1999 Annual Report
OPPENHEIMER
Multi-Sector
Income Trust
October 31, 1999
[logo]OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Dear Shareholder:
We are pleased to present this annual report for Oppenheimer Multi-Sector Income
Trust for the reporting period ended October 31, 1999. For the period, the Trust
provided a 4.46% average annual total return, which represents the sum of the
dividend income and the change in value of the underlying bond portfolio. Its
average annual total return at market value was -6.64%, which represents the
change in share price on the New York Stock Exchange. The dividend return was
10.50%.(1)
Investment Breakdown:
Oppenheimer Multi-Sector Income Trust
as of 10/31/99:(2)
[pie chart]
Corporate: 32.2%
International: 31.2%
Mortgage-Backed: 20.6%
U.S. Government: 10.1%
Money Market: 3.9%
Convertible: 2.0%
The world's bond markets have been highly volatile over the past year,
especially in the emerging markets. When the reporting period began, we were in
the midst of the global financial crisis, which had spread from Asia to Russia,
and was threatening Latin America. What's more, the U.S. and international bond
markets were further unsettled by problems experienced by a number of hedge
funds during the summer of 1998. These large, highly leveraged, private
investment companies were forced to sell large amounts of bonds into an already
troubled market, causing many bond prices to plummet. In 1999, both the global
financial crisis and hedge fund problems have appeared to ease. Signs began to
emerge early in the year that troubled emerging market economies were
stabilizing, and emerging market bond prices began to rise from depressed
levels.
In the United States, stronger-than-expected economic growth caused the Federal
Reserve Board to raise short-term interest rates twice during the summer of
1999. Most U.S. Government securities prices fell in anticipation of these rate
hikes. However, the strong economy benefited many high yield corporate bonds,
and prices generally rose in expectation of higher corporate profits and credit
quality.
In this environment, we have continued to emphasize those areas of the bond
market where we have identified attractive relative values. Emerging market
bonds currently offer yields at the high end of their range relative to
developed market bonds, providing the potential for capital appreciation.
Although we have not yet seen that potential realized, we believe that it will
occur when investors become convinced that global economic recovery is truly
underway.
Accordingly, we have increased our holdings in the Trust's emerging markets
sector, where we have focused on attractive values in Southeast Asia. By the
same token, we have de-emphasized investments in Latin American markets. In our
view, these economies may be slow to recover. While attractive
The Trust's performance may from time to time be subject to substantial
short-term changes, particularly during periods of market or interest rate
volatility. 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 10/31/99 without deducting any sales
charges or brokerage costs. Such performance would have been lower if sales
charges and brokerage costs were taken into account. Dividend return is
determined by annualizing the October 1999 dividend of $0.07 and dividing by the
closing market price on the New York Stock Exchange of $8.00 per share on
10/22/99 (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>
values in Latin American bonds and currencies exist, higher U.S. interest rates
are likely to adversely affect bond prices there. Therefore, we do not yet
believe that the time is right to increase our exposure to Latin America.
However, we have found particularly attractive values in certain areas of the
U.S. Government securities sector. While returns from U.S. Treasury securities
have been negative so far in 1999 because of higher interest rates, total
returns of mortgage-backed securities issued by government agencies have been
mostly positive. Bonds issued by the Federal Home Loan Mortgage Corporation, a
government agency, represent a particularly dramatic example of relative value
in this area. These mortgage-backed securities historically yield on average
about 40 basis points more than U.S. Treasury securities; as of October 1999,
they yield about 90 basis points more. We attribute this wider-than-average
difference to the achievement of a federal budget surplus, which has resulted in
lower issuance of U.S. Treasury securities. We have attempted to take advantage
of relative values such as these by increasing our holdings of mortgage-backed
securities, including "interest-only" securities whose prices tend to increase
as interest rates rise.
We have also increased our exposure to high yield corporate bonds. Like the
profits of the U.S.-based corporations that issue them, these securities tend to
do well in a strong economy. Our current favorite corporate sector continues to
be the telecommunications industry, which is growing dramatically. More
recently, we have added to our energy holdings as commodities prices have
improved. We've also increased our exposure to economically sensitive companies,
such as producers of chemicals, steel and paper.
We have recently adopted a number of proprietary quantitative models that are
designed to help us identify, quantify and manage three of the specific kinds of
risk that may affect the Fund: interest-rate risk, currency risk and credit
risk. These models combine quantitative tools--such as econometric modeling and
technical analysis--to help recommend the direction in which we should weight
the portfolio relative to our benchmark. Of course, we always combine the
quantitative analyses with our own fundamental judgment as portfolio managers.
In our view, these models serve as a valuable information resource in our
decision-making process.
As for the future of the financial markets, we are cautiously optimistic. We
have attempted to position the Trust to take advantage of good values in
emerging market, mortgage-backed and corporate bonds. If, as we expect, the U.S.
economy remains strong and international economies gain strength next year, we
believe these investments should provide above-average total returns, including
high yields and price appreciation. And because shares of the Trust are
currently selling at a discount to their net asset value, we believe that
investors may be able to participate in these trends at attractive prices.
Nonetheless, we are prepared for continued volatility in the fixed income
markets for the remainder of 1999. For example, higher U.S. interest rates
implemented by the Federal Reserve Board over the summer may adversely affect
international bond markets, especially in those countries that export goods and
services to the United States. However, once this round of rate hikes is over,
we believe the stage will be set for very attractive returns over the longer
term. Having the patience and discipline to weather short-term volatility on the
road to longer-term gains is the essence of our investment strategy, and is an
important reason Oppenheimer Multi-Sector Income Trust is part of The Right Way
to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
November 19, 1999
2
<PAGE>
Statement of Investments October 31, 1999
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
------------- ------------
U.S. Government Sector--10.2%
U.S. Treasury Bonds:
<S> <C> <C>
6%, 8/15/04 ................................................................. $ 5,260,000 $ 5,273,150
6.375%, 8/15/27 ............................................................. 18,200,000 18,137,447
11.875%, 11/15/03(2) ........................................................ 3,500,000 4,212,033
STRIPS, 5.99%, 11/15/18(3) .................................................. 1,100,000 318,353
-----------
Total U.S. Government Sector (Cost $28,954,659) ................................ 27,940,983
-----------
Shares
-------------
Convertible Sector--2.1%
Preferred Stocks--1.9%
CGA Group Ltd., Series A(4)(5) ................................................. 39,531 988,275
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(4) ....................................................... 234 222,885
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. ...................... 4,000 160,000
Dobson Communications Corp., 12.25% Sr. Exchangeable(4) ........................ 616 599,060
Dobson Communications Corp., 13% Sr. Exchangeable(4) ........................... 309 312,862
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(4) ............... 213 64,432
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable,
Series B, 3/1/08, Non-Vtg.(6) ............................................... 4,000 193,000
Global Crossing Ltd., 10.50% Sr. Exchangeable, 12/1/08(4) ...................... 4,000 423,000
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(4) .............. 821 749,162
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable
Preferred Stock, Non-Vtg.(4) ................................................ 2,948 89,177
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(4) ....... 364 375,830
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(4) ........................... 8,570 439,213
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(4) ......... 22 239,250
Spanish Broadcasting Systems, Inc., 14.25% Cum.
