<PAGE> 1
1999 SEMIANNUAL REPORT
OPPENHEIMER
MULTI-SECTOR
INCOME TRUST
APRIL 30, 1999
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
During the past six-month period, high yield bonds and emerging market
securities generally posted strong comebacks, while U.S. Treasury bonds lost
value after soaring last fall. The Trust's disciplined strategy of sector
diversification enabled us to participate in some of the rebound in previously
out-of-favor sectors.
As a result, Oppenheimer Multi-Sector Income Trust continued to post a strong
dividend return of 8.98% as of April 30, 1999. At the same time, the Trust's
six-month cumulative total return at net asset value was 6.73%, which represents
the sum of the dividend income and the change in value of the underlying bond
portfolio. Its six-month cumulative total return at market value was -2.25%,
which represents the change in share price on the New York Stock Exchange.(1)
INVESTMENT BREAKDOWN:
OPPENHEIMER MULTI-SECTOR INCOME
TRUST AS OF 4/30/99:(2)
[PIE CHART]
<TABLE>
<S> <C>
- Corporate: 38.0%
- International: 29.5%
- Mortgage-Backed: 18.4%
- U.S. Government: 10.5%
- Convertible: 2.6%
- Money Market: 1.0%
</TABLE>
Fed Restores Confidence
The U.S. Federal Reserve Board is widely credited for helping to restore
confidence in the global markets after Russia defaulted on its debt obligations
last August. Between September and November, the Fed lowered the federal funds
rate--the interest rate charged on overnight loans to member banks--from 5.50%
to 4.75%. Shortly thereafter, central banks around the world followed suit.
Many emerging market debt and domestic high yield bonds, which had been battered
by negative sentiment during the peak of the Asian economic crisis last fall,
staged a recovery during the six months that ended April 30, 1999. The Trust's
emphasis in these two sectors was beneficial to the performance.
U.S. Treasury securities, which had benefited greatly from the global investor's
desire for safety and liquidity amidst the turbulence, began to fall in price as
the crisis eased. Yields, which move inversely to bond prices, rose from about
4.7% on the 30-year Treasury bond to a peak of about 5.6% during the six-month
period. Fortunately, our portfolio of Treasury bonds had a shorter than average
"duration," which means that rising yields (and declining price) didn't
negatively affect the Trust's value as much as it did our peers.
Another positive factor, particularly in early 1999, has been the portfolio's
holdings of mortgage-backed securities, which typically outperform Treasury
bonds in a rising interest rate environment. Mortgages generally offer higher
yields than Treasury securities to compensate investors for prepayment risk, in
which homeowners are likely to refinance when interest rates fall. However,
because borrowers are not as likely to do so when interest rates are rising,
mortgage securities tend to hold their value in that type of environment.
Because of ongoing market volatility, the Trust's performance may be subject to
substantial short-term changes. For updates on the Trust's performance, please
contact your financial advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com.
1. Total returns are based on changes in net asset value and market value,
respectively, per share from 10/31/98 to 4/30/99 without deducting any sales
charges or brokerage costs. Such performance is not annualized and would have
been lower if sales charges and brokerage costs were taken into account.
Dividend return is determined by annualizing the April 1999 dividend of $0.065
and dividing by the closing market price on the New York Stock Exchange of $8.69
per share on 4/23/99 (payment date). Past performance does not guarantee future
results.
2. Portfolio composition is subject to change. Chart is based on total
investments at market value.
<PAGE> 3
High Yield Bounces Back
Domestic high yield bonds, the largest component of the portfolio, performed
very well during the six-month period that ended April 30, 1999. We invested
heavily in this sector because we believed that the massive sell-off of these
securities that occurred in 1998 was incorrectly anticipating high bond default
rates that would result from a poor economy. The strategy benefited the Trust's
performance during the past six months, as it became clear that the U.S. economy
was not sliding into a recession.
Indeed, the buoyant stock market resulting from a better-than-expected economy
has also boosted high yield bonds. Many investment-grade companies took
advantage of the high value of their stock to acquire noninvestment-grade
issuers of high yield debt. By doing so, the credit ratings of the acquired
companies were revised upward, causing price appreciation in our holdings.
Euro Weakness
Because of the strengthening U.S. dollar and the weakening euro, the performance
of European assets was poor during the period. Europe's economies continue to
lag the strong U.S. business environment. And so, the European Central Bank
recently reduced short-term interest rates from 3% to 2.5% in an attempt to
stimulate the economy. However, we believe that the U.S. Federal Reserve Board
is unlikely to lower interest rates any further. As a result, we expect that the
demand for U.S. currency will increase, as capital leaves Europe in search of
higher yields.
Asia: Selective Recovery
Securities in the Japanese bond market generally do not offer enough yield to
meet the Trust's investment objectives, so our holdings in Japan are minimal. We
also have little exposure to the rest of Asia with the exception of Korea, where
our significant bond holdings have performed well.
Latin America: Currency Troubles
In Brazil, we have relatively few holdings because we believe that the
government must more aggressively address fiscal problems such as its budget
deficit. However, Brazilian bonds performed surprisingly well in early 1999,
despite a severe devaluation of the country's currency in January, as investor
sentiment for Latin American debt improved.
Eastern Europe: War Casts a Shadow
The war in Kosovo has put some pressure on emerging market debt in Eastern
Europe. For example, reduced trade has hurt the finances of Yugoslavia, however,
we expect that many of these concerns should abate as the conflict ebbs.
Outlook: Confident
We are optimistic about the domestic high yield bond market because we believe
that the U.S. economy will continue to perform well. As a measure of our
optimism, we are diversifying into issues from chemical, paper and other
industrial companies that would benefit from a global recovery. Meanwhile, we
continue to generally keep the duration of our Treasury bond portfolio short
because we believe the prospects of an end to low inflation will increase.
Expectations of higher inflation negatively impact the portfolio because bond
prices erode in value as interest rates increase.
Globally, our belief is that the euro currency will stabilize later in 1999,
making European bonds more attractive. In Asia, we expect to continue to
maintain a low profile due to inadequate yields in Japan and the relatively
light bond issuance from other countries. Because of the country's continuing
fiscal problems, we believe that Brazilian debt will be volatile and we'll
generally continue to de-emphasize Latin America's largest country.
In summary, we intend to maintain the broadly diversified investment approach
that has helped us take advantage of improving markets over the past six months.
