<PAGE>
<PAGE>
Dear Shareholder:
Oppenheimer Multi-Sector Income Trust has had a positive year, particularly
during the past six months. In fact, as of October 31, 1996, the Fund's 1-year
total return at net asset value was 13.25% and its dividend return was
8.99%.(1) The Fund's success this year can be attributed to all three of its
investment allocations: foreign fixed income securities, U.S. government
securities and lower-rated, high yield domestic corporate bonds.
The success of our foreign exposure stems from several key factors. First, we
were overweighted in emerging markets and high-yielding European markets, two
sectors that performed tremendously over the period. And, because we were
underweighted in Japan, the slower-than expected recovery of the Japanese market
has not affected the Fund's performance.
Investment Breakdown:
Oppenheimer Multi-Sector Income
Trust as of 10/31/963
[graph]
U.S. corporate bonds & notes: 34.5%
U.S. government obligations -- Agency: 21.8%
Foreign government obligations: 21.6%
Foreign corporate bonds & notes: 8.4%
Structured notes: 6.3%
Short-term securities: 3.5%
U.S. government obligations -- Treasury: 2.9%
Equity securities: 1.0%
The U.S. component of the portfolio also performed well during the period.
Interest rates, which have recently leveled off, rose from 6% in January to
about 7% in July, driven by investors' concerns that strong U.S. economic growth
would trigger high inflation. Because a large percentage of the U.S. government
allocation -- about 70% -- was invested in higher-yielding mortgage-backed
securities, the Fund benefited from a reduction in prepayment risk. That's
because when interest rates rise homeowners are less likely to refinance their
homes. This high concentration of mortgage-backed securities also played a
significant role in protecting principal and enhancing yield.(2)
In addition, the overall average maturity of our U.S. government holdings is
usually limited to three years, but over the last six months, we have taken an
even more conservative approach, maintaining an average maturity of two and a
half years. This positioning can be advantageous to shareholders because shorter
maturities result in lower price sensitivity to fluctuations in interest rates.
Our holdings in lower-rated U.S. high yield corporate bonds have also reported
positive results. Over this past year, cash flows into high yield mutual funds
have continued to climb at a record pace, largely due to pension fund money from
the aging baby boomer generation. Also significant is that against all odds, the
U.S. has continued to experience six years of steady, noninflationary growth.
Finally, much to the surprise of many investors, default rates were low this
year -- currently below 2% -- even on mature bonds which typically default at
higher rates.
<PAGE>
<PAGE>
During the period, we have been decreasing our holdings in higher-yielding
European markets, specifically Italy, Spain, Sweden and Portugal. As these
markets have rallied, we've been taking profits in those investments that have
done very well. And, as we mentioned earlier, we've had a tremendous run in
emerging markets and have modified our exposure so the Fund can continue to take
advantage of the strong performance in this sector.
Looking forward, we remain optimistic that the global fixed income markets will
continue to offer the potential for higher yields, as well as for capital
appreciation. And we're confident that by diversifying investments throughout
the world, we should be positioned to participate in any economic environment.
Thank you for your confidence in OppenheimerFunds. We look forward to helping
you meet your financial goal in the future.
Sincerely,
[BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
November 21, 1996
1. Total return is based on the change in net asset value per share from
10/31/95 to 10/31/96, without deducting any brokerage costs. Dividend return is
determined by annualizing the October 1996 dividend of $0.074 and dividing by
the closing price on the New York Stock Exchange of $9.88 per share on 10/25/96
(payment date). Past performance does not guarantee future results.
2. Mortgage-backed securities involve risks from early prepayment of underlying
mortgages that can affect the Fund's income and principal value.
3. Portfolio composition is subject to change. Chart is based on total
investments at market value rather than net assets.
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
U.S. GOVERNMENT SECTOR -- 3.0%
TREASURY -- 3.0%
U.S. Treasury Bonds, 7.125%, 2/15/23(2)(3)................................ $ 7,577,000 $ 7,922,700
U.S. Treasury Nts., 6%, 8/31/97(2)(3)..................................... 1,256,000 1,261,102
------------
Total U.S. Government Sector (Cost $9,193,588)............................ 9,183,802
------------
Shares
------
CONVERTIBLE SECTOR -- 0.9%
PREFERRED STOCKS -- 0.5%
California Federal Bank, 10.625% Non-Cum., Series B....................... 1,995 215,460
Gulfstream Housing Corp. (4).............................................. 714 --
SD Warren Co., 14% Cum. Exchangeable, Series B (4)........................ 20,000 725,000
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred Stock (4)(5)...... 18,750 675,000
------------
1,615,460
------------
Units
-----
RIGHTS, WARRANTS AND CERTIFICATES -- 0.4%
American Communications Services, Inc. Wts., Exp. 11/05 (5)............... 700 59,500
American Telecasting, Inc. Wts., Exp. 6/99................................ 7,250 25,375
Ames Department Stores, Inc.:
Excess Cash Flow Payment Certificates, Series AG-7A (5)................. 40,300 403
Litigation Trust (5).................................................... 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/00 (5).................................. 25,000 6,250
Cellular Communications International, Inc. Wts., Exp. 8/03 (5)........... 2,500 50,000
Federated Department Stores, Inc.:
Cl. C Wts., Exp. 12/99.................................................. 20,000 242,500
Cl. D Wts., Exp. 12/01.................................................. 20,000 247,500
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(5)......................... 1,000 25,000
Gaylord Container Corp. Wts., Exp. 11/02.................................. 50,625 379,687
In-Flight Phone Corp. Wts., Exp. 8/02 (5)................................. 900 --
IntelCom Group, Inc. Wts., Exp. 9/05 (5).................................. 4,125 63,937
Protection One, Inc. Wts., Exp. 6/05 (5).................................. 6,400 84,000
SD Warren Co. Wts., Exp. 12/06 (5)........................................ 20,000 62,500
SDW Holdings Corp., Cl. B Wts., Exp. 12/06 (5)............................ 1,875 24,375
Wireless One, Inc. Wts., Exp. 10/00....................................... 1,500 6,000
------------
1,278,316
------------
Total Convertible Sector (Cost $1,612,189)................................ 2,893,776
------------
</TABLE>
3
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
------ ------------
<S> <C> <C>
CORPORATE SECTOR -- 35.1%
COMMON STOCKS -- 0.1%
Capital Gaming International, Inc. (4).................................... 7,198 $ 396
