<PAGE> 1
1998 ANNUAL REPORT
OPPENHEIMER
MULTI-SECTOR
INCOME TRUST
OCTOBER 31, 1998
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
During one of the most challenging and volatile periods in the history of the
fixed income markets, Oppenheimer Multi-Sector Income Trust's (the Trust)
average annual total return at market value was 0.17%, and its dividend return
was 8.75% for the fiscal year ended October 31, 1998.1 Clearly, these results
are weaker than we would like. Nevertheless, we believe that the Trust's
disciplined strategy of sector diversification enabled us to help cushion the
impact of market volatility and limit some of the risks of investing during
exceptionally difficult times.
The Trust faced unique challenges and opportunities in three of its main
investment sectors: international, corporate and U.S. government. The challenges
stemmed from widespread economic difficulties in emerging markets, which
eventually affected developed markets as well. The trouble surfaced in Asia more
than a year ago, when an economic slowdown forced many Asian countries to
devalue their currencies. As a result, Asian companies that had borrowed heavily
to finance speculative business development incurred severe losses in foreign
exchange markets. When investors attempted to take their money out of the
region, securities prices plunged.
INVESTMENT BREAKDOWN:
OPPENHEIMER MULTI-SECTOR INCOME TRUST AS OF 10/31/98:(2)
[PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
Corporate 35.5%
International 24.7
U.S. Government 20.5
Mortgage-Backed 10.1
Money Market 7.4
Convertible 1.8
</TABLE>
The global fixed income markets, especially among emerging countries, were
hardest hit by these events. While these markets generally offer the Trust its
greatest opportunities for high current income and capital appreciation, they
are also among the world's most volatile. In October 1997, as Asian markets and
currencies declined sharply, we sold many of our holdings in the region in an
attempt to preserve the Trust's capital. Although our actions caused us to
suffer some initial losses when these markets began to recover with unexpected
speed, we sought to take advantage of the opportunity, staking out significant
fixed income positions in the emerging markets of Latin America, Asia and
Eastern Europe at the end of November and in early December. From December 1997
through the end of April 1998, emerging markets were among the best performing
fixed income classes for the Trust.
However, in May 1998, deepening political and economic uncertainty caused
Russian markets to fall sharply. These events heightened investors' concerns
over the health of other emerging economies throughout the world. Latin American
markets and currencies came under selling pressure as investors turned to the
relative safety of the United
Because of ongoing market volatility, the Trust's performance may be subject to
substantial short-term changes. For updates on the Trust's performance, please
contact your financial advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com.
1. Total return is based on changes in net asset value per share from 10/31/97
to 10/31/98, without deducting any sales charges or brokerage costs. Returns
would have been lower if sales charges were deducted. Dividend return is
determined by annualizing the October 1998 dividend of $0.067 and dividing by
the closing market price on the New York Stock Exchange of $9.19 per share on
10/23/98 (payment date). Past performance does not guarantee future results.
2. Portfolio composition is subject to change. Chart is based on total
investments at market value.
<PAGE> 3
States. By the time emerging markets began to decline, we had worked to trim the
Trust's exposure to the international sector. However, this decline proved
deeper and more sustained than we anticipated. In August 1998, the decline
culminated in the worst month in the history of the emerging markets, resulting
in significant losses for the Trust.
At the same time, the market for high yield domestic corporate bonds also
suffered in the wake of the Asian crisis. Although the underlying U.S. economy
remained strong, with low inflation and low unemployment, profits declined among
multi-national companies because of weakening foreign demand. As profit growth
slowed, corporate stock and bond markets fell sharply in the United States. As a
result, from March 1998 through the end of the period, the Trust's high yield
investments yielded flat or negative returns every month. We helped limit our
losses in the corporate sector by focusing our holdings in telecommunications
bonds, which remained one of the strongest performing areas in the high yield
market. At the same time, with the exception of energy, we generally avoided
investments in companies that produce basic materials, such as chemicals, paper
and metals, all of which underperformed the market. We correctly foresaw that
the recent economic crisis in Asia would lead to excess production capacity and
weak pricing in these industries. We remained committed to the energy industry
in the belief that oil and natural gas represent tangible assets that we believe
are likely to retain their value over time. However, an unusually warm winter,
together with inaction on the part of the OPEC nations and slack global demand,
caused the Trust to suffer losses in these investments as well.
Partially offsetting the Trust's losses in the international and corporate
sectors were our investments in U.S. government securities. With low inflation,
low unemployment and relatively high rates of consumer spending, the U.S.
economy remained a bastion of strength in a time of global economic uncertainty.
Investors throughout the world searching for safe, high-quality securities
turned to long-term U.S. Treasury instruments for shelter. As a result,
long-term Treasuries performed quite well during the second half of the year. We
sought to take advantage of the opportunity by shifting some of the Trust's
assets from cash and mortgage-backed securities into Treasuries. We also acted
to lengthen the portfolio's average duration. Duration is a measure of a bond's
sensitivity to changes in interest rates. The longer a portfolio's average
duration, the higher the potential return investors may receive when interest
rates fall. In anticipation of continued low inflation, we extended the
portfolio's duration throughout the period, which enabled us to benefit from
falling interest rates and from the exceptional performance of longer-term
Treasuries.
It is impossible to predict exactly when the global economy will recover from
the effects of the current downturn. However, by placing each asset class in
which the Trust invests under the management of its own sector specialist, we
remain focused on our goals of returning high income to investors while working
to minimize the risks of each sector in which we invest. We believe our
disciplined strategy of sector diversification continues to make Oppenheimer
Multi-Sector Income Trust part of The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
- --------------------------------
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
November 20, 1998
<PAGE> 4
STATEMENT OF INVESTMENTS October 31, 1998
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- ------------
<S> <C> <C>
U.S. GOVERNMENT SECTOR -- 20.7%
U.S. Treasury Bonds, 11.875%, 11/15/03.................................. $25,000,000 $33,218,775
U.S. Treasury Nts.:
4.50%, 9/30/00........................................................ 15,000,000 15,079,695
5.625%, 5/15/08(2).................................................... 10,000,000 10,775,010
-----------
Total U.S. Government Sector (Cost $59,397,884) 59,073,480
-----------
Shares
--------------
CONVERTIBLE SECTOR -- 1.9%
PREFERRED STOCKS -- 1.7%
CGA Group Ltd., Preferred, Series A(3)(4)............................... 32,000 800,000
Concentric Network Corp., 13.50% Preferred, Series B(4)(5).............. 206 155,015
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg................ 4,000 199,000
Dobson Communications Corp., 12.25% Sr. Exchangeable(3)(4).............. 545 489,137
e.spire Communications, Inc., 12.75% Jr. Redeemable Preferred(3)(4)..... 441 336,262
Eagle-Picher Holdings, Inc., Cum. Exchangeable, Series B, 3/1/08,
Non-Vtg.(3)(5)........................................................ 4,000 215,000
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable, Series B, Non-Vtg.(4)................................... 95 90,962
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(4)....... 718 800,570
Nebco Evans Holdings, Inc., 11.25% Cum. Exchangeable(4)................. 2,638 132,560
Nextel Communications, Inc., 11.125% Exchangeable, Series E(4).......... 328 285,360
NEXTLINK Communications, Inc., 14% Cum. Exchangeable, Vtg.(4)........... 7,986 405,290
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable,
Non-Vtg.(3)(4)........................................................ 20 170,500
SD Warren Co., 14% Cum. Exchangeable, Series B, Non-Vtg.(5)............. 12,000 565,500
Spanish Broadcasting Systems, Inc., 14.25% Cum. Exchangeable,
Non-Vtg.(3)(4)........................................................ 200 194,500
Viatel, Inc., 10% Cv., Series A(3)(4)................................... 290 17,473
