<PAGE> 1
1997 Annual Report
OPPENHEIMER
Multi-Sector
Income Trust
October 31, 1997
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
Oppenheimer Multi-Sector Income Trust maintained its overall positive returns
for the past year, due to continued slower worldwide growth and generally
favorable inflation trends around the globe. As of October 31, 1997, the
Trust's one-year total return was 11.40%, at market value, and its dividend
return was 8.20%.(1) The Trust's net asset value rose and the yield remained
steady, although returns lagged our peer group because we took a defensive
stance against interest rate exposure early in the year. After the Federal
Reserve's slight rate increase in March 1997, which had a minor dampening
effect on the markets, we repositioned our holdings to take advantage of higher
returns.
INVESTMENT BREAKDOWN:
OPPENHEIMER MULTI-SECTOR INCOME
TRUST AS OF 10/31/97:(4)
35.1%
23.5%
10.0%
9.7%
9.5% [PIE CHART]
5.5%
5.5%
1.2%
- - U.S. corporate bonds & notes: 35.1%
- - U.S. government obligations -- Agency: 23.5%
- - Foreign government obligations: 10.0%
- - Short-term securities: 9.7%
- - U.S. government obligations -- Treasury: 9.5%
- - Structured notes: 5.5%
- - Foreign corporate bonds & notes: 5.5%
- - Equity securities: 1.2%
Over the year, three of the Trust's investment sectors -- U.S. government
securities, lower-rated, high-yield domestic corporate bonds and foreign
fixed-income securities -- benefited from advantageous conditions in most of
the world's fixed-income markets.
In spite of frequent bouts of short-term market volatility, the U.S. economy
continued to provide moderate growth, inflation remained insignificant, and
the economy continued to provide good investment opportunities. This
low-inflationary growth environment was beneficial for the bond market, because
when inflation is low, interest rates generally stay low and bond prices remain
stable. As a result, the U.S. Treasury market rallied strongly. Another strong
area was mortgage-backed securities, and the Trust was overweighted in this
sector all year. Although mortgage rates declined, homeowner refinancings
stayed surprisingly low. This helped keep volatility down and mortgage-backed
security prices up.(2)
About a third of the Trust's assets were in high-yield corporate bonds where we
favored sectors that were demonstrating strong growth.(3) We particularly liked
1. Total return is based on the change in market value per share from 10/31/96
to 10/31/97, without deducting any sales charges or brokerage costs. Returns
would have been lower if sales charges were deducted. Dividend return is
determined by annualizing the October 1997 dividend of $0.07 and dividing by
the closing market price on the New York Stock Exchange of $10.25 per share on
10/24/97 (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. Investors in high-yield bonds are subject to greater risk that the issuer
will default in its principal or interest payments.
4. Portfolio composition is subject to change. Chart is based on total
investments at market value.
<PAGE> 3
telecommunications providers which generally contributed good, though volatile,
high-yield returns. The break-up of monopolies, both in the United States and
abroad, also benefited some new companies in the high-yield sector.
The Trust's investments in foreign fixed-income securities delivered mixed
performance. On the positive side, about 57% of our foreign bond holdings were
in emerging markets, mainly Latin America and some Eastern European areas.
Because many of the emerging market bonds are primarily U.S.
dollar-denominated, they don't generally carry the usual foreign currency
exchange risks. When emerging markets experience strong growth, as they did
last year, their bonds generally perform well. (This is in contrast to
developed market bonds which often sell off when growth is strong because of
inflation fears.) The Trust's performance was not significantly impacted by the
Southeast Asian currency crisis.
On the other hand, bonds issued by developed countries were disappointing,
primarily because the U.S. dollar was strong versus major European currencies.
When the U.S. dollar is strong or rising compared to other currencies,
generally those other currencies are weak or falling. Consequently, generally
when the dollar rises, the value of investments--such as foreign
bonds--denominated in non-U.S. currencies falls. To help control currency
exchange rate risks, we partially hedged our European currency positions and
diversified broadly. Of course, any foreign investment, especially emerging
markets investment, entails greater expenses and risks, such as adverse market
changes due to currency fluctuations. But by diversifying the portfolio by
country and industry, we aim to help reduce those risks.
However, generalized interest rate hikes worldwide could impair the
environment. In early October, world markets experienced a series of
interest-rate shocks, as several European countries modestly increased
short-term rates. At the same time, Alan Greenspan, Chairman of the Federal
Reserve, cautioned about U.S. job wage pressures and too-strong financial
markets. His comments caused concerns in the markets; however, the markets
seemed to recover quickly.
As always, we appreciate the trust you have placed in OppenheimerFunds, The
Right Way to Invest. We look forward to helping you meet your investment goals
with Oppenheimer Multi-Sector Income Trust.
Sincerely,
[SIGNATURE]
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
November 21, 1997
<PAGE> 4
`STATEMENT OF INVESTMENTS October 31, 1997
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
U.S. GOVERNMENT SECTOR -- 10.4%
TREASURY -- 10.3%
U.S. Treasury Bonds:
11.875%, 11/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,130,000 $ 2,776,990
7.125%, 2/15/23(2) . . . . . . . . . . . . . . . . . . . . . . . . . 5,497,000 6,113,698
STRIPS, Zero Coupon, 6.85%, 2/15/19(3) . . . . . . . . . . . . . . . 11,000,000 2,908,015
U.S. Treasury Nts.:
6%, 8/15/00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 806,750
6.125%, 8/31/98 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,151,000 1,156,396
6.25%, 2/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . 490,000 500,413
6.25%, 2/28/02(4) . . . . . . . . . . . . . . . . . . . . . . . . . 793,000 807,621
7%, 4/15/99(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,455,000 13,711,493
7.50%, 10/31/99 . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,104,064
-----------
31,885,440
-----------
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
------ ----------- -------------
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED -- 0.1%
U.S. Treasury, 30 yr. Futures, 12/97 Call
Opt. . . . . . . . . . . . . . . . . . . . . . 11/97 $118 180 230,625
-----------
Total U.S. Government Sector (Cost $31,498,519) . . 32,116,065
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares
-------------
<S> <C> <C>
CONVERTIBLE SECTOR -- 1.4%
PREFERRED STOCKS -- 0.9%
American Radio Systems Corp., 11.375% Cum. Exchangeable
Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,170 735,772
CGA Group Ltd., Preferred(5)(6) . . . . . . . . . . . . . . . . . . . 32,000 800,000
Crown American Realty Trust, 11% Cum. Non-Vtg. Preferred,
Series A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 217,000
Del Monte Foods Corp., 14% Preferred Stock(7) . . . . . . . . . . . . . 250 250,625
Intermedia Communications, Inc., 13.50% Exchangeable
Preferred Stock, Series B(7) . . . . . . . . . . . . . . . . . . . . 500 591,250
Spanish Broadcasting Systems, Inc., 14.25% Cum. Sr.