Grand Union Co. (4)....................................................... 40,000 270,000
Gulfstream Housing Corp. (4).............................................. 357,150 --
Hollywood Casino Corp., Class A (4)....................................... 20,000 90,000
Triangle Wire & Cable, Inc. (4) (5)....................................... 84,444 84,444
------------
444,840
------------
Face Amount (1)
---------------
CORPORATE BONDS AND NOTES -- 35.0%
BASIC INDUSTRY -- 3.7%
Chemicals -- 0.7%
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts.,
7/15/01................................................................. $ 200,000 207,000
ISP Holdings, Inc., 9% Sr. Nts., 10/15/03 (6)............................. 1,000,000 1,015,000
Terra Industries, Inc., 10.50% Sr. Nts., Series B, 6/15/05................ 750,000 812,812
Texas Petrochemicals Corp., 11.125% Sr. Sub. Nts., 7/1/06 (6)............. 175,000 185,937
------------
2,220,749
------------
Containers -- 0.2%
U.S. Can Corp., 10.125% Sr. Sub. Nts., 10/15/06 (6)....................... 500,000 518,750
------------
Metals/Mining -- 0.2%
Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03............... 500,000 551,250
------------
Paper -- 1.7%
Buckeye Cellulose Corp., 9.25% Sr. Sub. Nts., 9/15/08 (3)................. 1,000,000 1,020,000
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05............. 875,000 960,312
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts., 2/1/02......... 500,000 507,500
Riverwood International Corp.:
10.25% Sr. Nts., 4/1/06 (3)............................................. 1,400,000 1,359,750
10.875% Sr. Sub. Nts., 4/1/08........................................... 750,000 690,937
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04...................... 575,000 619,562
Stone Container Corp., 10.75% First Mtg. Nts., 10/1/02.................... 300,000 312,750
------------
5,470,811
------------
Steel -- 0.9%
Bar Technologies, Inc., 13.50% Gtd. Bonds, 4/1/01......................... 700,000 707,000
Gulf States Steel, Inc., Alabama, 13.50% First Mtg. Nts., Series B,
4/15/03................................................................. 1,000,000 946,250
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01........ 250,000 233,750
WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02................... 750,000 840,938
------------
2,727,938
------------
</TABLE>
4
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
CONSUMER RELATED -- 7.2%
Consumer Products -- 1.0%
Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B,
10.615%, 5/27/98 (7).................................................... $ 1,000,000 $ 865,000
E & S Holdings Corp., 10.375% Sr. Sub. Nts., 10/1/06 (6).................. 1,350,000 1,392,188
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05........................... 750,000 810,000
------------
3,067,188
------------
Food/Beverages/Tobacco -- 0.9%
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 (3)................ 1,000,000 1,047,500
Doane Products Co., 10.625% Sr. Nts., 3/1/06.............................. 750,000 783,750
Foodbrands America, Inc., 10.75% Sr. Sub. Nts., 5/15/06................... 500,000 516,250
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 (6)........ 500,000 505,625
------------
2,853,125
------------
Healthcare -- 1.3%
Genesis Health Ventures, Inc. 9.25% Sr. Sub. Nts., 10/1/06 (6)............ 2,000,000 2,015,000
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04... 1,500,000 1,642,500
OrNda Healthcorp., 11.375% Gtd. Sr. Sub. Nts., 8/15/04.................... 200,000 227,000
------------
3,884,500
------------
Hotel/Gaming -- 2.9%
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 (5)...... 550,000 385,000
California Hotel Finance Corp., 11% Sr. Sub. Nts., 12/1/02................ 500,000 523,750
Capital Gaming International, Inc., Promissory Nts., 8/1/95 (8)........... 5,500 --
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00 (5)(8)......................................................... 200,000 150,000
Empress River Casino Finance Corp., 10.75% Sr. Gtd. Nts., 4/1/02.......... 1,545,000 1,660,875
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03................ 650,000 642,688
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07......... 750,000 727,500
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05.............. 2,000,000 2,030,000
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B,
11/15/02................................................................ 750,000 960,000
Players International, Inc., 10.875% Sr. Nts., 4/15/05.................... 350,000 348,250
Showboat Marina Casino Partnership/Showboat Marina Finance Corp., 13.50%
First Mtg. Nts., Series B, 3/15/03...................................... 1,250,000 1,353,125
------------
8,781,188
------------
</TABLE>
5
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
Textile/Apparel -- 1.1%
Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06............................ $ 750,000 $ 783,750
Consoltex Group, Inc., 11% Sr. Sub. Gtd. Nts., Series B, 10/1/03.......... 500,000 495,000
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03........................ 525,000 536,156
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05.................. 1,500,000 1,522,500
------------
3,337,406
------------
ENERGY -- 6.2%
Chesapeake Energy Corp.:
10.50% Sr. Nts., 6/1/02................................................. 400,000 429,500
9.125% Sr. Nts., 4/15/06 (3)............................................ 2,340,000 2,363,400
DeepTech International, Inc., 12% Sr. Sec. Nts., 12/15/00................. 1,500,000 1,567,500
Falcon Drilling Co., Inc.:
8.875% Sr. Nts., Series B, 3/15/03...................................... 1,125,000 1,130,625
9.75% Sr. Nts., Series B, 1/15/01....................................... 100,000 104,125
Forcenergy, Inc., 9.50% Sr. Sub. Nts., 11/1/06 (9)........................ 815,000 826,206
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 (6).................... 2,750,000 2,860,000
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (10)...... 4,700,000 3,125,500
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 (6)................. 1,000,000 1,006,875
Petroleum Heat & Power Co., Inc.:
10.125% Sub. Nts., 4/1/03............................................... 300,000 301,875
12.25% Sub. Debs., 2/1/05............................................... 456,000 503,880
9.375% Sub. Debs., 2/1/06............................................... 1,300,000 1,261,000
TransTexas Gas Corp., 11.50% Sr. Sec. Gtd. Nts., 6/15/02 (3).............. 3,200,000 3,416,000
------------
18,896,486
------------
FINANCIAL SERVICES -- 1.4%
Banks & Thrifts -- 0.7%
First Nationwide Escrow Corp., 10.625% Sr. Sub. Nts., 10/1/03 (6)......... 1,650,000 1,744,875
First Nationwide Holdings, Inc., 9.125% Sr. Sub. Nts., 1/15/03............ 250,000 251,250
------------
1,996,125
------------
Diversified Financial -- 0.7%
Aames Financial Corp., 9.125% Sr. Nts., 11/1/03........................... 1,000,000 1,012,500
