[FRONT COVER PANEL]
Semiannual Report
Oppenheimer
Multi-Sector
Income Trust
April 30, 2000
[LOGOTYPE]
OppenheimerFunds®
THE RIGHT WAY TO INVEST
Dear Shareholder:
We are pleased to present this semiannual report for Oppenheimer
Multi-Sector Income Trust for the six-month reporting period that ended April
30, 2000. During this period, the Trust was able to generate current income
consistent with preservation of capital. In terms of actual results, the Trust
delivered a six month cumulative total return at net asset value of 1.67%, which
includes the changes in the net asset value and the dividends paid during that
period. The six-month cumulative total return at market value was –1.95%,
which includes the changes in share price on the New York Stock Exchange. The
dividend return was 9.14%.1
Bond markets worldwide offered a mixed bag during the period, particularly
with respect to the United States. As the domestic economy continued to expand,
and many foreign economies rebounded from the global economic crisis that marked
1998 and 1999, the Federal Reserve Board grew increasingly uneasy about
inflationary pressures. In fact, questioning the U.S. economy’s ability to
sustain its robust growth, the Federal Reserve Board continued to raise
short-term interest rates, for a total of five increases since June of 1999.
While many bond investors were prepared for these moves, they were less so
for the U.S. Treasury Department’s buyback program, announced in late January of
this year. This repurchase of a larger-than-expected portion of outstanding
Treasury debt created an acute imbalance between supply and demand for Treasury
securities, particularly on the longer end of the maturity spectrum. With long
bonds already in short supply, the increased demand drove their prices up
dramatically. However, as yields on these longer term bonds dipped below yields
on shorter issues, inverting the yield curve, longer issues still in circulation
became even more valuable.
Investment Breakdown:
Oppenheimer Multi-Sector Income Trust
as of 4/30/00:2
[GRAPHIC: PIE CHART]
• Corporate: 34.7%
• International: 32.2%
• Mortgage-Backed: 17.7%
• Money Market: 7.7%
• U.S. Government: 5.5%
• Convertible: 2.2%
By comparison, the picture in many overseas markets brightened considerably.
The turnaround in the emerging markets of Asia, Eastern Europe and, to a lesser
extent, Latin America, has been swift. Many developed markets stabilized, with
most European economies experiencing moderate growth, while Japan showed only
budding signs of recovery after nearly a decade of recession.
Because of ongoing market volatility, the Trust’s returns may
fluctuate and may be less than the results shown.
For quarterly updates
on the Trust’s performance, please contact your financial advisor, call us at
1.800.525.7048 or visit our website at www.oppenheimerfunds.com.
1.Total returns are based on changes in net asset value and market value,
respectively, per share from 10/31/99 to 4/30/00 without deducting any sales
charges or brokerage costs. Such performance would have been lower if sales
charges and brokerage costs were taken into account. Dividend return is
determined by annualizing the April 2000 dividend of [$0.07] and dividing by the
closing market price on the New York Stock Exchange of [$9.19] per share on
4/28/00 (payment date). Past performance does not guarantee future results.
2.Portfolio composition is subject to change. Chart is based on total
market value of investments.
Against this backdrop, our goal during the period was to
de-emphasize interest-rate sensitive securities, such as U.S. Treasuries. Even
so, Treasuries continued to impact performance, albeit in a small way. For
reasons detailed earlier, we emphasized longer term issues, which helped to
cushion performance.
But it was our focus on the higher yielding, credit-sensitive
market that actually proved most successful. In particular, we increased our
exposure to high yield corporate securities, emerging-market bonds and
mortgage-backed securities. This approach provided above-average income streams,
which played a pivotal role in helping to offset the effects of an overall
decline in the bond market.
Within that market, of the three sectors we chose to emphasize,
emerging-market bonds contributed the most to performance. Consistent with our
current value orientation, we purchased many of our current holdings in 1998,
when they fell out of favor due to the global financial crisis. As market
conditions and investor interest have continued to improve, we have become more
aggressive within our emerging markets allocation. Another area where we have
followed a similar strategy is in mortgage-backed securities. Although we have
yet to reap rewards from this approach, we took advantage of weakness in the
sector to add what we believed were compelling high quality holdings.