-----------
4,857,129
-----------
Units
--------------
RIGHTS, WARRANTS AND CERTIFICATES -- 0.2%
American Telecasting, Inc. Wts., Exp. 6/99(3)........................... 4,750 47
Ames Department Stores, Inc., Litigation Trust(3)....................... 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/00(3)................................. 25,000 6,250
CellNet Data Systems, Inc. Wts., Exp. 10/07(6).......................... 559 1,887
CGA Group Ltd. Wts., Exp. 12/49(3)...................................... 32,000 9,600
Clearnet Communications, Inc. Wts., Exp. 9/05........................... 330 621
Concentric Network Corp. Wts., Exp. 12/07(3)............................ 600 60,000
Covad Communications Group, Inc. Wts., Exp. 3/08(3)..................... 320 3,200
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
e.spire Communications, Inc. Wts., Exp. 11/05........................... 700 $ 58,360
FirstWorld Communications, Inc. Wts., Exp. 4/08(3)...................... 700 7,000
Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(3)....................... 1,000 20,000
Globix Corp.Wts., Exp. 5/05............................................. 600 6,000
Gothic Energy Corp. Wts., Exp. 1/03(6).................................. 9,509 95
Gothic Energy Corp. Wts., Exp. 9/04(3).................................. 10,150 11,419
ICG Communications, Inc. Wts., Exp. 9/05(3)............................. 4,125 61,543
In-Flight Phone Corp. Wts., Exp. 8/02................................... 900 --
KMC Telecom Holdings, Inc. Wts., Exp. 4/08(3)........................... 920 2,990
Millenium Seacarriers, Inc. Wts., Exp. 7/05(6).......................... 700 4,375
Orbital Imaging Corp. Wts., Exp. 3/05(3)................................ 240 9,630
Orion Network Systems, Inc. Wts., Exp. 1/07(3).......................... 975 12,188
Price Communications Corp. Wts., Exp. 8/07(3)........................... 4,300 129,000
Protection One, Inc. Wts., Exp. 6/05(3)................................. 6,400 64,000
Teletrac, Inc. Wts., Exp. 8/07(3)....................................... 125 1
WAM!NET, Inc. Wts., Exp. 3/05(3)........................................ 1,500 12,000
Wireless One, Inc. Wts., Exp. 10/00(3).................................. 1,500 15
-----------
481,510
-----------
Total Convertible Sector (Cost $5,429,341) 5,338,639
-----------
Shares
--------------
CORPORATE SECTOR -- 35.7%
COMMON STOCKS -- 0.0%
Capital Gaming International, Inc.(5)................................... 18 --
Intermedia Communications, Inc.(5)...................................... 757 14,005
Optel, Inc.(5).......................................................... 815 8
-----------
14,013
-----------
Face Amount(1)
--------------
CORPORATE BONDS AND NOTES -- 32.7%
Aerospace -- 2.1%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05.................... $1,000,000 987,500
Amtran, Inc., 10.50% Sr. Nts., 8/1/04................................... 850,000 839,375
Atlas Air, Inc., 9.25% Sr. Nts., 4/15/08(6)............................. 675,000 602,437
BE Aerospace, Inc., 9.50% Sr. Sub. Nts., 11/1/08(3)..................... 900,000 918,000
Constellation Finance LLC, 9.80% Airline Receivable
Asset-Backed Nts., Series 1997-1, 1/1/01(3)........................... 500,000 485,000
</TABLE>
4
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Aerospace (Continued)
Decrane Aircraft Holdings, Inc., Units (each unit consists of
$1,000 principal amount of 12% sr. sub. nts., 9/30/08 and
one warrant to purchase 1.55 shares of common stock)(6)(7)............ $ 800,000 $ 780,000
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(3)...................................... 455,778 492,743
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04.............. 1,000,000 860,000
-----------
5,965,055
-----------
Chemicals -- 0.7%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07.............. 300,000 291,000
ICO, Inc., 10.375% Sr. Nts., 6/1/07..................................... 475,000 441,750
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B, 9/15/07........ 500,000 432,500
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07............. 200,000 151,000
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07...................................................... 600,000 570,000
-----------
1,886,250
-----------
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. Nts., 7/1/08(6).......................... 510,000 471,750
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05......... 340,000 164,900
Bell Sports, Inc., 11% Sr. Sub. Nts., 8/15/08(6)........................ 400,000 378,000
Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03............. 550,000 559,625
Globe Manufacturing, Inc., 10% Sr. Sub. Nts., 8/1/08(6)................. 400,000 314,000
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08........... 360,000 347,400
Revlon Consumer Products Corp., 8.625% Sr. Unsec. Sub. Nts.,
2/1/08................................................................ 800,000 726,000
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 9.73%, 3/15/01(8)........................................... 360,000 216,000
Styling Technology Corp., 10.875% Sr. Sub. Nts., 7/1/08(6).............. 195,000 182,325
-----------
3,360,000
-----------
Energy -- 1.9%
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07..................... 155,000 123,225
Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05....... 510,000 436,050
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07..... 845,000 722,475
Dailey International, Inc., 9.50% Sr. Unsec. Nts., Series B, 2/15/08.... 400,000 182,000
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08...................... 400,000 336,000
</TABLE>
5
<PAGE> 7
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Energy (Continued)
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(6)..... $250,000 $ 163,750
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08....... 380,000 286,900
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(9)...... 180,000 72,900
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., 5/15/08(6)............... 700,000 696,500
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06............. 500,000 457,500
Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07........................ 790,000 754,450
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03............................ 200,000 199,000
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07........................ 700,000 693,000
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts.,
2/15/08(6)(10)........................................................ 700,000 399,000
-----------
5,522,750
-----------
Financial -- 0.5%
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06.... 300,000 288,000
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08...................................................... 800,000 644,000
Veritas Capital Trust, 10% Nts., 1/1/28................................. 525,000 492,187
-----------
1,424,187
-----------
Food & Drug -- 0.3%
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07............ 750,000 690,000
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon Nts.,
11/1/03(10)........................................................... 400,000 294,000
-----------
984,000
-----------
Food/Tobacco -- 0.7%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08............... 200,000 207,000
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(10)... 500,000 287,500
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06.......... 500,000 530,000
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05............. 650,000 594,750
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10.................... 100,000 98,250
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08............ 400,000 391,000
-----------
2,108,500
-----------
Forest Products/Containers -- 0.6%
Ball Corp.: 7.75% Sr. Nts., 8/1/06(6)................................. 300,000 310,500
8.25% Sr. Sub. Nts., 8/1/08(6)........................................ 400,000 416,500
Four M Corp., 12% Sr. Sec. Nts., Series B, 6/1/06....................... 300,000 226,500
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Forest Products/Containers (Continued)
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07.......... $ 450,000 $ 420,750
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06............... 250,000 251,250
-----------
1,625,500
-----------
Gaming/Leisure -- 2.2%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(10)................ 150,000 70,875
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08........................ 400,000 352,000
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(9)... 5,500 --
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A,
11/15/00(3)(9)........................................................ 200,000 13,000
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07......................... 435,000 408,900
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06(6)............ 60,000 59,550
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05...................... 550,000 541,750
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07..................... 1,000,000 975,000
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec.