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98............................. 1,250,000 1,270,313
------------
2,282,813
------------
HOUSING RELATED -- 0.7%
Building Materials -- 0.3%
Building Materials Corp., 0%/11.75% Sr. Deferred Coupon Nts., Series B,
7/1/04 (10)............................................................. 500,000 410,000
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03............................... 500,000 502,500
------------
912,500
------------
</TABLE>
6
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
Homebuilders/Real Estate -- 0.4%
NVR, Inc., 11% Sr. Gtd. Nts., 4/15/03..................................... $ 500,000 $ 517,500
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts., Series B,
4/1/02.................................................................. 500,000 537,500
U.S. Home Corp., 9.75% Sr. Nts., 6/15/03.................................. 300,000 305,250
------------
1,360,250
------------
MANUFACTURING -- 3.1%
Aerospace/Electronics/Computers -- 0.6%
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01.............................. 500,000 532,500
Unisys Corp., 11.75% Sr. Nts., 10/15/04................................... 1,350,000 1,377,000
------------
1,909,500
------------
Automotive -- 1.8%
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06......... 1,000,000 1,046,250
Foamex LP/JPS Automotive Corp., 0%/14% Sr. Disc. Nts., Series B, 7/1/04
(10).................................................................... 750,000 581,250
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06.............. 1,640,000 1,709,700
Lear Corp., 9.50% Sub. Nts., 7/15/06...................................... 2,000,000 2,070,000
------------
5,407,200
------------
Capital Goods -- 0.7%
Farley, Inc., Zero Coupon Sub. Debs., 14.167%, 12/30/12 (5)(7)............ 198,000 21,986
Mettler Toledo, Inc., 9.75% Gtd. Sr. Unsec. Unsub. Nts., 10/1/06.......... 2,100,000 2,157,750
------------
2,179,736
------------
MEDIA -- 3.2%
Broadcasting -- 0.9%
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05..................... 500,000 502,500
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02............... 225,000 231,750
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06........... 1,150,000 1,188,813
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05................ 500,000 487,500
Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06............. 500,000 457,500
------------
2,868,063
------------
Cable Television -- 1.7%
American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04 (10)........ 1,000,000 685,000
Cablevision Systems Corp.:
10.50% Sr. Sub. Debs., 5/15/16.......................................... 500,000 491,250
10.75% Sr. Sub. Debs., 4/1/04........................................... 250,000 255,625
Comcast Corp., 10.625% Sr. Sub. Debs., 7/15/12............................ 500,000 534,375
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04 (10)..... 700,000 556,500
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B,
11/1/03 (11)............................................................ 625,000 640,625
</TABLE>
7
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- -------------
<S> <C> <C>
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts., Series
B, 2/1/06 (10).......................................................... $ 1,500,000 $ 915,000
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)(10)(12)................................... 650,000 364,000
United International Holdings, Inc.:
0%/14% Sr. Disc. Nts., Series B, 5/15/06 (10)........................... 300,000 158,250
Zero Coupon Sr. Sec. Disc. Nts., Series B, 14%, 11/15/99 (7)............ 800,000 560,000
Zero Coupon Sr. Sec. Disc. Nts., 12.579%, 11/15/99 (7).................. 200,000 140,000
------------
5,300,625
------------
Diversified Media -- 0.3%
Universal Outdoor, Inc., 9.75% Sr. Sub. Nts., 10/15/06.................... 1,000,000 992,500
------------
Publishing/Printing -- 0.3%
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05
(10).................................................................... 500,000 358,750
Hollinger International Publishing, Inc., 9.25% Sr. Sub. Gtd. Nts.,
2/1/06.................................................................. 500,000 488,750
------------
847,500
------------
OTHER -- 1.4%
Environmental -- 0.1%
Mid-American Waste Systems, Inc., 12.25% Sr. Sub. Nts.,
2/15/03 (5)(8).......................................................... 300,000 195,000
------------
Services -- 1.3%
Imo Industries, Inc., 11.75% Sr. Sub. Nts., 5/1/06........................ 750,000 772,500
Iron Mountain, Inc., 10.125% Sr. Sub. Nts., 10/1/06....................... 1,000,000 1,032,500
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05 (10)................................. 2,000,000 1,850,000
6.75% Cv. Sr. Sub. Nts., 9/15/03........................................ 325,000 312,406
------------
3,967,406
------------
RETAIL -- 1.1%
Grand Union Co., 12% Sr. Nts., 9/1/04..................................... 750,000 759,375
Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03.................. 951,300 958,435
Ralph's Grocery Co.:
10.45% Sr. Nts., 6/15/04................................................ 1,250,000 1,271,875
10.45% Sr. Nts., 6/15/04................................................ 250,000 254,375
------------
3,244,060
------------
</TABLE>
8
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
TRANSPORTATION -- 0.8%
Air Transportation -- 0.2%
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02................ $ 500,000 $ 546,250
------------
Railroads -- 0.3%
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts.,
Series B, 12/15/03 (10)................................................. 1,500,000 1,147,500
------------
Shipping -- 0.3%
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04................. 750,000 877,500
------------
UTILITIES -- 6.2%
Electric Utilities -- 1.2%
CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 (6).............................. 575,000 582,906
California Energy, Inc., 0%/10.25% Sr. Disc. Nts., 1/15/04 (10)........... 750,000 768,750
Calpine Corp., 10.50% Sr. Nts., 5/15/06 (6)............................... 750,000 781,875
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11............ 1,500,000 1,560,000
------------
3,693,531
------------
Telecommunications -- 5.0%
A+ Network, Inc., 11.875% Sr. Sub. Nts., 11/1/05.......................... 2,100,000 2,100,000
American Communications Services, Inc., 0%/13% Sr. Disc. Nts., 11/1/05
(10).................................................................... 700,000 399,000
Cellular Communications International, Inc., Zero Coupon Sr. Disc. Nts.,
12.892%, 8/15/00 (7).................................................... 1,500,000 997,500
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (10)................ 2,000,000 1,730,000
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07........................... 850,000 709,750
MFS Communications Co., Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04 (10)...... 1,000,000 853,750
Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 (6)............................ 2,500,000 2,550,000