In our view, maintaining a disciplined long-term approach is part of what makes
Oppenheimer Multi-Sector Income Trust part of The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
May 21, 1999
<PAGE> 4
STATEMENT OF INVESTMENTS April 30, 1999 (Unaudited)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
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<S> <C> <C>
U.S. GOVERNMENT SECTOR -- 10.1%
U.S. Treasury Bonds:
6.375%, 8/15/27........................................................ $18,700,000 $19,938,875
11.875%, 11/15/03...................................................... 3,500,000 4,405,625
STRIPS, 5.99%, 11/15/18(2)............................................. 1,100,000 340,136
U.S. Treasury Nts.:
5.875%, 11/15/05....................................................... 3,000,000 3,084,375
6.50%, 8/15/05......................................................... 1,900,000 2,014,000
-----------
Total U.S. Government Obligations (Cost $31,155,554) 29,783,011
-----------
Shares
-------------
CONVERTIBLE SECTOR -- 2.5%
PREFERRED STOCKS -- 2.0%
CGA Group Ltd., Preferred Stock, Series A(3)(4).......................... 39,531 988,275
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable
Preferred Stock, Series B, Non-Vtg.(4)................................. 219 239,257
Dobson Communications Corp.:
12.25% Sr. Exchangeable(4)............................................. 579 586,238
13% Sr. Exchangeable(5)(6)(7).......................................... 300 300,000
e.spire Communications, Inc., 12.75% Jr. Redeemable
Preferred Stock, Non-Vtg.(4)........................................... 469 252,088
Eagle-Picher Holdings, Inc., Cum. Exchangeable, Series B,
3/1/08, Non-Vtg.(7).................................................... 4,000 213,000
Global Crossing Ltd., 10.50% Sr. Exchangeable Preferred, 12/1/08(7)...... 4,000 465,000
Intermedia Communications, Inc., 13.50%
Exchangeable, Series B(4).............................................. 768 831,360
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable
Exchangeable Preferred Stock, Non-Vtg.(4).............................. 2,788 103,853
Nextel Communications, Inc., 11.125% Preferred, Series E,
Non-Vtg.(4)............................................................ 346 384,925
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(4)..................... 8,000 434,000
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable,
Non-Vtg.(4)............................................................ 21 177,975
Petroleum Heat & Power Co., Inc., 2.75% Jr. Cv., Series A,
Non-Vtg.(7)............................................................ 1,687 2,952
SD Warren Co., 14% Cum. Exchangeable, Series B, Non-Vtg.(7).............. 12,000 633,000
Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable,
Non-Vtg.(4)(6)......................................................... 214 229,515
-----------
5,841,438
-----------
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
------------- ----------
<S> <C> <C>
OTHER SECURITIES -- 0.1%
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg................. 400,000 $ 187,000
Viatel, Inc., 10% Cv., Series A(4)....................................... 311 74,718
-----------
261,718
-----------
Units
-------------
RIGHTS, WARRANTS AND CERTIFICATES -- 0.4%
American Telecasting, Inc. Wts., Exp. 6/99(3)............................ 4,750 47
Ames Department Stores, Inc., Litigation Trust(3)........................ 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/00(3).................................. 25,000 250
CellNet Data Systems, Inc. Wts., Exp. 10/07(6)........................... 404 1,565
CGA Group Ltd. Wts., Exp. 12/49(3)....................................... 32,000 9,600
Clearnet Communications, Inc. Wts., Exp. 9/05............................ 330 2,104
Concentric Network Corp. Wts., Exp. 12/07(3)............................. 600 170,475
Covad Communications Group, Inc. Wts., Exp. 3/08(3)...................... 320 413,440
e.spire Communications, Inc. Wts., Exp. 11/05............................ 700 61,516
FirstWorld Communications, Inc. Wts., Exp. 4/08(3)....................... 750 37,500
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(3)........................ 1,000 9,875
Globix Corp. Wts., Exp. 5/05(3).......................................... 600 57,000
Gothic Energy Corp. Wts.:
Exp. 1/03.............................................................. 6,053 --
Exp. 1/03(3)........................................................... 3,455 35
Exp. 9/04(3)........................................................... 10,150 11,419
ICG Communications, Inc. Wts., Exp. 9/05(3).............................. 4,125 65,474
In-Flight Phone Corp. Wts., Exp. 8/02.................................... 900 --
KMC Telecom Holdings, Inc. Wts., Exp. 4/08(3)............................ 920 2,415
Long Distance International, Inc. Wts., Exp. 4/08(3)..................... 400 1,000
Loral Space & Communications Ltd. Wts., Exp. 1/07(3)..................... 975 11,822
Millenium Seacarriers, Inc. Wts., Exp. 7/05(3)........................... 700 4,375
Price Communications Corp. Wts., Exp. 8/07(3)............................ 4,300 236,500
Protection One, Inc. Wts., Exp. 6/05(3).................................. 6,400 76,800
WAM!NET, Inc. Wts., Exp. 3/05(3)......................................... 1,500 23,062
Wireless One, Inc. Wts., Exp. 10/00(3)................................... 1,500 15
-----------
1,197,578
-----------
Total Convertible Sector (Cost $6,493,140) 7,300,734
-----------
CORPORATE SECTOR -- 36.8% Shares
COMMON STOCKS -- 0.0% -------------
Capital Gaming International, Inc.(7).................................... 18 --
Intermedia Communications, Inc.(7)....................................... 757 24,366
Optel, Inc.(7)........................................................... 815 8
-----------
24,374
-----------
</TABLE>
4
<PAGE> 6
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- 35.0%
Aerospace/Defense -- 2.1%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05..................... $1,000,000 $1,036,250
Amtran, Inc., 10.50% Sr. Nts., 8/1/04.................................... 850,000 885,062
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08(3)............................................. 675,000 673,312
9.375% Sr. Nts., 11/15/06.............................................. 800,000 805,000
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08.................. 1,000,000 1,072,500
Constellation Finance LLC, 9.80% Airline Receivable
Asset-Backed Nts., Series 1997-1, 1/1/01(3)............................ 500,000 485,000
Decrane Aircraft Holdings, Inc., Units (each unit consists of
$1,000 principal amount of 12% sr. sub. nts., 9/30/08 and
one warrant to purchase 1.55 shares of common stock)(6)(8)............. 800,000 805,000
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(3)....................................... 440,484 463,831
-----------
6,225,955
-----------
Chemicals -- 0.5%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07............... 300,000 297,750
ICO, Inc., 10.375% Sr. Nts., 6/1/07...................................... 475,000 346,750
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07.............. 200,000 171,500
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07....................................................... 600,000 627,000
-----------
1,443,000
-----------
Consumer Durables -- 0.1%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts.,
Series B, 11/15/07..................................................... 400,000 398,000
-----------
Consumer Non-Durables -- 1.8%
AKI Holdings, Inc., 10.50% Sr. Unsec. Nts., 7/1/08....................... 600,000 591,000
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05.......... 340,000 209,100
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08........... 400,000 410,000
Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03.............. 370,000 376,012
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(6).............. 500,000 495,000
Globe Manufacturing, Inc., 10% Sr. Sub. Nts., 8/1/08..................... 400,000 330,000
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08............ 360,000 369,000
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08.................................... 800,000 764,000
9% Sr. Nts., 11/1/06................................................... 775,000 790,500
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14.44%, 3/15/01(2)........................................... 270,000 176,850
</TABLE>
5
<PAGE> 7
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Consumer Non-Durables (continued)
Salton/Maxim Housewares, Inc., 10.75% Sr. Sub. Nts., 12/15/05............ $400,000 $ 422,500
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08........... 400,000 393,000
-----------
5,326,962
-----------
Energy -- 1.5%
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07...... 845,000 736,206
Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B, 2/15/08..... 400,000 126,000
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08....................... 400,000 366,000
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(6)...... 250,000 216,250
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08........ 380,000 207,100
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(9)....... 180,000 63,450
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08......... 700,000 729,750
Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07......................... 790,000 762,350
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03............................. 200,000 221,500
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07......................... 535,000 544,362
Universal Compression Holdings, Inc., 0%/9.875% Sr.