Exchangeable Preferred Stock, Non-Vtg.(7)(8) . . . . . . . . . . . . 175 185,938
-----------
2,780,585
-----------
OTHER SECURITIES -- 0.4%
SD Warren Co., 14% Cum. Exchangeable, Series B(5)(6) . . . . . . . . . 25,000 1,156,250
-----------
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Units See Note 1
------------- -------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES -- 0.1%
American Communications Services, Inc. Wts., Exp. 11/05(6) . . . . . . 700 $ 59,500
American Telecasting, Inc. Wts., Exp. 6/99(6) . . . . . . . . . . . . . 4,750 47
Ames Department Stores, Inc., Litigation Trust(6) . . . . . . . . . . . 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/00(6) . . . . . . . . . . . . . . . . 25,000 5,000
Cellular Communications International, Inc. Wts., Exp. 8/03(6) . . . . 2,500 42,500
CGA Group Ltd. Wts., Exp. 12/49(6) . . . . . . . . . . . . . . . . . . 32,000 16,000
Clearnet Communications, Inc. Wts., Exp. 9/05 . . . . . . . . . . . . . 330 2,310
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(6) . . . . . . . . . . . 1,000 28,000
ICG Communications, Inc. Wts., Exp. 9/05(6) . . . . . . . . . . . . . . 4,125 61,875
In-Flight Phone Corp. Wts., Exp. 8/02 . . . . . . . . . . . . . . . . . 900 --
NEXTLINK Communications, Inc. Wts., Exp. 2/09(6) . . . . . . . . . . . 15,000 150
Orion Network Systems, Inc. Wts., Exp. 1/07 . . . . . . . . . . . . . . 975 12,188
Protection One, Inc. Wts., Exp. 6/05(6) . . . . . . . . . . . . . . . . 6,400 81,600
UNIFI Communications, Inc. Wts., Exp. 3/07(6) . . . . . . . . . . . . . 500 1,000
Wireless One, Inc. Wts., Exp. 10/00(6) . . . . . . . . . . . . . . . . 1,500 15
-----------
311,474
-----------
Total Convertible Sector (Cost $3,382,149) . . . . . . . . . . . . . . 4,248,309
-----------
<CAPTION>
Shares
----------------
<S> <C> <C>
CORPORATE SECTOR -- 36.6%
COMMON STOCKS -- 0.0%
Capital Gaming International, Inc.(5) . . . . . . . . . . . . . . . . . 18 --
Optel, Inc.(5)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . 815 8
-----------
8
-----------
<CAPTION>
Face Amount(1)
----------------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- 36.6%
BASIC INDUSTRY -- 2.3%
Chemicals -- 1.1%
ICO, Inc., 10.375% Sr. Nts., 6/1/07(8) . . . . . . . . . . . . . . . . $475,000 510,625
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07(8) . . . . . . . 750,000 753,750
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(8) . . . . 600,000 597,000
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Sub. Nts., 8/1/07(8) . . 600,000 612,000
Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06 . . . . 600,000 667,500
-----------
3,140,875
-----------
Containers -- 0.4%
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(6) . . . . 750,000 813,750
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 . . . . . . . 250,000 265,000
-----------
1,078,750
-----------
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Paper -- 0.1%
Four M Corp., 12% Sr. Nts., Series B, 6/1/06(6) . . . . . . . . . . . . $ 300,000 $ 321,000
-----------
Steel -- 0.7%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 . . . . . . . . . . . . . . . 700,000 731,500
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 . . . . . . . . . 525,000 567,000
Keystone Consolidated Industries, Inc., 9.625% Sr. Nts., 8/1/07(8) . . 900,000 918,000
-----------
2,216,500
-----------
CONSUMER RELATED -- 5.8%
Consumer Products -- 0.4%
Coleman Escrow Corp., Zero Coupon Sr. First Priority Disc. Nts.,
10.71%, 5/15/01(3)(8) . . . . . . . . . . . . . . . . . . . . . . . 800,000 516,000
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07(8) . . . . . . . . . . . . 500,000 512,500
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
10.947%, 3/15/01(3) . . . . . . . . . . . . . . . . . . . . . . . . 455,000 311,675
-----------
1,340,175
-----------
Food/Beverages/Tobacco -- 0.6%
CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., Series B, 1/15/04 . . . . . 600,000 579,000
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 . . . . 500,000 532,500
Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07 . . . . . . . . 700,000 717,500
-----------
1,829,000
-----------
Healthcare -- 0.7%
Integrated Health Services, Inc.:
11% Sr. Sub. Nts., 4/30/06(12) . . . . . . . . . . . . . . . . . . . 15,000 15,900
9.50% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . . . . . . . . . 1,200,000 1,245,000
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(8) . . . . . . 800,000 812,000
-----------
2,072,900
-----------
Hotel/Gaming -- 2.7%
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series B, 11/15/00(6)(9) 550,000 295,625
Capital Gaming International, Inc., Promissory Nts., 8/1/95(9) . . . . 5,500 --
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00(6)(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 28,500
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07(8) . . . . . . . . . . 875,000 884,844
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 . . . . . 750,000 716,250
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 . . . . . . 250,000 265,625
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05 . . . . . 500,000 517,500
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . 1,000,000 1,025,000
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 1,156,500
</TABLE>
5
<PAGE> 7
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Hotel/Gaming (Continued)
Rio Hotel & Casino, Inc., 9.50% Gtd. Sr. Sub. Nts., 4/15/07 . . . . . . $ 500,000 $ 522,500
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 . . . . . . 1,000,000 1,147,500
Signature Resorts, Inc., 9.75% Sr. Nts., 10/1/07(8) . . . . . . . . . . 530,000 537,950
Station Casinos, Inc., 10.125% Sr. Sub. Nts., 3/15/06 . . . . . . . . . 1,325,000 1,358,125
-----------
8,455,919
-----------
Restaurants -- 0.1%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 . . . . . . . . . . . . . . . 230,000 244,375
-----------
Textile/Apparel -- 1.3%
CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03(6) . . . . . . . . . 575,000 563,500
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03(6) . . 500,000 527,500
Dan River, Inc., 10.125% Sr. Sub. Nts., 12/15/03 . . . . . . . . . . . 800,000 854,000
Tultex Corp., 9.625% Sr. Nts., 4/15/07 . . . . . . . . . . . . . . . . 700,000 722,750
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 . . . . . . . 750,000 791,250
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 . . . . . 500,000 527,500
-----------
3,986,500
-----------
ENERGY -- 3.2%
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . 1,310,000 1,342,750
Canadian Forest Oil Ltd., 8.75% Sr. Sub. Nts., 9/15/07(8) . . . . . . . 90,000 89,749
Chesapeake Energy Corp.:
12% Gtd. Sr. Exchangeable Nts., 3/1/01 . . . . . . . . . . . . . . . 1,000,000 1,080,000
9.125% Sr. Nts., 4/15/06 . . . . . . . . . . . . . . . . . . . . . . 700,000 724,500
Dailey International, Inc., 9.75% Gtd. Sr. Unsec. Nts.,
8/15/07(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 522,500
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B, 2/15/07 . . . . . . . . . . . . . . . 250,000 250,000
9.50% Sr. Sub. Nts., 11/1/06 . . . . . . . . . . . . . . . . . . . . 540,000 568,350
Gothic Energy Corp., Units (each unit consists of $1,000
principal amount of 0%/12.25% sr. disc. nts., 9/1/04
and 14 warrants to purchase one ordinary share)(8)(10)(11) . . . . . 725,000 772,125
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 . . . . . . . . . . 275,000 292,875
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(11) . . 1,000,000 805,000
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 . . . . . . . . . 100,000 104,000
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06(6) . . . . 500,000 465,000
Pogo Producing Co., 8.75% Sub. Nts., 5/15/07 . . . . . . . . . . . . . 900,000 918,000
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 . . . . . . . . . . . . . 200,000 213,000
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
ENERGY (CONTINUED)
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . $1,400,000 $1,396,500
Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07 . . . . . . . . . . . . . . 385,000 385,000
----------
9,929,349
----------
FINANCIAL SERVICES -- 2.6%
Banks & Thrifts -- 0.4%
First Nationwide Holdings, Inc., 10.625% Sr. Sub. Nts., 10/1/03 . . . . 530,000 585,650
Western Financial Bank, 8.875% Sub. Bonds, 8/1/07 . . . . . . . . . . . 725,000 728,335
----------
1,313,985
----------
Diversified Financial -- 2.2%
Americredit Corp., 9.25% Sr. Nts., 2/1/04 . . . . . . . . . . . . . . . 190,000 190,950
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 . . . . . . . . 400,000 420,000
Emergent Group, Inc., 10.75% Sr. Nts., 9/15/04(8) . . . . . . . . . . . 925,000 911,125
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 800,625
Shoshone Partners Loan Trust, 7.375% Sr. Nts., 5/31/02(6)(12) . . . . . 4,225,000 4,339,778
----------
6,662,478
----------
HOUSING RELATED -- 0.9%
Building Materials -- 0.4%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B,
12/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 306,000