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03 (10)............................. 1,700,000 1,389,750
10.75% Sr. Nts., 11/1/04 (6)(9)......................................... 600,000 604,688
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc. Nts., 7/1/07
(10).................................................................... 2,500,000 1,618,750
Western Wireless Corp.:
10.50% Sr. Sub. Nts., 2/1/07 (5)........................................ 1,500,000 1,505,625
10.50% Sr. Sub. Nts., 6/1/06............................................ 700,000 708,750
------------
15,167,563
------------
Total Corporate Sector (Cost $105,632,435)................................ 107,649,853
------------
</TABLE>
9
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- -------------
<S> <C> <C>
INTERNATIONAL SECTOR -- 37.0%
CORPORATE BONDS AND NOTES -- 8.8%
BASIC INDUSTRY -- 1.3%
Metals/Mining -- 0.5%
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 (6)..................... $ 1,500,000 $ 1,552,500
------------
Paper -- 0.8%
APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05.......... 750,000 774,375
Indah Kiat International Finance Co. BV, 12.50% Sr. Sec. Gtd. Nts., Series
C, 6/15/06.............................................................. 500,000 540,000
QUNO Corp., 9.125% Sr. Nts., 5/15/05...................................... 500,000 507,500
Tembec Finance Corp., 9.875% Gtd. Sr. Nts., 9/30/05....................... 750,000 723,750
------------
2,545,625
------------
CONSUMER RELATED -- 1.1%
Consumer Products -- 0.6%
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 (6)............... 1,500,000 1,702,500
------------
Food/Beverages/Tobacco -- 0.2%
Cott Corp., 9.375% Sr. Nts., 7/1/05....................................... 750,000 761,250
------------
Textile/Apparel -- 0.3%
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01........................... 750,000 826,875
------------
FINANCIAL SERVICES -- 3.1%
Banco Bamerindus do Brasil SA:
10.50% Debs., 6/23/97................................................... 750,000 744,844
11% Unsec. Unsub. Nts., 11/24/97........................................ 1,800,000 1,787,625
Banco de Colombia, 5.20% Cv. Jr. Sub. Unsec. Nts., 2/1/99................. 1,750,000 1,662,500
Banco Itamarati SA, 10.50% Medium-Term Nts., 11/29/96..................... 50,000 50,156
Bank Internationale Indonesia, Zero Coupon Negotiable CD, 15.912%, 1/6/97
(7) (IDR)............................................................... 7,500,000,000 3,134,670
Siam Commercial Bank Public Ltd., Zero Coupon Debs., 10.581%, 11/18/96 (7)
(THB)................................................................... 20,500,000 801,167
Snap Ltd., 11.50% Sec. Bonds, 1/29/09 (DEM)............................... 2,200,000 1,442,123
------------
9,623,085
------------
HOUSING RELATED -- 0.1%
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11 (6).......... 500,000 414,063
------------
</TABLE>
10
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
MEDIA -- 2.2%
Cable Television -- 1.9%
Bell Cablemedia PLC:
0%/11.875% Sr. Disc. Nts., 9/15/05 (10)................................. $ 1,250,000 $ 937,500
0%/11.95% Sr. Disc. Nts., 7/15/04 (10).................................. 2,000,000 1,655,000
Diamond Cable Communications PLC, 0%/11.75% Sr. Disc. Nts., 12/15/05
(10).................................................................... 1,200,000 792,000
Rogers Cablesystems Ltd., 10% Sr. Sec. Second Priority Debs., 12/1/07..... 500,000 502,500
TeleWest PLC, 0%/11% Sr. Disc. Debs., 10/1/07 (10)........................ 3,000,000 1,935,000
------------
5,822,000
------------
Entertainment/Film -- 0.3%
Imax Corp., 7% Sr. Nts., 3/1/01 (13)...................................... 1,000,000 1,000,000
------------
OTHER -- 0.2%
CE Casecnan Water & Energy, Inc., 11.45% Sr. Nts., Series A, 11/15/05..... 500,000 550,000
------------
TRANSPORTATION -- 0.3%
Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04........................... 750,000 813,750
------------
UTILITIES -- 0.5%
Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon Bonds, 11/15/03
(5)(10)................................................................. 1,000,000 630,000
Rogers Cantel, Inc., 9.375% Sr. Sec. Debs., 6/1/08........................ 750,000 759,375
------------
1,389,375
------------
FOREIGN GOVERNMENT OBLIGATIONS -- 18.7%
Argentina -- 1.2%
Argentina (Republic of):
Treasury Bills, Zero Coupon, 12.117%, 1/17/97 (7) (ARP)................. 1,000,000 983,996
Treasury Bills, Zero Coupon, 10.156%, 11/15/96 (7) (ARP)................ 1,000,000 997,960
Unsec. Unsub. Bonds, 11.50%, 8/14/01 (GBP).............................. 75,000 123,962
Banco Hipotecario Nacional (Argentina) Medium-Term Nts., 10.625%,
8/7/06.................................................................. 1,000,000 1,016,250
Buenos Aires (Province of) Bonds, 10%, 3/5/01 (DEM)....................... 680,000 471,955
------------
3,594,123
------------
Australia -- 1.1%
First Australia National Mortgage Acceptance Corp. Ltd. Bonds, Series 22,
11.40%, 12/15/01 (AUD).................................................. 1,575,355 1,370,218
New South Wales Treasury Corp. Gtd. Bonds, 12%, 12/1/01 (AUD)............. 2,010,000 1,919,267
------------
3,289,485
------------
</TABLE>
11
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
Brazil -- 0.5%
Banco Estado Minas Gerais, 8.25%, 2/10/00................................. $ 1,370,000 $ 1,301,500
Telecomunicacoes Brasileiras SA Bonds, 13%, 2/5/99 (ITL).................. 470,000,000 330,489
------------
1,631,989
------------
Bulgaria -- 0.7%
Bulgaria (Republic of):
Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 2.25%, 7/28/12
(3)(13).............................................................. 6,000,000 1,918,125
Interest Arrears Bonds, 6.688%, 7/28/11 (11)............................ 559,000 245,960
------------
2,164,085
------------
Canada -- 1.7%
Canada (Government of) Real Return Debs., 4.25%, 12/1/21 (14) (CAD)....... 6,525,000 5,322,873
------------
Costa Rica -- 0.4%
Central Bank of Costa Rica Interest Claim Bonds, Series B, 6.344%, 5/21/05
(5)(11)................................................................. 1,023,212 974,610
------------
Denmark -- 0.9%
Denmark (Kingdom of) Bonds, 8%, 11/15/01 (DKK)............................ 14,535,000 2,738,604
------------
Great Britain -- 3.0%
United Kingdom Treasury Nts., 13%, 7/14/00 (3) (GBP)...................... 4,660,000 9,006,412
------------
Italy -- 1.4%
Italy (Republic of):
Sr. Unsec. Unsub. Global Bonds, 0.563%, 7/26/99 (11) (JPY).............. 110,000,000 972,195
Treasury Bonds, Buoni del Tesoro Poliennali, 10.50%, 7/15/00 (ITL)...... 4,725,000,000 3,424,522
------------
4,396,717
------------
Jordan -- 1.2%
Hashemite Kingdom of Jordan:
Disc. Bonds, 6.625%, 12/23/23 (11)...................................... 2,250,000 1,760,625
Interest Arrears Bonds, 6.625%, 12/23/05 (11)........................... 2,260,000 2,005,750
------------
3,766,375
------------
Mexico -- 3.1%
Banco Nacional de Comercio Exterior SNC International Finance BV Gtd.