Exchangeable, Non-Vtg.(4)(7) ................................................ 230 245,525
Star Gas Partners, LP .......................................................... 220 3,658
-----------
5,105,329
-----------
Units
-------------
Rights, Warrants and Certificates--0.2%
Ames Department Stores, Inc., Litigation Trust Wts.(5) ......................... 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/15/00(5) ..................................... 25,000 --
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(7) ............................... 404 1,565
CGA Group Ltd. Wts., Exp. 12/31/49(5) .......................................... 32,000 9,600
Clearnet Communications, Inc. Wts., Exp. 9/15/05 ............................... 330 6,976
Concentric Network Corp. Wts., Exp. 12/15/07(5) ................................ 600 150,075
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 ............................. 800 --
e.spire Communications, Inc. Wts., Exp. 11/1/05 ................................ 700 43,858
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(5) .......................... 500 35,062
Globix Corp. Wts., Exp. 5/1/05(5) .............................................. 600 42,000
3
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Market Value
Units See Note 1
------------ ------------
Rights, Warrants and Certificates (Continued)
Gothic Energy Corp. Wts.:
Exp. 1/23/03 ................................................................ 6,053 $ --
Exp. 1/23/03(5) ............................................................. 3,455 35
Exp. 9/1/04(5) .............................................................. 10,150 10,789
ICG Communications, Inc. Wts., Exp. 9/15/05 .................................... 4,125 45,950
In-Flight Phone Corp. Wts., Exp. 8/31/02 ....................................... 900 --
Insilco Corp. Wts., Exp. 8/15/07(5) ............................................ 720 --
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(5) ............................... 920 2,818
Long Distance International, Inc. Wts., Exp. 4/15/08(5) ........................ 400 400
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(5) ........................ 975 11,822
Millennium Seacarriers, Inc. Wts., Exp. 7/15/05(5) ............................. 700 963
Protection One, Inc. Wts., Exp. 6/30/05(5) ..................................... 6,400 1,600
WAM!NET, Inc. Wts., Exp. 3/1/05(7) ............................................. 1,500 33,563
Wireless One, Inc. Wts., Exp. 10/19/20(5) ...................................... 1,500 15
----------
398,380
----------
Total Convertible Sector (Cost $5,856,242) ..................................... 5,503,709
----------
Shares
-------------
Corporate Sector--32.5%
Common Stocks--0.5%
Capital Gaming International, Inc.(6) .......................................... 18 --
Intermedia Communications, Inc.(6) ............................................. 756 19,656
Optel, Inc.(6) ................................................................. 815 8
Price Communications Corp.(6) .................................................. 45,734 994,719
Viatel, Inc.(6) ................................................................ 2,356 78,632
Weatherford International, Inc. ................................................ 7,581 256,806
----------
1,349,821
----------
Face
Amount(1)
-------------
Corporate Bonds and Notes--31.2%
Aerospace/Defense--1.8%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 .......................................... $ 850,000 838,312
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 ..................................................... 675,000 621,000
9.375% Sr. Unsec. Nts., 11/15/06 ............................................ 800,000 744,000
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 ........................ 1,000,000 950,000
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 9.80%, 1/1/01(5) ............................................. 500,000 465,000
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts.,
Series B, 9/30/08 ........................................................... 800,000 772,000
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(5) ............................................ 418,823 432,267
----------
4,822,579
----------
4
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Chemicals--0.8%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 ..................... $ 300,000 $ 247,500
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon
Sr. Disc. Nts., 13.08%, 12/31/09(3)(7) ...................................... 1,250,000 340,625
Lyondell Chemical Co., 9.875% Sec. Nts., Series B, 5/1/07 ...................... 500,000 500,000
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 .................... 200,000 157,000
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 ............................................................ 600,000 596,250
Sterling Chemicals, Inc., 12.375% Sec. Nts., 7/15/06(7) ........................ 250,000 251,250
----------
2,092,625
----------
Consumer Durables--0.1%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 ......... 400,000 358,000
----------
Consumer Non-Durables--1.2%
AKI Holdings, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 ............................. 600,000 531,750
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 ................. 400,000 395,000
Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03 .................... 370,000 371,850
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06 ....................... 300,000 61,500
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 .......... 400,000 214,000
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08(5) ............... 360,000 336,600
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 ......................................... 300,000 165,000
9% Sr. Nts., 11/1/06 ........................................................ 775,000 623,875
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 ............................ 400,000 410,000
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 ................. 400,000 262,000
----------
3,371,575
----------
Energy--2.1%
Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05 .............. 550,000 522,500
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 ............ 845,000 663,325
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 ............................. 400,000 363,000
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(7) ............ 750,000 637,500
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 .............. 380,000 229,900
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(8) ............. 180,000 72,000
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 ............... 600,000 580,500
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 ..................... 790,000 754,450
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 .............................. 400,000 426,000
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 .................................... 500,000 527,500
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 .................................. 200,000 209,000
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 ............................... 535,000 510,925
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(9) ..... 700,000 437,500
----------
5,934,100
----------
5
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Corporate Bonds and Notes (Continued)
Financial--0.4%
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08 ............................................................ $ 865,000 $ 800,125
Veritas Capital Trust, 10% Nts., 1/1/28 ........................................ 525,000 395,062
----------
1,195,187
----------
Food & Drug--0.5%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 ............................... 300,000 143,250
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 ................... 640,000 576,000
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(9) ......................... 515,000 504,700
12.625% Sub. Nts., 6/15/02 .................................................. 200,000 195,000
----------
1,418,950
----------
Food/Tobacco--0.8%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 ...................... 200,000 191,500
Chiquita Brands International, Inc., 10% Sr. Nts., 6/15/09 ..................... 325,000 245,375
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(9) ........... 327,000 250,155
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 ................. 500,000 515,000
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 .................... 650,000 537,875
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(8) ........................ 100,000 24,500
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 ................... 400,000 358,000
----------
2,122,405
----------
Forest Products/Containers--1.0%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 ............................................... 300,000 292,500
8.25% Sr. Unsec. Sub. Nts., 8/1/08 .......................................... 400,000 388,000
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 ............................... 250,000 234,375
Mail-Well Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08(5) ............. 325,000 306,312
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 ............................................. 450,000 457,875
10.875% Sr. Sub. Nts., 4/1/08 ............................................... 250,000 245,000
SD Warren Co., 14% Unsec. Nts., 12/15/06(4) .................................... 556,199 628,505
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 ...................... 250,000 254,375
----------
2,806,942
----------
Gaming/Leisure--1.8%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(9) ........................ 150,000 72,937