Disc. Nts., 2/15/08(10)................................................ 700,000 458,500
-----------
4,431,468
-----------
Financial -- 0.7%
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts.,
6/1/06(3).............................................................. 300,000 307,500
RBF Finance Co., 11% Sec. Nts., 3/15/06(6)............................... 500,000 525,000
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08....................................................... 865,000 843,375
Veritas Capital Trust, 10% Nts., 1/1/28.................................. 525,000 473,812
-----------
2,149,687
-----------
Food & Drug -- 0.5%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02......................... 300,000 171,000
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07............. 640,000 622,400
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(3)(10)................ 515,000 515,000
12.625% Sub. Nts., 6/15/02............................................. 200,000 206,500
-----------
1,514,900
-----------
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Food/Tobacco -- 0.7%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08................ $ 200,000 $ 210,000
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts.,
Series B, 12/15/07(10)................................................. 327,000 250,972
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06........... 500,000 545,625
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05.............. 650,000 663,000
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10..................... 100,000 86,500
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08............. 400,000 386,000
-----------
2,142,097
-----------
Forest Products/Containers -- 0.8%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06.......................................... 300,000 312,000
8.25% Sr. Unsec. Sub. Nts., 8/1/08..................................... 400,000 416,000
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07......................... 250,000 243,750
Mail-Well Corp., 8.75% Sr. Sub. Nts., 12/15/08(6)........................ 325,000 334,750
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07........................................ 450,000 474,750
10.875% Sr. Sub. Nts., 4/1/08.......................................... 250,000 247,500
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06................ 250,000 266,250
-----------
2,295,000
-----------
Gaming/Leisure -- 2.1%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(10)................. 150,000 86,250
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08......................... 400,000 378,500
Capital Gaming International, Inc., 11.50% Promissory Nts.,
8/1/95(9).............................................................. 5,500 ---
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(3)(9)............................................... 200,000 10,000
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07.......................... 435,000 430,650
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05....................... 550,000 530,750
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08.................. 800,000 809,000
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07...................... 1,000,000 1,042,500
Mohegan Tribal Gaming Authority, 8.75% Sr. Sub. Nts., 1/1/09(6).......... 500,000 521,250
Outboard Marine Corp., 10.75% Sr. Nts., 6/1/08........................... 240,000 198,000
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(10)...................................... 500,000 357,500
9.25% Sr. Nts., 4/1/06................................................. 300,000 314,250
Rio Hotel & Casino, Inc., 9.50% Sr. Sub. Nts., 4/15/07................... 300,000 339,000
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06................... 440,000 458,150
</TABLE>
7
<PAGE> 9
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Gaming/Leisure (continued)
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07........................................... $300,000 $ 321,000
10.125% Sr. Sub. Nts., 3/15/06......................................... 200,000 216,000
-----------
6,012,800
-----------
Healthcare -- 0.8%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08............. 600,000 592,500
ICN Pharmaceuticals, Inc., 8.75% Sr. Nts., 11/15/08(6)................... 415,000 422,781
Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07(11)(12)................................... 300,000 223,500
10.25% Sr. Sub. Nts., 4/30/06.......................................... 15,000 11,456
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08................ 250,000 213,750
Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(6)...................... 600,000 618,000
Tenet Healthcare Corp., 8.125% Sr. Sub. Nts., 12/1/08(6)................. 250,000 247,500
-----------
2,329,487
-----------
Housing -- 0.5%
Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08............... 400,000 399,500
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07...................................... 420,000 439,950
9.25% Sr. Nts., Series B, 3/15/07...................................... 600,000 628,500
-----------
1,467,950
-----------
Information Technology -- 1.0%
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05..................... 600,000 576,000
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07............................... 600,000 611,250
Fairchild Semiconductor Corp., 10.375% Sr. Sub. Nts., 10/1/07(6)......... 500,000 516,250
Unisys Corp., 11.75% Sr. Nts., 10/15/04.................................. 500,000 568,750
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07............................ 800,000 764,000
-----------
3,036,250
-----------
Manufacturing -- 1.9%
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08................................ 150,000 153,000
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07....................... 700,000 563,500
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08....... 350,000 340,812
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08......................... 315,000 272,475
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07....... 950,000 844,312
Insilco Corp., Units (each unit consists of $1,000 principal amount
of 12% sr. sub. nts., 8/15/07 and one warrant to purchase
0.52 shares of common stock)(6)(8)..................................... 720,000 711,900
International Wire Group, Inc., 11.75% Sr. Sub. Nts.,
Series B, 6/1/05....................................................... 700,000 743,750
</TABLE>
8
<PAGE> 10
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Manufacturing (continued)
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08............... $ 280,000 $ 249,200
Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08......................... 500,000 502,500
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts.,
Series B, 6/15/07...................................................... 500,000 477,500
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08......................... 210,000 209,212
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03....................... 525,000 553,875
-----------
5,622,036
-----------
Media/Entertainment: Broadcasting -- 2.2%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07......... 900,000 954,000
CBS Radio, Inc., 11.375% Unsec. Sub. Debs., 1/15/09(4)................... 617,000 718,034
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07.......................... 700,000 726,250
9% Sr. Unsec. Sub. Nts., 10/1/08....................................... 800,000 858,000
10.50% Sr. Sub. Nts., Series B, 1/15/07.................................. 735,000 817,687
Emmis Communications Corp., 8.125% Sr. Sub. Nts., 3/15/09(6)............. 600,000 603,000
Jacor Communications Co., 8% Sr. Sub. Nts., 2/15/10...................... 400,000 425,000
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(13)................. 700,000 729,750
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04................ 475,000 520,125
-----------
6,351,846
-----------
Media/Entertainment: Cable/Wireless Video -- 2.6%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03..................................... 250,000 254,375
8.375% Sr. Nts., Series B, 2/1/08...................................... 100,000 103,000
9.25% Sr. Nts., 10/1/02................................................ 435,000 454,575
9.875% Sr. Nts., Series B, 3/1/07...................................... 565,000 622,912
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 4/1/23.......................................... 1,000,000 1,120,000
9.875% Sr. Sub. Nts., 5/15/06.......................................... 1,000,000 1,097,500
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09(6).................... 1,705,000 1,788,119
Falcon Holding Group LP, 8.375% Sr. Unsec. Debs.,
Series B, 4/15/10...................................................... 1,000,000 1,020,000
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(14).................................................. 250,000 262,813
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05............................. 480,000 477,600
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(10).................................................. 600,000 414,000
-----------
7,614,894
-----------
</TABLE>
9
<PAGE> 11
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Media/Entertainment: Diversified Media -- 0.7%
Hollinger International Publishing, Inc., 9.25% Sr. Unsec. Sub.
Nts., 2/1/06........................................................... $ 250,000 $ 262,813
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10.................................. 500,000 477,500
9.50% Sr. Unsec. Sub. Nts., 6/1/08..................................... 700,000 701,750
SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts.,
Series B, 2/1/08....................................................... 600,000 622,500
-----------
2,064,563
-----------
Media/Entertainment: Telecommunications -- 5.3%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(10)............... 1,165,000 850,450
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07............... 495,000 564,919
Covad Communications Group, Inc., 0%/13.50% Sr. Disc.
Nts., 3/15/08(10)...................................................... 1,000,000 595,000
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08..................... 365,000 399,675
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(10)...... 750,000 416,250
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc.
Nts., 2/15/08(10)...................................................... 345,000 200,100
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08........................... 100,000 112,000
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05(3)............................. 600,000 620,250
GST Telecommunications, Inc./GST Network Funding Corp., Inc.,
0%/10.50% Sr. Disc. Nts., 5/1/08(6)(10)................................ 250,000 153,125
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc.
Nts., 2/15/08(10)...................................................... 480,000 304,800
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., 3/1/09(6)(10)................................ 200,000 129,000
8.50% Sr. Nts., Series B, 1/15/08...................................... 500,000 501,250
8.60% Sr. Unsec. Nts., Series B, 6/1/08................................ 360,000 361,800
8.875% Sr. Nts., 11/1/07............................................... 265,000 268,313
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08................................................ 500,000 518,750
11% Sr. Nts., 6/1/07................................................... 250,000 277,500
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc.
Nts., 2/15/08(3)(10)................................................... 920,000 529,000
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(6)(10)............................... 250,000 163,125
9.125% Sr. Unsec. Nts., 5/1/08......................................... 565,000 579,831
Long Distance International, Inc., 12.25% Sr. Disc. Nts., 4/15/08........ 400,000 250,000
Metromedia Fiber Network, Inc., 10% Sr. Nts., 11/15/08(6)................ 600,000 651,000
</TABLE>
10
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Media/Entertainment: Telecommunications (continued)
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Disc. Unsec. Nts., 4/15/08(10)............................ $ 250,000 $ 163,125
9% Sr. Nts., 3/15/08................................................... 250,000 248,750
9.625% Sr. Nts., 10/1/07............................................... 500,000 508,750
10.75% Sr. Nts., 11/15/08(6)........................................... 600,000 648,000
NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08.................. 500,000 532,500
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05..................... 1,300,000 1,371,500
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08......................... 500,000 547,500
US Xchange LLC, 15% Sr. Unsec. Nts., 7/1/08.............................. 400,000 428,000
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05........................................ 645,000 694,181
11.25% Sr. Nts., 12/1/08(6)............................................ 700,000 784,000
13.50% Sr. Unsec. Nts., 6/15/04........................................ 165,000 192,225
Viatel, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 4/15/08(10)........................... 385,000 253,138
11.25% Sr. Sec. Nts., 4/15/08.......................................... 195,000 204,750
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(10)..... 500,000 315,000
-----------
15,337,557
-----------
Media/Entertainment: Wireless Communications -- 2.3%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07....................... 100,000 90,500
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(10)........... 554,000 213,290
Crown Castle International Corp., 0%/10.625% Sr. Unsec. Disc.