Nts., 8%, 8/5/03........................................................ 2,225,000 1,970,516
Bonos de la Tesoreria de la Federacion, Zero Coupon:
28.589%, 7/31/97 (7) (MXP).............................................. 6,200,000 632,077
27.799%, 9/4/97 (7) (MXP)............................................... 9,750,000 972,097
United Mexican States Bonds, 10.375%, 1/29/03 (DEM)....................... 8,700,000 6,046,841
------------
9,621,531
------------
</TABLE>
12
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
Norway -- 0.7%
Norwegian Government Bonds, 9.50%, 10/31/02 (NOK)......................... $ 12,315,000 $ 2,234,011
------------
Panama -- 0.3%
Panama (Republic of) Interest Reduction Bonds, 3.50%,
7/17/14 (13)............................................................ 1,500,000 986,250
------------
Portugal -- 0.4%
Portugal (Republic of) Bonds, Obrigicion do tes Medio Prazo, 11.875%,
2/23/00 (PTE)........................................................... 175,000,000 1,311,613
------------
Sweden -- 1.2%
Sweden (Kingdom of) Bonds, Series 1030, 13%, 6/15/01 (SEK)................ 19,200,000 3,668,359
------------
Venezuela -- 0.9%
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds:
Series A, 6.375%, 3/31/07 (11).......................................... 2,075,000 1,730,031
Series B, 6.50%, 3/31/07 (11)........................................... 1,250,000 1,042,188
------------
2,772,219
------------
LOAN PARTICIPATIONS -- 3.3%
Algeria (Republic of) Reprofiled Debt Loan Participation, Tranche A,
6.625%, 9/4/06 (5)(11).................................................. 6,000,000 4,275,000
Colombia (Republic of) Concorde Loan Participation, 8.625%, 1/31/98
(5)(11)................................................................. 499,492 494,497
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 5.531%, 10/16/00 (5)(11)..................................... 625,000 603,125
Tranche B, 6.312%, 11/15/04 (5)(11)..................................... 1,778,957 1,512,114
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.437%, 1/1/09 (11).......................................... 875,000 694,258
Tranche B, 6.437%, 1/1/04 (11).......................................... 882,352 783,088
Trinidad & Tobago Loan Participation Agreement:
Tranche A, 1.772%, 9/30/00 (5)(11) (JPY)................................ 96,000,000 751,186
Tranche B, 1.772%, 9/30/00 (5)(11) (JPY)................................ 96,000,000 751,187
United Mexican States, Combined Facility 3, Loan Participation Agreement,
Tranche A, 6.563%, 9/20/97 (5)(11)...................................... 193,194 166,872
------------
10,031,327
------------
</TABLE>
13
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Units See Note 1
----- ------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES -- 0.0%
Australis Media Ltd. Wts., Exp. 5/00 (5).............................. 80 $ 1
Comunicacion Celular SA Wts., Exp. 11/03 (5).......................... 1,000 65,000
------------
65,001
------------
</TABLE>
<TABLE>
<CAPTION>
Expiration
Date Strike Contracts
---- ------ ---------
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED -- 0.1%
Australian Dollar Put Opt.............. 1/97 0.78 AUD 2,070,000 8,694
Bulgaria (Republic of) Interest Arrears
Bonds:
6.688%, 7/28/11 Put Opt.............. 11/96 41.10% 500 3,350
6.688%, 7/28/11 Put Opt.............. 12/96 40.75% 6,000 59,400
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali,
9.50%, 2/1/06 Put Opt................ 7/97 99.96 ITL 2,548 11,212
Swiss Franc Put Opt.................... 1/97 1.256 CHF 12,672,242 225,312
------------
307,968
------------
</TABLE>
<TABLE>
<CAPTION>
Face Amount (1)
---------------
<S> <C> <C>
STRUCTURED INSTRUMENTS -- 6.1%
Bayerische Landesbank Girozentrale, New York Branch:
14% CD Linked Nts., 12/17/96 (indexed to the cross currency rates of
Greek Drachma and European Currency Unit)............................ $ 1,000,000 988,600
6.28% Deutsche Mark Currency Protected Yield Curve CD, 7/25/97.......... 1,000,000 998,950
Canadian Imperial Bank, 10% CD British Pound Sterling Maximum Rate Linked
Nts., 11/8/96 (indexed to the 3-month GBP LIBOR, multiplied by 9) (5)... 750,000 750,375
Canadian Imperial Bank of Commerce, New York Branch:
14% CD Linked Nts., 11/25/96 (indexed to the cross currency rates of
Greek Drachma and European Currency Unit)............................ 1,000,000 990,200
16.75% CD Linked Nts., 4/16/97 (indexed to the Federation GKO, Zero
Coupon, 4/9/97)...................................................... 2,000,000 1,990,000
17% CD Linked Nts., 2/26/97 (indexed to the Federation GKO, Zero Coupon,
2/19/97)............................................................. 1,000,000 997,000
17% CD Linked Nts., 4/2/97 (indexed to the Russian Federation GKO, Zero
Coupon, 3/26/97)..................................................... 1,000,000 995,500
Internationale Nederlanden (U.S.) Capital Holdings Corp.:
Zero Coupon Chilean Peso Linked Nts., 11.813%, 6/23/97 (7).............. 2,250,000 2,036,700
Zero Coupon Indian Rupee Linked Nts., 15.672%, 12/20/96 (7)............. 500,000 490,250
Lehman Brothers, Inc., Zero Coupon Citibank Czech Koruna Linked Nts.,
12.399%, 11/21/96 (7) (9) (CZK)......................................... 40,500,000 1,497,926
</TABLE>
14
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
STRUCTURED INSTRUMENTS (CONTINUED)
Morgan Guaranty Trust Co. of New York, Nassau Branch, Zero Coupon Indian
Rupee Currency Linked Nts., 17.392%, 11/27/96 (7)....................... $ 250,000 $ 248,142
Salomon Brothers, Inc., Zero Coupon:
Brazilian Credit Linked Nts., 12.38%, 1/3/97 (indexed to the Brazilian
National Treasury Nts., Zero Coupon, 1/2/97) (7)..................... 3,000,000 2,946,900
Chilean Peso Indexed Enhanced Access Nts., 12.145%, 12/11/96 (7)........ 1,000,000 969,100
Chilean Peso Indexed Enhanced Access Nts., 11.792%, 12/11/96 (7)........ 1,000,000 969,400
Chilean Peso Indexed Enhanced Access Nts., 12.218%, 12/18/96 (7)........ 500,000 482,850
Swiss Bank Corp., New York Branch, 6.05% CD Linked Nts., 6/20/97 (indexed
to the closing Nikkei 225 Index on 1/23/97, 5 yr. & 3 mos. Japanese Yen
Swap rate & New Zealand Dollar)......................................... 1,000,000 1,009,250
------------
18,361,143
------------
Total International Sector (Cost $109,112,559)............................ 113,245,718
------------
</TABLE>
15
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
MORTGAGE-BACKED SECTOR -- 22.3%
GOVERNMENT AGENCY -- 20.9%
FHLMC/FNMA/Sponsored -- 13.9%
Federal Home Loan Mortgage Corp.:
Certificates of Participation, 12%, 10/1/11............................. $ 359,173 $ 412,072
Certificates of Participation, 12%, 10/1/14............................. 191,808 216,086
Certificates of Participation, 12%, 5/1/10.............................. 680,507 774,635
Certificates of Participation, 12%, 6/1/15.............................. 284,054 326,927
Certificates of Participation, 12%, 8/1/13.............................. 44,889 51,665