Nts., Series B, 11/15/02.............................................. 900,000 1,120,500
Outboard Marine Corp., 10.75% Sr. Nts., 6/1/08(6)....................... 240,000 222,600
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(10)..................................... 500,000 302,500
9.25% Sr. Nts., 4/1/06................................................ 300,000 302,250
Rio Hotel & Casino, Inc., 9.50% Sr. Sub. Nts., 4/15/07.................. 300,000 327,000
Showboat Marina Casino Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts., Series B, 3/15/03...................... 1,000,000 1,135,000
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06.................. 440,000 445,500
-----------
6,276,425
-----------
Healthcare -- 0.8%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08............ 400,000 377,000
ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(6)................... 415,000 404,625
Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07.......................................... 455,000 420,875
10.25% Sr. Sub. Nts., 4/30/06......................................... 15,000 14,025
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08(6)............ 250,000 208,125
Oxford Health Plans, Inc., 11% Sr. Nts., 5/15/05(6)..................... 600,000 489,000
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07................. 375,000 279,375
Tenet Healthcare Corp., 8.125% Sr. Sub. Nts., 12/1/08(6)................ 250,000 255,000
-----------
2,448,025
-----------
</TABLE>
7
<PAGE> 9
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Housing -- 0.5%
Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08.............. $400,000 $ 377,000
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07..................................... 420,000 411,600
9.25% Sr. Nts., Series B, 3/15/07..................................... 600,000 597,000
-----------
1,385,600
-----------
Information Technology -- 1.0%
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts.,
3/15/08(10)........................................................... 320,000 107,200
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05.................... 600,000 555,000
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07.............................. 600,000 544,500
Unisys Corp., 11.75% Sr. Nts., 10/15/04................................. 500,000 564,375
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(10).... 500,000 237,500
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07........................... 800,000 740,000
-----------
2,748,575
-----------
Manufacturing -- 2.0%
Axia, Inc. (New), 10.75% Sr. Sub. Nts., 7/15/08(6)...................... 150,000 141,750
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07...................... 700,000 656,250
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08...... 350,000 313,250
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08(6)..................... 315,000 269,325
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07...... 950,000 871,625
Insilco Corp., 10.25% Sr. Sub. Nts., 8/15/07............................ 800,000 812,000
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05.. 700,000 714,000
Moll Industries, Inc., 10.50% Sr. Sub. Nts., 7/1/08(6).................. 280,000 263,200
Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08........................ 500,000 462,500
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts.,
Series B, 6/15/07..................................................... 500,000 457,500
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08........................ 210,000 192,150
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(3)................... 525,000 518,437
-----------
5,671,987
-----------
Media/Entertainment: Broadcasting -- 1.8%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07........ 900,000 895,500
CBS Radio, Inc., 11.375% Unsec. Sub. Debs., 1/15/09(4).................. 617,000 731,145
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07......................... 700,000 693,000
9% Sr. Sub. Nts., 10/1/08(3).......................................... 500,000 505,000
10.50% Sr. Sub. Nts., Series B, 1/15/07............................... 735,000 804,825
Jacor Communications Co., 8% Sr. Sub. Nts., 2/15/10..................... 400,000 414,000
</TABLE>
8
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Broadcasting (Continued)
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(11)................ $ 700,000 $ 647,500
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04............... 475,000 486,875
-----------
5,177,845
-----------
Media/Entertainment: Cable/Wireless Video -- 2.5%
Adelphia Communications Corp.:
8.125% Sr. Nts., 7/15/03(6)........................................... 250,000 248,750
8.375% Sr. Nts., Series B, 2/1/08..................................... 100,000 100,000
9.25% Sr. Nts., 10/1/02............................................... 435,000 449,138
9.875% Sr. Nts., Series B, 3/1/07..................................... 565,000 608,788
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 4/1/23......................................... 1,000,000 1,075,000
9.875% Sr. Sub. Nts., 5/15/06......................................... 1,000,000 1,080,000
EchoStar DBS Corp., 12.50% Sr. Sec. Nts., 7/1/02........................ 800,000 834,000
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04(10)............................................... 1,000,000 875,000
Falcon Holding Group LP, 8.375% Sr. Unsec. Debs., Series B,
4/15/10............................................................... 1,000,000 995,000
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(12)................................................. 250,000 266,250
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05............................ 480,000 468,000
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(10)................................................. 600,000 285,000
-----------
7,284,926
-----------
Media/Entertainment: Diversified Media -- 0.7%
Hollinger International Publishing, Inc., 9.25% Sr. Unsec. Sub.
Nts., 2/1/06.......................................................... 250,000 261,875
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07................. 475,000 429,875
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07.................... 875,000 896,875
SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts.,
Series B, 2/1/08...................................................... 600,000 562,500
-----------
2,151,125
-----------
Media/Entertainment: Telecommunications -- 4.2%
Amazon.Com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(10).............. 1,000,000 550,000
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07.............. 495,000 438,075
e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07.................. 205,000 208,075
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08(6)................. 365,000 327,588
FaciliCom International, Inc., 10.50% Sr. Nts., Series B, 1/15/08....... 205,000 162,975
</TABLE>
9
<PAGE> 11
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Telecommunications (Continued)
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts.,
4/15/08(3)(10)........................................................ $ 700,000 $ 206,500
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts.,
2/15/08(10)........................................................... 590,000 295,000
Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08(6).............. 100,000 97,250
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05(3)............................ 600,000 462,000
ICG Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(10)............... 405,000 305,775
ICG Services, Inc., 0%/10% Sr. Unsec. Disc. Nts., 2/15/08(10)........... 800,000 385,000
Intermedia Communications, Inc.:
8.50% Sr. Nts., Series B, 1/15/08..................................... 500,000 475,000
8.60% Sr. Unsec. Nts., Series B, 6/1/08............................... 360,000 342,900
8.875% Sr. Nts., 11/1/07.............................................. 265,000 255,725
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08............................................... 500,000 485,000
11% Sr. Nts., 6/1/07.................................................. 250,000 268,125
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts.,
2/15/08(10)........................................................... 920,000 427,800
Level 3 Communications, Inc., 9.125% Sr. Unsec. Nts., 5/1/08............ 600,000 567,000
Long Distance International, Inc., Units (each unit consists of
$1,000 principal amount of 12.25% sr. nts., 4/15/08 and one
warrant to purchase 15.0875 shares of common stock)(6)(7)............. 400,000 338,000
NEXTLINK Communications, Inc.:
0%/9.45% Sr. Unsec. Disc. Nts., 4/15/08(10)........................... 750,000 397,500
9% Sr. Nts., 3/15/08.................................................. 250,000 228,750
9.625% Sr. Nts., 10/1/07.............................................. 500,000 465,000
NorthEast Optic Network, Inc., 12.75% Sr. Nts., 8/15/08................. 500,000 442,500
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05.................... 1,300,000 1,264,250
Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07(10).......................................................... 350,000 276,500
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08........................ 900,000 911,250
US Xchange LLC, 15% Sr. Nts., 7/1/08(6)................................. 400,000 377,000
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05....................................... 645,000 615,975