Nts., 11/15/07(10)..................................................... 800,000 584,000
ICO Global Communications (Holdings) Ltd., Units (each unit
consists of $1,000 principal amount of 15% sr. nts., 8/1/05 and
one warrant to purchase 19.85 shares of common stock)(8)............... 400,000 258,000
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06(6)............ 325,000 313,625
Millicom International Cellular SA, 0%/13.50%
Sr. Disc. Nts., 6/1/06(10)............................................. 205,000 158,363
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 10/31/07(10)....... 425,000 328,313
Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06..................... 1,200,000 1,122,000
ORBCOMM Global LP/ORBCOMM Capital Corp.,
14% Sr. Nts., 8/15/04.................................................. 175,000 182,875
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(10)....... 1,275,000 784,125
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(10)....... 900,000 560,250
Price Communications Cellular Holdings, Inc.,
11.25% Sr. Nts., 8/15/08(4)............................................ 212,187 215,900
</TABLE>
11
<PAGE> 13
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Media/Entertainment: Wireless Communications (continued)
Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07....... $ 100,000 $ 111,500
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08............ 700,000 740,250
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(10)....... 1,000,000 665,000
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(6)(10)........ 600,000 388,500
-----------
6,716,491
-----------
Metals/Minerals -- 1.2% AK Steel Corp.:
7.875% Sr. Nts., 2/15/09(6)............................................ 500,000 503,750
9.125% Sr. Nts., 12/15/06.............................................. 400,000 426,000
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01..................... 250,000 264,063
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08........ 800,000 831,000
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(10).......... 1,200,000 462,000
Metallurg, Inc., 11% Sr. Nts., 12/1/07................................... 365,000 363,175
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01....... 700,000 731,500
-----------
3,581,488
-----------
Retail -- 0.9%
Boyds Collection Ltd. (The), 9% Sr. Sub. Nts., 5/15/08(6)................ 293,000 315,341
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub.
Nts., 5/1/08........................................................... 500,000 430,000
Finlay Enterprises, Inc., 9% Debs., 5/1/08............................... 500,000 487,500
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08....................... 300,000 298,500
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08.............. 400,000 408,000
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07....................... 775,000 815,688
-----------
2,755,029
-----------
Service -- 2.1%
Allied Waste North America, Inc., 7.875% Sr. Unsec. Nts.,
Series B, 1/1/09....................................................... 500,000 490,000
Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07................ 700,000 728,000
Budget Group, Inc., 9.125% Sr. Nts., 4/1/06(6)........................... 375,000 373,125
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07(3)............. 200,000 197,000
Fisher Scientific International, Inc.:
9% Sr. Sub. Nts., 2/1/08............................................... 185,000 186,850
9% Sr. Unsec. Sub. Nts., 2/1/08........................................ 1,000,000 1,017,500
Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08........... 445,000 468,919
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09.......... 250,000 265,000
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07..................... 500,000 530,000
Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08(3)........... 500,000 480,000
</TABLE>
12
<PAGE> 14
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Service (continued)
Protection One Alarm Monitoring, Inc., 13.625% Sr. Sub. Disc.
Nts., 6/30/05.......................................................... $ 655,000 $ 738,513
United Rentals, Inc., 9.25% Sr. Sub. Nts., 1/15/09(6).................... 500,000 519,375
-----------
5,994,282
-----------
Transportation -- 2.1%
Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07.................. 195,000 204,263
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub.
Nts., 4/15/06.......................................................... 200,000 211,000
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(6)..................... 300,000 292,500
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07.............. 775,000 790,500
Millenium Seacarriers, Inc., Units (each unit consists of $1,000
principal amount of 12% first priority ship mtg. sr. sec. nts., 7/15/05
and one warrant to purchase five shares of common stock)(8)............ 700,000 518,000
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(6)....................... 1,250,000 743,750
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(6)(8)....... 100,000 48,500
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07........... 600,000 627,000
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08............................ 500,000 490,000
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04............... 600,000 501,000
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(10)................................. 1,500,000 1,492,500
-----------
5,919,013
-----------
Utility -- 0.6%
Calpine Corp., 10.50% Sr. Nts., 5/15/06.................................. 565,000 620,088
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11....... 570,000 654,510
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds,
Series B, 12/30/11..................................................... 500,000 492,666
-----------
1,767,264
-----------
102,498,019
-----------
STRUCTURED INSTRUMENTS -- 1.8%
Bankers Trust/Lehman High Yield Composite Index Linked Nts.,
7.70%, 5/4/99.......................................................... 3,000,000 3,195,360
Shoshone Partners Loan Trust Sr. Nts., 6.653%, 4/28/02
(representing a basket of reference loans and a total return
swap between Chase Manhattan Bank and the Trust)(3)(14)................ 2,500,000 2,232,705
-----------
5,428,065
-----------
</TABLE>
13
<PAGE> 15
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
---- ------ --------------- ----------
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED -- 0.0%
J.P. Morgan & Co., Inc., The Emerging Market
Bond Index Put Opt.(3)............................................... 7/99 $148.99 800 $ 11,703
------------
Total Corporate Sector (Cost $109,103,468) 107,962,161
------------
Face Amount(1)
--------------
INTERNATIONAL SECTOR -- 28.5%
MORTGAGE-BACKED OBLIGATIONS -- 0.1%
Nykredit AS, 8% Cv. Bonds, 10/1/26(DKK)..................................................... 1,721,000 254,767
------------
CORPORATE BONDS AND NOTES -- 4.6%
Energy -- 0.5%
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05....................................... 1,000,000 1,027,500
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08........................................... 700,000 493,500
------------
1,521,000
------------
Financial -- 0.2%
Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/99(3)(9)(IDR).......................... 3,160,000,000 58,629
Eurofima, 7.50% Sr. Unsec. Unsub. Nts., 11/4/02(DEM)........................................ 770,000 475,760
PT Polysindo Eka Perkasa:
20% Nts., 3/6/00(9)(IDR).................................................................. 3,000,000,000 48,239
24% Nts., 6/19/03(9)(IDR)................................................................. 1,314,400,000 21,135
------------
603,763
------------
Food/Tobacco -- 0.2%
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07...................... 565,000 449,175
------------
Gaming/Leisure -- 0.3%
Intrawest Corp., 9.75% Sr. Nts., 8/15/08.................................................... 800,000 839,000
------------
Media/Entertainment: Diversified Media -- 0.2%
Imax Corp., 7.875% Sr. Nts., 12/1/05........................................................ 700,000 700,875
------------
Media/Entertainment: Telecommunications -- 2.9%
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(10)................................................ 100,000 85,500
Units (each unit consists of $1,000 principal amount of
0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase
7.8 ordinary shares)(8)(10)............................................................... 900,000 778,500
Diamond Cable Communications plc, 0%/11.75%
Sr. Disc. Nts., 12/15/05(10).............................................................. 1,600,000 1,448,000
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08............................................... 200,000 210,500
</TABLE>
14
<PAGE> 16
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Media/Entertainment: Telecommunications (continued)
NTL, Inc.:
0%/12.375% Sr. Nts., 10/1/08(6)(10)...................................... $1,700,000 $ 1,207,000
10% Sr. Nts., Series B, 2/15/07.......................................... 550,000 594,000
11.50% Sr. Nts., 10/1/08(6).............................................. 500,000 567,500
RSL Communications plc:
9.125% Sr. Unsec. Nts., 3/1/08........................................... 500,000 490,000
10.50% Gtd. Sr. Nts., 11/15/08........................................... 500,000 522,500
Telewest Communications plc:
0%/9.25% Sr. Nts., 4/15/09(6)(10)........................................ 250,000 170,625
0%/9.875% Sr. Nts., 4/15/09(6)(10)(GBP).................................. 575,000 601,775
0%/11% Sr. Disc. Debs., 10/1/07(10)...................................... 500,000 447,500
11.25% Sr. Nts., 11/1/08(6).............................................. 1,035,000 1,229,063
-----------
8,352,463
-----------
Media/Entertainment: Wireless Communications -- 0.3%
Orange plc, 8% Sr. Nts., 8/1/08............................................ 800,000 826,000
-----------
Metals/Minerals -- 0.0%
