (7,693,213)
Net change in unrealized appreciation or depreciation on investments,
options written and translation of assets and liabilities denominated
in foreign currencies.................................................. 8,597,737 (15,068,472)
------------ ------------
Net increase in net assets resulting from operations................. 26,208,519 5,361,667
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income..................................... (26,608,817) (24,512,388)
Tax return of capital distribution....................................... (625,807) (3,638,975)
BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares issued to shareholders in reinvestment of
dividends -- Note 2.................................................... 496,299 1,801,323
------------ ------------
Total decrease in net assets............................................. (529,806) (20,988,373)
NET ASSETS:
Beginning of period...................................................... 295,658,129 316,646,502
------------ ------------
End of period (including overdistributed net investment income of
$113,075 and $3,324,611, respectively)................................. $295,128,323 $295,658,129
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE> 21
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988(1)
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period................ $ 10.17 $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 $ 11.16
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from
investment operations:
Net investment income.... .94 1.00 1.08 1.06 1.11 1.15 1.12 .64
Net realized and
unrealized gain
(loss)................. (.04) (.82) .43 (.08) .82 (.78) (.52) .05
-------- -------- -------- -------- -------- -------- -------- --------
Total income from
investment
operations........... .90 .18 1.51 .98 1.93 .37 .60 .69
-------- -------- -------- -------- -------- -------- -------- --------
Dividends and
distributions to
shareholders:
Dividends from net
investment income...... (.91) (.84) (1.01) (1.16) (1.07) (1.10) (1.13) (.59)
Distributions from net
realized gain.......... -- -- -- -- (.10) (.02) (.01) (.06)
Tax return of capital.... (.02) (.13) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions to
shareholders......... (.93) (.97) (1.01) (1.16) (1.17) (1.12) (1.14) (.65)
Offering costs............ -- -- -- -- -- -- -- (.03)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................... $ 10.14 $ 10.17 $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17
======== ======== ======== ======== ======== ======== ======== ========
Market value, end of
period................... $ 10.00 $ 9.50 $ 11.25 $ 11.13 $ 11.13 $ 9.38 $ 10.13 $ 11.50
TOTAL RETURN, AT MARKET
VALUE(2)................. 15.62% (7.46)% 11.10% 11.48% 33.05% 4.09% (1.86)% 6.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)........... $295,128 $295,658 $316,647 $299,368 $301,568 $278,511 $299,673 $314,656
Average net assets (in
thousands)............... $288,884 $306,686 $307,244 $303,773 $289,681 $290,533 $307,735 $311,254
Number of shares
outstanding at end of
period (in thousands).... 29,116 29,065 28,896 28,625 28,347 28,194 28,194 28,162
Ratios to average net
assets:
Net investment income.... 9.51% 9.17% 10.13% 9.95% 10.80% 11.16% 10.28% 9.80%(3)
Expenses................. 1.05% 1.02% 1.00% 1.11% 1.16%(4) 1.03% 1.03% 1.01%(3)
Portfolio turnover
rate(5).................. 240.1% 187.6% 131.3% 95.9% 59.7% 85.7% 162.0% 60.1%
</TABLE>
(1) For the period from March 24, 1988 (commencement of operations) to October
31, 1988.
(2) Assumes a hypothetical purchase at the current market price 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
a sale at the current market price on the last business day of the period.
Total return does not reflect sales charges or brokerage commissions. Total
returns are not annualized for periods of less than one full year.
(3) Annualized.
(4) Includes $.01 per share of federal excise tax expense. The expense ratio,
exclusive of federal excise tax expense, was 1.10%.
(5) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the period ended October 31, 1995 were
$637,018,865 and $644,253,972, respectively.
See accompanying Notes to Financial Statements.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's investment advisor is Oppenheimer
Management Corporation (the Manager). The following is a summary of significant
accounting policies consistently followed by the Trust.