13.50% Sr. Unsec. Nts., 6/15/04....................................... 165,000 179,850
Viatel, Inc.:
0%/12.50% Sr. Unsec. Disc. Nts., 4/15/08(10).......................... 385,000 190,575
11.25% Sr. Sec. Nts., 4/15/08......................................... 195,000 172,575
------------
12,119,513
------------
</TABLE>
10
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Wireless Communications -- 2.2%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07(6)................... $ 100,000 $ 85,500
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(10).......... 709,000 216,245
Crown Castle International Corp., 0%/10.625% Sr. Unsec. Disc. Nts.,
11/15/07(10).......................................................... 800,000 468,000
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 buy 19.85 shares of common stock)(7)................... 400,000 250,000
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts.,
6/1/06(10)............................................................ 205,000 124,025
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 10/31/07(10)...... 860,000 481,600
Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06(13)................ 1,250,000 812,500
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts.,
8/15/04............................................................... 175,000 156,625
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(10)...... 1,275,000 758,625
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(10)...... 800,000 372,000
Price Communications Cellular Holdings, Inc., 11.25% Sr. Nts.,
8/15/08(4)............................................................ 200,000 173,000
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., 12/15/06(6)..................................... 250,000 246,250
11.75% Sr. Sub. Nts., 7/15/07......................................... 100,000 101,500
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08........... 700,000 663,250
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(10)...... 1,000,000 455,000
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(6)(10)....... 600,000 237,000
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06............................................................... 500,000 567,500
----------
6,168,620
----------
Metals/Minerals -- 1.1%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06............................... 400,000 415,000
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01.................... 250,000 268,750
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., 5/15/08(6).............. 800,000 772,000
Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07.... 900,000 832,500
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(6)(10)...... 1,200,000 402,000
Metallurg, Inc., 11% Sr. Nts., 12/1/07.................................. 365,000 323,025
----------
3,013,275
----------
Retail -- 0.9%
Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(6)..................... 500,000 477,500
Eye Care Centers of America, Inc., 9.125% Sr. Sub. Nts., 5/1/08(6)...... 500,000 412,500
Finlay Enterprises, Inc., 9% Debs., 5/1/08.............................. 500,000 380,000
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08...................... 300,000 247,500
</TABLE>
11
<PAGE> 13
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Retail (Continued)
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(6).......... $ 400,000 $ 374,000
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07...................... 775,000 755,625
------------
2,647,125
------------
Service -- 1.6%
Allied Waste Industries, Inc., 0%/11.30% Sr. Disc. Nts., 6/1/07(10)..... 500,000 375,000
Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07............... 700,000 761,250
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(10)...................... 500,000 356,250
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07............... 200,000 193,500
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08.. 1,000,000 967,500
Great Lakes Dredge & Dock Corp., 11.25% Sr. Sub. Nts., 8/15/08(6)....... 445,000 431,650
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09......... 250,000 241,875
Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08............. 500,000 422,500
Protection One Alarm Monitoring, Inc., 13.625% Sr. Sub. Disc. Nts.,
6/30/05............................................................... 655,000 749,975
------------
4,499,500
------------
Transportation -- 2.4%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07..... 800,000 726,000
Coach USA, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07................. 195,000 195,975
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts.,
4/15/06............................................................... 700,000 696,500
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(6).................... 300,000 241,500
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07............. 775,000 736,250
Millenium Seacarriers, Inc., Units (each unit consists of $1,000
principal amount of 12% first priority ship mtg. nts., 7/15/05 and one
warrant to purchase five shares of common stock)(6)(7)................ 700,000 591,500
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(6)...................... 1,250,000 1,193,750
Units (each unit consists of $1,000 principal amount of
12% second priority ship mtg. nts., 6/30/07 and
7.66 warrants)(6)(7)................................................ 100,000 98,500
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07.......... 600,000 555,000
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08........................... 500,000 472,500
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03(10).......................................... 1,500,000 1,286,250
------------
6,793,725
------------
</TABLE>
12
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
Utility -- 0.7%
Calpine Corp., 10.50% Sr. Nts., 5/15/06................................. $ 565,000 $ 613,025
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11...... 570,000 649,800
ESI Tractebel Acquisition Corp., 7.99% Bonds, 12/30/11(6)............... 500,000 466,903
Niagara Mohawk Power Corp., 7.75% Sr. Unsec. Nts., Series G,
10/1/08............................................................... 250,000 262,667
-----------
1,992,395
-----------
93,612,903
-----------
STRUCTURED INSTRUMENTS -- 3.0%
Bank of America NT & SA (London Branch), Goldman Sachs
Commodity Index Excess Return Linked Nts., 5.50%, 1/5/00.............. 500,000 355,950
Bear Stearns High Yield Composite Index Linked Nts., 9%, 2/5/99......... 3,000,000 2,650,200
Commerzbank International SA, Energy Linked Nts., 5.156%,
7/1/99(12)............................................................ 500,000 389,050
Goldman Sachs Group LP, High Yield Index Nts., 8%, 3/4/99............... 3,000,000 2,799,300
Shoshone Partners Loan Trust Sr. Nts., 6.97%, 4/28/02 (representing
a basket of reference loans and a total return swap between
Chase Manhattan Bank and the Trust)(3)(12)............................ 2,500,000 2,316,889
-----------
8,511,389
-----------
Total Corporate Sector (Cost $110,888,566) 102,138,305
-----------
INTERNATIONAL SECTOR -- 24.8%
CORPORATE BONDS AND NOTES -- 3.9%
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05.................... 215,000 153,725
Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/99(3)(9)IDR........ 3,160,000,000 103,268
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(10)............................ 100,000 78,000
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)(7)(10)......................................... 900,000 715,500
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(10).......................................................... 1,600,000 1,208,000
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(3)........................ 200,000 186,500
Imax Corp., 10% Sr. Nts., 3/1/01........................................ 1,000,000 1,035,000
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08.... 200,000 167,000
Intrawest Corp., 9.75% Sr. Nts., 8/15/08................................ 250,000 249,375
NTL, Inc.:
0%/12.375% Sr. Nts., 10/1/08(6)(10)(14)............................... 5,000,000 2,775,250
10% Sr. Nts., Series B, 2/15/07....................................... 550,000 530,750
</TABLE>
13
<PAGE> 15
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
-------------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08(6).................... $ 700,000 $ 493,500
Orange plc, 8% Sr. Nts., 8/1/08......................................... 800,000 784,000
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship
Mtg. Nts., 5/30/08(6)................................................... 300,000 232,500
PT Polysindo Eka Perkasa:
24% Nts., 6/19/03IDR.................................................. 1,314,400,000 20,618
Zero Coupon Promissory Nts., 3/16/99(3)(9)IDR......................... 3,000,000,000 47,059
RSL Communications plc, 9.125% Sr. Unsec. Nts., 3/1/08.................. 500,000 425,000
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts.,
11/15/07(3)........................................................... 565,000 546,637
TeleWest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(10)................................... 500,000 400,000
11.25% Sr. Nts., 11/1/08(6)........................................... 965,000 1,008,425
------------
11,160,107
------------
FOREIGN GOVERNMENT OBLIGATIONS -- 20.1%
Argentina -- 1.3%
Argentina (Republic of) Sr. Unsec. Unsub. Bonds, 11%, 10/9/06........... 3,200,000 3,168,000
Banco Hipotecario Nacional (Argentina) Medium-Term Unsec.