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 ............................... 400,000 334,500
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(8) .......... 5,500 --
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 ................................ 435,000 394,762
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 ............................. 550,000 415,250
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 ........................ 800,000 720,000
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(10) ........................ 1,000,000 990,000
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 ............ 500,000 490,000
6
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Gaming/Leisure (Continued)
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(9) ............................................ $ 500,000 $ 331,250
9.25% Sr. Nts., 4/1/06 ...................................................... 300,000 288,375
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 ......................... 440,000 422,400
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07 ................................................ 300,000 304,500
10.125% Sr. Sub. Nts., 3/15/06 .............................................. 200,000 205,000
----------
4,968,974
----------
Healthcare--0.6%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 ................... 600,000 546,000
ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(7) .......................... 415,000 379,725
Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07(8)(10) ......................................... 100,000 7,500
10.25% Sr. Sub. Nts., Series A, 4/30/06(8) .................................. 15,000 1,125
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 ...................... 250,000 213,750
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 ........................ 250,000 236,250
Tenet Healthcare Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08 ......... 250,000 221,875
----------
1,606,225
----------
Housing--0.6%
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 ........... 300,000 281,250
Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08 ..................... 400,000 350,000
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 ........................................... 420,000 403,200
9.25% Sr. Nts., Series B, 3/15/07 ........................................... 600,000 583,500
----------
1,617,950
----------
Information Technology--1.0%
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 ........................... 400,000 368,000
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 ..................................... 600,000 567,000
Fairchild Semiconductor International, Inc.,
10.375% Sr. Unsec. Nts., 10/1/07 ............................................ 500,000 500,625
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 ......... 185,000 173,900
Unisys Corp., 11.75% Sr. Nts., 10/15/04 ........................................ 500,000 555,000
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 .................................. 800,000 680,000
----------
2,844,525
----------
Manufacturing--1.7%
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 ...................................... 150,000 138,750
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 ............................. 700,000 353,500
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 ............. 350,000 299,250
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 ............................... 315,000 118,125
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 ............. 600,000 525,000
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07(5) ................................... 720,000 702,000
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 ......... 700,000 719,250
7
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Corporate Bonds and Notes (Continued)
Manufacturing (Continued)
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 ..................... $ 280,000 $ 177,800
Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08 ............................... 500,000 472,500
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts.,
Series B, 6/15/07 ........................................................... 500,000 442,500
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08 ............................... 210,000 195,300
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(2) .......................... 525,000 517,125
----------
4,661,100
----------
Media/Entertainment: Broadcasting--1.5%
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 ............................... 700,000 700,000
9% Sr. Unsec. Sub. Nts., 10/1/08 ............................................ 800,000 822,000
10.50% Sr. Sub. Nts., Series B, 1/15/07 ..................................... 735,000 797,475
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts.,
Series B, 3/15/09 ........................................................... 600,000 573,000
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(11) ....................... 700,000 733,250
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., Series B, 3/15/04 ............ 475,000 526,063
----------
4,151,788
----------
Media/Entertainment: Cable/Wireless Video--2.2%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03 .......................................... 250,000 242,813
8.375% Sr. Nts., Series B, 2/1/08 ........................................... 100,000 94,500
9.875% Sr. Nts., Series B, 3/1/07 ........................................... 565,000 577,713
Charter Communication Holdings LLC/Charter
Communication Holdings Capital Corp.:
0%/9.92% Sr. Disc. Nts., 4/1/11(9) .......................................... 500,000 300,000
8.625% Sr. Unsec. Nts., 4/1/09 .............................................. 500,000 475,000
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 .............................. 1,000,000 1,042,500
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 ............................. 1,705,000 1,698,606
Falcon Holding Group LP, 8.375% Sr. Unsec. Debs., Series B, 4/15/10 ............ 1,000,000 1,007,500
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(12) ....................................................... 250,000 258,750
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(9) ........................................................ 600,000 343,500
----------
6,040,882
----------
Media/Entertainment: Diversified Media--0.5%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 .................... 350,000 306,250
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10 ....................................... 500,000 352,500
9.50% Sr. Unsec. Sub. Nts., 6/1/08 .......................................... 200,000 151,000
SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 ......... 600,000 552,000
----------
1,361,750
----------
8
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Media/Entertainment: Telecommunications--4.1%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(9) ...................... $ 1,165,000 $ 763,075
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 ..................... 495,000 517,275
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(9) ......... 1,000,000 565,000
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08 ........................... 365,000 375,038
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(9) ............. 500,000 270,000
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(9) ....... 100,000 58,500
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 ................................. 100,000 102,000
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05 ...................................... 500,000 437,500
GST Network Funding, Inc., 0%/10.50% Sr. Disc. Nts., 5/1/08(9) ................. 250,000 116,250
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(9) ...... 480,000 252,000
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(9) ............................... 200,000 109,000
8.50% Sr. Nts., Series B, 1/15/08 ........................................... 500,000 443,750
8.60% Sr. Unsec. Nts., Series B, 6/1/08 ..................................... 300,000 267,000
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08 ..................................................... 500,000 477,500
11% Sr. Nts., 6/1/07 ........................................................ 250,000 263,750
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(9) ........ 920,000 501,400
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(9) ........................................ 250,000 147,500
9.125% Sr. Unsec. Nts., 5/1/08 .............................................. 250,000 234,375
Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08 ........ 600,000 592,500
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 ........................................................ 250,000 236,250
9.625% Sr. Nts., 10/1/07(10) ................................................ 500,000 482,500
10.75% Sr. Unsec. Nts., 11/15/08 ............................................ 600,000 609,000
10.75% Sr. Unsec. Nts., 6/1/09 .............................................. 300,000 307,500
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(8) ................................ 480,000 122,400
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 ........................... 400,000 393,000
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 ............................... 500,000 515,000
US Xchange LLC, 15% Sr. Unsec. Nts., 7/1/08 .................................... 400,000 395,000
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 ............................................. 645,000 651,450
11.25% Sr. Unsec. Nts., 12/1/08 ............................................. 500,000 525,000