Nortek, Inc.:
9.125% Sr. Nts., 9/1/07(8) . . . . . . . . . . . . . . . . . . . . . 400,000 404,000
9.25% Sr. Nts., Series B, 3/15/07 . . . . . . . . . . . . . . . . . . 600,000 610,500
----------
1,320,500
----------
Homebuilders/Real Estate -- 0.5%
Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds,
4/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000 189,900
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 . . . . 250,000 261,875
Standard Pacific Corp., 8.50% Sr. Nts., 6/15/07 . . . . . . . . . . . . 1,000,000 1,010,000
----------
1,461,775
----------
MANUFACTURING -- 4.6%
Aerospace -- 0.9%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05(6) . . . . . . . . 1,360,000 1,462,000
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(8) . . . . . . . . . . . . . . . 900,000 911,250
</TABLE>
7
<PAGE> 9
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Aerospace (Continued)
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Cl. B, 6/15/04(6) . . . . . . . . . . . . . . . . . . . . . . . . . $ 490,315 $ 505,662
----------
2,878,912
----------
Automotive -- 1.2%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., 7/15/07(8) . . . . . 800,000 836,000
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 . . . 700,000 798,000
Hayes Wheels International, Inc., 9.125% Sr. Sub. Nts., 7/15/07 . . . . 600,000 618,000
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 . . . . . . 750,000 785,625
Oxford Automotive, Inc., 10.125% Sr. Sub. Nts., 6/15/07(8) . . . . . . 500,000 525,000
----------
3,562,625
----------
Capital Goods -- 2.5%
Burke Industries, Inc., 10% Sr. Nts., 8/15/07(8) . . . . . . . . . . . 700,000 728,000
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 . . . . . . . . . . . . . . . . . . . . . . 250,000 271,250
12.50% Debs., 7/15/07(7)(8) . . . . . . . . . . . . . . . . . . . . 689,910 762,351
Farley, Inc., Zero Coupon Sub. Debs., 14.146%, 12/30/12(3)(6) . . . . . 198,000 24,930
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts.,
8/1/07(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950,000 985,625
Insilco Corp., 10.25% Sr. Sub. Nts., 8/15/07(8) . . . . . . . . . . . . 800,000 840,000
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B,
6/1/05(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000 768,250
Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 . . . . . . . . 1,000,000 1,130,000
Roller Bearing Co. (America), 9.625% Sr. Sub. Nts., 6/15/07(6) . . . . 500,000 505,000
Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07 . . . . . . . 250,000 256,250
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 . . . . . 900,000 936,000
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(6) . . . . . . . . . 525,000 539,437
----------
7,747,093
----------
MEDIA -- 5.4%
Broadcasting -- 1.9%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 . . . 900,000 909,000
Chancellor Radio Broadcasting Co., 8.75% Sr. Sub. Nts., 6/15/07(8) . . 700,000 707,000
Jacor Communications Co.:
8.75% Gtd. Sr. Sub. Nts., 6/15/07(8) . . . . . . . . . . . . . . . . 465,000 467,325
9.75% Gtd. Unsec. Sr. Sub. Nts., 12/15/06 . . . . . . . . . . . . . . 250,000 267,500
Radio One, Inc., 7% Sr. Sub. Nts., 5/15/04(8)(13) . . . . . . . . . . . 700,000 675,500
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06 . . . . 800,000 876,000
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 . . . . . . 700,000 736,750
</TABLE>
8
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Broadcasting (Continued)
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 . . . . . . . $ 475,000 $ 515,375
Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06 . . . . . 500,000 496,250
----------
5,650,700
----------
Cable Television -- 1.9%
Adelphia Communications Corp.:
9.25% Sr. Nts., 10/1/02(8) . . . . . . . . . . . . . . . . . . . . . 800,000 796,000
9.875% Sr. Nts., Series B, 3/1/07 . . . . . . . . . . . . . . . . . . 800,000 824,000
Cablevision Systems Corp., 9.875% Sr. Sub. Nts., 5/15/06 . . . . . . . 1,000,000 1,070,000
EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02(8) . . . . . . . . . . . . 500,000 533,750
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts.,
3/15/04(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 596,250
FrontierVision Holdings LP, 0%/11.875% Sr. Disc. Nts.,
9/15/07(8)(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . 485,000 333,437
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(12) . . . . . . . . . . . . . . . . . . . . . . . . 250,000 265,000
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(11) . . . . . . 750,000 678,750
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 . . . . . . . . . . . . . 440,000 455,400
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07(8) . 390,000 403,650
----------
5,956,237
----------
Diversified Media -- 1.2%
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07(8) . . . . . . 475,000 501,125
ITT Publimedia BV, 9.375% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . 570,000 584,250
Katz Media Corp., 10.50% Sr. Sub. Nts., Series B, 1/15/07 . . . . . . . 735,000 810,338
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . 875,000 883,750
Outdoor Systems, Inc., 8.875% Sr. Sub. Nts., 6/15/07 . . . . . . . . . 500,000 513,750
Universal Outdoor, Inc., 9.75% Sr. Sub. Nts., 10/15/06 . . . . . . . . 500,000 557,500
----------
3,850,713
----------
Publishing/Printing -- 0.4%
Hollinger International Publishing, Inc.:
9.25% Gtd. Sr. Sub. Nts., 2/1/06 . . . . . . . . . . . . . . . . . . 500,000 516,250
9.25% Gtd. Sr. Sub. Nts., 3/15/07 . . . . . . . . . . . . . . . . . . 500,000 517,500
----------
1,033,750
----------
OTHER -- 1.3%
Conglomerates -- 0.1%
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(11) . . . . . 250,000 243,438
----------
</TABLE>
9
<PAGE> 11
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Environmental -- 0.2%
Allied Waste Industries, Inc., 0%/11.30% Sr. Disc. Nts., 6/1/07(8)(11) $ 500,000 $ 340,000
Allied Waste North America, Inc., 10.25% Sr. Sub. Nts., 12/1/06 . . . . 200,000 216,500
----------
556,500
----------
Services -- 1.0%
Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 . . . . . . . 700,000 724,500
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(6)(11) . . . . . . . . . 500,000 395,000
Energy Corp. of America, 9.50% Sr. Sub. Nts., Series A, 5/15/07 . . . . 440,000 442,200
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 . . . . 500,000 493,750
Protection One Alarm Monitoring, Inc., 0%/13.625% Sr. Disc.
Nts., 6/30/05(11) . . . . . . . . . . . . . . . . . . . . . . . . . 1,100,000 1,171,500
----------
3,226,950
----------
RETAIL -- 1.3%
Specialty Retailing -- 0.5%
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 . . . . . . . 165,000 179,850
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(6) . . . . . . . . 250,000 263,750
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07(6) . . . . . . . . . 775,000 763,375
Specialty Retailers, Inc., 9% Gtd. Sr. Sub. Nts., 7/15/07 . . . . . . . 400,000 408,000
----------
1,614,975
----------
Supermarkets -- 0.8%
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., 7/31/07(8) . . . . . . . . . 1,000,000 1,060,000
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., 7/1/07(8) . . . . . 850,000 845,750
Stater Brothers Holdings, Inc., 9% Sr. Sub. Nts., 7/1/04(8) . . . . . . 700,000 705,250
----------
2,611,000
----------
TECHNOLOGY -- 7.3%
Information Technology -- 4.2%
CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts., 6/15/05(6)(11) . . . 400,000 276,000
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 11.467%, 8/15/00(3) . . . . . . . . . . . . . . . . . 1,000,000 795,000
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(11) . . . . . . . 1,250,000 1,237,500
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . . 465,000 460,931
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 . . . . . . . . . . . . . . 600,000 609,000
Globalstar LP/Globalstar Capital Corp., 11.25% Sr. Nts., 6/15/04 . . . 500,000 490,000
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts.,
Series B, 6/1/06(11) . . . . . . . . . . . . . . . . . . . . . . . . 900,000 603,000
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts.,
6/1/06(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775,000 587,063
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts.,
10/31/07(8)(11) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,050,000 1,142,875
</TABLE>
10
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Information Technology (Continued)
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 . . . . . . . . . . . . . . . . . . . . . $ 290,000 $ 300,150
11.625% Sr. Nts., Series A, 8/15/06 . . . . . . . . . . . . . . . . . 1,150,000 1,190,250
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts.,
1/15/07(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975,000 721,500
Pierce Leahy Corp., 11.125% Sr. Sub. Nts., 7/15/06 . . . . . . . . . . 664,000 753,640
Price Communications Cellular Holdings, Inc., Units (each unit
consists of $1,000 principal amount of 0%/13.50% sr. sec.