Nts., Series 3, 10.625%, 8/7/06....................................... 700,000 640,500
------------
3,808,500
------------
Australia -- 0.3%
Australia (Government of) Bonds, Series 904, 9%, 9/15/04AUD............. 1,175,000 892,140
------------
Brazil -- 0.9%
Brazil (Federal Republic of) Bonds, Series RG, 6.188%, 4/15/12(12)...... 820,000 403,850
Brazil (Federal Republic of) Debt Conversion Bonds, 6.188%,
4/15/12(12)........................................................... 4,215,000 2,075,887
------------
2,479,737
------------
Bulgaria -- 1.0%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.688%, 7/28/24(12)...... 3,891,000 2,733,427
------------
Canada -- 0.2%
Canada (Government of) Bonds, 10.25%, 12/1/98CAD........................ 760,000 495,737
------------
Denmark -- 0.4%
Denmark (Kingdom of) Bonds:
7%, 12/15/04DKK....................................................... 3,470,000 626,565
8%, 5/15/03DKK........................................................ 2,855,000 522,826
------------
1,149,391
------------
</TABLE>
14
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Ecuador -- 0.4%
Ecuador (Republic of) Debs., 6.625%, 2/27/15(12)........................ $ 1,154,293 $ 500,675
Ecuador (Republic of) Past Due Interest Bonds, 6.625%, 2/27/15(12)...... 1,556,032 674,929
------------
1,175,604
------------
France -- 0.6%
France (Government of) Bonds, Obligations Assimilables
du Tresor, 5.50%, 4/25/29(FRF)........................................ 9,080,000 1,704,734
------------
Germany -- 5.2%
Germany (Republic of) Bonds, 6.25%, 4/26/06DEM.......................... 705,000 484,210
Germany (Republic of) Treasury Bills, Zero Coupon, 7.87%,
1/15/99(8)(DEM)....................................................... 24,000,000 14,397,302
------------
14,881,512
------------
Great Britain -- 1.3%
United Kingdom Treasury Bonds, 6.75%, 11/26/04GBP....................... 880,000 1,607,848
United Kingdom Treasury Nts., 8%, 6/10/03(GBP).......................... 1,190,000 2,231,246
------------
3,839,094
------------
Italy -- 0.8%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali,
8.50%, 1/1/04(ITL).................................................... 2,925,000,000 2,151,839
------------
Ivory Coast -- 0.7%
Ivory Coast (Government of) Past Due Interest Bonds, 2%,
3/29/18(6)(12)........................................................ 7,011,250 2,120,903
------------
Jordan -- 0.6%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5%,
12/23/23(11).......................................................... 3,125,000 1,664,062
------------
Korea, Republic of (South) -- 0.7%
Korea (Republic of) Bonds, 8.875%, 4/15/08.............................. 2,100,000 1,913,518
------------
Mexico -- 1.1%
United Mexican States Bonds, 11.50%, 5/15/26............................ 3,015,000 3,112,988
------------
Nigeria -- 0.6%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20.......... 1,750,000 1,100,313
Nigeria (Federal Republic of) Promissory Nts., Series RC,
5.092%, 1/5/10........................................................ 1,256,782 673,427
------------
1,773,740
------------
</TABLE>
15
<PAGE> 17
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Norway -- 0.1%
Norway (Government of) Bonds, 9.50%, 10/31/02(NOK)...................... 2,655,000 $ 414,099
------------
Panama -- 0.5%
Panama (Government of) Bonds, 8.875%, 9/30/27........................... 545,000 492,544
Panama (Government of) Past Due Interest Debs., 6.688%,
7/17/16(12)........................................................... 1,318,325 985,448
------------
1,477,992
------------
Peru -- 1.0%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.25%, 3/7/17(11)..................................................... 5,580,000 2,845,800
------------
Philippines -- 0.2%
Philippines (Republic of) Bonds, 8.75%, 10/7/16......................... 710,000 602,613
------------
Poland -- 0.6%
Poland (Republic of) Par Bonds, 3%, 10/27/24(11)........................ 2,725,000 1,804,461
------------
Russia -- 0.2%
Russia (Government of) Debs.:
6.719%, 12/15/15(12).................................................. 1,258,480 128,994
Series 19 yr., 6.625%, 12/15/15(12)................................... 1,623,039 166,362
Russia (Government of) Principal Loan Debs., Series 24 yr.,
6.625%, 12/15/20(12).................................................. 2,100,000 166,031
------------
461,387
------------
Spain -- 1.0%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado:
6%, 1/31/29ESP........................................................ 273,900,000 2,079,204
10%, 2/28/05ESP....................................................... 73,410,000 686,367
------------
2,765,571
------------
Venezuela -- 0.4%
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series A, 6.125%, 3/31/07(12)......................................... 1,821,425 1,057,565
------------
57,326,414
------------
LOAN PARTICIPATIONS -- 0.7%
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.:
Tranche 1, 6.375%, 9/4/06(12)......................................... 1,065,272 508,668
Tranche A, 7.188%, 3/4/00(12)......................................... 532,636 450,078
</TABLE>
16
<PAGE> 18
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- ------------
<S> <C> <C>
LOAN PARTICIPATIONS (CONTINUED)
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.563%, 1/1/09(3)(12)...................................... $ 187,000 $ 140,717
Tranche B, 6.563%, 1/1/04(3)(12)...................................... 647,058 524,117
Trinidad & Tobago Loan Participation Agreement, Tranche B,
1.497%, 9/30/00(3)(12)JPY............................................. 59,999,999 424,796
------------
2,048,376
------------
MORTGAGE-BACKED OBLIGATIONS -- 0.1%
Nykredit AS, 8% Cv. Bonds, 10/1/26DKK................................... 2,778,000 453,722
------------
Units
--------------
RIGHTS, WARRANTS AND CERTIFICATES -- 0.0%
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/00(3)..... 80 --
Microcell Telecommunications, Inc. Wts., Exp. 6/06(3)................... 2,800 50,750
------------
50,750
------------
Total International Sector (Cost $78,976,545) 71,039,369
------------
MORTGAGE-BACKED SECTOR -- 10.2%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:.. Face Amount(1)
--------------
Series 1996-D3, Cl. A5, 8.33%, 10/13/26(3)(12)........................ $ 500,000 507,656
Series 1996-MD6, Cl. A5, 6.955%, 11/13/26(12)......................... 800,000 817,125
BKB Commercial Mortgage Trust, Commercial Mtg. Obligations,
Series 1997-C1, Cl. C, 7.45%, 10/25/00(3)............................. 250,000 249,844
Capital Lease Funding Securitization LP, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-CTL1, 0.549%, 6/22/24(3)(15)........ 10,938,078 450,649
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 0.98%,
12/25/20(3)(15)....................................................... 12,416,600 256,092
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(3)................. 710,000 708,891
Federal Home Loan Mortgage Corp.:
Certificates of Participation, 12%, 5/1/10-6/1/15..................... 1,395,518 1,594,303
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1343, Cl. LA, 8%, 8/15/22........ 1,000,000 1,095,940
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 2054, Cl. TE, 6.25%, 4/15/24................... 534,000 542,678
Interest-Only Stripped Mtg.-Backed Security, Series 197,
Cl. IO, 15.225%, 4/1/28(15)......................................... 4,934,053 1,147,938
Interest-Only Stripped Mtg.-Backed Security, Series 199,
Cl. IO, 6.50%, 8/1/28(15)........................................... 5,656,280 1,236,428
</TABLE>
17
<PAGE> 19
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- ------------
<S> <C> <C>
MORTGAGE-BACKED SECTOR (CONTINUED)
Federal National Mortgage Assn.:
7.50%, 6/1/10......................................................... $1,095,379 $1,124,933
11%, 7/1/16........................................................... 614,453 703,549
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through
Certificates, 13%, 6/1/15............................................. 792,198 927,610
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1992-162, Cl. C, 7%, 10/25/21................................. 5,400,000 5,656,500
Trust 1995-4, Cl. PC, 8%, 5/25/25................................... 664,690 723,262
Trust 1997-25, Cl. B, 7%, 12/18/22.................................. 340,000 349,561
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security:
Trust 277, Cl. 1, 20.156%, 4/1/27(16)............................... 174,943 156,465
Trust 294, Cl. 1, 5.536%, 2/1/28(16)................................ 1,428,879 1,231,069
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, 8.131%, 7/25/06(3)(12)................ 800,000 805,750
First Union-Lehman Brothers Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1,
1.31%, 4/18/27(15).................................................... 4,688,333 311,060
General Motors Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1997-C1, Cl. X, 2.08%, 7/15/27(15)....... 3,489,616 314,066
Government National Mortgage Assn.:
6%, 7/20/27........................................................... 632,303 640,403
7%, 1/15/28-3/15/28................................................... 973,446 996,713
11%, 10/20/19......................................................... 403,778 459,550
12%, 11/20/13-9/20/15................................................. 451,661 505,105
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. D, 7.42%, 4/25/28................... 800,000 843,922
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. D-1, 7.436%, 2/15/28(3)(12)......... 1,000,000 1,061,250
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates, Series-DMC:
Cl. B, 8.562%, 8/12/11(3)........................................... 400,000 411,625
Cl. C, 8.921%, 8/12/11(3)........................................... 400,000 410,438
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through
Certificates, Series 1, Cl. D, 7.683%, 12/21/26(3).................... 500,000 508,906
</TABLE>
18
<PAGE> 20
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
--------------- ------------
<S> <C> <C>
MORTGAGE-BACKED SECTOR (CONTINUED)
Salomon Brothers Mortgage Securities VII, Series 1996-B,
Cl. 1, 7.132%, 4/25/26(3)............................................. $ 1,311,201 $ 963,733
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(3)...... 250,000 256,563
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through Certificates, Series 1997-LLI,
Cl. E, 7.30%, 4/12/12................................................. 500,000 489,844
Multiclass Pass-Through Certificates, Series 1996-C3,
Cl. D, 8%, 6/25/30(3)................................................. 650,000 659,953
-------------
Total Mortgage-Backed Sector (Cost $28,132,410) 29,119,374
-------------
MONEY MARKET SECTOR -- 7.4%
Repurchase agreement with PaineWebber, Inc., 5.35%, dated 10/30/98, to
be repurchased at $21,259,474 on 11/2/98, collateralized by U.S.