13.50% Sr. Unsec. Nts., 6/15/04 ............................................. 165,000 181,088
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 .................................... 195,000 184,275
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(5)(9) ......... 500,000 302,500
-----------
11,398,376
-----------
9
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Corporate Bonds and Notes (Continued)
Media/Entertainment: Wireless Communications--2.6%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 ............................. $ 100,000 $ 71,000
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(9) .................. 554,000 113,570
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(9) ....................................... 550,000 328,625
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(9) ............................... 800,000 580,000
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)(13) ............................ 400,000 90,000
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 ..................... 500,000 402,500
Microcell Telecommunications, Inc., 0%/12% Sr. Unsec. Disc. Nts., 6/1/09(9) .... 750,000 455,625
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(9) ........ 205,000 149,138
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 10/31/07(9) .............. 425,000 308,125
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(7) ................................................. 200,000 210,000
11.625% Sr. Nts., 8/15/06 ................................................... 300,000 315,000
11.625% Sr. Nts., Series A, 8/15/06(10) ..................................... 1,200,000 1,260,000
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 ................. 175,000 144,375
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(9) .............. 1,275,000 567,375
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(9) .............. 900,000 549,000
Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07 ............. 100,000 109,750
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 .................. 700,000 721,000
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(9) .............. 1,000,000 565,000
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(9) .................. 600,000 340,500
----------
7,280,583
----------
Metals/Minerals--1.0% AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 ............................................. 500,000 460,000
9.125% Sr. Nts., 12/15/06 ................................................... 400,000 399,000
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 .............. 800,000 728,000
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(9) ................. 1,200,000 378,000
Metallurg, Inc., 11% Sr. Nts., 12/1/07 ......................................... 365,000 326,675
Republic Technologies International, Units (each unit consists
of $1,000 principal amount of 13.75% sr. nts., 7/15/09 and one
warrant to purchase Cl. D common stock at $0.01 per share)(13) .............. 400,000 372,000
----------
2,663,675
----------
Retail--0.9%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 ........ 293,000 286,408
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 ......... 500,000 362,500
Finlay Enterprises, Inc., 9% Debs., 5/1/08 ..................................... 500,000 442,500
10
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Retail (Continued)
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 ............................. $ 300,000 $ 271,500
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 .................... 400,000 328,000
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07(5) .......................... 775,000 740,125
-----------
2,431,033
-----------
Service--1.4%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 ..................................... 200,000 169,000
10% Sr. Sub. Nts., 8/1/09(7) ................................................. 500,000 425,625
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(7) ..................................... 600,000 616,500
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 ...................... 200,000 137,500
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 .......... 445,000 451,675
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 ................ 250,000 235,000
Lamar Media Corp., 8.625% Sr. Sub. Nts., 9/15/07 ............................... 500,000 486,250
Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08 .................... 500,000 277,500
Packaging Corp. of America, 9.625% Sr. Sub. Nts., 4/1/09(7) .................... 300,000 301,500
Protection One Alarm Monitoring, Inc., 13.625%
Sr. Sub. Disc. Nts., 6/30/05 ................................................ 655,000 153,925
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09 ............................. 50,000 47,125
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 ............ 500,000 462,500
US Unwired, Inc., 0%/13.375% Sr. Disc. Nts., 11/1/09(7)(9) ..................... 50,000 27,000
-----------
3,791,100
-----------
Transportation--2.0%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05(10) ....................... 1,000,000 977,500
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 ............................. 250,000 217,500
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 .................... 775,000 616,125
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(7) ............................. 1,250,000 618,750
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(7)(13) ......... 100,000 16,500
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 ....... 600,000 543,000
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 .................................. 500,000 432,500
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 ..................... 600,000 429,000
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(9) ....................................... 1,500,000 1,485,000
-----------
5,335,875
-----------
Utility--0.6%
Calpine Corp., 10.50% Sr. Nts., 5/15/06 ........................................ 565,000 593,250
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(10) ......... 570,000 623,609
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 .......... 500,000 445,530
-----------
1,662,389
-----------
85,938,588
-----------
11
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Loan Participations--0.8%
Shoshone Partners Loan Trust Sr. Nts., 7.063%, 4/28/02
(representing a basket of reference loans and a total return swap
between Chase Manhattan Bank and the Trust)(5)(12) .......................... $ 2,500,000 $ 2,141,359
-----------
Date Strike Contracts
-------- -------- ---------------
Options Purchased--0.0%
Morgan Guaranty Trust Co. of New York,
The Emerging Markets
Bond Index Linked Nts. Call Opt.(5) ............ 1/19/00 $349.73 1,600 80,160
-----------
Total Corporate Sector (Cost $99,192,254) ......... 89,509,928
-----------
Face
Amount(1)
---------------
International Sector--31.4%
Corporate Bonds and Notes--8.7%
Energy--0.5%
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05 .......................... $ 1,000,000 972,500
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 .............................. 700,000 577,500
-----------
1,550,000
-----------
Financial--2.6%
AB Spintab, 5.50% Bonds, Series 169, 9/17/03SEK ................................ 3,900,000 467,096
Allgemeine Hypobk AG, 5% Sec. Nts., Series 501, 9/2/09EUR ...................... 850,000 849,299
Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/99(5)(8) IDR .............. 3,160,000,000 69,451
Deutsche Pfandbrief & Hypobank, 5.50% Sec. Nts., 1/15/10EUR .................... 580,000 603,664
Eurofima, 7.50% Sr. Unsec. Unsub. Nts., 11/4/02DEM ............................. 770,000 446,255
Hypothekenbk in Essen, 3.50% Sec. Debs., 3/17/04EUR ............................ 3,955,000 3,928,668
KBC Bank Funding Trust IV, 8.22% Nts., 11/29/49(14)(15)EUR ..................... 650,000 697,672
PT Polysindo Eka Perkasa:
20% Nts., 3/6/00(8)IDR ....................................................... 3,000,000,000 57,143
24% Nts., 6/19/03(8)IDR ...................................................... 1,314,400,000 25,036
-----------
7,144,284
-----------
Food/Tobacco--0.2%
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 ......... 565,000 443,525
-----------
Forest Products/Containers--0.1%
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 ...... 400,000 354,000
-----------
Gaming/Leisure--0.3%
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 ....................................... 800,000 778,000
-----------
Media/Entertainment: Diversified Media--0.2%
Imax Corp., 7.875% Sr. Nts., 12/1/05 ........................................... 700,000 654,500
-----------
12
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Media/Entertainment: Telecommunications--4.0%
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(9) ................................... $ 100,000 $ 83,500
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)(9)(13) ............................................... 900,000 760,500
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(9) ........ 1,600,000 1,468,000
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 .................................. 200,000 198,000
Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(7)EUR ........................... 1,850,000 1,993,148
NTL, Inc.:
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(9) ............................ 1,500,000 1,005,000
10% Sr. Nts., Series B, 2/15/07 ............................................. 550,000 563,750
11.50% Sr. Unsec. Nts., Series B, 10/1/08 ................................... 500,000 536,250
RSL Communications plc:
9.125% Sr. Unsec. Nts., 3/1/08 .............................................. 500,000 422,500
10.50% Gtd. Sr. Nts., 11/15/08 .............................................. 500,000 462,500