Investment Valuation -- Portfolio securities are valued at the close of the New
York Stock Exchange on the last day of each week on which day the New York Stock
Exchange is open. Listed and unlisted securities for which such information is
regularly reported are valued at the last sale price of the day or, in the
absence of sales, at values based on the closing bid or asked price or the last
sale price on the prior trading day. Long-term and short-term "non-money market"
debt securities are valued by a portfolio pricing service approved by the Board
of Trustees. Such securities which cannot be valued by the approved portfolio
pricing service are valued using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is reliable and that the quotes
reflect current market value, or are valued under consistently applied
procedures established by the Board of Trustees to determine fair value in good
faith. Short-term "money market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount. Forward
contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. Options are valued based upon the last
sale price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last sale
price on the prior trading date if it is within the spread between the closing
bid and asked prices. If the last sale price is outside the spread, the closing
bid or asked price closest to the last reported sale price is used.
Foreign Currency Translation -- The accounting records of the Trust are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of exchange.
Amounts related to the purchase and sale of securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Trust's Statement of Operations.
Repurchase Agreements -- The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Trust may be delayed or limited.
Federal Taxes -- The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At October 31, 1995, the
Trust had available for federal income tax purposes an unused capital loss
carryover of approximately $22,900,000, $6,700,000 of which will expire in 1998,
$2,500,000 in 1999, $4,500,000 in 2002 and $9,200,000 in 2003.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement plan
for the Trust's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended,
October 31, 1995, the Trust's projected benefit obligations were reduced by
$2,641. In addition, one retired trustee is eligible for payments under the
Trust's retirement plan and a payment of $2,026 was made. The accumulated
liability for the Trust's projected benefit obligations was $113,074 at October
31, 1995.
Distributions to Shareholders -- The Trust intends to declare and pay dividends
from net investment income monthly. Distributions from net realized gains on
investments, if any, will be made at least once each year.
Classification of Distributions to Shareholders -- Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of paydown gains and losses and certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gain (loss) was recorded by the Trust.
During the year ended October 31, 1995, the Trust changed the classification of
distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, during the year ended October 31, 1995,
amounts have been reclassified to reflect a decrease in paid-in capital of
$3,832,676, a decrease in overdistributed net investment income of $2,987,863,
and a decrease in accumulated net realized loss on investments of $844,813.
Other -- Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. Dividends in kind are recognized as income
on the ex-dividend date, at the current market value of the underlying security.
Interest on payment-in-kind debt instruments is accrued as income at the coupon
rate and a market adjustment is made periodically.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1995 October 31, 1994
------------------ ---------------------
Shares Amount Shares Amount
------ -------- ------- ----------
<S> <C> <C> <C> <C>
Net increase from
dividends reinvested..... 51,219 $496,299 168,788 $1,801,323
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON
INVESTMENTS
At October 31, 1995, net unrealized appreciation on investments and options
written of $4,034,682 was composed of gross appreciation of $9,659,546, and
gross depreciation of $5,624,864.
4. OPTION ACTIVITY
The Trust may buy put and call options, or write covered call options on
portfolio securities or cash secured put options in order to produce incremental
earnings or protect against changes in the value of portfolio securities.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
The Trust generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Trust receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Trust will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
In this report, securities designated to cover outstanding call options are
noted in the Statement of Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are detailed in a footnote to
the Statement of Investments. Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are reported in the
Statement of Operations.
The risk in writing a call option is that the Trust gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Trust may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Trust pays a premium whether or not the
option is exercised. The Trust also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended October 31, 1995 was as follows:
<TABLE>
<CAPTION>
Call Options
--------------------
Number Amount
of of
Options Premiums
------- ---------
<S> <C> <C>
Options outstanding at October 31, 1994..... -- --
Options written............................. 38,535 $ 312,206
Options cancelled in closing transactions... (15,932) (137,048)
Options expired............................. (6,874) (22,375)
Options exercised........................... (7,984) (61,336)
------ ---------
Options outstanding at October 31, 1995..... 7,745 $ 91,447
====== =========
</TABLE>
<TABLE>
<CAPTION>
Put Options
--------------------
Number Amount
of of
Options Premiums
-------- --------
<S> <C> <C>
Options outstanding at October 31, 1994.... -- --
Options written............................ 856,164 $ 8,850
Options expired............................ (856,164) (8,850)
-------- -------
Options outstanding at October 31, 1995.... -- $ --
======== =======
</TABLE>
5. MANAGEMENT AND ADMINISTRATIVE FEES
AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for an annual fee of .65% on
the Trust's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The
Trust pays the Administrator an annual fee of .20% of the Trust's average annual
net assets.