disc. nts., 8/1/07 and 3.44 warrants to purchase one ordinary
share)(8)(10)(11) . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 595,000
Sprint Spectrum LP/Sprint Spectrum Finance Corp.:
0%/12.50% Sr. Disc. Nts., 8/15/06(11) . . . . . . . . . . . . . . . . 500,000 380,000
11% Sr. Nts., 8/15/06 . . . . . . . . . . . . . . . . . . . . . . . 500,000 553,750
Teletrac, Inc., Units (each unit consists of $1,000 principal
amount of 14% sr. nts., 8/1/07 and one warrant to buy
.537495 ordinary shares)(6)(10) . . . . . . . . . . . . . . . . . . 375,000 380,625
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 . . . . . . . . . . . . . . . 750,000 766,875
Unisys Corp., 11.75% Sr. Nts., 10/15/04 . . . . . . . . . . . . . . . . 500,000 567,500
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . . . . 800,000 820,000
-----------
13,230,659
-----------
Telecommunications/Technology -- 3.1%
American Communications Services, Inc., 13.75% Sr. Nts.,
7/15/07(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470,000 528,750
BTI Telecom Corp., 10.50% Sr. Nts., 9/15/07(8) . . . . . . . . . . . . 470,000 470,000
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(11) . . . . . . 1,000,000 715,000
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Sec. Disc. Nts., 5/1/06(11) . . . . . . . . . . . 900,000 664,875
0%/13.50% Sr. Disc. Nts., 9/15/05(11) . . . . . . . . . . . . . . . . 475,000 379,406
Intermedia Communications, Inc.:
0%/11.25% Sr. Disc. Nts., 7/15/07(11) . . . . . . . . . . . . . . . . 800,000 532,000
8.875% Sr. Nts., 11/1/07(8) . . . . . . . . . . . . . . . . . . . . 225,000 221,625
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 . . . . . 350,000 399,000
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts., 3/1/07(11) . . . . . . . . . . . . . . . . 500,000 347,500
9.25% Sr. Nts., 7/15/07(8) . . . . . . . . . . . . . . . . . . . . . 200,000 205,000
MGC Communications, Inc., Units (each unit consists of $1,000
principal amount of 13% sr. sec. nts., 10/1/04 and one warrant to
purchase 8.07 shares of common stock at $0.01 per share)(8)(10) . . . 885,000 876,150
NEXTLINK Communications, Inc., 9.625% Sr. Nts., 10/1/07 . . . . . . . . 750,000 753,750
NTL, Inc., 10% Sr. Nts., 2/15/07 . . . . . . . . . . . . . . . . . . . 250,000 258,750
</TABLE>
11
<PAGE> 13
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Telecommunications/Technology (Continued)
Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07(8)(11) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,600,000 $ 1,032,000
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 1,577,500
UNIFI Communications, Inc., 14% Sr. Nts., 3/1/04 . . . . . . . . . . . 500,000 472,500
-------------
9,433,806
-------------
TRANSPORTATION -- 1.2%
Railroads -- 0.4%
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(11) . . . . . . . . . . . . . . . . . . . . 1,500,000 1,286,250
-------------
Shipping -- 0.5%
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(8) . . . . . . . . . . 1,250,000 1,343,750
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66
warrants)(8)(10) . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 276,250
-------------
1,620,000
-------------
Trucking -- 0.3%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., 7/1/07(8) . . . . . . . . . 925,000 938,875
-------------
UTILITIES -- 0.7%
Electric Utilities -- 0.7%
AES Corp., 8.375% Sr. Sub. Nts., 8/15/07 . . . . . . . . . . . . . . . 480,000 470,400
Calpine Corp., 10.50% Sr. Nts., 5/15/06(6) . . . . . . . . . . . . . . 700,000 759,500
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 . . . . 800,000 888,000
-------------
2,117,900
-------------
112,934,464
-------------
Total Corporate Sector ($112,337,203) . . . . . . . . . . . . . . . . . 112,934,472
-------------
INTERNATIONAL SECTOR -- 25.2%
CORPORATE BONDS AND NOTES -- 7.6%
BASIC INDUSTRY -- 0.9%
Metals/Mining -- 0.0%
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., Series B, 8/15/06 . . . . . . 35,000 30,975
-------------
</TABLE>
12
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Paper -- 0.6%
Ainsworth Lumber Ltd., 12.50% Sr. Sec. Nts., 7/15/07(7)(8) . . . . . . $ 410,000 $ 416,150
APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05 . . . 450,000 451,125
Indah Kiat International Finance Co. BV, 11.875% Gtd. Sr. Sec. Nts.,
6/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273,000 279,825
Pindo Deli Finance Mauritius Ltd., 10.75% Gtd. Nts., 10/1/07(6) . . . . 455,000 423,150
Tjiwi Kimia International Finance Co. BV, 13.25% Gtd. Sr. Nts., 8/1/01 355,000 370,620
----------
1,940,870
----------
Steel -- 0.3%
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 . . . . . . . . . 700,000 808,500
----------
CONSUMER RELATED -- 0.3%
Textile/Apparel -- 0.3%
Polysindo International Finance Co. BV, 11.375% Gtd. Sec. Nts., 6/15/06 250,000 255,625
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts., 30.945%,
3/16/98(3)(IDR) . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000,000 739,863
----------
995,488
FINANCIAL SERVICES -- 1.0%
Banks & Thrifts -- 0.2%
Banco de Colombia, 5.20% Cv. Jr. Unsec. Sub. Nts., 2/1/99 . . . . . . . 550,000 576,125
----------
Diversified Financial -- 0.5%
Bakrie Investindo, Zero Coupon Promissory Nts., 17.246%,
3/16/98(3)(IDR) . . . . . . . . . . . . . . . . . . . . . . . . . . 3,160,000,000 768,725
Pycsa Panama SA, 10.28% Sr. Sec. Bonds, 12/15/12(6) . . . . . . . . . . 875,000 813,750
----------
1,582,475
----------
Insurance -- 0.3%
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 . . . . . . . . . . . 1,000,000 1,040,000
----------
HOUSING RELATED -- 0.3%
Homebuilders/Real Estate -- 0.3%
International de Ceramica SA, 9.75% Gtd. Unsec. Unsub. Nts.,
8/1/02(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970,000 911,800
----------
MEDIA -- 1.6%
Broadcasting -- 0.1%
Conecel Holdings Ltd., Units (each unit consists of $1,000 principal
amount of 14% sec. nts., 10/1/00 and one warrant to buy class B
common stock)(6)(10) . . . . . . . . . . . . . . . . . . . . . . . . 355,000 358,550
----------
</TABLE>
13
<PAGE> 15
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Cable Television -- 0.2%
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 . . . . . . . . . $ 675,000 $ 669,937
----------
Diversified Media -- 0.8%
ITT Promedia CVA, 9.125% Sr. Sub. Nts., 9/15/07(8)(DEM) . . . . . . . . 4,000,000 2,358,885
----------
Entertainment/Film -- 0.3%
Imax Corp., 10% Sr. Nts., 3/1/01 . . . . . . . . . . . . . . . . . . . 1,000,000 1,055,000
----------
Publishing/Printing -- 0.2%
Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07 . . . . . . . . . . . . . 645,000 683,700
----------
OTHER -- 0.2%
Conglomerates -- 0.2%
Mechala Group Jamaica Ltd.:
12% Bonds, 2/15/02(6) . . . . . . . . . . . . . . . . . . . . . . . 200,000 194,000
12.75% Bonds, 12/30/99 . . . . . . . . . . . . . . . . . . . . . . . 600,000 570,000
----------
764,000
----------
TECHNOLOGY -- 2.3%
Information Technology -- 1.1%
Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts.,
12/15/05(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615,000 473,550
Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon
Bonds, 11/15/03(11) . . . . . . . . . . . . . . . . . . . . . . . . 1,875,000 1,415,625
Consorcio Ecuatoriano:
14% Nts., 5/1/02(6) . . . . . . . . . . . . . . . . . . . . . . . . 630,000 642,600
14% Nts., 5/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . 185,000 188,700
Microcell Telecommunications, Inc., 0%/11.125% Sr. Disc. Nts.,
10/15/07(8)(11)(CAD) . . . . . . . . . . . . . . . . . . . . . . . 1,810,000 712,969
----------
3,433,444
----------
Telecommunications/Technology -- 1.2%
Call-Net Enterprises, Inc., 0%/9.27% Sr. Disc. Nts., 8/15/07(11) . . . 825,000 548,625
Colt Telecom Group plc, Units (each unit consists of $1,000
principal amount of 0%/12% sr. disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary shares)(10)(11) . . . . . . . . . . 900,000 679,500
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 1,856,250
Telewest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(11) . . . 1,000,000 745,000
----------
3,829,375
----------
</TABLE>
14
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
TRANSPORTATION -- 0.4%
Trucking -- 0.4%
Road King Infrastructure Finance (1997) Ltd., 9.50% Gtd. Unsec.