Unfortunately, our holdings in high yield corporate bonds
provided only modest returns. Although these securities generally outperformed
U.S. Treasuries during the period, they were also adversely affected by
supply-and-demand factors. In addition, our weighting in the telecommunications
sector hindered performance as many technology stocks participated in a broad
sell-off.
Our holdings in foreign bonds from developed markets were
somewhat hurt by the strength of the U.S. dollar relative to many European
currencies, including the euro. Many European economies are growing at slower
rates than the U.S. economy, making U.S. investments more attractive to domestic
and foreign investors alike. In Japan, the relationship between the Japanese yen
and the U.S. dollar has been relatively stable during the past six months.
However, poor economic conditions in Japan have led to relatively unattractively
low bond yields.
In our last report, we talked about a number of sophisticated
quantitative models that we have adopted to help us capitalize on trends in
three key risk areas: interest-rate risk, currency risk and credit risk. We are
pleased with the results so far. Needless to say, we will continue to look for
ways to optimize the effectiveness of these tools. Of course, we always combine
quantitative analysis with our own fundamental judgment as portfolio managers,
viewing these models as a valuable resource in our decision-making process.
Regardless of future economic events in the United States and
around the world, we seek to continue managing the Trust in a way that takes
advantage of changing relationships among the various sectors of the bond
market. In other words, we will seek to invest for high income with less
volatility relative to investing in any single sector alone. In fact, adhering
to our long-term investment discipline is just one of the many reasons why
Oppenheimer Multi-Sector Income Trust is an important part of The Right Way to
Invest.
Sincerely,
[Signature of Bridget A. Macaskill]
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
May 19, 2000
2
Statement of Investments April 30, 2000 (Unaudited)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
U.S. Government Sector—5.5%
U.S. Treasury Bonds:
6.375%, 8/15/27(1) $14,000,000 $14,315,000
STRIPS, 5.99%, 11/15/18(2) 1,100,000 355,289
-------------
Total U.S. Government Sector (Cost $14,739,958) 14,670,289
-------------
Shares
------------
Convertible Sector—2.2%
Preferred Stocks—2.0%
CGA Group Ltd., Series A(3)(4) 46,810 1,170,250
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(4) 250 255,625
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. 4,000 140,000
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(4) 654 649,095
13% Sr. Exchangeable, Non-Vtg.(4) 340 348,925
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(4) 227 68,667
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable,
Series B, Non-Vtg.(5) 4,000 121,000
Global Crossing Ltd., 10.50% Sr. Exchangeable(4) 4,000 393,000
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(4) 876 838,770
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable
Non-Vtg.(4) 3,030 379
Nextel Communications, Inc., 11.125% Exchangeable,
Series E, Non-Vtg.(4) 384 371,520
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(4) 9,179 452,066
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable,
Non-Vtg.(4) 24 246,600
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(4) 257 247,362
Star Gas Partners LP 220 3,080
-------------
5,306,339
-------------
Units
------------
Rights, Warrants and Certificates—0.2%
Becker Gaming, Inc. Wts., Exp. 11/15/00(3) 25,000 —
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(6) 404 1,262
CGA Group Ltd. Wts., Exp. 6/16/07(3) 32,000 9,600
Clearnet Communications, Inc. Wts., Exp. 9/15/05 330 11,067
Concentric Network Corp. Wts., Exp. 12/15/07(3) 600 282,075
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 800 —
e.spire Communications, Inc. Wts., Exp. 11/1/05 700 2,502
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(6) 500 47,438
3
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Rights, Warrants and Certificates (Continued)
Gothic Energy Corp. Wts.:
Exp. 1/23/03 6,053 $ —
Exp. 1/23/03(3) 3,455 35
Exp. 9/1/04(3) 10,150 —
ICG Communications, Inc. Wts., Exp. 9/15/05 4,125 90,144
In-Flight Phone Corp. Wts., Exp. 8/31/02 900 —
Insilco Corp. Wts., Exp. 8/15/07(3)(6) 720 —
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(3) 920 2,818
Long Distance International, Inc. Wts., Exp. 4/13/08(3) 400 40
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(3) 975 11,578
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(3) 700 963
Protection One Alarm Monitoring, Inc. Wts., Exp. 6/30/05(3) 6,400 640
Republic Technologies International LLC. Wts., Exp. 7/15/09(3) 400 4
WAM!NET, Inc. Wts., Exp. 3/1/05(3) 1,500 17,438
Wireless One, Inc. Wts., Exp. 10/19/00(3) 1,500 15
-------------
477,619
-------------
Total Convertible Sector (Cost $6,264,599) 5,783,958