The Manager acts as the accounting agent for the Trust at an annual fee of
$24,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the
Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI
are based on the number of accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses.
24
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
6. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1995, investments in securities included issues that are illiquid
or restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. The Trust intends to invest no more
than 10% of its net assets (determined at the time of purchase) in illiquid or
restricted securities. The aggregate value of these securities subject to this
limitation at October 31, 1995 was $2,638,989 which represents .89% of the
Trust's net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Unit as of
Security Date Per Unit October 31, 1995
- ------------------------------ ----------- -------- ---------------
<S> <C> <C> <C>
Arizona Charlie's, Inc., 12%
First Mtg. Nts., Series A,
11/15/00..................... 11/18/93 $100.00 $ 79.00
Becker Gaming, Inc. Wts.,
Exp. 11/00................... 11/18/93 $ 2.00 $ 1.00
Canadian Imperial Bank, 10%
Certificate of Deposit
British Pound Sterling
Maximum Rate Linked Nts.,
11/8/96...................... 4/28/95 $100.00 $102.00
Capitol Queen & Casino, Inc.,
12% First Mtg. Nts., Series
A, 11/15/00.................. 11/18/93 $ 87.50 $ 89.00
Jamaica (Government of) 1990
Refinancing Agreement Nts., 7/12/95-
Tranche A, 6.75%, 10/16/00... 8/15/95 $ 88.75 $ 89.50
Purity Supreme, Inc. Wts.,
Exp. 8/97.................... 7/29/92 -- $ .02
Triangle Wire & Cable, Inc.
Common Stock................. 5/2/94 $ 9.50 $ 2.00
United Mexican States,
Combined Facility 3, Loan
Participation Agreement,
Tranche A, 6.75%, 9/20/97.... 10/25/94 $ 89.00 $ 69.38
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitation specified above.
7. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Trust uses forward contracts to seek to manage foreign currency risks. They
may also be used to tactically shift portfolio currency risk. The Trust
generally enters into forward contracts as a hedge upon the purchase or sale of
a security denominated in a foreign currency. In addition, the Trust may enter
into such contracts as a hedge against changes in foreign currency exchange
rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Trust will realize a gain or loss
upon the closing or settlement of the forward transaction.
In this report, securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
reported in the Statement of Assets and Liabilities. Realized and unrealized
gains and losses are reported with all other foreign currency gains and losses
in the Trust's Statement of Operations.