Certificates of Participation, 12%, 8/1/14.............................. 659,623 759,180
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, Series 1343, Cl. LA, 8%, 8/15/22....................... 1,000,000 1,037,500
Gtd. Multiclass Mtg. Participation Certificates, 7.50%, 5/1/26.......... 3,976,495 3,999,996
Interest-Only Stripped Mtg.-Backed Security, Trust 177, Cl. B,
6.90%-7.20%, 7/15/26 (15)............................................ 25,159,524 8,974,874
Federal National Mortgage Assn.:
11%, 7/1/16............................................................. 1,013,626 1,158,702
7%, 11/1/25............................................................. 18,111,159 17,789,506
7.50%, 6/1/10........................................................... 1,901,629 1,937,798
8%, 11/15/26 (9)........................................................ 2,500,000 2,550,000
Gtd. Mtg. Pass-Through Certificates, 13%, 6/1/15........................ 1,307,757 1,551,733
Principal-Only Stripped Mtg.-Backed Security, Trust 4, Cl. J, Zero
Coupon, 2.261%, 9/25/22 (16)......................................... 1,700,000 1,026,375
------------
42,567,049
------------
GNMA/Guaranteed -- 7.0%
Government National Mortgage Assn.:
6%, 11/15/26 (9)........................................................ 3,000,000 3,005,625
7%, 3/15/26-4/15/26..................................................... 4,530,679 4,445,865
7.50%, 8/15/25.......................................................... 8,845,824 8,866,258
8%, 12/15/26 (9)........................................................ 2,500,000 2,550,775
11%, 11/15/26 (9)....................................................... 804,000 915,298
12%, 11/20/13-9/20/15................................................... 801,014 911,817
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-5, Cl. PQ, 7.493%,
7/16/24.............................................................. 750,000 755,152
------------
21,450,790
------------
</TABLE>
16
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount (1) See Note 1
--------------- ------------
<S> <C> <C>
PRIVATE -- 1.4%
Commercial -- 0.8%
Asset Securitization Corp., Series 1996-D3, Cl. A5, 8.165%, 10/13/26
(5)..................................................................... $ 500,000 $ 517,187
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D-1, 7.51%, 2/15/28 (5)(11)......................... 1,000,000 983,125
NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series-DMC:
Cl. B, 8.562%, 8/12/11 (5).............................................. 400,000 404,063
Cl. C, 8.921%, 8/12/11 (5).............................................. 400,000 403,938
------------
2,308,313
------------
Multi-Family -- 0.2%
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06 (5)................ 750,000 593,438
------------
Other -- 0.1%
Nomura Asset Securities Corp., Series 1994-MD1, Cl. B2, 8.422%, 3/15/18
(6)(11)................................................................. 500,000 442,852
------------
Residential -- 0.3%
Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.136%,
4/25/26................................................................. 1,344,444 803,306
------------
Total Mortgage-Backed Sector (Cost $68,274,518)........................... 68,165,748
------------
MONEY MARKET SECTOR -- 3.6%
Repurchase agreement with Zion First National Bank, 5.52%, dated 10/31/96,
to be repurchased at $10,901,671 on 11/1/96, collateralized by U.S.
Treasury Nts., 5.75%-9.25%, 5/15/97-8/15/04, with a value of $11,129,860
(Cost $10,900,000)...................................................... 10,900,000 10,900,000
------------
Total Investments, at Value (Cost $304,725,289)........................... 101.9% 312,038,897
Liabilities in Excess of Other Assets..................................... (1.9) (5,857,577)
--------------- ------------
Net Assets................................................................ 100.0% $306,181,320
--------------- ------------
--------------- ------------
</TABLE>
17
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (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> <C>
ARP -- Argentine Peso IDR -- Indonesian Rupiah
AUD -- Australian Dollar ITL -- Italian Lira
CAD -- Canadian Dollar JPY -- Japanese Yen
CHF -- Swiss Franc MXP -- Mexican Peso
CZK -- Czech Koruna NOK -- Norwegian Krone
DEM -- German Deutsche Mark PTE -- Portuguese Escudo
DKK -- Danish Krone SEK -- Swedish Krona
GBP -- British Pound Sterling THB -- Thai Baht
</TABLE>
2. Securities with an aggregate market value of $1,477,791 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
3. A sufficient amount of securities has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
Face/Contracts Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
---------------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Call Option on Australian Dollar................... 2,070,000 11/27/96 1.263AUD $ 9,936 $ 8,694
Call Option on Banco Hipotecario Nacional
(Argentina) Medium Term Nts., 10.625%, 8/7/06.... 1,000 8/7/00 100% 9,200 20,000
Call Option on British Pound Sterling.............. 950,000 1/30/97 0.613GBP 21,394 24,890
Call Option on Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds, Tranche A,
2.25%, 7/28/12................................... 3,000 12/4/96 32.75% 22,500 46,500
Call Option on Bulgaria (Republic of) Front-Loaded
Interest Reduction Bearer Bonds, Tranche A,
2.25%, 7/28/12................................... 3,000 12/11/96 32.13% 17,100 60,000
Call Option on Bulgaria (Republic of) Interest
Arrears Bonds, 6.688%, 7/28/11................... 500 11/29/96 47.10% 2,850 3,000
Call Option on Swiss Franc......................... 6,250,000 1/6/97 1.20CHF 24,343 15,469
-------- ------------
$107,323 $178,553
-------- ------------
-------- ------------
</TABLE>
4. Non-income producing security.
5. Identifies issues considered to be illiquid -- See Note 8 of Notes to
Financial Statements.
6. 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 $19,875,634 or 6.49% of the Trust's net
assets, at October 31, 1996.
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. Non-income producing -- issuer is in default of interest payment.
9. When-issued security to be delivered and settled after October 31, 1996.
10. Denotes a step bond: a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
11. Represents the current interest rate for a variable rate security.
12. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
13. Represents the current interest rate for an increasing rate security.
14. Indexed instrument for which the principal amount and/or interest is
affected by the relative value of a foreign index.
15. 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.
16. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment
rates rise. The price of these securities is typically more volatile than
that of coupon-bearing bonds of the same maturity. Interest rates disclosed
represent current yields based upon the current cost basis and estimated
timing of future cash flows.
See accompanying Notes to Financial Statements.