Telewest Communications plc:
0%/9.25% Sr. Nts., 4/15/09(7)(9) ............................................ 250,000 155,000
0%/9.875% Sr. Nts., 4/15/09(7)(9)GBP ........................................ 575,000 570,828
0%/11% Sr. Disc. Debs., 10/1/07(9) .......................................... 500,000 456,875
11.25% Sr. Nts., 11/1/08 .................................................... 1,035,000 1,115,213
United Pan-Europe Communications NV, 10.875% Sr. Nts., 8/1/09(7)EUR ............ 750,000 778,471
Versatel Telecom International BV, 11.875% Sr. Nts., 7/15/09EUR ................ 250,000 260,147
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(7) ................................. 250,000 251,250
-----------
11,080,932
-----------
Media/Entertainment: Wireless Communications--0.4%
Orange plc:
8% Sr. Nts., 8/1/08 ......................................................... 800,000 805,000
8.75% Sr. Unsec. Bonds, 6/1/06(7) ........................................... 250,000 257,500
-----------
1,062,500
-----------
Metals/Minerals--0.1%
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 ........... 200,000 179,000
-----------
Transportation--0.3%
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04GBP ............. 545,000 880,429
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship Mtg. Nts.,
5/30/08 ..................................................................... 300,000 114,375
-----------
994,804
-----------
24,241,545
-----------
13
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
U.S. Government Obligations--0.2%
Federal National Mortgage Assn.:
Sr. Unsub. Medium-Term Nts., 6.50%, 7/10/02AUD .............................. 430,000 $ 273,840
Sr. Unsub. Nts., 6.375%, 8/15/07AUD ......................................... 460,000 280,157
----------
553,997
----------
Foreign Government Obligations--19.7%
Argentina--2.0%
Argentina (Republic of) Bonds:
12.125%, 2/25/19 ............................................................ 165,000 169,348
Series D, Zero Coupon, 9.87%, 10/15/02(3) ................................... 1,200,000 906,000
Series L, 6.812%, 3/31/05(12) ............................................... 1,584,000 1,405,800
Argentina (Republic of) Global Unsec. Unsub. Bonds,
Series BGL5, 11.375%, 1/30/17 ............................................... 1,235,000 1,182,512
Argentina (Republic of) Unsec. Unsub. Medium-Term Nts.,
8.75%, 7/10/02ARP ........................................................... 1,490,000 1,285,768
Banco Hipotecario Nacional (Argentina) Medium-Term Unsec. Nts.,
Series 3, 10.625%, 8/7/06 ................................................... 546,000 546,000
----------
5,495,428
----------
Australia--0.1%
Australia Postal Corp. Unsec. Unsub. Nts., 6%, 3/25/09AUD ...................... 580,000 338,930
----------
Brazil--2.2%
Brazil (Federal Republic of) Bonds:
11.625%, 4/15/04 ............................................................ 160,000 152,848
Series RG, 5.938%, 4/15/12(12) .............................................. 820,000 537,100
Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14 ............. 3,718,488 2,500,684
Brazil (Federal Republic of) Debt Conversion Bonds, 7%, 4/15/12(12) ............ 3,623,000 2,373,065
Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(12) ...... 359,080 293,548
Brazil (Federal Republic of) Gtd. Bonds, 7%, 4/15/09(12) ....................... 110,000 80,850
----------
5,938,095
----------
Bulgaria--0.6%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.50%, 7/28/24(12) .............. 576,000 428,400
Bulgaria (Republic of) Front-Loaded Interest Reduction
Bearer Bonds, Tranche A, 2.75%, 7/28/12(11) ................................. 10,000 6,750
Bulgaria (Republic of) Interest Arrears Bonds, 6.50%, 7/28/11(12) .............. 1,540,000 1,178,100
----------
1,613,250
----------
Canada--0.1%
Canada (Government of) Bonds, Series J24, 10.25%, 2/1/04CAD .................... 200,000 157,317
----------
Colombia--0.2%
Colombia (Republic of) Nts., 8.625%, 4/1/08 .................................... 135,000 115,594
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 ........................ 570,000 468,825
----------
584,419
----------
14
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Ecuador--0.0%
Ecuador (Republic of) Past Due Interest Bonds, 2/27/15(8) ...................... $ 25,615 $ 5,507
----------
Finland--0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04EUR ................................. 500,000 621,031
----------
France--0.5%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 10/25/07EUR .......................................................... 1,300,000 1,400,591
----------
Germany--1.7%
Germany (Republic of) Bonds:
6.25%, 4/26/06EUR ........................................................... 120,460 135,049
6.75%, 5/13/04EUR ........................................................... 635,000 719,710
6.75%, 7/15/04EUR ........................................................... 2,815,000 3,200,584
Series 95, 6.50%, 10/14/05EUR ............................................... 375,799 426,129
Germany (Republic of) Nts., Series 98, 4%, 3/17/00EUR .......................... 140,605 148,234
----------
4,629,706
----------
Great Britain--1.3%
United Kingdom Treasury Nts.:
8%, 6/10/03GBP .............................................................. 850,000 1,469,385
10%, 9/8/03GBP .............................................................. 1,105,000 2,036,217
----------
3,505,602
----------
Hungary--0.3%
Hungary (Government of) Bonds, Series 01/H, 13.50%, 6/12/01HUF ................. 219,660,000 906,860
----------
Italy--1.1%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
8.75%, 7/1/06EUR ............................................................ 2,000,000 2,507,084
10.50%, 9/1/05EUR ........................................................... 467,392 619,745
----------
3,126,829
----------
Ivory Coast--0.1%
Ivory Coast (Government of) Front Loaded Interest
Reduction Bonds, 2%, 3/29/18(11) ............................................ 641,000 161,852
Ivory Coast (Government of) Past Due Interest Bonds,
Series 20 yr., 2%, 3/29/18(11) .............................................. 885,500 267,864
----------
429,716
----------
Japan--0.6%
Japan (Government of) Bonds, Series 141, 6.50%, 6/20/01JPY ..................... 155,000,000 1,633,322
----------
Jordan--0.1%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5.50%, 12/23/23(11) ........... 365,000 230,862
Hashemite (Kingdom of Jordan) Disc. Bonds, 6.188%, 12/23/23(12) ................ 125,000 84,062
----------
314,924
----------
15
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Foreign Government Obligations (Continued)
Mexico--2.6%
United Mexican States Bonds:
11.375%, 9/15/16 ............................................................ $ 3,710,000 $3,974,337
11.50%, 5/15/26 ............................................................. 2,690,000 3,014,818
United Mexican States Collateralized Fixed Rate Par Bonds,
Series W-A, 6.25%, 12/31/19 ................................................. 170,000 127,500
----------
7,116,655
----------
Nigeria--0.2%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 ................. 750,000 436,875
----------
Norway--0.9%
Norway (Government of) Bonds, 9.50%, 10/31/02NOK ............................... 17,300,000 2,419,918
----------
Panama--0.5%
Panama (Republic of) Past Due Interest Debs., 5.819%, 7/17/16(12) .............. 1,705,956 1,283,733
----------
Peru--0.7%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.75%, 3/7/17(11) ........................................................... 3,490,000 1,928,225
----------
Philippines--0.2%
Philippines (Republic of) Bonds, 8.75%, 10/7/16 ................................ 710,000 637,225
----------
Poland--0.7%
Poland (Republic of) Bonds:
12%, 6/12/01PLZ ............................................................. 4,077,000 925,537
Series 1000, 13%, 10/12/00PLZ ............................................... 3,965,000 921,193
----------
1,846,730
----------
Russia--1.0%
Russia (Government of) Debs., 12/15/15(8) ...................................... 1,293,840 150,409
Russia (Government of) Principal Loan Debs., Series 24 yr., 12/15/20(8) ........ 7,800,000 723,938
Russia (Government of) Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03 ................. 665,000 407,313
Russia (Government of) Unsec. Bonds, 11%, 7/24/18 .............................. 602,000 294,980
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 .............................................................. 320,000 154,400
12.75%, 6/24/28 ............................................................. 1,903,000 1,006,782
----------
2,737,822
----------
16
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
South Africa--0.4%
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10ZAR .................. 8,410,000 $ 1,236,458
-----------
Venezuela--1.4%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27 .................................. 1,450,000 967,948
Venezuela (Republic of) Disc. Bonds, Series DL, 6.312%, 12/18/07(12) ........... 2,337,089 1,884,278
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series A, 6.875%, 3/31/07(12) ............................................... 892,857 712,054
Venezuela (Republic of) New Money Bonds,
Series A, 6.437%, 12/18/05(12) .............................................. 382,357 308,993
-----------
3,873,273
-----------
54,218,441
-----------
Loan Participations--1.0%
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 6.812%, 9/4/06(5)(12) ............................................ 344,272 252,610
Algeria (Republic of) Trust III Nts., Tranche 3:
1.063%, 3/4/10(5)(12)JPY .................................................... 152,654,000 705,783
6.812%, 3/4/10(5)(12) ....................................................... 598,000 414,115