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
25
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
At October 31, 1995, the Trust had outstanding forward contracts to purchase and
sell foreign currencies as follows:
<TABLE>
<CAPTION>
Contract Valuation Unrealized
Contracts Exchange Amount as of Appreciation
to Purchase Date (000s) October 31, 1995 (Depreciation)
- ----------- --------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Canadian
Dollar
(CAD)..... 11/2/95 5,525 CAD $ 4,107,758 $ 75,647
German
Deutsche
Mark 11/6/95-
(DEM)..... 11/30/95 28,240 DEM 20,053,058 41,604
Netherlands
Guilder
(NLG)..... 11/1/95 1,607 NLG 1,017,098 (2,671)
Swedish
Krone
(SEK)..... 11/2/95 172 SEK 25,923 (69)
---- -------- ------
35,544 $25,203,837 $114,511
---- -------- ------
Contracts
to Sell
- -----------
Canadian
Dollar
(CAD)..... 11/2/95 5,525 CAD $ 4,107,758 $ 16,115
German
Deutsche
Mark 11/6/95-
(DEM)..... 11/30/95 28,240 DEM 20,053,058 219,808
New Zealand
Dollar
(NZD)..... 11/3/95 4 NZD 2,702 2
---- -------- ------
33,769 $24,163,518 235,925
------ ----------- --------
Net
Unrealized
Appreciation.. $350,436
========
</TABLE>
26
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
8. QUARTERLY RESULTS OF OPERATIONS: (UNAUDITED)
<TABLE>
<CAPTION>
Net Realized and
Unrealized Gain (Loss) Net Increase
on Investments, (Decrease) in Net
Options and Foreign Assets Resulting from
Net Investment Income Currency Transactions Operations Market Price
---------------------- ---------------------- ---------------------- on NYSE
Quarter Total Per Total Per Total Per -------------------
ended (000) Share (000) Share (000) Share High Low
- ------------- ------- ----- -------- ----- -------- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
October 31, 1995... $ 6,825 $ .23 $ 454 $ .02 $ 7,279 $ .25 $ 10.00 $ 9.375
July 31, 1995...... 7,054 .24 6,929 .24 13,983 .48 9.875 9.375
April 30, 1995..... 6,516 .23 5,028 .17 11,544 .40 10.00 9.25
January 31, 1995... 7,063 .24 (13,660) (.47) (6,597) (.23) 10.00 8.875
------- ----- -------- ----- -------- -----
Totals... $27,458 $ .94 $ (1,249) $(.04) $ 26,209 $ .90
======= ===== ======== ===== ======== =====
October 31, 1994... $ 6,743 $ .23 $ (3,543) $(.12) $ 3,200 $ .11 $10.375 $ 9.125
July 31, 1994...... 7,104 .25 (2,081) (.08) 5,023 .17 10.625 10.00
April 30, 1994..... 7,073 .26 (24,698) (.87) (17,625) (.61) 11.375 10.00
January 31, 1994... 7,203 .26 7,561 .25 14,764 .51 11.375 10.625
------- ----- -------- ----- -------- -----
Totals... $28,123 $1.00 $(22,761) $(.82) $ 5,362 $ .18
======= ===== ======== ===== ======== =====
October 31, 1993... $ 7,974 $ .27 $ (3) $ .00 $ 7,971 $ .27 $11.375 $ 11.00
July 31, 1993...... 7,175 .25 4,200 .16 11,375 .41 11.375 11.00
April 30, 1993..... 7,782 .27 9,342 .31 17,124 .58 11.25 10.75
January 31, 1993... 8,200 .29 (1,263) (.04) 6,937 .25 11.00 10.00
------- ----- -------- ----- -------- -----
Totals... $31,131 $1.08 $ 12,276 $ .43 $ 43,407 $1.51
======= ===== ======== ===== ======== =====
</TABLE>
27
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
Oppenheimer Multi-Sector Income Trust
The Board of Trustees and Shareholders of
Oppenheimer Multi-Sector Income Trust:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Multi-Sector Income Trust as of October 31, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the seven-year period then
ended and the period from March 24, 1988 (commencement of operations) to October
31, 1988. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Multi-Sector Income Trust as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the seven-year period then ended and the period from March
24, 1988 (commencement of operations) to October 31, 1988, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1995
28
<PAGE> 29
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer Multi-Sector Income Trust
In early 1996, shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1995. Regulations
of the U.S. Treasury Department require the Trust to report this information to
the Internal Revenue Service.
Dividends paid by the Trust during the fiscal year ended October 31, 1995 which
are not designated as capital gain distributions should be multiplied by .60% to
arrive at the net amount eligible for the corporate dividend received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust 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.