-------------
Shares
-------------
Corporate Sector—34.4%
Common Stocks—0.4%
Capital Gaming International, Inc.(5) 18 —
Grant Prideco, Inc.(5) 5,000 96,250
Optel, Inc.(3)(5) 815 8
Price Communications Corp. 35,000 708,750
Weatherford International, Inc. 5,000 203,125
-------------
1,008,133
-------------
Principal
Amount
-------------
Corporate Bonds and Notes—33.3%
Aerospace/Defense—0.8%
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 $ 500,000 435,000
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 9.80%, 1/1/01(3) 500,000 460,000
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts., Series B, 9/30/08 800,000 700,000
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 250,000 170,000
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(3) 397,445 401,659
-------------
2,166,659
-------------
4
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Chemicals—1.2%
Georgia Gulf Corp., 10.375% Sr. Sub. Nts., 11/1/07(6) $ 325,000 $ 334,750
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Unsec. Disc. Nts.,
13.08%, 12/31/09(2) 1,250,000 400,000
Lyondell Chemical Co.:
9.875% Sec. Nts., Series B, 5/1/07 500,000 494,375
10.875% Sr. Sub. Nts., 5/1/09 250,000 248,125
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 400,000 334,000
Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08 500,000 451,250
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06 350,000 313,250
12.375% Sr. Sec. Nts., Series B, 7/15/06 750,000 783,750
-------------
3,359,500
-------------
Consumer Durables—0.3%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 293,000 256,375
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 400,000 248,000
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(3) 300,000 238,500
-------------
742,875
-------------
Consumer Non-Durables—0.9%
AKI Holdings, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 600,000 513,000
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 400,000 395,000
Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03 370,000 339,475
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 400,000 26,000
Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06 775,000 561,875
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 400,000 394,000
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 400,000 122,000
-------------
2,351,350
-------------
Energy—2.1%
Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05 550,000 530,750
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 845,000 511,225
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 400,000 358,000
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 600,000 580,500
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(6) 750,000 633,750
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08(3) 380,000 241,300
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 790,000 744,575
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 400,000 434,000
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 500,000 528,750
Statia Terminals International NV/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., 9/15/07 535,000 505,575
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(8) 700,000 441,000
-------------
5,708,425
-------------
5
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Corporate Bonds and Notes (Continued)
Financial—0.7%
AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 $ 400,000 $ 266,000
LaBranche & Co., Inc., 12% Sr. Sub. Nts., 3/1/07(6) 250,000 243,750
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 865,000 741,737
Sovereign Bancorp, Inc., 10.50% Sr. Unsec. Nts., 11/15/06 300,000 297,750
Veritas Capital Trust, 10% Nts., 1/1/28 525,000 248,062
-------------
1,797,299
-------------
Food & Drug—0.5%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 300,000 133,500
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 600,000 504,000
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 775,000 713,000
Pathmark Stores, Inc., 12.625% Sub. Nts., 6/15/02 200,000 60,000
-------------
1,410,500
-------------
Food/Tobacco—0.7%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 200,000 110,000
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(8) 327,000 240,345
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 500,000 495,000
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 650,000 529,750
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(3)(5)(7) 100,000 28,500
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 400,000 352,000
-------------
1,755,595
-------------
Forest Products/Containers—1.3%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 300,000 285,000
8.25% Sr. Unsec. Sub. Nts., 8/1/08 400,000 379,000
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 250,000 224,375
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 300,000 303,750
Riverwood International Corp.:
10.25% Sr. Nts., 4/1/06 600,000 595,500
10.625% Sr. Unsec. Nts., 8/1/07 450,000 452,250
10.875% Sr. Sub. Nts., 4/1/08 400,000 386,000