Treasury Nts., 5.625%-6.625%, 5/31/99-2/15/03, with a value of
$21,728,009 (Cost $21,250,000)........................................ 21,250,000 21,250,000
-------------
TOTAL INVESTMENTS, AT VALUE (COST $304,074,746)......................... 100.7% 287,959,167
LIABILITIES IN EXCESS OF OTHER ASSETS................................... (0.7) (2,052,230)
----- -------------
NET ASSETS.............................................................. 100.0% $285,906,937
===== =============
</TABLE>
19
<PAGE> 21
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>
AUD - Australian Dollar GBP - British Pound Sterling
CAD - Canadian Dollar IDR - Indonesian Rupiah
DEM - German Mark ITL - Italian Lira
DKK - Danish Krone JPY - Japanese Yen
ESP - Spanish Peseta NOK - Norwegian Krone
FRF - French Franc
</TABLE>
2. Securities with an aggregate market value of $10,775,010 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
3. Identifies issues considered to be illiquid or restricted -- See Note 8 of
Notes to Financial Statements.
4. Interest or dividend is paid-in-kind.
5. Non-income producing security.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $21,084,013 or 7.37% of the Trust's
net assets as of October 31, 1998.
7. 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 underlying
principal of the notes.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Non-income producing -- issuer is in default.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
11. Represents the current interest rate for an increasing rate security.
12. Represents the current interest rate for a variable rate security.
13. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to
Financial Statements.
14. When-issued security to be delivered and settled after October 31, 1998.
15. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income
securities increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount on which
current interest is calculated. The price of these securities is typically
more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest rates
disclosed represent current yields based upon the current cost basis and
estimated timing and amount of future cash flows.
16. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these
securities generally increases as interest rates decline and prepayment
rates rise. The price of these securities is typically more volatile than
that of coupon-bearing bonds of the same maturity. Interest rates disclosed
represent current yields based upon the current cost basis and estimated
timing of future cash flows.
See accompanying Notes to Financial Statements.
20
<PAGE> 22
STATEMENT OF ASSETS AND LIABILITIES October 31, 1998
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments, at value (cost $304,074,746)--see accompanying statement........................................... $287,959,167
Cash............................................................................................................ 20,506
Receivables and other assets:
Interest...................................................................................................... 5,679,681
Investments sold.............................................................................................. 4,833,962
Closed forward foreign currency exchange contracts............................................................ 96,781
Other......................................................................................................... 16,905
-------------
Total assets................................................................................................ 298,607,002
-------------
LIABILITIES
Unrealized depreciation on forward foreign currency exchange contracts -- Note 5................................ 130,021
Payables and other liabilities:
Investments purchased (including $2,775,250 purchased on a when-issued
basis) -- Note 1............................................................................................ 11,565,530
Closed forward foreign currency exchange contracts............................................................ 534,294
Trustees' fees -- Note 1...................................................................................... 172,482
Management and administrative fees............................................................................ 118,020
Daily variation on futures contracts -- Note 6................................................................ 89,127
Shareholder reports........................................................................................... 55,629
Custodian fees................................................................................................ 6,782
Transfer agent and accounting services fees................................................................... 2,215
Other......................................................................................................... 25,965
-------------
Total liabilities........................................................................................... 12,700,065
-------------
NET ASSETS...................................................................................................... $285,906,937
=============
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest...................................................................... $ 291,161
Additional paid-in capital...................................................................................... 312,140,847
Undistributed net investment income............................................................................. 169,342
Accumulated net realized loss on investments and foreign currency transactions.................................. (10,400,329)
Net unrealized depreciation on investments and translation of assets and liabilities
denominated in foreign currencies............................................................................. (16,294,084)
-------------
NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding................................ $285,906,937
=============
NET ASSET VALUE PER SHARE....................................................................................... $9.82
=====
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE> 23
STATEMENT OF OPERATIONS For the Year Ended October 31, 1998
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $411)............................................................. $ 25,603,479
Dividends....................................................................................................... 494,062
------------
Total income.................................................................................................. 26,097,541
------------
EXPENSES
Management fees -- Note 4....................................................................................... 1,980,152
Administrative fees -- Note 4................................................................................... 604,427
Shareholder reports............................................................................................. 192,299
Trustees' fees and expenses -- Note 1........................................................................... 79,370
Transfer and shareholder servicing agent fees -- Note 4......................................................... 54,062
Legal, auditing and other professional fees..................................................................... 39,202
Custodian fees and expenses..................................................................................... 36,101
Registration and filing fees.................................................................................... 30,258
Accounting service fees -- Note 4............................................................................... 24,000
Insurance expenses.............................................................................................. 11,460
Other........................................................................................................... 16,816
------------
Total expenses................................................................................................ 3,068,147
------------
NET INVESTMENT INCOME........................................................................................... 23,029,394
------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (including premiums on options exercised)......................................................... (1,967,924)
Closing of futures contracts.................................................................................. (530,310)
Closing and expiration of option contracts written -- Note 7.................................................. 119,030
Foreign currency transactions................................................................................. 425,153
------------
Net realized loss........................................................................................... (1,954,051)
------------
Net change in unrealized appreciation or depreciation on:
Investments................................................................................................... (19,491,964)
Translation of assets and liabilities denominated in foreign currencies....................................... (539,630)
------------
Net change.................................................................................................. (20,031,594)
------------
Net realized and unrealized loss................................................................................ (21,985,645)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................................ $ 1,043,749
============
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE> 24
STATEMENT OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income........................................................... $ 23,029,394 $ 26,006,984
Net realized gain (loss)........................................................ (1,954,051) 6,185,833
Net change in unrealized appreciation or depreciation........................... (20,031,594) (3,663,440)
------------ ------------
Net increase in net assets resulting from operations.......................... 1,043,749 28,529,377
------------ ------------