Unsub. Bonds, 7/15/07(6) . . . . . . . . . . . . . . . . . . . . . . $1,200,000 $ 1,119,000
-----------
UTILITIES -- 1.1%
Electric Utilities -- 1.0%
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04(6) . . . . . . . . . 900,000 868,500
-----------
Gas Utilities -- 0.1%
CE Casecnan Water & Energy, Inc., 11.45% Sr. Nts., Series A, 11/15/05 . 300,000 312,750
-----------
23,339,374
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 11.2%
Argentina -- 0.2%
Banco Hipotecario Nacional (Argentina) Medium-Term Nts.,
10.625%, 8/7/06(14) . . . . . . . . . . . . . . . . . . . . . . . . 700,000 714,000
-----------
Australia -- 0.4%
Queensland Treasury Corp. Exchangeable Gtd. Nts.:
8%, 5/14/03 (AUD) . . . . . . . . . . . . . . . . . . . . . . . . . 210,000 163,127
8%, 8/14/01 (AUD) . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 72,297
Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03 (AUD) . . . . . 1,220,000 957,846
-----------
1,193,270
-----------
Canada -- 0.2%
Canada (Government of) Bonds, 5.50%, 9/1/02 (CAD) . . . . . . . . . . . 920,000 667,782
-----------
Cayman Islands -- 0.4%
Pera Financial Services Sec. Nts., 9.375%, 10/15/02(8) . . . . . . . . 1,270,000 1,189,037
-----------
Colombia -- 0.2%
Colombia (Republic of) Unsec. Unsub. Bonds, 8.375%, 2/15/27 . . . . . . 200,000 184,248
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 . . . . . . . . 300,000 302,812
-----------
487,060
-----------
Germany -- 1.2%
Germany (Republic of) Bonds:
6.50%, 7/15/03 (DEM) . . . . . . . . . . . . . . . . . . . . . . . . 2,300,000 1,420,769
Series 123, 4.50%, 5/17/02 (DEM) . . . . . . . . . . . . . . . . . . 3,185,000 1,822,007
Series JA07, Zero Coupon, 4.255%, 1/4/01(3) (DEM) . . . . . . . . . . 470,000 235,986
Series JA07, Zero Coupon, 5.747%, 1/4/07(3) (DEM) . . . . . . . . . . 95,000 33,262
Series JL07, Zero Coupon, 5.66%, 7/4/07(3) (DEM) . . . . . . . . . . 510,000 172,738
-----------
3,684,762
-----------
</TABLE>
15
<PAGE> 17
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Great Britain -- 1.0%
United Kingdom Treasury Nts:
13%, 7/14/00 (GBP) . . . . . . . . . . . . . . . . . . . . . . . . . 315,000 $ 605,972
8%, 6/10/03 (GBP) . . . . . . . . . . . . . . . . . . . . . . . . . 1,360,000 2,420,272
----------
3,026,244
----------
Italy -- 1.0%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali,
12%, 1/1/02 (ITL) . . . . . . . . . . . . . . . . . . . . . . . . . 4,210,000,000 3,045,627
----------
Ivory Coast -- 0.2%
Ivory Coast (Government of) Past Due Interest Bonds,
12/29/49(13)(15) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,770,000 652,687
----------
Jordan -- 0.7%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 4%, 12/23/23(13) . . . 1,250,000 800,000
Hashemite (Kingdom of Jordan) Disc. Bonds, 6.75%, 12/23/23(12) . . . . 1,750,000 1,421,875
----------
2,221,875
----------
Mexico -- 0.2%
Petroleos Mexicanos Debs., 14.50%, 3/31/06 . . . . . . . . . . . . . . 280,000 605,697
----------
Moldova -- 0.2%
Moldova (Republic of) Sr. Unsub. Nts., 8.465%, 12/10/99(12) . . . . . . 550,000 550,344
----------
New Zealand -- 0.9%
National Bank of New Zealand, New Zealand Dollar Bank Bill,
Zero Coupon, 7.594%, 12/10/97(3)(16) (NZD) . . . . . . . . . . . . . 3,885,000 2,403,870
New Zealand (Government of) Bonds, 8%, 11/15/06 (NZD) . . . . . . . . . 630,000 431,889
----------
2,835,759
----------
Norway -- 0.4%
Norway (Government of) Bonds, 9.50%, 10/31/02 (NOK) . . . . . . . . . . 6,330,000 1,065,610
----------
Pakistan -- 0.4%
Pakistan (Republic of) Debs., 11.50%, 12/22/99 . . . . . . . . . . . . 64,000 66,880
Pakistan (Republic of) Bonds, 9.946%, 5/30/00(12) . . . . . . . . . . . 1,090,000 1,106,350
----------
1,173,230
----------
Peru -- 0.3% . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Peru (Republic of) Front-Loaded Interest Reduction Bonds, 3.25%,
3/7/17(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,760,000 893,200
----------
Romania -- 0.2%
Romania (Government of) Bonds, 7.75%, 6/17/02 (DEM) . . . . . . . . . . 1,349,000 754,386
----------
</TABLE>
16
<PAGE> 18
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
Russia -- 0.4%
Ministry of Finance (Russian Government) Debs., 9%, 3/25/04 (DEM) . . . 1,275,000 $ 711,152
SBS Agro Finance BV Bonds, 10.25%, 7/21/00 . . . . . . . . . . . . . . 670,000 654,088
----------
1,365,240
----------
South Africa -- 1.4%
South Africa (Republic of) Bonds:
Series 150, 12%, 2/28/05 (ZAR) . . . . . . . . . . . . . . . . . . . 12,571,150 2,322,402
Series 162, 12.50%, 1/15/02 (ZAR) . . . . . . . . . . . . . . . . . . 6,980,980 1,360,339
Series 175, 9%, 10/15/02 (ZAR) . . . . . . . . . . . . . . . . . . . 3,666,620 615,383
----------
4,298,124
----------
Spain -- 0.2%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
12.25%, 3/25/00 (ESP) . . . . . . . . . . . . . . . . . . . . . . . 94,240,000 747,558
----------
Sweden -- 0.5%
Sweden (Kingdom of) Bonds, Series 1033, 10.25%, 5/5/03 (SEK) . . . . . 10,600,000 1,691,799
----------
Turkey -- 0.5%
Export Credit Bank of Turkey Bonds, 8.352%, 8/18/00(12) . . . . . . . . 640,000 632,800
Halkbank Turkiye Halk Bonds, 8%, 2/26/02 (DEM) . . . . . . . . . . . . 1,670,000 907,212
----------
1,540,012
----------
Venezuela -- 0.1%
Venezuela (Republic of) Disc. Bonds, Series DL, 6.75%, 12/18/07(12) . . 500,000 433,750
----------
34,837,053
----------
LOAN PARTICIPATIONS -- 0.4%
Morocco (Kingdom of) Loan Participation Agreement,
Tranche B, 6.812%, 1/1/04(12) . . . . . . . . . . . . . . . . . . . 764,705 698,750
Trinidad & Tobago Loan Participation Agreement, Tranche B,
1.575%, 9/30/00(6)(12)(JPY) . . . . . . . . . . . . . . . . . . . . . 71,999,999 556,747
----------
1,255,497
----------
<CAPTION>
Units
-----------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES -- 0.0%
Australis Media Ltd. Wts., Exp. 5/00(6) . . . . . . . . . . . . . . . . 80 --
Comunicacion Celular SA Wts., Exp. 11/03(6) . . . . . . . . . . . . . . 2,125 127,500
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97(6) . . . . . . . . . . . . . . . . . . 2,800 1,751
Wts., Exp. 12/97(6) . . . . . . . . . . . . . . . . . . . . . . . . 2,800 36,400
----------
165,651
----------
</TABLE>
17
<PAGE> 19
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
STRUCTURED INSTRUMENTS -- 5.8%
Business Development Bank of Canada, Goldman Sachs Excess
Return Commodity Index Linked Commercial Paper, 5.40%,
12/22/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000,000 $ 2,351,800
Canadian Imperial Bank of Commerce (New York Branch)
Canadian Dollar Three Month Banker's Acceptance Linked
Maximum Rate Nts., 8.66%, 4/13/98 . . . . . . . . . . . . . . . . . . 1,000,000 1,003,200
Canadian Imperial Bank of Commerce, U.S. Dollar Nts. Linked
to the Ministry of Finance of the Russian Federation GKO,
Zero Coupon, 9.857%, 9/17/98(3) . . . . . . . . . . . . . . . . . . 1,170,000 1,042,236
Credit Suisse First Boston (Cayman) Ltd., City of Moscow,
Credit & Convertibility Linked Nts., Series EM 215, Zero
Coupon, 12.046%, 12/30/97(3) . . . . . . . . . . . . . . . . . . . . 400,000 389,281
ING (U.S.) Financial Holdings Corp., PT Polysindo Linked Nts.,
Zero Coupon, 10.426%, 7/15/98(3)(6) . . . . . . . . . . . . . . . . . 400,000 359,212
Merrill Lynch & Co., Inc.:
SPIRES Ltd. -- Series XXX, 10.91%, 10/11/06(15) . . . . . . . . . . . 1,880,000 1,880,000
U.S. Dollar Nts. Linked to the Ministry of Finance of Ukraine
OVGZ's, Zero Coupon, 11.45%, 10/19/98(3) . . . . . . . . . . . . . 2,560,000 2,221,312
Morgan Guaranty Trust Co. of New York:
2 Times Leveraged Nts. on The Emerging Bond Markets Index,
Zero Coupon, 0%, 1/29/98(3) . . . . . . . . . . . . . . . . . . . 3,000,000 2,630,400
Japanese Government Bond 193 Currency Protected Bank Nts.,
8.14%, 4/29/98 . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 18,000
Salomon, Inc.:
Colombian Peso Linked Nts., Zero Coupon, 18.174%, 8/20/98(3) . . . . 934,000 754,672
Russian GKO Linked Nts., Zero Coupon:
9.58%, 6/11/99(3) . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000 955,800
9.589%, 6/11/99(3) . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 2,389,500
Russian S-Account Credit Linked Nts., Zero Coupon:
14.163%, 5/22/98(3) . . . . . . . . . . . . . . . . . . . . . . . 1,520,000 1,405,696
9.785%, 7/31/98(3) . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 894,900
Union Bank of Switzerland, Indian Rupee Linked Nts., 5.40%,
11/17/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,000 94,978
----------
18,390,987
----------
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
------ ------------------ -------------
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED -- 0.0%
German Mark Call Opt. . . . . . . . . . . . . . . . 12/97 19.22 CZK 735,000 16,905
Russian (Government of) Principal Loans
Debs., 5.80%, 12/29/49 Call Opt. . . . . . . . . 11/97 75.125% 1,080 540
</TABLE>
18
<PAGE> 20
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
See Note 1
-------------
CALL OPTIONS PURCHASED (CONTINUED)
Date Strike Contracts
------ -------------- -----------
<S> <C> <C> <C> <C>
Russian (Government of) Principal Loans
Debs., 12/29/49 Call Opt. . . . . . . . . . . . 12/97 75.50% 1,590 $ 795
-----------
18,240
-----------
PUT OPTIONS PURCHASED -- 0.1%
Brazil (Federal Republic of) Capitalization
Bonds, 8%, 4/15/14 Put Opt. (Cost $216,866) . . . 12/97 76.00% 1,756 199,306
-----------
Total International Sector (Cost $77,906,933) . . . 78,206,108
-----------
<CAPTION>
Face Amount(1)
--------------
<S> <C> <C>
MORTGAGE-BACKED SECTOR -- 24.1%
GOVERNMENT AGENCY -- 20.7%
FHLMC/FNMA/Sponsored -- 16.4%
Federal Home Loan Mortgage Corp., Certificates of Participation:
12%, 10/1/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 298,326 342,846
12%, 10/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,675 211,268
12%, 5/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547,055 622,746
12%, 6/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,322 249,100
12%, 8/1/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,051 50,962
12%, 8/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,691 534,942
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1343, Cl. LA, 8%, 8/15/22 . . . 1,000,000 1,101,257
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1610, Cl. PM, 6.25%, 4/15/22 . . . . . . . . . 2,500,000 2,498,425
Interest-Only Stripped Mtg.-Backed Security, Series 177,
Cl. B, 10.751%-11.001% 7/1/26(17) . . . . . . . . . . . . . . . . . 11,092,590 3,433,504
Federal National Mortgage Assn.:
11%, 7/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812,434 933,031
7%, 11/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,556,568 2,570,271
7%, 11/25/27(15) . . . . . . . . . . . . . . . . . . . . . . . . . . 5,700,000 5,717,841
7%, 12/1/12(15) . . . . . . . . . . . . . . . . . . . . . . . . . . 7,140,000 7,235,962
7.50%, 11/1/27(15) . . . . . . . . . . . . . . . . . . . . . . . . . 12,950,000 13,229,202
7.50%, 6/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,614,509 1,662,202
Gtd. Mtg. Pass-Through Certificates, 13%, 6/1/15 . . . . . . . . . . 1,050,136 1,254,314
</TABLE>
19
<PAGE> 21
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED (Continued)
Federal National Mortgage Assn.: (continued)
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates:
Trust 1992-162, Cl. C, 7%, 10/25/21 . . . . . . . . . . . . . . . $ 5,400,000 $ 5,489,424
Trust 1995-4, Cl. PC, 8%, 5/25/25 . . . . . . . . . . . . . . . . 664,690 738,495
Trust 1997-25, Cl. B, 7%, 12/18/22 . . . . . . . . . . . . . . . 340,000 347,196
Trust 1997-27, Cl. J, 7.50%, 4/18/27 . . . . . . . . . . . . . . 537,753 572,931
Trust 1997-5, Cl. B, 7%, 9/18/17 . . . . . . . . . . . . . . . . 1,045,000 1,067,067
Principal-Only Stripped Mtg.-Backed Security, Trust 277-C1,
5.924%, 4/1/27(18) . . . . . . . . . . . . . . . . . . . . . . . . 984,297 746,528
-----------
50,609,514
-----------
GNMA/Guaranteed -- 4.3%
Government National Mortgage Assn.:
11%, 10/20/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . 614,365 704,407
12%, 11/20/13-9/20/15 . . . . . . . . . . . . . . . . . . . . . . . 582,878 682,530
6%, 7/20/27-8/20/27 . . . . . . . . . . . . . . . . . . . . . . . . 3,744,319 3,783,522
7.50%, 11/1/27(15) . . . . . . . . . . . . . . . . . . . . . . . . . 3,500,000 3,578,750
7.50%, 2/15/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,593,751 3,676,983
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-5, Cl. PQ,
7.493%, 7/16/24 . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 796,883
-----------
13,223,075
-----------
PRIVATE -- 3.4%
Commercial -- 2.4%
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1996-D3, Cl. A5, 8.334%, 10/13/26(6)(12) . . . . . . . . . . 500,000 546,094
Series 1996-MD6, Cl. A5, 6.957%, 11/13/26(12) . . . . . . . . . . . 800,000 837,625
Series 1997-MD7, Cl. A6, 8.243%, 1/13/30(12) . . . . . . . . . . . 150,000 161,016
BKB Commercial Mortgage Trust, Commercial Mtg. Obligations,
Series 1997-C1, Cl. C, 7.45%, 10/25/00(6) . . . . . . . . . . . . . . 250,000 252,266
Capital Lease Funding Securitization LP, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-CTL1, 0.549%, 6/22/24(6)(17) . . . 11,502,462 540,616
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 0.981%, 12/25/20(6)(17) 12,416,600 360,857
General Motors Acceptance Corp., Interest-Only Stripped Mtg.-
Backed Security, Series 1997-C1, Cl. X, 1.629%, 7/15/27(17) . . . . . 3,600,000 374,625
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. D, 7.42%, 4/25/28 . . . . . . . . . 800,000 834,062
</TABLE>
20
<PAGE> 22
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- -------------
<S> <C> <C>
COMMERCIAL (Continued)
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. D-1, 7.51%, 2/15/28(6)(12) . . . . $ 1,000,000 $ 1,039,375
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates, Series-DMC:
Cl. B, 8.562%, 8/12/11(6) . . . . . . . . . . . . . . . . . . . . 400,000 422,375
Cl. C, 8.921%, 8/12/11(8) . . . . . . . . . . . . . . . . . . . . 400,000 428,937
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through
Certificates, Series 1, Cl. D, 7.683%, 12/21/26(6) . . . . . . . . . 500,000 511,875
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through Certificates, Series 1997-LLI,
Cl. E, 7.30%, 10/20/34 . . . . . . . . . . . . . . . . . . . . . . 500,000 511,094
Multiclass Pass-Through Certificates, Series 1996-C3, Cl. D, 8%,
6/25/30(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650,000 669,500
------------
7,490,317
------------
Residential -- 1.0%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(6) . . . . . . . . 710,000 722,425
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, 8.134%, 7/25/06(6)(12) . . . . . . . 800,000 827,250
First Union-Lehman Brothers Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1,
1.307%, 4/18/27(17) . . . . . . . . . . . . . . . . . . . . . . . . 4,748,654 378,501
Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1,
7.136%, 4/25/26 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,329,112 930,379
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(6) . . 250,000 266,094
------------
3,124,649
------------
Total Mortgage-Backed Sector (Cost $73,079,840) . . . . . . . . . . . . 74,447,555
------------
MONEY MARKET SECTOR -- 10.5%
Repurchase agreement with First Chicago Capital Markets, 5.69%,
dated 10/31/97, to be repurchased at $32,338,326 on 11/3/97,
collateralized by U.S. Treasury Nts., 5.75%-8.50%, 5/15/99-11/15/00,
with a value of $32,986,315 (Cost $32,323,000) . . . . . . . . . . . 32,323,000 32,323,000
------------
Total Investments, at Value (Cost $330,527,644) . . . . . . . . . . . . 108.2% 334,275,509
Liabilities in Excess of Other Assets . . . . . . . . . . . . . . . . . (8.2) (25,303,363)
------- ------------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $308,972,146
======= ============
</TABLE>
21
<PAGE> 23
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
AUD -- Australian Dollar ITL -- Italian Lira
CAD -- Canadian Dollar JPY -- Japanese Yen
CZK -- Czech Koruna NOK -- Norwegian Krone
DEM -- German Mark NZD -- New Zealand Dollar
ESP -- Spanish Peseta SEK -- Swedish Krona
GBP -- British Pound Sterling ZAR -- South African Rand
IDR -- Indonesian Rupiah
2. Securities with an aggregate market value of $1,881,407 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 6 of Notes to Financial Statements.
3. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
4. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts.
5. Non-income producing security.
6. Identifies issues considered to be illiquid or restricted -- See Note 8 of
Notes to Financial Statements.
7. Interest or dividend is paid in kind.
8. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established
by the Board of Trustees. These securities amount to $43,759,803 or 14.16%
of the Trust's net assets as of October 31, 1997.
9. Non-income producing -- issuer is in default of interest payment.
10. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
12. Represents the current interest rate for a variable rate security.
13. Represents the current interest rate for an increasing rate security.
14. A sufficient amount of cash and securities has been designated to cover
outstanding written options, as follows:
<TABLE>
<CAPTION>
Expiration Exercise Premium Market Value
Contracts Date Price Received See Note 1
--------- ---- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Banco Hipotecario Nacional (Argentina) Medium-
Term Nts., 10.625%, 8/7/06 Call Opt. 700 8/7/00 100.00% $ 6,440 $ 24,500
Natural Gas Futures, 1/98 Call Opt. 20 12/26/97 $3.20 75,880 111,000
United Mexican States Collateralized Fixed Rate
Par Bonds, Series A, 6.25%, 12/31/19 Put Opt. 705 11/28/97 75.00% 63,450 45,120
-------- --------
$145,770 $180,620
======== ========
</TABLE>
15. When-issued security to be delivered and settled after October 31, 1997.
16. A sufficient amount of securities has been designated to cover outstanding
interest rate swap transactions. See Note 9 of Notes to Financial
Statements.
17. 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.
18. 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.
22
<PAGE> 24
STATEMENT OF ASSETS AND LIABILITIES October 31, 1997
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $330,527,644) -- see accompanying statement . . $334,275,509
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378,741
Unrealized appreciation on forward foreign currency exchange contracts -- Note 5 70,249
Receivables:
Investments sold and options written . . . . . . . . . . . . . . . . . . 50,422,343
Interest, dividends and principal paydowns . . . . . . . . . . . . . . . 4,232,948
Closed forward foreign currency exchange contracts . . . . . . . . . . . 212,390
Daily variation on futures contracts -- Note 6 . . . . . . . . . . . . . 7,813
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,878
------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389,609,871
------------
LIABILITIES:
Unrealized depreciation on forward foreign currency exchange contracts -- Note 5 1,526
Options written, at value (premiums received $145,770) -- see accompanying
statement -- Note 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,620
Open interest rate swap transactions at market value -- Note 9 . . . . . . 15,297
Payables and other liabilities:
Investments purchased (including $32,422,733 purchased on a when-issued
basis) -- Note 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,794,979
Closed forward foreign currency exchange contracts . . . . . . . . . . . 233,072
Trustees' fees -- Note 1 . . . . . . . . . . . . . . . . . . . . . . . . 154,787
Management and administrative fees . . . . . . . . . . . . . . . . . . . 129,885
Daily variation on futures contracts -- Note 6 . . . . . . . . . . . . . . 17,643
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,916
------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,637,725
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $308,972,146
============
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest . . . . . . . . . . . . . . . . $ 291,161
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 313,688,210
Overdistributed net investment income . . . . . . . . . . . . . . . . . . . (249,479)
Accumulated net realized loss on investments and foreign currency transactions (8,495,256)
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies . . . . . . . . . 3,737,510
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ------------
NET ASSETS -- applicable to 29,116,068 shares of beneficial interest
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $308,972,146
============
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . $10.61
======
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE> 25
STATEMENT OF OPERATIONS For the Year Ended October 31, 1997
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $710) . . . . . . . . . . . . $28,938,776
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,377
-----------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,070,153
-----------
EXPENSES:
Management fees -- Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . 1,997,563
Administrative fees -- Note 4 . . . . . . . . . . . . . . . . . . . . . . . 614,751
Shareholder reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,583
Transfer agent and accounting services fees -- Note 4 . . . . . . . . . . . 79,657
Custodian fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 58,807
Legal and auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . . 47,243
Trustees' fees and expenses -- Note 1 . . . . . . . . . . . . . . . . . . . 31,658
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . 23,922
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,985
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,063,169
-----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,006,984
-----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments (including premiums on options exercised) . . . . . . . . . . 8,829,790
Closing of futures contracts . . . . . . . . . . . . . . . . . . . . . . (1,015,374)
Closing and expiration of options written -- Note 7 . . . . . . . . . . . (143,877)
Foreign currency transactions . . . . . . . . . . . . . . . . . . . . . . (1,484,706)
-----------
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,185,833
-----------
Net change in unrealized appreciation or depreciation on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,977,811)
Translation of assets and liabilities denominated in foreign currencies . (685,629)
-----------
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,663,440)
-----------
NET REALIZED AND UNREALIZED GAIN . . . . . . . . . . . . . . . . . . . . . 2,522,393
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . $28,529,377
===========
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE> 26
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,006,984 $ 26,471,497
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,185,833 7,876,133
Net change in unrealized appreciation or depreciation . . . . . . . . . . . (3,663,440) 3,026,272
------------ -----------
Net increase in net assets resulting from operations . . . . . . . . . . 28,529,377 37,373,902
------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME . . . . . . . . . . . (25,738,551) (26,320,905)
------------ -----------
NET ASSETS:
Total increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,790,826 11,052,997
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306,181,320 295,128,323
------------ -------------
End of period [including undistributed (overdistributed) net investment
income of $(249,479) and $556,961, respectively] . . . . . . . . . . . . $308,972,146 $306,181,320
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
25
<PAGE> 27
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period . . . . . . . . . . . $10.52 $10.14 $10.17 $10.96 $10.46
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income . . . . . . . . . . . . . . . . . . .89 .91 .94 1.00 1.08
Net realized and unrealized gain (loss) . . . . . . . . . .08 .37 (.04) (.82) .43
------ ------ ------ ------ ------
Total income from investment operations . . . . . . . . .97 1.28 .90 .18 1.51
------ ------ ------ ------ ------
Dividends and distributions to shareholders:
Dividends from net investment income . . . . . . . . . . (.88) (.90) (.91) (.84) (1.01)
Tax return of capital distribution . . . . . . . . . . . -- -- (.02) (.13) --
------ ------ ------ ------ ------
Total dividends and distributions to shareholders . . . (.88) (.90) (.93) (.97) (1.01)
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . $10.61 $10.52 $10.14 $10.17 $10.96
====== ====== ====== ====== ======
Market value, end of period . . . . . . . . . . . . . . . . $10.13 $ 9.88 $10.00 $ 9.50 $11.25
TOTAL RETURN, AT MARKET VALUE(1) . . . . . . . . . . . . . 11.40% 7.85% 15.62% (7.46)% 11.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) . . . . . . . . . $308,972 $306,181 $295,128 $295,658 $316,647
Average net assets (in thousands) . . . . . . . . . . . . . $308,712 $298,496 $288,884 $306,686 $307,244
Ratios to average net assets:
Net investment income . . . . . . . . . . . . . . . . . . 8.42% 8.87% 9.51% 9.17% 10.13%
Expenses . . . . . . . . . . . . . . . . . . . . . . . . 0.99% 1.04% 1.05% 1.02% 1.00%
Portfolio turnover rate(2) . . . . . . . . . . . . . . . . 258.9% 225.4% 240.1% 187.6% 131.3%
</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 and mortgage "dollar-rolls")
for the period ended October 31, 1997 were $776,051,192 and $765,405,480,
respectively. Prior to the period ended October 31, 1996, purchases and
sales of investment securities included mortgage "dollar-rolls."
See accompanying Notes to Financial Statements.
26
<PAGE> 28
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 consistent with preservation of capital by investments among
seven sectors of the fixed income securities market. The Trust's investment
advisor 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.
Structured Notes -- The Trust invests in foreign currency-linked structured
notes whereby the market value and redemption price are linked to foreign
currency exchange rates. The structured notes may be leveraged, which increases
the notes' volatility relative to the face of the security. Fluctuations in
values of the securities are recorded as unrealized gains and losses in the
accompanying financial statements. During the year ended October 31, 1997, the
market value of these securities comprised an average of 6% of the Trust's net
assets, and resulted in realized and unrealized losses of $1,634,532.