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 5.906%, 1/1/09(5)(12) ............................................. 519,190 451,696
Tranche B, 5.906%, 1/1/09(5)(12) ............................................. 689,411 635,120
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.148%, 9/30/00(5)(12)JPY ........................................ 23,999,999 209,276
-----------
2,668,600
-----------
Mortgage-Backed Obligations--0.2%
Nykredit AS, 7% Cv. Bonds, 10/1/29DKK .......................................... 3,055,000 423,173
-----------
Units
-------------
Rights, Warrants and Certificates--0.0%
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/15/00(5) ......... 80 1
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(5) ........................ 2,800 119,700
Central Bank of Nigeria Wts., Exp. 11/15/20 .................................... 750 --
Venezuela (Republic of) Oil Linked Payment Obligation Wts.,
Exp. 4/15/20 ................................................................ 2,856 --
-----------
119,701
-----------
17
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Structured Instruments--1.6%
Citibank NA (Nassau Branch):
Mexican Peso Linked Nts., 26.10%, 10/29/01MXN ................................ 5,726,875 $ 601,790
Polish Zloty Linked Nts., 16.10%, 11/3/00 .................................... 620,660 620,660
Deutsche Bank AG, Indonesian Rupiah Linked Nts., 13.667%, 6/30/00 .............. 485,000 471,371
Deutsche Morgan Grenfell, Turkish Lira Treasury Bill Linked Nts.,
Zero Coupon, 82.04%, 5/24/00(3)TRL ..........................................350,557,900,000 503,120
Merrill Lynch & Co., Inc. Turkey Treasury Bond Linked Nts.:
87.282%, 1/9/01(12)TRL ...................................................... 87,600,000,000 211,507
87.283%, 1/7/01(12)TRL ......................................................185,000,000,000 446,675
Salomon Smith Barney, Inc. Turkey Treasury Bill Linked Nts.:
91.86%, 8/24/00(12) ......................................................... 330,000 295,059
92.10%, 8/24/00(12) ......................................................... 330,000 294,664
Salomon, Inc. Indonesian Rupiah Linked Nts., 29.55%, 4/12/00 ................... 750,000 988,950
-----------
4,433,796
-----------
Total International Sector (Cost $90,243,759) 86,659,253
-----------
Mortgage-Backed Sector--20.7%
Government Agency--15.4%
FHLMC/FNMA/Sponsored--14.8%
Federal Home Loan Mortgage Corp., Certificates of Participation,
12%, 5/1/10-6/1/15 .......................................................... 1,004,776 1,113,791
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 1343, Cl. LA,
8%, 8/15/22 ................................................................. 1,000,000 1,024,060
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 2054, Cl. TE, 6.25%, 4/15/24 ...... 534,000 510,637
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 190, Cl. IO, 10.779%, 8/1/28(16) ...................................... 7,727,269 2,512,570
Series 197, Cl. IO, 11.092%, 4/1/28(16) ...................................... 4,587,074 1,460,696
Series 199, Cl. IO, 22.32%, 8/1/28(16) ....................................... 5,113,475 1,662,679
Federal National Mortgage Assn.:
6.50%, 1/1/29 ................................................................ 11,508,974 11,032,387
7%, 11/25/27(15) ............................................................. 7,000,000 6,873,160
7.50%, 6/1/10(10) ............................................................ 693,229 702,762
7.50%, 9/1/29 ................................................................ 3,922,345 3,933,210
7.50%, 9/1/29 ................................................................ 8,077,655 8,100,030
11%, 7/1/16(10) .............................................................. 390,671 430,441
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through
Certificates, 13%, 6/1/15(10)(17) ........................................... 673,309 768,220
18
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
FHLMC/FNMA/Sponsored (Continued)
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Trust 1995-4, Cl. PC, 8%, 5/25/25 ................ $ 664,690 $ 677,771
-----------
40,802,414
-----------
GNMA/Guaranteed--0.6%
Government National Mortgage Assn.:
6%, 7/20/27 ................................................................. 329,438 331,293
7%, 1/15/28 ................................................................. 578,280 567,790
7%, 3/15/28 ................................................................. 243,417 239,001
11%, 10/20/19 ............................................................... 259,102 286,531
12%, 11/20/13 ............................................................... 99,746 111,124
12%, 2/20/15 ................................................................ 61,256 68,427
12%, 9/20/15 ................................................................ 109,675 122,700
-----------
1,726,866
-----------
Private--5.3%
Commercial--3.7%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1996-D3, Cl. A5, 8.142%, 10/13/26(12) ................................ 500,000 445,469
Series 1996-MD6, Cl. A5, 7.163%, 11/13/26(12) ............................... 800,000 768,250
Capital Lease Funding Securitization LP, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-CTL1, 11.378%, 6/22/24(5)(16) ............. 10,665,693 439,960
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 29.86%, 12/25/20(5)(16) ...... 12,416,600 162,968
General Motors Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1997-C1, Cl. X, 8.985%, 7/15/27(16) ............ 3,363,976 260,708
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D, 7.42%, 4/25/28 ....................................... 800,000 767,375
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D1, 7.421%, 2/15/28(5)(12) .............................. 1,000,000 953,750
NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series DMC:
Cl. B, 8.562%, 8/12/11(5) ................................................... 400,000 378,250
Cl. C, 8.921%, 8/12/11(5) ................................................... 400,000 379,750
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates,
Series 1, Cl. D, 7.68%, 12/21/26(5) ......................................... 500,000 482,188
Structured Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1997-LLI, Cl. E, 7.30%, 4/12/12 ...................................... 500,000 434,063
Structured Asset Securities Corp., Multiclass Pass-Through Certificates:
Series 1996-C3, Cl. D, 8%, 6/25/30(5) ....................................... 650,000 653,656
Series 1999-1, 10%, 8/25/28 ................................................. 3,985,392 3,962,974
-----------
10,089,361
-----------
19
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
------------- ------------
Private (Continued)
Residential--1.6%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1997-C1, Cl. E, 7.50%, 3/1/11(5) ..................................... $ 710,000 $ 592,184
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, Cl. C, 8.227%, 7/25/06(5)(12) ............................. 800,000 734,000
Residential Asset Securitization Trust, Collateralized Mtg. Obligations,
Non-Accelerated Security, Series 1997-A2, Cl. A8, 7.75%, 4/25/27 ............ 2,000,000 1,997,500
Salomon Brothers Mortgage Securities VII, Series 1996-B,
Cl. 1, 6.581%, 4/25/26(5) ................................................... 1,282,666 865,399
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(5) ............. 250,000 236,328
------------
4,425,411
------------
Total Mortgage-Backed Sector (Cost $57,304,147) ................................ 57,044,052
------------
Money Market Sector--4.0%
Repurchase agreement with PaineWebber, Inc., 5.20%, dated 10/29/99, to be
repurchased at $10,904,723 on 11/1/99, collateralized by U.S. Treasury Nts.,
5.75%-6.875%, 3/31/01-10/15/06, with a value of $2,795,793 and U.S. Treasury
Bonds, 5.50%-12%, 8/15/13-8/15/28,
with a value of $8,432,354 (Cost $10,900,000) ............................... 10,900,000 10,900,000
------------
Total Investments, at Value (Cost $292,451,061) ................................ 100.9% 277,557,925
Liabilities in Excess of Other Assets .......................................... (0.9) (2,377,202)
---------- ------------
Net Assets ..................................................................... 100.0% $275,180,723
========== ============
</TABLE>
20
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C>
ARP -- Argentine Peso IDR -- Indonesian Rupiah
AUD -- Australian Dollar JPY -- Japanese Yen
BRR -- Brazilian Real MXN -- Mexican Nuevo Peso
CAD -- Canadian Dollar NOK -- Norwegian Krone
DEM -- German Mark PLZ -- Polish Zloty
DKK -- Danish Krone SEK -- Swedish Krona
EUR -- Euro TRL -- Turkish Lira
GBP -- British Pound Sterling ZAR -- South African Rand
HUF -- Hungarian Forint
</TABLE>
2. Securities with an aggregate market value of $4,729,158 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. Interest or dividend is paid in kind.
5. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
6. Non-income-producing security.
7. 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 $8,111,825 or 2.95% of the Trust's net
assets as of October 31, 1999.
8. Non-income-producing--issuer is in default.
9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
10. A sufficient amount of securities has been designated to cover outstanding
foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
11. Represents the current interest rate for an increasing rate security.
12. Represents the current interest rate for a variable rate security.
13. 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.
14. Represents the current interest rate for a decreasing rate security.
15. When-issued security to be delivered and settled after October 31, 1999.
16. 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.