18
<PAGE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES October 31, 1996
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $304,725,289) -- see accompanying statement................. $312,038,897
Cash...................................................................................... 63,053
Unrealized appreciation on forward foreign currency exchange contracts -- Note 5........ 39,636
Receivables:
Investments sold........................................................................ 11,923,650
Interest and principal paydowns......................................................... 5,751,475
Closed forward foreign currency exchange contracts...................................... 360,796
Daily variation on futures contracts -- Note 6........................................ 32,813
Other..................................................................................... 21,129
------------
Total assets......................................................................... 330,231,449
------------
LIABILITIES:
Options written, at value (premiums received $107,323) -- see accompanying
statement -- Note 7................................................................... 178,553
Unrealized depreciation on forward foreign currency exchange
contracts -- Note 5................................................................... 5,744
Payables and other liabilities:
Investments purchased (including $15,967,473 purchased on a when-issued basis) -- Note
1.................................................................................... 23,385,124
Trustees' fees.......................................................................... 150,132
Closed forward foreign currency exchange contracts...................................... 138,861
Management and administrative fees...................................................... 72,923
Other................................................................................... 118,792
------------
Total liabilities.................................................................... 24,050,129
------------
NET ASSETS................................................................................ $306,181,320
------------
------------
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest................................................ $ 291,161
Additional paid-in capital................................................................ 315,440,767
Undistributed net investment income....................................................... 556,961
Accumulated net realized loss on investments and foreign currency transactions............ (17,508,519)
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies....................................................... 7,400,950
------------
NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding........ $306,181,320
------------
------------
NET ASSET VALUE PER SHARE................................................................. $10.52
------
------
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE>
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended October 31, 1996
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $8,969)....................................... $29,402,390
Dividends................................................................................... 183,032
-----------
Total income........................................................................... 29,585,422
-----------
EXPENSES:
Management fees -- Note 4................................................................. 1,939,377
Administrative fees -- Note 4............................................................. 596,733
Shareholder reports......................................................................... 173,286
Custodian fees and expenses................................................................. 133,049
Trustees' fees and expenses -- Note 1..................................................... 93,175
Transfer agent and accounting service fees -- Note 4...................................... 71,592
Legal and auditing fees..................................................................... 37,084
Registration and filing fees................................................................ 29,098
Other....................................................................................... 40,531
-----------
Total expenses......................................................................... 3,113,925
-----------
NET INVESTMENT INCOME....................................................................... 26,471,497
-----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments (including premiums on options exercised)..................................... 8,093,575
Closing of futures contracts.............................................................. (536,439)
Closing and expiration of options written -- Note 7..................................... (403,592)
Foreign currency transactions............................................................. 722,589
-----------
Net realized gain...................................................................... 7,876,133
-----------
Net change in unrealized appreciation or depreciation on:
Investments............................................................................... 3,143,529
Translation of assets and liabilities denominated in foreign currencies................... (117,257)
-----------
Net change............................................................................. 3,026,272
-----------
NET REALIZED AND UNREALIZED GAIN............................................................ 10,902,405
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................ $37,373,902
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................................................... $ 26,471,497 $ 27,458,297
Net realized gain (loss)....................................................... 7,876,133 (9,847,515)
Net change in unrealized appreciation or depreciation.......................... 3,026,272 8,597,737
------------ ------------
Net increase in net assets resulting from operations...................... 37,373,902 26,208,519
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income........................................... (26,320,905) (26,608,817)
Tax return of capital distribution............................................. -- (625,807)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares issued to shareholders in reinvestment of
dividends -- Note 2........................................................ -- 496,299
------------ ------------
Total increase (decrease)...................................................... 11,052,997 (529,806)
NET ASSETS:
Beginning of period............................................................ 295,128,323 295,658,129
------------ ------------
End of period [including undistributed (overdistributed) net investment income
of $556,961 and $(113,075), respectively].................................... $306,181,320 $295,128,323
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.14 $ 10.17 $ 10.96 $ 10.46 $ 10.64
-------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income................ .91 .94 1.00 1.08 1.06
Net realized and unrealized gain
(loss)............................. .37 (.04) (.82) .43 (.08)
-------- -------- -------- -------- --------
Total income from investment
operations....................... 1.28 .90 .18 1.51 .98
-------- -------- -------- -------- --------
Dividends and distributions to
shareholders:
Dividends from net investment
income............................. (.90) (.91) (.84) (1.01) (1.16)
Tax return of capital distribution... -- (.02) (.13) -- --
-------- -------- -------- -------- --------
Total dividends and distributions
to shareholders.................. (.90) (.93) (.97) (1.01) (1.16)
-------- -------- -------- -------- --------
Net asset value, end of period......... $ 10.52 $ 10.14 $ 10.17 $ 10.96 $ 10.46
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Market value, end of period............ $ 9.88 $ 10.00 $ 9.50 $ 11.25 $ 11.13
TOTAL RETURN, AT MARKET VALUE(1)....... 7.85% 15.62% (7.46)% 11.10% 11.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $306,181 $295,128 $295,658 $316,647 $299,368
Average net assets (in thousands)...... $298,496 $288,884 $306,686 $307,244 $303,773
Ratios to average net assets:
Net investment income.............. 8.87% 9.51% 9.17% 10.13% 9.95%
Expenses........................... 1.04% 1.05% 1.02% 1.00% 1.11%
Portfolio turnover rate(2)............. 225.4% 240.1% 187.6% 131.3% 95.9%
</TABLE>
(1) 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.
(2) 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 year ended October 31, 1996 were $620,563,409
and $621,303,130, respectively. For the years ended October 31, 1995 and
1994, purchases and sales of investment securities included mortgage
'dollar-rolls.'
See accompanying Notes to Financial Statements.
22
<PAGE>
<PAGE>
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 objective is to seek high
current income. The Trust's investment adviser is OppenheimerFunds, Inc. (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 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
foreign currency contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. Options are valued based upon the last
sale price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last sale
price on the prior trading date if it is within the spread between the closing
bid and asked prices. If the last sale price is outside the spread, the closing
bid is used.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities that have been purchased by the Trust on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Trust maintains, in a segregated account with its custodian, assets with a
market value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Trust's net asset value to the extent the Trust makes such
purchases while remaining substantially fully invested. As of October 31, 1996,
the Trust had entered into outstanding when-issued or forward commitments of
$15,967,473.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Trust may enter into mortgage 'dollar-rolls`!' in
which the Trust sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Trust records each dollar-roll as a sale and a new purchase
transaction.
Security Credit Risk -- The Trust invests in high yield securities, which may
be subject to a greater degree of credit risk, greater market fluctuations and
risk of loss of income and principal, and may be more sensitive to eco-
23
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
nomic conditions than lower yielding, higher rated fixed income securities. The
Trust may acquire securities in default, and is not obligated to dispose of
securities whose issuers subsequently default. At October 31, 1996, securities
with an aggregate market value of $345,000, representing 0.11% of the Trust's
net assets, were in default.
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, 1996, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $15,600,000, which expires between 1999 and 2003.
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, 1996, a provision of $41,911 was made for the Trust's
projected benefit obligations and payments of $4,853 were made to retired
trustees, resulting in an accumulated liability of $150,132 at October 31, 1996.
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. 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, 1996, the Fund adjusted the classification of
distributions to shareholders to reflect the differences between financial
statement amounts and distributions determined in accordance with
24
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
income tax regulations. Accordingly, during the year ended October 31, 1996,
amounts have been reclassified to reflect an increase in undistributed net
investment income of $459,398. Accumulated net realized loss on investments was
increased by the same amount. In addition, to properly reflect foreign currency
gain in the components of capital, $60,046 of foreign exchange gain determined
according to U.S. Federal income tax rules has been reclassified from
accumulated net realized loss to undistributed net investment income.
Other -- Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. Dividends in kind are recognized as income
on the ex-dividend date, at the current market value of the underlying security.
Interest on payment-in-kind debt instruments is accrued as income at the coupon
rate and a market adjustment is made periodically.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. 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 October 31,
------------------------------------
1996 1995
--------------- -----------------
Shares Amount Shares Amount
------ ------ ------ --------
<S> <C> <C> <C> <C>
Net increase from
dividends
reinvested...... -- $ -- 51,219 $496,299
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1996 net unrealized appreciation on investments and options
written of $7,242,379 was composed of gross appreciation of $10,513,258, and
gross depreciation of $3,270,879.
4. 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 0.65% 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 0.20% 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.
25
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The 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.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statement of Assets and Liabilities. Realized gains and losses are reported with
all other foreign currency gains and losses in the 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.