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income............................................ (22,561,595) (25,738,551)
Tax return of capital .......................................................... (1,547,363) --
------------ ------------
NET ASSETS
Total increase (decrease)....................................................... (23,065,209) 2,790,826
Beginning of period............................................................. 308,972,146 306,181,320
------------ ------------
End of period [including undistributed (overdistributed) net investment
income of $169,342 and ($249,479), respectively].............................. $285,906,937 $308,972,146
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE> 25
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period................. $10.61 $10.52 $10.14 $10.17 $10.96
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income ............................. .79 .89 .91 .94 1.00
Net realized and unrealized gain (loss)............ (.75) .08 .37 (.04) (.82)
------ ------ ------ ------ ------
Total income from investment operations.......... .04 .97 1.28 .90 .18
------ ------ ------ ------ ------
Dividends to shareholders:
Dividends from net investment income............... (.78) (.88) (.90) (.91) (.84)
Tax return of capital.............................. (.05) -- -- (.02) (.13)
------ ------ ------ ------ ------
Total dividends to shareholders.................. (.83) (.88) (.90) (.93) (.97)
------ ------ ------ ------ ------
Net asset value, end of period....................... $9.82 $10.61 $10.52 $10.14 $10.17
====== ====== ====== ====== ======
Market value, end of period.......................... $9.38 $10.13 $ 9.88 $10.00 $ 9.50
====== ====== ====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1)..................... 0.17% 11.40% 7.85% 15.62% (7.46)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............. $285,907 $308,972 $306,181 $295,128 $295,658
Average net assets (in thousands).................... $304,773 $308,712 $298,496 $288,884 $306,686
Ratios to average net assets:
Net investment income.............................. 7.56% 8.42% 8.87% 9.51% 9.17%
Expenses........................................... 1.01% 0.99% 1.04% 1.05% 1.02%
Portfolio turnover rate(2)........................... 401.5% 258.9% 225.4% 240.1% 187.6%
</TABLE>
(1) Assumes a hypothetical purchase at the current market price on the business
day before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date, and
a sale at the current market price on the last business day of the period.
Total return does not reflect sales charges or brokerage commissions.
(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities and mortgage dollar-rolls) for the period ended
October 31, 1998 were $1,174,378,376 and $1,196,177,680, 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.
24
<PAGE> 26
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.
Investment Valuation -- Portfolio securities are valued at the close of the
New York Stock Exchange on the last day of each week in which the New York
Stock Exchange is open. Listed and unlisted securities for which such
information is regularly reported are valued at the last sale price of the
day or, in the absence of sales, at values based on the closing bid or the
last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by
the approved portfolio pricing service are valued using dealer-supplied
valuations provided the Manager is satisfied that the firm rendering the
quotes is reliable and that the quotes reflect current market value, or are
valued under consistently applied procedures established by the Board of
Trustees to determine fair value in good faith. Short-term "money market
type" debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization
to maturity of any premium or discount. Forward foreign currency exchange
contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. Options are valued based upon the
last sale price on the principal exchange on which the option is traded or,
in the absence of any transactions that day, the value is based upon the
last sale price on the prior trading date if it is within the spread between
the closing bid and asked prices. If the last sale price is outside the
spread, the closing bid is used.
Structured Notes -- The Trust invests in foreign currency-linked structured
notes whereby the market value and redemption price are linked to foreign
currency exchange rates. The structured notes may be leveraged, which
increases the notes' volatility relative to the face of the security.
Fluctuations in values of the securities are recorded as unrealized gains
and losses in the accompanying financial statements. During the year ended
October 31, 1998, the market value of these securities comprised an average
of 7% of the Trust's net assets, and resulted in realized and unrealized
losses of $5,521,850.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities that have been purchased by the Trust on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Trust maintains, in a segregated account with its custodian,
assets with a market value equal to the amount of its purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Trust's net asset value to the extent the
Trust makes such purchases while remaining substantially fully invested. As
of October 31, 1998, the Trust had entered into outstanding when-issued or
forward commitments of $2,775,250.
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Securities Purchased on a When-Issued Basis (continued)
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Trust may enter into mortgage dollar-rolls in
which the Trust sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar
(same type, coupon and maturity) but not identical securities on a specified
future date. The Trust records each dollar-roll as a sale and a new purchase
transaction.
Security Credit Risk -- The Trust invests in high yield securities, which
may be subject to a greater degree of credit risk, greater market
fluctuations and risk of loss of income and principal, and may be more
sensitive to economic conditions than lower-yielding, higher-rated fixed
income securities. The Trust may acquire securities in default, and is not
obligated to dispose of securities whose issuers subsequently default. As of
October 31, 1998, securities with an aggregate market value of $236,227,
representing 0.08% of the Trust's net assets, were in default.
Foreign Currency Translation -- The accounting records of the Trust are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of foreign securities and
investment income are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the Trust's Statement of Operations.
Repurchase Agreements -- The Trust requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book Entry
System or to have segregated within the custodian's vault, all securities
held as collateral for repurchase agreements. The market value of the
underlying securities is required to be at least 102% of the resale price at
the time of purchase. If the seller of the agreement defaults and the value
of the collateral declines, or if the seller enters an insolvency
proceeding, realization of the value of the collateral by the Trust may be
delayed or limited.
Federal Taxes -- The Trust intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of October 31, 1998,
the Trust had available for federal income tax purposes an unused capital
loss carryover of approximately $9,493,000, which expires between 2003 to
2006.
Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement
plan for the Trust's independent trustees. Benefits are based on years of
service and fees paid to each trustee during the years of service. During
the year ended October 31, 1998, a provision of $33,369 was made for the
Trust's projected benefit obligations and payments of $7,543 were made to
retired trustees, resulting in an accumulated liability of $168,599 as of
October 31, 1998.
The Board of Trustees has adopted a deferred compensation plan for
independent Trustees that enables a Trustee to elect to defer receipt of all
or a portion of annual fees they are entitled to receive from the Trust.
Under the plan, the compensation deferred by a Trustee is periodi-
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
cally adjusted as though an equivalent amount had been invested 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
materially affect the Trust's assets, liabilities or net income per share.
Distributions to Shareholders -- The Trust intends to declare and pay
dividends from net investment income monthly. Distributions from net
realized gains on investments, if any, will be made at least once each year.
Classification of Distributions to Shareholders -- Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income
(loss) for tax purposes. The character of the distributions made during the
year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized
gain was recorded by the Trust.
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, 1998, amounts have been
reclassified to reflect a decrease in additional paid-in capital of
$1,547,363, a decrease in overdistributed net investment income of
$1,498,385, and a decrease in accumulated net realized loss on investments
of $48,978.
Other -- Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an identified
cost basis, which is the same basis used for federal income tax purposes.
Dividends-in-kind are recognized as income on the ex-dividend date, at the
current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market
adjustment is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. There were no transactions in shares of beneficial
interest for the years ended October 31, 1998 and 1997.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of October 31, 1998, net unrealized depreciation on investments of
$16,115,579 was composed of gross appreciation of $4,250,501, and gross
depreciation of $20,366,080.
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
4. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for an annual fee of 0.65%
on the Trust's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator.
The Trust pays the Administrator an annual fee of 0.20% of the Trust's
average annual net assets.