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08....... 200,000 204,750
-----------
Transportation -- 0.0%
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship
Mtg. Nts., 5/30/08....................................................... 300,000 127,500
-----------
13,624,526
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 22.6%
Argentina -- 2.4%
Argentina (Republic of) Bonds, Bonos de Consolidacion de
Deudas, Series I, 2.878%, 4/1/07(14)(ARP).................................. 741,635 549,151
Argentina (Republic of) Sr. Unsec. Unsub. Bonds, 11%, 10/9/06.............. 3,200,000 3,196,000
Argentina (Republic of) Unsec. Unsub. Medium-Term Nts.,
8.75%, 7/10/02(ARP)...................................................... 2,990,000 2,729,393
Banco Hipotecario Nacional (Argentina) Medium-Term Unsec. Nts.,
Series 3, 10.625%, 8/7/06................................................ 700,000 708,750
-----------
7,183,294
-----------
Australia -- 0.2%
Queensland Treasury Corp. Bonds., Series 07, 8%, 9/14/07(AUD).............. 575,000 439,248
-----------
Brazil -- 2.9%
Brazil (Federal Republic of) Bonds:
11.625%, 4/15/04......................................................... 160,000 155,200
Series RG, 5.938%, 4/15/12(14)........................................... 820,000 522,750
</TABLE>
15
<PAGE> 17
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14(11)......... $7,076,057 $ 4,935,550
Brazil (Federal Republic of) Debt Conversion Bonds,
5.938%, 4/15/12(14)...................................................... 3,495,000 2,228,062
Brazil (Federal Republic of) Interest Due & Unpaid Bonds,
6.063%, 1/1/01(14)....................................................... 632,220 602,190
-----------
8,443,752
-----------
Bulgaria -- 1.0%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 5.875%, 7/28/24(14)......... 2,051,000 1,404,935
Bulgaria (Republic of) Front-Loaded Interest Reduction
Bearer Bonds, Tranche A, 2.50%, 7/28/12(13).............................. 160,000 97,400
Bulgaria (Republic of) Interest Arrears Bonds, 5.875%, 7/28/11(14)......... 2,000,000 1,355,000
-----------
2,857,335
-----------
Canada -- 0.1%
Canada (Government of) Bonds, Series J24, 10.25%, 2/1/04(CAD).............. 200,000 167,297
-----------
Colombia -- 0.2%
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06.................... 570,000 511,575
-----------
Denmark -- 0.1%
Denmark (Kingdom of) Bonds:
7%, 12/15/04(DKK)........................................................ 840,000 139,704
8%, 5/15/03(DKK)......................................................... 595,000 99,093
-----------
238,797
-----------
Ecuador -- 0.1%
Ecuador (Republic of) Past Due Interest Bonds, 4.422%, 2/27/15(14)......... 1,030,118 436,513
-----------
Finland -- 0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04(EUR)........................... 500,000 673,557
-----------
France -- 0.5%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 10/25/07(EUR)..................................................... 1,300,000 1,540,382
-----------
Germany -- 2.2%
Deutsche Ausgleichsbank Bonds, 4%, 7/4/09(EUR)............................. 455,000 476,941
Germany (Republic of) Bonds:
6.25%, 4/26/06(EUR)...................................................... 120,460 148,368
6.75%, 7/15/04(EUR)...................................................... 4,165,000 5,142,688
Series 95, 6.50%, 10/14/05(EUR).......................................... 375,799 466,360
Germany (Republic of) Nts., Series 98, 4%, 3/17/00(EUR).................... 140,605 150,546
-----------
6,384,903
-----------
</TABLE>
16
<PAGE> 18
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Great Britain -- 1.2%
United Kingdom Treasury Bonds:
8.50%, 12/7/05(GBP)...................................................... 855,000 $ 1,716,055
10%, 9/8/03(GBP)......................................................... 910,000 1,749,439
-----------
3,465,494
-----------
Italy -- 1.4%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
8.75%, 7/1/06(EUR)....................................................... 2,000,000 2,773,957
10.50%, 9/1/05(EUR)...................................................... 467,392 685,399
11.50%, 3/1/03(EUR)...................................................... 495,797 679,373
-----------
4,138,729
-----------
Ivory Coast -- 0.1%
Ivory Coast (Government of) Past Due Interest Bonds,
Series 20 yr., 2%, 3/29/18(13)........................................... 897,000 289,282
-----------
Jordan -- 0.1%
Hashemite (Kingdom of Jordan) Bonds,
Series DEF, 5.50%, 12/23/23(13).......................................... 525,000 313,687
-----------
Mexico -- 3.8%
Bonos de la Tesoreria de la Federcion, Zero Coupon,
22.39%, 6/3/99(2)(MXP)................................................... 16,000,000 1,699,664
United Mexican States Bonds:
10.375%, 2/17/09......................................................... 590,000 630,946
11.375%, 9/15/16......................................................... 4,000,000 4,600,000
11.50%, 5/15/26.......................................................... 3,630,000 4,328,775
-----------
11,259,385
-----------
New Zealand -- 1.0%
New Zealand (Government of) Bonds, 10%, 3/15/02(NZD)....................... 4,640,000 2,936,100
-----------
Nigeria -- 0.2%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20............. 750,000 497,062
-----------
Panama -- 0.8%
Panama (Republic of) Bonds, 8.875%, 9/30/27................................ 545,000 516,388
Panama (Republic of) Nts., 8.25%, 4/22/08.................................. 785,000 743,788
Panama (Republic of) Past Due Interest Debs., 5.41%, 7/17/16(14)........... 1,336,625 1,047,580
-----------
2,307,756
-----------
</TABLE>
17
<PAGE> 19
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Peru -- 0.7%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.75%, 3/7/17(13)....................................................... $ 3,490,000 $ 2,159,438
-----------
Philippines -- 0.2%
Philippines (Republic of) Bonds, 8.75%, 10/7/16........................... 710,000 690,475
-----------
Poland -- 0.5%
Poland (Republic of) Par Bonds, 3%, 10/27/24(13).......................... 2,325,000 1,508,460
-----------
Russia -- 0.5%
Russia (Government of) Debs.:
5.969%, 12/15/15(14).................................................... 1,293,840 97,038
Series 19 yr., 5.969%, 12/15/15(14)..................................... 1,623,039 121,728
Russia (Government of) Principal Loan Debs.,
Series 24 yr., 19.77%, 12/15/20(2)...................................... 2,100,000 149,625
Russia (Government of) Unsec. Bonds, 11%, 7/24/18......................... 2,945,000 1,104,375
-----------
1,472,766
-----------
Spain -- 0.9%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
10.90%, 8/30/03(EUR).................................................... 2,000,000 2,762,849
-----------
Sweden -- 0.1%
Sweden (Kingdom of) Bonds, Series 1033, 10.25%, 5/5/03(SEK)............... 1,600,000 238,642
-----------
Turkey -- 0.5%
Turkey (Republic of) Treasury Bills, Series 6B, Zero Coupon,
78.18%, 9/15/99(2)(TRL)................................................. 678,000,000,000 1,326,442
-----------
Venezuela -- 0.7%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27............................. 790,000 558,965
Venezuela (Republic of) Disc. Bonds:
Series DL, 5.938%, 12/18/07(14)......................................... 214,285 170,089
Series W-A, 5.875%, 3/31/20(14)......................................... 400,000 291,500
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series A, 6%, 3/31/07(14)............................................... 952,381 735,715
Venezuela (Republic of) New Money Bonds,
Series A, 6.063%, 12/18/05(14).......................................... 411,770 338,810
-----------
2,095,079
-----------
66,338,299
-----------
</TABLE>
18
<PAGE> 20
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
LOAN PARTICIPATIONS -- 0.5%
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 6%, 9/4/06(14)............................................... $ 1,065,272 $ 572,584
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.063%, 1/1/09(5)(14)........................................ 178,095 145,815
Tranche B, 6.132%, 1/1/09(5)(14)........................................ 588,235 508,824
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.087%, 9/30/00(5)(14)(JPY).................................. 35,999,999 274,461
-----------
1,501,684
-----------
Units
--------------
RIGHTS, WARRANTS AND CERTIFICATES -- 0.0%
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/00(3)....... 80 1
Central Bank of Nigeria Wts., Exp. 11/20.................................. 500 ---
Microcell Telecommunications, Inc. Wts., Exp. 6/06(3)..................... 2,800 48,062
----------
48,063
----------
STRUCTURED INSTRUMENTS -- 0.7%
Deutsche Bank AG, Turkish Lira O/N Linked Nts.,
76.39%, 6/16/99(14)(TRL)................................................ 528,090,000,000 1,348,655
Salomon, Inc., Indonesian Rupiah Linked Nts., 29.55%, 4/12/00............. 750,000 803,872
----------
2,152,527
----------
<CAPTION>
Date Strike Contracts
---- ------ ---------
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED -- 0.0%
Brazil (Federal Republic of) Capitalization
Bonds, Cl. C., 8%, 4/15/14 Put Opt............ 7/99 65.375% 1,141 24,337
----------
Total International Sector (Cost $85,870,508)... 83,944,203
----------
Face Amount(1)
--------------
MORTGAGE-BACKED SECTOR -- 17.8%
Government Agency -- 14.0%
FHLMC/FNMA/Sponsored -- 13.3%
Federal Home Loan Mortgage Corp., Certificates of Participation:
12%, 5/1/10............................................................. $ 354,717 395,056
12%, 10/1/11............................................................ 222,944 249,301
12%, 8/1/13............................................................. 42,671 48,179
12%, 8/1/14............................................................. 315,713 356,460
12%, 10/1/14............................................................ 163,146 183,057
12%, 6/1/15............................................................. 118,320 133,312
Federal Home Loan Mortgage Corp., Collateralized Mtg.