SHAREHOLDER MEETING (Unaudited)
On May 3, 1995, an annual shareholder meeting was held at which the five
Trustees identified below were elected and the selection of KPMG Peat Marwick
LLP as the independent certified public accountants and auditors of the Trust
for the fiscal year beginning November 1, 1994 was ratified (Proposal No. 1). In
addition, the terms of office of the following Trustees continued after the
meeting: Messrs. Leon Levy, Leo Cherne, Clayton K. Yeutter, Sidney M. Robbins,
and Donald W. Spiro and Ms. Elizabeth B. Moynihan and Pauline Trigere. The
following is a report of the votes cast:
<TABLE>
<CAPTION>
Withheld/
Nominee/Proposal For Against Abstain Total
- ---------------------------------------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Trustee
Robert G. Galli......................... 16,644,292.1176 68,119.7701 194,646.8293 16,907,058.7170
Benjamin Lipstein....................... 16,647,553.0115 68,119.7701 191,385.9354 16,907,058.7170
Kenneth A. Randall...................... 16,656,682.0531 68,119.7701 182,256.8938 16,907,058.7170
Edward V. Regan......................... 16,658,674.9350 68,119.7701 180,264.0119 16,907,058.7170
Russell S. Reynolds, Jr. ............... 16,657,323.4538 68,119.7701 181,615.4931 16,907,058.7170
Proposal No. 1.......................... 16,532,571.8546 112,308.0326 262,178.8298 16,907,058.7170
</TABLE>
29
<PAGE> 30
OPPENHEIMER MULTI-SECTOR INCOME TRUST
GENERAL INFORMATION CONCERNING THE TRUST
Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end diversified
management investment company with a primary investment objective of seeking
high current income consistent with preservation of capital. The Trust's
secondary investment objective is capital appreciation. In seeking its
objectives, the Trust may invest any percentage of its assets in at least three
of the following seven fixed-income sectors: U.S. Government, Corporate,
International, Asset-Backed, Municipal, Convertible and Money Market. Current
income, preservation of capital and, secondarily, possible capital appreciation
will be considerations in the allocation of assets among such sectors. The Trust
may invest in a number of different kinds of "derivative investments," and may
also engage in certain special investment techniques, including repurchase
transactions, when-issued and delayed delivery transactions and hedging. The
investment advisor to the Trust is Oppenheimer Management Corporation (the
Manager).
The Portfolio Managers of the Trust are Robert Patterson, Thomas Reedy, David
Rosenberg, Ashwin Vasan, Carol Wolf and Arthur Zimmer, who also serve as Vice
Presidents of the Trust and are officers of certain mutual funds managed by the
Manager (Oppenheimer funds). Messrs. Reedy, Rosenberg, Vasan and Zimmer and Ms.
Wolf also serve as Vice Presidents of the Manager and Mr. Patterson serves as
Senior Vice President of the Manager. The foregoing persons have been the
persons principally responsible for the day-to-day management of the Trust's
portfolio since inception (March 1988), August 1993, June 1994 and August 1993,
as to Messrs. Patterson, Reedy, Rosenberg and Vasan, respectively, and since
July 1990 and October 1990 as to Ms. Wolf and Mr. Zimmer, respectively. During
the past five years, such persons also served as an officer and portfolio
manager for other Oppenheimer funds and, in addition, Mr. Reedy served as a
securities analyst for the Manager, and, prior to joining the Manager, Mr.
Rosenberg served as an officer and portfolio manager for Delaware Investment
Advisors and one of its mutual funds, Mr. Vasan served as a securities analyst
for Citibank, N.A. and Mr. Zimmer served as Vice President of Hanifen Imhoff
Management Company, a mutual fund investment advisor.