At October 31, 1996, the Trust had outstanding forward contracts to
purchase and sell currencies as follows:
<TABLE>
<CAPTION>
Contract
Amount Valuation as of Unrealized Unrealized
Contracts to Purchase Expiration Date (000s) October 31, 1996 Appreciation Depreciation
- --------------------------------- ------------------ --------- --------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Italian Lira (ITL)............... 10/20/97-10/30/97 2,803,294 ITL $1,822,865 $12,819 $ --
Mexican Peso (MXP)............... 11/1/96 5,078 MXP 630,001 -- 5,320
Spanish Peseta (ESP)............. 10/20/97 149,800 ESP 1,161,379 10,820 --
---------- ------- ------
$3,614,245 23,639 5,320
Contracts to Sell
- -----------------
Japanese Yen (JPY)............... 12/20/96-10/30/97 125,000 JPY $1,131,759 $ 4,635 $ 424
Swiss Franc (CHF)................ 10/20/97 2,810 CHF 2,294,745 11,362 --
---------- ------- ------
$3,426,504 15,997 424
---------- ------- ------
----------
Total Unrealized Appreciation and Depreciation $39,636 $5,744
------- ------
------- ------
</TABLE>
6. FUTURES CONTRACTS
The Trust may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Trust may also buy
or write put or call options on these futures contracts.
The Trust generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Trust may also purchase futures contracts to gain
exposure to changes in interest rates as it may be
26
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
more efficient or cost effective than actually buying fixed income securities.
Upon entering into a futures contract, the Trust is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Trust 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 Trust recognizes a realized gain or loss when the contract is closed
or expires.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
At October 31, 1996, the Trust had outstanding futures contracts to purchase
debt securities as follows:
<TABLE>
<CAPTION>
Number Valuation
of as of
Expiration Futures October 31, Unrealized
Date Contracts 1996 Appreciation
---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury
Bonds....... 12/96 90 $10,170,000 $109,219
</TABLE>
7. OPTION ACTIVITY
The Trust may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The 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.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the 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.
27
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
Written option activity for the year ended October 31, 1996 was as follows:
<TABLE>
<CAPTION>
Call Options
-----------------------
Number of Amount of
Options Premiums
----------- ---------
<S> <C> <C>
Options outstanding at October
31, 1995..................... 7,745 $ 91,447
Options written................ 36,665,597 460,599
Options closed or expired...... (25,233,036) (426,961)
Options exercised.............. (2,162,806) (17,762)
----------- ---------
Options outstanding at October
31, 1996..................... 9,277,500 $ 107,323
----------- ---------
----------- ---------
Put Options
-----------------------
Number of Amount of
Options Premiums
----------- ---------
Options outstanding at October
31, 1995..................... -- $ --
Options written................ 2,177 75,337
Options closed................. (2,177) (75,337)
----------- ---------
Options outstanding at October
31, 1996..................... -- $ --
----------- ---------
----------- ---------
</TABLE>
8. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1996, investments in securities included issues that are illiquid
or restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily-available market or if its valuation has not
changed for a certain period of time. The Trust intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed from time
to time) in illiquid or restricted securities. Certain restricted securities,
eligible for resale to qualified institutional investors, are not subject to
that limit. The aggregate value of illiquid or restricted securities subject to
this limitation at October 31, 1996 was $17,270,027, which represents 5.64% of
the Trust's net assets. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation
Per Unit
as of
Acquisition Cost October 31,
Security Date Per Unit 1996
- -------- ----------- -------- -----------
<S> <C> <C> <C>
Arizona Charlie's Inc., 12% First Mtg. Nts. Series A, 11/15/00........... 11/18/93 $100.00 $ 70.00
Becker Gaming, Inc. Wts., Exp. 11/00..................................... 11/18/93 2.00 0.25
Canadian Imperial Bank, 10% CD British Pound Sterling Maximum Rate Linked
Nts., 11/8/96.......................................................... 4/28/95 100.00 100.05
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00.... 11/18/93 87.50 75.00
Triangle Wire & Cable, Inc. Common Stock................................. 5/2/94 9.50 1.00
</TABLE>
28
<PAGE>
<PAGE>
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, 1996 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 five year period then
ended. 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, 1996 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, 1996 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 five year period then ended, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1996
29
<PAGE>
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer Multi-Sector Income Trust
In early 1997 shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1996. 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, 1996 which
are not designated as capital gain distributions should be multiplied by 0.68%
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 adviser for specific guidance.
SHAREHOLDER MEETING (Unaudited)
On May 21, 1996, 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 auditors of the Trust for the fiscal year beginning
November 1, 1995 was ratified (Proposal No. 1). The following is a report of the
votes cast:
<TABLE>
<CAPTION>
Withheld/ Broker
Nominee/Proposal For Against Abstain Non Votes Total
- ---------------------------------------- ---------- ------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Bridget A. Macaskill.................... 22,816,761 375,783 -- 1,943,021 25,135,565
Elizabeth Moynihan...................... 22,178,992 413,552 -- 1,943,021 25,135,565
Sidney M. Robbins....................... 22,754,739 437,805 -- 1,943,021 25,135,565
Donald W. Spiro......................... 22,809,389 383,155 -- 1,943,021 25,135,565
Pauline Trigere......................... 22,773,588 418,956 -- 1,943,021 25,135,565
Proposal No. 1.......................... 22,794,873 115,279 282,392 1,943,021 25,135,565
</TABLE>
30
<PAGE>
<PAGE>
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. 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 adviser to the
Trust is OppenheimerFunds, Inc. (the Manager).
The Portfolio Managers of the Trust are Robert E. Patterson, Thomas P. Reedy,
David A. Rosenberg, Ashwin K. Vasan, Carol E. Wolf and Arthur J. Zimmer and who
also serve as Vice Presidents of the Trust and of the Manager, and are officers
of certain mutual funds managed by the Manager (Oppenheimer funds). Messrs.
Reedy, Rosenberg and Vasan have been the persons principally responsible for the
day-to-day management of the Trust's portfolio since August 1993, June 1994 and
August 1993, respectively. During the past five years, 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
Advisers and one of its mutual funds, Mr. Vasan served as a securities analyst
for Citibank, N.A. and Mr. Zimmer served as a Vice President of Hanifen Imhoff
Management Company.
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 $0.75.
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 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.
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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 and each Sunday in the The New York Times and each Saturday in Barron's,
and other newspapers in a table called 'Closed-End Bond Funds."
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OPPENHEIMER MULTI-SECTOR INCOME TRUST
Officers And Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the
Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Thomas P. Reedy, Vice President
David A. Rosenberg, Vice President
Ashwin K. Vasan, Vice President
Carol E. Wolf, Vice President
Arthur J. Zimmer, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Adviser
OppenheimerFunds, Inc.
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.
RA0680.001.1296 [Logo] Printed on recycled paper
1996 ANNUAL REPORT
OPPENHEIMER
MULTI-SECTOR
INCOME TRUST
OCTOBER 31, 1996
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