Obligations, Gtd. Multiclass Mtg. Participation Certificates,
Series 1343, Cl. LA, 8%, 8/15/22........................................ 1,000,000 1,046,560
</TABLE>
19
<PAGE> 21
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
FHLMC/FNMA/Sponsored (continued)
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates,
Series 2054, Cl. TE, 6.25%, 4/15/24..................................... $ 534,000 $ 525,488
Federal Home Loan Mortgage Corp., Interest-Only
Stripped Mtg.-Backed Security:
Series 197, Cl. IO, 9.57%, 4/1/28(15)................................. 4,776,101 1,444,024
Series 199, Cl. IO, 20.83%, 8/1/28(15)................................ 5,361,714 1,567,464
Federal National Mortgage Assn.:
6.50%, 1/1/29........................................................... 24,768,513 24,614,453
7.50%, 6/1/10........................................................... 821,015 847,526
11%, 7/1/16............................................................. 499,211 562,120
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through
Certificates, 13%, 6/1/15............................................... 731,698 852,465
Federal National Mortgage Assn., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
Trust 1992-162, Cl. C, 7%, 10/25/21................................... 5,400,000 5,464,098
Trust 1995-4, Cl. PC, 8%, 5/25/25..................................... 664,690 700,829
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security, Trust 277, Cl. 1, 23.50%, 4/1/27(16).............. 125,836 103,776
----------
39,094,168
----------
GNMA/Guaranteed -- 0.7%
Government National Mortgage Assn.:
6%, 7/20/27............................................................. 425,639 431,624
7%, 1/15/28............................................................. 608,748 618,197
7%, 3/15/28............................................................. 261,983 266,049
11%, 10/20/19........................................................... 314,717 354,475
12%, 11/20/13........................................................... 126,571 143,366
12%, 2/20/15............................................................ 63,958 72,506
12%, 9/20/15............................................................ 132,860 150,879
----------
2,037,096
----------
Private -- 3.8%
Commercial -- 2.2%
Asset Securitization Corp., Commercial Mtg.
Pass-Through Certificates:
Series 1996-D3, Cl. A5, 8.332%, 10/13/26(14).......................... 500,000 464,219
Series 1996-MD6, Cl. A5, 7.438%, 11/13/26(14)......................... 800,000 802,000
BKB Commercial Mortgage Trust, Commercial Mtg. Obligations,
Series 1997-C1, Cl. C, 7.45%, 10/25/00(3)............................... 126,778 126,660
</TABLE>
20
<PAGE> 22
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
Commercial (continued)
Capital Lease Funding Securitization LP, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-CTL1, 11.44%, 6/22/24(3)(15).......... $10,803,602 $ 441,428
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 28.37%,
12/25/20(3)(15)......................................................... 12,416,600 190,129
General Motors Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1997-C1, Cl. X, 9.08%, 7/15/27(15)......... 3,435,079 298,422
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. D, 7.42%, 4/25/28..................... 800,000 794,813
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. D1, 7.432%, 2/15/28(3)(14)............ 1,000,000 992,813
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates:
Series DMC, Cl. B, 8.562%, 8/12/11(3)................................. 400,000 410,375
Series DMC, Cl. C, 8.921%, 8/12/11(3)................................. 400,000 407,750
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through
Certificates, Series 1, Cl. D, 7.68%, 12/21/26(3)....................... 500,000 487,500
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through Certificates, Series 1997-LLI, Cl. E,
7.30%, 4/12/12........................................................ 500,000 452,813
Multiclass Pass-Through Certificates, Series 1996-C3,
Cl. D, 8%, 6/25/30(3)................................................. 650,000 647,156
----------
6,516,078
----------
Residential -- 1.6%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(3)................... 710,000 637,003
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, Cl. C, 8.05%, 7/25/06(3)(14)............ 800,000 738,750
Residential Asset Securitization Trust, Collateralized Mtg.
Obligations, Non-Accelerated Security, Series 1997-A2,
Cl. A8, 7.75%, 4/25/27.................................................. 2,000,000 2,060,000
Salomon Brothers Mortgage Securities VII, Series 1996-B,
Cl. 1, 7.132%, 4/25/26(3)............................................... 1,297,949 930,468
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(3)........ 250,000 247,500
----------
4,613,721
----------
Total Mortgage-Backed Sector (Cost $51,740,159)........................... 52,261,063
----------
</TABLE>
21
<PAGE> 23
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ----------
<S> <C> <C>
MONEY MARKET SECTOR -- 1.1%
Repurchase agreement with PaineWebber, Inc., 4.86%, dated 4/30/99, to be
repurchased at $3,101,256 on 5/3/99, collateralized by U.S. Treasury Nts.,
5.875%-7.50%, 8/31/00-8/15/05, with a value of $3,166,962
(Cost $3,100,000)....................................................... $3,100,000 $ 3,100,000
------------
TOTAL INVESTMENTS, AT VALUE (COST $287,462,829)........................... 96.8% 284,351,172
OTHER ASSETS NET OF LIABILITIES........................................... 3.2 9,252,129
----- ------------
NET ASSETS................................................................ 100.0% $293,603,301
===== ============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP -- Argentine Peso IDR -- Indonesian Rupiah
AUD -- Australian Dollar JPY -- Japanese Yen
CAD -- Canadian Dollar MXP -- Mexican Peso
DEM -- German Mark NZD -- New Zealand Dollar
DKK -- Danish Krone SEK -- Swedish Krona
EUR -- Euro TRL -- Turkish Lira
GBP -- British Pound Sterling
2. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
3. Identifies issues considered to be illiquid or restricted -- See Note 8 of
Notes to Financial Statements.
4. Interest or dividend is paid-in-kind.
5. When-issued security to be delivered and settled after April 30, 1999.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $18,138,559 or 6.18% of the Trust's
net assets as of April 30, 1999.
7. Non-income producing security.
8. 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.