Dividend Reinvestment and Cash Purchase Plan -- Pursuant to the Trust's Dividend
Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust
(Shares) not registered in nominee name, all dividends and capital gains
distributions (Distributions) declared by the Trust will be automatically
reinvested in additional full and fractional Shares unless a shareholder elects
to receive cash. If Shares are registered in nominee name, the shareholder
should consult the nominee if the shareholder desires to participate in the
Plan. Shareholders that participate in the Plan (Participants) may, at their
option, make additional cash investments in Shares, semi-annually in amounts of
at least $100, through payment to Shareholder Financial Services, Inc., the
agent for the Plan (the Agent), accompanied by a service fee of $.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional Shares at the greater of the Trust's net asset
value determined as of the date of purchase or 95% of the then-current market
price. If the market price is lower than net asset value, the Distribution will
be paid in cash, which the Agent will use to buy Shares on The New York Stock
Exchange (the NYSE), or otherwise on the open market to the extent available. If
the market price exceeds the net asset value before the Agent has completed its
purchases, the average
30
<PAGE> 31
OPPENHEIMER MULTI-SECTOR INCOME TRUST (Continued)
purchase price per Share paid by the Agent may exceed the net asset value,
resulting in fewer Shares being acquired than if the Distribution had been paid
in Shares issued by the Trust.
Participants may elect to withdraw from the Plan at any time and thereby receive
cash in lieu of Shares by sending appropriate written instructions to the Agent.
Elections received by the Agent will be effective only if received more than ten
days prior to the record date for any Distribution; otherwise, such termination
will be effective shortly after the investment of such Distribution with respect
to any subsequent Distribution. Upon withdrawal from or termination of the Plan,
all Shares acquired under the Plan will remain in the Participant's account
unless otherwise requested. For full Shares, the Participant may either: (1)
receive without charge a share certificate for such Shares; or (2) request the
Agent (after receipt by the Agent of signature guaranteed instructions by all
registered owners) to sell the Shares acquired under the Plan and remit the
proceeds less any brokerage commissions and a $2.50 service fee. Fractional
Shares may either remain in the Participant's account or be reduced to cash by
the Agent at the current market price with the proceeds remitted to the
Participant. Shareholders who have previously withdrawn from the Plan may rejoin
at any time by sending written instructions signed by all registered owners to
the Agent.
There is no direct charge for participation in the Plan; all fees of the Agent
are paid by the Trust. There are no brokerage charges for Shares issued directly
by the Trust. However, each Participant will pay a pro rata share of brokerage
commissions incurred with respect to open market purchases of Shares to be
issued under the Plan. Participants will receive tax information annually for
their personal records and to assist in federal income tax return preparation.
The automatic reinvestment of Distributions does not relieve Participants of any
income tax that may be payable on Distributions.
The Plan may be terminated or amended at any time upon 30 days' prior written
notice to Participants which, with respect to a Plan termination, must precede
the record date of any Distribution by the Trust. Additional information
concerning the Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
Shareholder Information -- The Shares are traded on the NYSE. Daily market
prices for the Trust's shares are published in the New York Stock Exchange
Composite Transaction section of newspapers under the designation "OppenMlti."
The Trust's NYSE trading symbol is OMS. Weekly net asset value (NAV) and market
price information about the Trust is published each Monday in The Wall Street
Journal, each Sunday in The New York Times and each Saturday in Barron's, and
other newspapers in a table called "Closed-End Bond Funds."
31
<PAGE> 32
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Officers and Trustees
Leon Levy, Chairman of the Board
of Trustees
Leo Cherne, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Bridget A. Macaskill, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Thomas P. Reedy, Vice President
David Rosenberg, Vice President
Ashwin K. Vasan, Vice President
Carol Wolf, Vice President
Arthur Zimmer, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Advisor
Oppenheimer Management Corporation
Administrator
Mitchell Hutchins Asset Management, Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
The Bank of New York
Independent Auditors
KPMG Peat Marwick LLP
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov
& Wein
This is a copy of a report to shareholders of
Oppenheimer Multi-Sector Income Trust. It does not
offer for sale or solicit orders to buy any securities.
Notice is hereby given in accordance with Section 23(c)
of the Investment Company Act of 1940 that periodically
the Trust may purchase its shares of beneficial
interest in the open market at prevailing market
prices.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
RA0680.001.1295 [LOGO] Printed on recycled paper
1995 ANNUAL REPORT
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OPPENHEIMER
MULTI-SECTOR
INCOME TRUST
OCTOBER 31, 1995
[OPPENHEIMERFUNDS LOGO]