17. A sufficient amount of liquid assets has been designated to cover
outstanding written options, as follows:
<TABLE>
<CAPTION>
Contracts Expiration Exercise Premium Market Value
Subject to Put Date Price Received See Note 1
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brazilian Real Put Opt. 3,388,275 1/28/00 2.054 BRR $56,100 $42,353
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE>
Statement of Assets and Liabilities October 31, 1999
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $292,451,061)--see accompanying statement .......................... $277,557,925
Cash ........................................................................................... 24,089
Unrealized appreciation on foreign currency exchange contracts ................................. 44,630
Receivables and other assets:
Interest, dividends and principal paydowns .................................................. 5,443,999
Investments sold ............................................................................ 2,076,643
Daily variation on futures contracts ........................................................ 186,944
Closed foreign currency exchange contracts .................................................. 18,000
Other ....................................................................................... 16,436
------------
Total assets .............................................................................. 285,368,666
------------
LIABILITIES
Unrealized depreciation on foreign currency exchange contracts ................................. 8,809
Options written, at value (premiums received $56,100)--see accompanying statement .............. 42,353
Payables and other liabilities:
Investments purchased (including $7,560,083 purchased on a when-issued basis) ............... 9,211,457
Daily variation on futures contracts ........................................................ 508,469
Trustees' compensation ...................................................................... 206,071
Management and administrative fees .......................................................... 51,946
Closed foreign currency exchange contracts .................................................. 29,909
Other ....................................................................................... 128,929
------------
Total liabilities ......................................................................... 10,187,943
------------
NET ASSETS ..................................................................................... $275,180,723
============
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest ..................................................... $ 291,161
Additional paid-in capital ..................................................................... 312,129,416
Overdistributed net investment income .......................................................... (418,568)
Accumulated net realized loss on investments and foreign currency transactions ................. (22,009,025)
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies ..................................... (14,812,261)
------------
NET ASSETS--applicable to 29,116,068 shares of beneficial interest outstanding ................. $275,180,723
============
NET ASSET VALUE PER SHARE ...................................................................... $9.45
=====
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE>
Statement of Operations For the Year Ended October 31, 1999
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest .................................................................................. $ 27,434,883
Dividends ................................................................................. 784,345
------------
Total income ......................................................................... 28,219,228
------------
EXPENSES
Management fees ........................................................................... 1,857,232
Administrative fees ....................................................................... 571,349
Shareholder reports ....................................................................... 191,217
Custodian fees and expenses ............................................................... 79,349
Trustees' compensation .................................................................... 78,917
Transfer and shareholder servicing agent fees ............................................. 45,641
Accounting service fees ................................................................... 24,000
Other ..................................................................................... 103,510
------------
Total expenses ....................................................................... 2,951,215
Less expenses paid indirectly ............................................................. (12,401)
------------
Net expenses .............................................................................. 2,938,814
------------
NET INVESTMENT INCOME ..................................................................... 25,280,414
------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ............................................................................ (11,162,893)
Closing of futures contracts ........................................................... (569,134)
Closing and expiration of option contracts written ..................................... 35,078
Foreign currency transactions .......................................................... (2,353,067)
------------
Net realized loss .................................................................... (14,050,016)
------------
Net change in unrealized appreciation or depreciation on:
Investments ............................................................................ 1,581,442
Translation of assets and liabilities denominated in foreign currencies ................ (99,619)
------------
Net change ........................................................................... 1,481,823
------------
Net realized and unrealized loss .......................................................... (12,568,193)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................................... $ 12,712,221
============
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE>
Statements of Changes in Net Assets
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income .......................................................... $ 25,280,414 $ 23,029,394
Net realized loss .............................................................. (14,050,016) (1,954,051)
Net change in unrealized appreciation or depreciation .......................... 1,481,823 (20,031,594)
------------ ------------
Net increase in net assets resulting from operations ......................... 12,712,221 1,043,749
------------ ------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ........................................... (23,438,435) (22,561,595)
Tax return of capital .......................................................... -- (1,547,363)
------------ ------------
NET ASSETS
Total decrease ................................................................. (10,726,214) (23,065,209)
Beginning of period ............................................................ 285,906,937 308,972,146
------------ ------------
End of period [including undistributed (overdistributed) net investment
income of $(418,568) and $169,342, respectively] ............................. $275,180,723 $285,906,937
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE>
Financial Highlights
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
------ ------- ------- ------- ------
<S> <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
----- ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income ........................... .87 .79 .89 .91 .94
Net realized and unrealized gain (loss) ......... (.43) (.75) .08 .37 (.04)
----- ------ ------ ------ ------
Total income from investment operations ....... .44 .04 .97 1.28 .90
----- ------ ------ ------ ------
Dividend and/or distributions to shareholders:
Dividends from net investment income ............ (.81) (.78) (.88) (.90) (.91)
Tax return of capital ........................... -- (.05) -- -- (.02)
----- ------ ------ ------ ------
Total dividends and/or distributions
to shareholders ............................. (.81) (.83) (.88) (.90) (.93)
----- ------ ------ ------ ------
Net asset value, end of period .................... $9.45 $ 9.82 $10.61 $10.52 $10.14
===== ====== ====== ====== ======
Market value, end of period ....................... $8.06 $ 9.38 $10.13 $ 9.88 $10.00
===== ====== ====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1) .................. (6.64)% 0.17% 11.40% 7.85% 15.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) .......... $275,181 $285,907 $308,972 $306,181 $295,128
Average net assets (in thousands) ................. $285,213 $304,773 $308,712 $298,496 $288,884
Ratios to average net assets:(2)
Net investment income ........................... 8.86% 7.56% 8.42% 8.87% 9.51%
Expenses ........................................ 1.03% 1.01%(3) 0.99%(3) 1.04%(3) 1.05%(3)
Portfolio turnover rate(4) ........................ 159% 402% 259% 225% 240%
</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 for periods of less than one full year.
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 October 31, 1999, were $418,867,882 and
$494,995,156, 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.
25
<PAGE>
Notes to Financial Statements
Oppenheimer Multi-Sector Income Trust
1. Significant Accounting Policies
Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's investment objective is to seek high
current income 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.
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. 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 an
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
whose 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 value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of October 31, 1999, the market value of these
securities comprised 1.82% of the Trust's net assets and resulted in realized
and unrealized losses of $889,943. The Trust also hedges a portion of the
foreign currency exposure generated by these securities, as discussed in Note 5.
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. Normally the
settlement date occurs within six months after the transaction date; however,
the Trust may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
date. During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Trust maintains segregated assets with a market value equal to or
greater than 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
26
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
invested. As of October 31, 1999, the Trust had entered into net outstanding
when-issued or forward commitments of $7,560,083.
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 October 31, 1999, securities with an
aggregate market value of $1,349,009, representing 0.49% 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, 1999, the Trust
had available for federal income tax purposes an unused capital loss carryover
of approximately $21,079,000, which expires between 2003 and 2007.
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 year ended
October 31, 1999, a provision of $45,330 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 $205,542 as of October 31, 1999.
The Board of Trustees has adopted a deferred compensation plan for independent
Trustees that enables Trustees to elect to defer receipt of all or a portion of
annual compensation they are entitled to receive from the Trust. Under the plan,
the
27
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
1. Significant Accounting Policies
(continued)
compensation deferred is periodically adjusted as though an equivalent amount
had been invested for the Trustees in shares of one or more Oppenheimer funds
selected by the Trustee. 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 affect the net assets of the Trust, and
will not materially affect the Trust's assets, liabilities or net income per
share.
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of 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.
The Trust adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
October 31, 1999, amounts have been reclassified to reflect a decrease in
additional paid-in capital of $11,431, a decrease in undistributed net
investment income of $2,429,889, and a decrease in accumulated net realized loss
on investments of $2,441,320.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of 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 options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. Shares of Beneficial Interest
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. There were no transactions in shares of beneficial interest
for the years ended October 31, 1999 and 1998.
28
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
3. Unrealized Gains and Losses on Securities
As of October 31, 1999, net unrealized depreciation on securities and options
written of $14,879,389 was composed of gross appreciation of $5,248,782, and
gross depreciation of $20,128,171.
4. Management and Administrative Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for an annual fee of
0.65% on the Trust's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The
Trust pays the Administrator an annual fee of 0.20% of the Trust's average
annual net assets.
The Manager acts as the accounting agent for the Trust at an annual fee of
$24,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the
Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI
are based on the number of accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses.
5. Foreign Currency Contracts
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. The Trust may enter
into foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuations. 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.