The Manager acts as the accounting agent for the Trust at an annual fee of
$24,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of
the Manager, is the transfer agent and registrar for the Trust. Fees paid to
SFSI are based on the number of accounts and the number of shareholder
transactions, plus out-of-pocket costs and expenses.
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a
commitment to purchase or sell a foreign currency at a future date, at a
negotiated rate.
The Trust uses forward contracts to seek to manage foreign currency risks.
They may also be used to tactically shift portfolio currency risk. The Trust
generally enters into forward contracts as a hedge upon the purchase or sale
of a security denominated in a foreign currency. In addition, the Trust may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily
basis as provided by a reliable bank or dealer. The Trust will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
reported in the Statement of Assets and Liabilities. Realized gains and
losses are reported with all other foreign currency gains and losses in the
Trust's Statement of Operations.
Risks include the potential inability of the counterparty to meet the terms
of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
As of October 31, 1998, the Trust had outstanding forward contracts as
follows:
<TABLE>
<CAPTION>
Valuation
Contract As of
Expiration Amount October 31, Unrealized
Contract Description Date (000s) 1998 Depreciation
--------------------------------------------------------------------------------------------------------------------------------
Contracts to Sell
-----------------
<S> <C> <C> <C> <C>
Canadian Dollar............................................. 12/16/98 760 CAD $492,742 $ 3,461
Japanese Yen................................................ 12/16/98 47,750 JPY 412,485 44,866
New Zealand Dollar.......................................... 12/16/98 1,670 NZD 885,457 63,149
Norwegian Krone............................................. 12/16/98 2,970 NOK 405,105 7,755
Swedish Krona............................................... 12/16/98 3,370 SEK 432,130 10,790
--------
$130,021
========
</TABLE>
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
6. FUTURES CONTRACTS
The Trust may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Trust may also
buy or write put or call options on these futures contracts.
The Trust generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Trust may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Trust is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Trust each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as
unrealized gains and losses. The Trust recognizes a realized gain or loss
when the contract is closed or expires.
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.
As of October 31, 1998, the Trust had outstanding futures contracts as
follows:
<TABLE>
<CAPTION>
Valuation
As of
Expiration Number of October 31, Unrealized
Contract Description Date Contracts 1998 Depreciation
--------------------------------------------------------------------------------------------------------------------------------
Contracts to Purchase
---------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 20 yr. ...................................... 12/98 101 $13,019,531 $44,469
=======
</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
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
7. OPTION ACTIVITY (CONTINUED)
call, expiration date, exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments. Options written are
reported as a liability in the Statement of Assets and Liabilities. Gains
and losses are reported in the Statement of Operations.
The risk in writing a call option is that the Trust gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Trust may incur a
loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Trust pays a premium
whether or not the option is exercised. The Trust also has the additional
risk of not being able to enter into a closing transaction if a liquid
secondary market does not exist.
Written option activity for the year ended October 31, 1998 was as follows:
<TABLE>
<CAPTION>
Call Options
------------------------------------------------------
Number of Options Amount of Premiums
------------------ ------------------
<S> <C> <C>
Options outstanding as of October 31, 1997.......................... 720 $ 82,320
Options written .................................................... 2,285 225,866
Options closed or expired........................................... (1,995) (279,136)
Options exercised................................................... (1,010) (29,050)
------ ---------
Options outstanding as of October 31, 1998 ......................... -- $ --
====== =========
<CAPTION>
Put Options
-----------------------------------------------------
Number of Options Amount of Premiums
----------------- ------------------
<S> <C> <C>
Options outstanding as of October 31, 1997 ......................... 705 $ 63,450
Options written .................................................... 22,352,800 559,073
Options closed or expired........................................... (1,143,505) (620,867)
Options exercised................................................... (21,210,000) (1,656)
----------- ---------
Options outstanding as of October 31, 1998 ......................... -- $ --
=========== =========
</TABLE>
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
8. ILLIQUID AND RESTRICTED SECURITIES
As of October 31, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may
be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Trust intends to
invest no more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid or restricted securities.
Certain restricted securities, eligible for resale to qualified
institutional investors, are not subject to that limit. The aggregate value
of illiquid or restricted securities subject to this limitation as of
October 31, 1998 was $17,825,807, which represents 6.23% of the Trust's net
assets, of which $828,850 is considered restricted. Information concerning
restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Unit as of
Security Date Per Unit October 31, 1998
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
-----
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00........... 11/18/93 87.50% 6.50%
Stocks and Warrants
-------------------
Becker Gaming, Inc. Wts., Exp. 11/00............................................ 11/18/93 $ 2.00 $ .25
CGA Group Ltd., Preferred, Series A............................................. 6/17/97 25.00 25.00
CGA Group Ltd. Wts. Exp. 12/49.................................................. 6/17/97 -- .30
</TABLE>
31
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
Oppenheimer Multi-Sector Income Trust
The Board of Trustees and Shareholders of Oppenheimer Multi-Sector Income Trust:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Multi-Sector Income Trust as of October 31, 1998 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, 1998 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, 1998 the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 20, 1998
32
<PAGE> 34
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer Multi-Sector Income Trust
In early 1999 shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1998. 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, 1998 which
are not designated as capital gain distributions should be multiplied by 2.14%
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.
33
<PAGE> 35
OPPENHEIMER MULTI-SECTOR INCOME TRUST
GENERAL INFORMATION CONCERNING THE TRUST
Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end
diversified management investment company with a primary investment
objective of seeking high current income consistent with preservation of
capital. The Trust's secondary investment objective is capital appreciation.
In seeking its objectives, the Trust may invest any percentage of its assets
in at least three of the following seven fixed-income sectors: U.S.
Government, Corporate, International, Asset-Backed, Municipal, Convertible
and Money Market. Current income, preservation of capital and, secondarily,
possible capital appreciation may be considerations in the allocation of
assets among such sectors. The Trust can invest in a number of different
kinds of "derivative investments" and can also engage in certain special
investment techniques, including repurchase transactions, when-issued and
delayed delivery transactions and hedging. 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 Robert E. Patterson, Thomas P.
Reedy, Ashwin K. Vasan, Carol E. Wolf and Arthur J. Zimmer and who also
serve as Vice Presidents of the Trust and of the Manager, and are officers
of certain mutual funds managed by the Manager (Oppenheimer funds). Messrs.
Reedy and Vasan have been the persons principally responsible for the
day-to-day management of the Trust's portfolio since June 1993. Prior to
that Mr. Reedy served as a securities analyst for the Manager and Mr. Vasan
served as a securities analyst for Citibank, N.A.
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 securities trades, pricing and accounting
services. Data processing errors by government issuers of securities could
result in economic uncertainties, and those 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 of 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.
34
<PAGE> 36
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.
35
<PAGE> 37
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.
36
<PAGE> 38
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<PAGE> 39
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<PAGE> 40
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Officers and Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Thomas P. Reedy, Vice President
Ashwin K. Vasan, Vice President
Carol E. Wolf, Vice President
Arthur J. Zimmer, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Advisor
OppenheimerFunds, Inc.
Administrator
Mitchell Hutchins Asset Management Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
The Bank of New York
Independent Auditors
KPMG Peat Marwick LLP
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer Multi-Sector
Income Trust. It does not offer for sale or solicit orders to buy any
securities.
Notice is hereby given in accordance with Section 23(c) of
the Investment Company Act of 1940 that periodically the Trust may
purchase its shares of beneficial interest in the open market at
prevailing market prices.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
RA0680.001.1098 @ Printed on recycled paper