SD Warren Co., 14% Unsec. Nts., 12/15/06(4) 556,199 609,038
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 250,000 268,750
-------------
3,503,663
-------------
Gaming/Leisure—1.5%
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995(5)(7) 5,500 —
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 435,000 386,062
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 800,000 718,000
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 1,000,000 977,500
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09 500,000 475,000
6
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Gaming/Leisure (Continued)
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(8) $ 500,000 $ 331,875
9.25% Sr. Nts., 4/1/06 300,000 282,750
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 440,000 412,500
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07 300,000 301,500
10.125% Sr. Sub. Nts., 3/15/06 200,000 205,000
-------------
4,090,187
-------------
Healthcare—0.8%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 600,000 529,500
ICN Pharmaceutical, Inc., 9.75% Sr. Nts., 11/15/08(6) 415,000 388,025
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 250,000 166,250
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 250,000 248,750
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 750,000 722,813
-------------
2,055,338
-------------
Housing—0.4%
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 420,000 390,600
9.25% Sr. Nts., Series B, 3/15/07 600,000 562,500
-------------
953,100
-------------
Information Technology—0.7%
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 400,000 376,000
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 500,000 503,750
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 185,000 171,125
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07(3) 800,000 884,000
-------------
1,934,875
-------------
Manufacturing—1.6%
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 150,000 115,125
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 400,000 394,000
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07(3) 700,000 269,500
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 350,000 297,500
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 250,000 106,250
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 600,000 459,000
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 800,000 760,000
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 700,000 728,000
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 280,000 91,000
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 500,000 462,500
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08(3) 100,000 88,750
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(1)(3) 525,000 496,125
-------------
4,267,750
-------------
7
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Corporate Bonds and Notes (Continued)
Media/Entertainment: Broadcasting—1.6%
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 $ 700,000 $ 703,500
9% Sr. Unsec. Sub. Nts., 10/1/08 800,000 814,000
10.50% Sr. Sub. Nts., Series B, 1/15/07 735,000 791,963
Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08 300,000 273,750
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 600,000 568,500
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(9) 700,000 745,500
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 300,000 268,125
-------------
4,165,338
-------------
Media/Entertainment: Cable/Wireless Video—1.7%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03 250,000 237,500
8.375% Sr. Nts., Series B, 2/1/08 100,000 90,000
9.875% Sr. Nts., Series B, 3/1/07 565,000 552,288
Charter Communications Holdings LLC/Charter Communications
Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(8) 500,000 276,250
8.625% Sr. Unsec. Nts., 4/1/09 500,000 439,375
Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10(6) 300,000 297,000
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 500,000 512,500
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 1,705,000 1,662,375
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(8) 600,000 393,000
-------------
4,460,288
-------------
Media/Entertainment: Diversified Media—1.2%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(8) 1,500,000 873,750
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 500,000 275,000
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 500,000 475,000
Mail-Well Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08 325,000 284,375
Regal Cinemas, Inc., 8.875% Sr. Unsec. Sub. Nts., 12/15/10 600,000 225,000
SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 600,000 603,000
WRC Media Corp., Units (each unit consists of $1,000 principal
amount of 12.75% sr. sub. nts., 11/15/09 and one warrant to purchase
1.353 shares of common stock)(6)(10) 500,000 476,250
-------------
3,212,375
-------------
8
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Media/Entertainment: Telecommunications—6.1%
Colo.Com, Units (each unit consists of $1,000 principal