9. Non-income producing -- issuer is in default.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
11. A sufficient amount of securities have been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Contracts/Face Expiration Exercise Premium Market Value
Subject to Put Date Price Received See Note 1
------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Brazil (Federal Republic of) Capitalization
Bonds, 8%, 4/15/14 Put Option $1,823,000 7/15/99 66.625% $ 55,072 $ 54,684
Brazil (Federal Republic of) Capitalization
Bonds, 8%, 4/15/14 Put Option 950,000 7/20/99 63.375% 21,400 20,430
Mexican Peso Put Opt. 8,560,000 10/11/99 10.70 MXP 25,600 7,188
Mexican Peso Put Opt. 8,546,250 10/13/99 10.75 MXP 22,021 7,838
-------- ---------
$124,093 $ 90,140
======== =========
</TABLE>
12. A sufficient amount of securities has been designated to cover outstanding
foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
13. Represents the current interest rate for an increasing rate security.
22
<PAGE> 24
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
14. Represents the current interest rate for a variable rate security.
15. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities
typically decline in price as interest rates decline. Most other fixed
income securities increase in price when interest rates decline. The
principal amount of the underlying pool represents the notional amount on
which current interest is calculated. The price of these securities is
typically more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest
rates disclosed represent current yields based upon the current cost basis
and estimated timing and amount of future cash flows.
16. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment
rates rise. The price of these securities is typically more volatile than
that of coupon-bearing bonds of the same maturity. Interest rates disclosed
represent current yields based upon the current cost basis and estimated
timing of future cash flows.
See accompanying Notes to Financial Statements.
23
<PAGE> 25
STATEMENT OF ASSETS AND LIABILITIES April 30, 1999 (Unaudited)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
See Note 1
------------
<S> <C>
ASSETS
Investments, at value (cost $287,462,829) -- see accompanying statement......................... $284,351,172
Cash............................................................................................ 1,373,673
Receivables and other assets:
Investments sold.............................................................................. 6,708,611
Interest, dividends and principal paydowns.................................................... 6,070,312
Other......................................................................................... 34,972
------------
Total assets................................................................................ 298,538,740
------------
LIABILITIES
Unrealized depreciation on foreign currency exchange contracts -- Note 5........................ 5,619
Options written, at value (premiums received $124,093) --
see accompanying statement -- Note 6.......................................................... 90,140
Payables and other liabilities:
Investments purchased (including $300,000 purchased on a when-issued basis) --
Note 1...................................................................................... 4,193,276
Trustees' compensation -- Note 1.............................................................. 175,170
Management and administrative fees............................................................ 168,480
Shareholder reports........................................................................... 118,833
Custodian fees................................................................................ 23,567
Other......................................................................................... 160,354
------------
Total liabilities........................................................................... 4,935,439
------------
NET ASSETS...................................................................................... $293,603,301
============
COMPOSITION OF NET ASSETS
Par value of shares of capital stock............................................................ $ 291,161
Additional paid-in capital...................................................................... 312,140,847
Undistributed net investment income............................................................. 1,237,925
Accumulated net realized loss on investments and foreign currency transactions.................. (16,949,108)
Net unrealized depreciation on investments and translation of assets and liabilities
denominated in foreign currencies............................................................. (3,117,524)
------------
NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding................ $293,603,301
============
NET ASSET VALUE PER SHARE....................................................................... $10.08
=====
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE> 26
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 1999 (Unaudited)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $3,718)........................................... $13,405,623
Dividends....................................................................................... 537,698
-----------
Total income................................................................................ 13,943,321
-----------
EXPENSES
Management fees -- Note 4....................................................................... 946,462
Administrative fees -- Note 4................................................................... 291,112
Shareholder reports............................................................................. 126,985
Custodian fees and expenses..................................................................... 40,800
Trustees' compensation -- Note 1................................................................ 33,765
Transfer and shareholder servicing agent fees -- Note 4......................................... 22,364
Legal, auditing and other professional fees..................................................... 20,265
Registration and filing fees.................................................................... 15,430
Accounting service fees -- Note 4............................................................... 12,000
Insurance expenses.............................................................................. 3,141
Other........................................................................................... 12,380
-----------
Total expenses.............................................................................. 1,524,704
Less expenses paid indirectly --Note 4.......................................................... (5,233)
-----------
Net expenses................................................................................ 1,519,471
-----------
NET INVESTMENT INCOME........................................................................... 12,423,850
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments................................................................................... (5,132,737)
Closing of futures contracts.................................................................. (252,182)
Closing and expiration of option contracts written -- Note 6.................................. (2,590)
Foreign currency transactions................................................................. (1,161,270)
-----------
Net realized loss........................................................................... (6,548,779)
-----------
Net change in unrealized appreciation or depreciation on:
Investments................................................................................... 13,553,340
Translation of assets and liabilities denominated in foreign currencies....................... (376,780)
-----------
Net change.................................................................................. 13,176,560
-----------
Net realized and unrealized gain................................................................ 6,627,781
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $19,051,631
===========
</TABLE>
See accompanying Notes to Financial Statements.
25
<PAGE> 27
STATEMENT OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1999 Year Ended
(Unaudited) October 31, 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS
Net investment income....................................................... $ 12,423,850 $ 23,029,394
Net realized loss........................................................... (6,548,779) (1,954,051)
Net change in unrealized appreciation or depreciation....................... 13,176,560 (20,031,594)
------------ ------------
Net increase in net assets resulting from operations...................... 19,051,631 1,043,749
------------ ------------
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income........................................ (11,355,267) (22,561,595)
Tax return of capital ...................................................... -- (1,547,363)
------------ ------------
NET ASSETS
Total increase (decrease)................................................... 7,696,364 (23,065,209)
Beginning of period......................................................... 285,906,937 308,972,146
------------ ------------
End of period (including undistributed net investment income
of $1,237,925 and $169,342, respectively)................................. $293,603,301 $285,906,937
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 28
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31,
1999 ------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period.......... $ 9.82 $10.61 $10.52 $10.14 $10.17 $10.96
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income ...................... .42 .79 .89 .91 .94 1.00
Net realized and unrealized gain (loss)..... .23 (.75) .08 .37 (.04) (.82)
------ ------ ------ ------ ------ ------
Total income from investment operations... .65 .04 .97 1.28 .90 .18
------ ------ ------ ------ ------ ------
Dividends to shareholders:
Dividends from net investment income........ (.39) (.78) (.88) (.90) (.91) (.84)
Tax return of capital....................... -- (.05) -- -- (.02) (.13)
------ ------ ------ ------ ------ ------
Total dividends to shareholders........... (.39) (.83) (.88) (.90) (.93) (.97)
------ ------ ------ ------ ------ ------
Net asset value, end of period................ $10.08 $ 9.82 $10.61 $10.52 $10.14 $10.17
====== ====== ====== ====== ====== ======
Market value, end of period................... $ 8.81 $ 9.38 $10.13 $ 9.88 $10.00 $ 9.50
====== ====== ====== ====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1).............. (2.25)% 0.17% 11.40% 7.85% 15.62% (7.46)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)...... $293,603 $285,907 $308,972 $306,181 $295,128 $295,658
Average net assets (in thousands)............. $289,703 $304,773 $308,712 $298,496 $288,884 $306,686
Ratios to average net assets:
Net investment income....................... 8.65%(2) 7.56% 8.42% 8.87% 9.51% 9.17%
Expenses(3)................................. 1.06%(2) 1.01% 0.99% 1.04% 1.05% 1.02%
Portfolio turnover rate(4).................... 99% 402% 259% 225% 240% 188%
</TABLE>
(1) Assumes a $1,000 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) Annualized.
(3) The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
(4) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities and mortgage dollar rolls) for the period ended April
30, 1999 were $257,788,716 and $341,432,360, 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.
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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. 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 in which 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.
Foreign currency exchange contracts are valued based on the closing prices of
the foreign currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. Options are valued based
upon the last sale price on the principal exchange on which the option is
traded or, in the absence of any transactions that day, the value is based upon
the last sale price on the prior trading date if it is within the spread
between the closing bid and asked prices. If the last sale price is outside the
spread, the closing bid is used.