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, 1997,
the Trust had entered into outstanding when-issued or forward commitments of
$32,422,733.
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Securities Purchased on a When-Issued Basis (continued)
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 economic
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, 1997, securities
with an aggregate market value of $324,125, representing 0.01% 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, 1997, the
Trust had available for federal income tax purposes an unused capital loss
carryover of approximately $7,983,000, which expires in 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, 1997, a provision of $185 was made for the Trust's
projected benefit obligations and payments of $7,544 were made to retired
trustees, resulting in an accumulated liability of $142,773 at October 31,
1997.
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.
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
Classification of Distributions to Shareholders -- Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes primarily because of paydown gains and losses and the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from 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 was recorded by the
Trust.
The Trust adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended October 31, 1997, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $1,074,873, a decrease in
accumulated net realized loss on investments of $2,827,430, and a decrease in
additional paid-in capital of $1,752,557.
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. There were no transactions in shares of beneficial
interest for the years ended October 31, 1997 and 1996.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1997 net unrealized appreciation on investments and options
written of $3,713,015 was composed of gross appreciation of $8,558,085, and
gross depreciation of $4,845,070.
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
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
4. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES
(CONTINUED)
to SFSI are based on the number of accounts and the number of shareholder
transactions, plus out-of-pocket costs and expenses.
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 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, 1997, the Trust had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Valuation
Contract as of
Expiration Amount October 31, Unrealized Unrealized
Dates (000s) 1997 Appreciation Depreciation
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
German Mark (DEM) . . . . . . . . . . 11/4/97 1,170 DEM $ 679,660 $ -- $ 151
-------- ------
Contracts to Sell
- -----------------
Argentine Peso (ARP) . . . . . . . . 11/5/97 3,042 ARP 1,767,695 -- 1,375
Indonesian Rupiah (IDR) . . . . . . . 2/10/98 4,905,000 IDR 1,306,501 7,573 --
South African Rand (ZAR) . . . . . . 12/29/97 16,224 ZAR 3,310,273 62,676 --
------- ------
70,249 1,375
------- ------
Total Appreciation and Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . $70,249 $1,526
======= ======
</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 more efficient or cost
effective than actually buying fixed income securities.
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
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 and/or payable for
the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
At October 31, 1997, the Trust had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Valuation
Number as of Unrealized
Expiration of Futures October 31, Appreciation
Date Contracts 1997 (Depreciation)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
U.S. Treasury Bonds . . . . . . . . . 12/97 25 $2,961,718 $ 20,312
--------
Contracts to Sell
- -----------------
Hang Seng Index . . . . . . . . . . . 11/97 16 1,096,061 (52,008)
Nikkei 225 . . . . . . . . . . . . . 12/97 17 1,394,000 24,800
Standard & Poor's 500 . . . . . . . . 12/97 6 2,772,000 (9,750)
U.S. Treasury Nts., 5 yr. . . . . . 12/97 44 4,769,875 (18,719)
U.S. Treasury Nts., 2 yr. . . . . . 12/97 6 1,247,250 (8,718)
U.S. Treasury Nts., 10 yr. . . . . . 12/97 44 4,917,000 --
--------
(64,395)
--------
$(44,083)
========
</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
31
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
7. OPTION ACTIVITY (CONTINUED)
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, 1997 was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
----------------------------- --------------------------------
Number Amount Number Amount
of of of of
Options Premiums Options Premiums
------------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
Options outstanding at October 31, 1996 9,277,500 $ 107,323 -- $ --
Options written . . . . . . . . . . . 73,237,667 1,151,885 389,549,046 423,720
Options closed or expired . . . . . . (75,477,897) (856,023) (377,347,901) (291,477)
Options exercised . . . . . . . . . . (7,036,550) (320,865) (12,200,440) (68,793)
------------ ---------- ------------- ----------
Options outstanding at October 31, 1997 720 $ 82,320 705 $ 63,450
============ ========== ============= ==========
</TABLE>
8. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1997, 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 periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at October 31, 1997 was $28,054,853, which
represents 9.08% of the Trust's net assets, of which $2,233,753 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Unit as of
Security Date Per Unit October 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds:
Arizona Charlie's, Inc., 12% First Mtg. Nts.,
Series B, 11/15/00 . . . . . . . . . . . . . . 11/18/93 100.00% 53.75%
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00 . . . . . . . . . . . . . . 11/18/93 87.50 14.25
Stocks and Warrants:
Becker Gaming, Inc. Wts., Exp. 11/00 . . . . . . 11/18/93 $ 2.00 $ .20
CGA Group Ltd., Preferred . . . . . . . . . . . . 6/17/97 25.00 25.00
CGA Group Ltd. Wts., Exp. 12/49 . . . . . . . . . 6/17/97 -- .50
</TABLE>
32
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
9. INTEREST RATE SWAP TRANSACTIONS
The Trust may enter into an interest rate swap transaction to seek to maintain
a total return or yield spread on a particular investment or portion of its
portfolio, or for other non-speculative purposes. Interest rate swaps involve
the exchange of commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The coupon payments are based
on an agreed upon principal amount and a specified index. Because the principal
amount is not exchanged, it represents neither an asset nor a liability to
either counterparty, and is referred to as a notional principal amount. The
Trust records an increase or decrease to interest income, the amount due or
owed by the Trust at termination or settlement. The Trust enters into swaps
only on securities it owns. Interest rate swaps are subject to credit risks (if
the other party fails to meet its obligations) and also to interest rate risks.
The Trust could be obligated to pay more under its swap agreements than it
receives under them, as a result of interest rate changes. The Trust segregates
liquid assets to cover any amounts it could owe under swaps that exceed the
amounts it is entitled to receive.
As of October 31, 1997, the Trust had entered into the following interest rate
swap agreements:
<TABLE>
<CAPTION>
Swap Notional Rate Paid by the Floating Rate Received Floating Termination Net
Counterparty Principal Trust at 10/31/97 by the Trust at 10/31/97 Rate Index Date Unrealized Loss
- ------------ ----------- ----------------- ------------------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Morgan $3,830,000 7.65% 7.287% Three- 3/8/01 $15,297
Guaranty month
Trust Co. New Zealand
of New York Dollar Bank
Bills
</TABLE>
33
<PAGE> 35
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, 1997 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, 1997 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, 1997 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, 1997
34
<PAGE> 36
FEDERAL INCOME TAX INFORMATION (Unaudited)
OPPENHEIMER MULTI-SECTOR INCOME TRUST
In early 1998 shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1997. 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, 1997 which
are not designated as capital gain distributions should be multiplied by 0.57%
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.
35
<PAGE> 37
SHAREHOLDER MEETING (Unaudited)
On May 5, 1997, an annual shareholder meeting was held at which the three
Trustees identified below were elected, 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, 1996 was ratified (Proposal No. 1) and
the Investment Advisory Agreement between the Trust and OppenheimerFunds, Inc.
was approved (Proposal No. 2) as described in the Trust's proxy statement for
that meeting. The following is a report of the votes cast:
<TABLE>
<CAPTION>
Withheld/
Nominee/Proposal For Against Abstain Broker Non-Votes Total
- ---------------- ------- -------- --------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Trustees
Leon Levy . . . . . . . 23,915,196 21,626 4,798,621 23,936,822
Bridget A. Macaskill . 23,916,012 20,810 4,798,621 23,936,822
Clayton K. Yeutter . . 23,914,886 21,936 4,798,621 23,936,822
Proposal No. 1 . . . . 23,839,950 42,542 54,330 4,798,621 23,936,822
Proposal No. 2 . . . . 23,733,503 72,351 130,968 4,798,621 23,936,822
</TABLE>
36
<PAGE> 38
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 OppenheimerFunds, Inc. (the Manager).
The Portfolio Managers of the Trust are Robert E. Patterson, Thomas P. Reedy,
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. Messrs. Reedy and Vasan have been the persons
principally responsible for the day-to-day management of the Trust's portfolio
since June 1993. Prior to that, Mr. Reedy served as a securities analyst for
the Manager and 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
37
<PAGE> 39
OPPENHEIMER MULTI-SECTOR INCOME TRUST
General Information Concerning the Fund (Continued)
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 and each Sunday in The New York Times and each Saturday in
Barron's, and other newspapers in a table called "Closed-End Bond Funds."
38
<PAGE> 40
(This Page Intentionally Left Blank)
39
<PAGE> 41
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
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Thomas P. Reedy, 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 Advisor
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.
RA0680.001.1097 [RECYCLELOGO] Printed on recycled paper