29
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
5. Foreign Currency Contracts (continued)
As of October 31, 1999, the Trust had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Valuation
Contract As of
Expiration Amount October 31, Unrealized Unrealized
Contract Description Date (000s) 1999 Appreciation Depreciation
- ----------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
<S> <C> <C> <C> <C> <C>
Canadian Dollar (CAD) ......... 11/29/99 1,380 CAD $ 938,744 $ -- $1,407
Euro (EUR) .................... 11/10/99 650 EUR 683,687 -- 568
Japanese Yen (JPY) ............ 12/6/99 136,900 JPY 1,319,226 3,575 --
Polish Zloty (PLZ) ............ 11/3/99 2,775 PLZ 657,044 -- 2,956
------- ------
3,575 4,931
------- ------
Contracts to Sell
- -----------------
Australian Dollar (AUD) ....... 11/17/99 1,040 AUD 662,933 10,662 --
British Pound Sterling (GBP) .. 11/22/99-12/13/99 1,630 GBP 2,674,836 -- 3,878
Euro (EUR) .................... 11/22/99-12/1/99 2,533 EUR 2,667 20,210 --
Japanese Yen (JPY) ............ 11/24/99 134,118 JPY 1,289,713 9,894 --
New Zealand Dollar (NZD) ...... 11/24/99 15 NZD 7,597 289 --
------- ------
41,055 3,878
------- ------
Total Unrealized Appreciation and Depreciation $44,630 $8,809
======= ======
</TABLE>
6. Futures Contracts
The Trust may buy and sell futures contracts in order to gain exposure to or to
seek to 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 may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
30
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
As of October 31, 1999, the Trust had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Valuation
As of Unrealized
Expiration Number of October 31, Appreciation
Contract Description Date Contracts 1999 (Depreciation)
- -----------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
<S> <C> <C> <C> <C>
Euro-Bund ........................................ 12/8/99 9 $ 1,001,709 $ 23,177
Euro-Schatz ...................................... 12/8/99 28 3,039,613 12,066
Standard & Poor's 500 Index ...................... 12/16/99 20 6,881,000 416,250
---------
451,493
---------
Contracts to Sell
- -----------------
Euro-Bobl ........................................ 12/8/99 35 3,839,616 (38,470)
Japanese Treasury Bond, 10 yr. ................... 3/8/00 1 627,396 718
Japanese Treasury Bond, 10 yr. ................... 3/9/00 2 2,509,199 2,875
U.K. Long Gilt ................................... 12/24/99 5 885,676 (14,522)
U.S. Treasury Bond, 5 yr. ........................ 12/20/99 84 9,068,063 26,328
U.S. Long Bond ................................... 12/20/99 250 28,398,438 (361,094)
U.S. Treasury Bond, 10 yr. ....................... 12/20/99 88 9,655,250 (22,383)
---------
(406,548)
---------
$ 44,945
=========
</TABLE>
7. Option Activity
The Trust may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Trust generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Trust receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Trust will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
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.
31
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
7. Option Activity (continued)
Written option activity for the year ended October 31, 1999 was as follows:
<TABLE>
<CAPTION>
Call Options
- --------------------------------------------------------------------------------------------------------
Number of Options Amount of Premium
--------------------- --------------------
<S> <C> <C>
Options outstanding as of October 31, 1998 ........ -- $ --
Options written ................................... 150,000 10,500
Options closed or expired ......................... (150,000) (10,500)
Options exercised ................................. -- --
-------- --------
Options outstanding as of October 31, 1999 ........ -- $ --
======== ========
<CAPTION>
Put Options
- --------------------------------------------------------------------------------------------------------
Number of Options Amount of Premium
--------------------- --------------------
<S> <C> <C>
Options outstanding as of October 31, 1998 ........ -- $ --
Options written ................................... 20,498,888 215,931
Options closed or expired ......................... (17,107,840) (83,359)
Options exercised ................................. (2,773) (76,472)
----------- --------
Options outstanding as of October 31, 1999 ........ 3,388,275 $ 56,100
=========== ========
</TABLE>
8. Illiquid or Restricted Securities
As of October 31, 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 also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The 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 limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of October 31, 1999, was $15,497,251,
which represents 5.63% of the Trust's net assets, of which $997,875 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation
Acquisition Cost Per Unit as of
Security Date Per Unit October 31, 1999
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stocks and Warrants
- -------------------
Becker Gaming, Inc. Wts., Exp. 11/15/00 ........... 11/18/1993 $ 2.00 $ --
CGA Group Ltd., Preferred, Series A ............... 6/17/1997 25.00 25.00
CGA Group Ltd. Wts., Exp. 12/31/49 ................ 6/17/1997 -- 0.30
</TABLE>
32
<PAGE>
Independent Auditors' Report
Oppenheimer Multi-Sector Income Trust
The Board of Trustees and Shareholders of Oppenheimer
Multi-Sector Income Trust:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Multi-Sector Income Trust as of
October 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1999, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Multi-Sector Income Trust as of October 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
November 19, 1999
33
<PAGE>
Federal Income Tax Information (Unaudited)
Oppenheimer Multi-Sector Income Trust
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1999. Regulations
of the U.S. Treasury Department require the Trust to report this information to
the Internal Revenue Service.
Dividends paid by the Trust during the fiscal year ended October 31, 1999, which
are not designated as capital gain distribution should be multiplied by 3.35% to
arrive at the net amount eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
34
<PAGE>
Oppenheimer Multi-Sector Income Trust
General Information Concerning the Trust
Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end diversified
management investment company with a primary investment objective of seeking
high current income consistent with preservation of capital. In seeking its
objective, 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. 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 has 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 as 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.
35
<PAGE>
Oppenheimer Multi-Sector Income Trust
General Information Concerning the Trust (Continued)
Dividend Reinvestment and Cash Purchase Plan--Pursuant to the Trust's Dividend
Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust
(Shares) not registered in nominee name, all dividends and capital gains
distributions (Distributions) declared by the Trust will be automatically
reinvested in additional full and fractional Shares unless a shareholder elects
to receive cash. If Shares are registered in nominee name, the shareholder
should consult the nominee if the shareholder desires to participate in the
Plan. Shareholders that participate in the Plan (Participants) may, at their
option, make additional cash investments in Shares, semi-annually in amounts of
at least $100, through payment to Shareholder Financial Services, Inc., the
agent for the Plan (the Agent), accompanied by a service fee of $0.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional Shares at the greater of the Trust's net asset
value determined as of the date of purchase or 95% of the then-current market
price. If the market price is lower than net asset value, the Distribution will
be paid in cash, which the Agent will use to buy Shares on The New York Stock
Exchange (the NYSE), or otherwise on the open market to the extent available. If
the market price exceeds the net asset value before the Agent has completed its
purchases, the average purchase price per Share paid by the Agent may exceed the
net asset value, resulting in fewer Shares being acquired than if the
Distribution had been paid in Shares issued by the Trust.
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.
36
<PAGE>
Oppenheimer Multi-Sector Income Trust
General Information Concerning the Trust (Continued)
The Plan may be terminated or amended at any time upon 30 days' prior written
notice to Participants which, with respect to a Plan termination, must precede
the record date of any Distribution by the Trust. Additional information
concerning the Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
Shareholder Information--The Shares are traded on the NYSE. Daily market prices
for the Trust's shares are published in the New York Stock Exchange Composite
Transaction section of newspapers under the designation "OppenMlti." The Trust's
NYSE trading symbol is OMS. Weekly net asset value (NAV) and market price
information about the Trust is published each Monday in The Wall Street Journal
and each Sunday in The New York Times and each Saturday in Barron's, and other
newspapers in a table called "Closed-End Bond Funds."
37
<PAGE>
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<PAGE>
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<PAGE>
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
Phillip A. Griffiths, 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 P. Steinmetz, Vice President
Caleb Wong, 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
Mayer, Brown & Platt
This is a copy of a report to shareholders of Oppenheimer Multi-Sector
Income Trust. It does not offer for sale or solicit orders to buy any
securities.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that periodically the Trust may purchase its shares of
beneficial interest in the open market at prevailing market prices.
Shares of Oppenheimer funds are not deposits or obligations of any bank,
are not guaranteed by any bank, and are not insured by the FDIC or any
other agency, and involve investment risks, including the possible loss of
the principal amount invested.
RA0680.001.1099 (recycle symbol) Printed on recycled paper