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 six months ended April 30, 1999,
the market value of these securities comprised an average of 3% of the Trust's
net assets, and resulted in realized and unrealized losses of $794,497.
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 April 30, 1999,
the Trust had entered into outstanding when-issued or forward commitments of
$300,000.
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
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. As of April 30, 1999, securities
with an aggregate market value of $201,453, representing 0.07% 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 foreign securities and investment
income are translated at the rates of exchange prevailing on the respective
dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the 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. As of October 31, 1998, the
Trust had available for federal income tax purposes an unused capital loss
carryover of approximately $9,493,000, which expires between 2003 to 2006.
Trustees' Compensation -- 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 six months
ended April 30, 1999, a provision of $14,783 was made for the Trust's projected
benefit obligations and payments of $8,387 were made to retired trustees,
resulting in an accumulated liability of $174,995 as of April 30, 1999.
The Board of Trustees has adopted a deferred compensation plan for independent
Trustees that enables a Trustee to elect to defer receipt of all or a portion
of annual fees they are entitled to receive from the Trust. Under the plan, the
compensation deferred by a Trustee is periodically adjusted as though an
equivalent amount had been invested in shares of one or more Oppenheimer funds
selected by the Trustee.
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Trustees' Compensation (continued)
The amount paid to the Trustee under the plan will be
determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not materially affect the Trust's assets,
liabilities or net income per share.
Distributions to Shareholders -- The Trust intends to declare and pay dividends
from net investment income monthly. Distributions from net realized gains on
investments, if any, will be made at least once each year.
Classification of Distributions to Shareholders -- Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes primarily because of 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 its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded
by the Trust.
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 six months ended April 30, 1999, or for the year ended October
31, 1998.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of April 30, 1999, net unrealized depreciation on investments of $3,077,704
was composed of gross appreciation of $10,344,302, and gross depreciation of
$13,422,006.
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.
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
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.
Expenses paid indirectly represent a reduction of custodian fees for earnings
on cash balances maintained by the Trust.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the
Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI
are based on the number of accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses.
5. FOREIGN CURRENCY CONTRACTS
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at negotiated rate. The Trust may enter into
foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuation. Risks to the Trust include
the potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Trust and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided
by a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Trust may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on outstanding
foreign currency contracts are noted in the Statement of Investments where
applicable.
As of April 30, 1999, the Trust had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Valuation
Contract As of
Expiration Amount April 30, Unrealized
CONTRACT DESCRIPTION Date (000s) 1999 Depreciation
- --------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- -----------------
<S> <C> <C> <C> <C>
British Pound Sterling (GBP) ........ 7/15/99 350 GBP $563,169 $5,619
======
</TABLE>
31
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
Oppenheimer Multi-Sector Income Trust
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.
Upon entering into a futures contract, the Trust is required to deposit either
cash or securities (initial margin) in an amount equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the 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.
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.
7. OPTION ACTIVITY
The Trust may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Trust generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Trust receives a premium and becomes obligated to sell
or purchase the underlying security at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Trust will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Trust gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Trust may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Trust pays a premium whether or not the
option is exercised. The Trust also has the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not
exist.
32
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Written option activity for the six months ended April 30, 1999, was as
follows:
<TABLE>
<CAPTION>
PUT OPTIONS
-----------------------------------------
NUMBER OF OPTIONS AMOUNT OF PREMIUMS
----------------- ------------------
<S> <C> <C>
Options outstanding as of October 31, 1998 ........... -- $ --
Options written ...................................... 17,110,613 159,821
Options closed or expired ............................ (1,590) (35,728)
---------- --------
Options outstanding as of April 30, 1999 ............. 17,109,023 $124,093
========== ========
</TABLE>
8. ILLIQUID AND RESTRICTED SECURITIES
As of April 30, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may 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 as of April 30, 1999 was $15,939,293, which
represents 5.43% of the Trust's net assets, of which $1,008,125 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Unit as of
SECURITY Date Per Unit April 30, 1999
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS
- -----
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00........ 11/18/93 87.50% 5.00%
STOCKS AND WARRANTS
- -------------------
Becker Gaming, Inc. Wts., Exp. 11/00......................................... 11/18/93 $ 2.00 $ .01
CGA Group Ltd., Preferred Stock, Series A.................................... 6/17/97 25.00 25.00
CGA Group Ltd. Wts. Exp. 12/49............................................... 6/17/97 -- .30
</TABLE>
33
<PAGE> 35
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
may be considerations in the allocation of assets among such sectors. The Trust
can invest in a number of different kinds of "derivative investments" and can
also engage in certain special investment techniques, including repurchase
transactions, when-issued and delayed delivery transactions and hedging,
although the Trust is not required to invest in any of these types of
securities at all times. The investment advisor to the Trust is
OppenheimerFunds, Inc. (the Manager).
The Portfolio Managers of the Trust are Arthur Steinmetz and Caleb Wong. Mr.
Steinmetz is a Vice President of the Trust and a Senior Vice President of the
Advisor and Mr. Wong is an Assistant Vice President of the Advisor. Messrs.
Steinmetz and Wong have been the persons principally responsible for the
day-to-day management of the Trust's portfolio since February 1, 1999. Prior to
February 1999, Mr. Steinmetz served as a portfolio manager and officer of other
Oppenheimer funds. Mr. Wong worked on fixed-income quantitative research and
risk management for the Advisor since July 1996, prior to which he was enrolled
in the Ph.D. program for Economics at the University of Chicago. Other members
of the Advisor's fixed-income portfolio department, particularly portfolio
analysts, traders and other portfolio managers provide the Trust's Portfolio
Managers with support in managing the Trust's portfolio.
Year 2000 Risks -- Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Trust invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Trust and
other investors. That failure could have a negative impact on handling trades,
pricing and accounting services. Data processing errors by government issuers
of securities could result in economic uncertainties, and the issuers may incur
substantial costs in attempting to prevent or fix such errors, all of which
could have a negative effect on the Trust's investments and returns.
The Manager and the Transfer Agent have been working on necessary changes to
their computer systems to deal with the year 2000 and expect that their systems
will be adapted in time for that event, although there cannot be assurance of
success. Additionally, the services they provide depend on the interaction of
their computer systems with those brokers, information services, the Trust's
custodian and other parties. Therefore, any failure of the computer systems of
those parties to deal with the year 2000 may also have a negative effect on the
services they provide to the Trust. The extent of that risk cannot be
ascertained at this time.
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
34
<PAGE> 36
OPPENHEIMER MULTI-SECTOR INCOME TRUST
GENERAL INFORMATION CONCERNING THE TRUST (Continued)
shareholder elects to receive cash. If Shares are registered in nominee name,
the shareholder should consult the nominee if the shareholder desires to
participate in the Plan. Shareholders that participate in the Plan
(Participants) may, at their option, make additional cash investments in
Shares, semi-annually in amounts of at least $100, through payment to
Shareholder Financial Services, Inc., the agent for the Plan (the Agent),
accompanied by a service fee of $0.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional Shares at the greater of the Trust's net asset
value determined as of the date of purchase or 95% of the then-current market
price. If the market price is lower than net asset value, the Distribution will
be paid in cash, which the Agent will use to buy Shares on The New York Stock
Exchange (the NYSE), or otherwise on the open market to the extent available.
If the market price exceeds the net asset value before the Agent has completed
its purchases, the average purchase price per Share paid by the Agent may
exceed the net asset value, resulting in fewer Shares being acquired than if
the Distribution had been paid in Shares issued by the Trust.
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,
35
<PAGE> 37
OPPENHEIMER MULTI-SECTOR INCOME TRUST
GENERAL INFORMATION CONCERNING THE TRUST (Continued)
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."
36
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<PAGE> 39
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<PAGE> 40
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<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
Arthur Steinmetz, Vice President
Brian W. Wixted, 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 LLP
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken from the
records of the Trust without examination of the independent auditors.
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, are not insured by the FDIC or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
RS0680.001.0499 [RECYCLE LOGO] Printed on recycled paper