amount of 13.875% sr. nts., 3/15/10 and one warrant to purchase
19.9718 shares of common stock at $.01 per share)(6)(10) $ 300,000 $ 307,500
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 495,000 532,125
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(8) 700,000 430,500
Equinix, Inc., Units (each unit consists of $1,000 principal amount
of 13% sr. nts., 12/1/07 and one warrant to purchase 11.255 shares
of common stock)(6)(10) 400,000 418,000
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08 765,000 778,388
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(8) 250,000 113,750
Focal Communications Corp.:
0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(8) 100,000 65,500
11.875% Sr. Nts., 1/15/10(6) 600,000 603,750
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 100,000 98,500
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(6)(EUR) 500,000 410,085
Globix Corp., 12.50% Sr. Nts., 2/1/10(6) 500,000 442,500
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(8) 480,000 247,200
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(8) 500,000 302,500
8.50% Sr. Nts., Series B, 1/15/08 700,000 640,500
8.60% Sr. Unsec. Nts., Series B, 6/1/08 300,000 274,500
ITC Deltacom, Inc., 8.875% Sr. Nts., 3/1/08 500,000 462,500
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(8) 700,000 347,375
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(8) 250,000 143,750
9.125% Sr. Unsec. Nts., 5/1/08 250,000 218,750
11.25% Sr. Nts., 3/15/10(6) 500,000 480,000
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 250,000 239,375
10% Sr. Unsec. Nts., Series B, 11/15/08 600,000 573,000
MGC Communications, Inc./Mpower Communications Corp.,
13% Sr. Nts., 4/1/10(6) 600,000 555,000
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 250,000 227,500
9.625% Sr. Nts., 10/1/07 500,000 470,000
10.75% Sr. Unsec. Nts., 11/15/08 600,000 591,000
10.75% Sr. Unsec. Nts., 6/1/09 500,000 493,750
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10(6) 300,000 268,500
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(7) 250,000 198,750
9
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Corporate Bonds and Notes (Continued)
Media/Entertainment: Telecommunications (Continued)
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05 $ 400,000 $ 356,000
10.50% Sr. Nts., 12/1/06(6)(EUR) 500,000 416,920
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 1,000,000 895,000
Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts., 2/15/10(6) 600,000 534,000
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 200,000 173,000
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 500,000 492,500
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 645,000 620,813
11.25% Sr. Unsec. Nts., 12/1/08 500,000 495,000
13.50% Sr. Unsec. Nts., 6/15/04 165,000 174,488
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 195,000 178,425
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(8) 500,000 277,500
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(6) 700,000 672,000
Worldwide Fiber, Inc., 12% Sr. Unsec. Sub. Nts., 8/1/09 200,000 186,000
-------------
16,406,194
-------------
Media/Entertainment: Wireless Communications—3.3%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 100,000 81,000
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(5)(7)(8) 554,000 42,935
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(8) 550,000 332,750
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(8) 800,000 584,000
ICO Global Communications (Holdings) Ltd., Units (each unit
consists of $1,000 principal amount of 15% sr. nts., 8/1/05 and
one warrant to purchase 19.85 shares of common stock)(5)(7)(10) 400,000 234,000
Leap Wireless International, Inc., Units (each unit consists of
12.50% sr. nts., 4/15/10 and one warrant to purchase 5.146 shares
of common stock)(6)(10) 400,000 387,500
Microcell Telecommunications, Inc., 0%/12% Sr. Unsec. Disc. Nts., 6/1/09(8) 750,000 483,750
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(8) 205,000 173,225
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(8) 250,000 180,625
9.375% Sr. Unsec. Nts., 11/15/09 200,000 192,000
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(3) 200,000 215,000
11.625% Sr. Nts., 8/15/06 300,000 319,500
11.625% Sr. Nts., Series A, 8/15/06 1,200,000 1,278,000
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(3) 175,000 160,125
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(8) 1,150,000 442,750
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(8) 900,000 598,500
10
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Media/Entertainment: Wireless Communications (Continued)
Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07 $ 100,000 $ 108,500
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 700,000 679,000
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(8) 1,300,000 903,500
Spectrasite Holdings, Inc.:
0%/12% Sr. Disc. Nts., 7/15/08(8) 600,000 375,000
10.75% Sr. Nts., 3/15/10(6) 250,000 247,500
VoiceStream Wireless Corp., 10.375% Sr. Nts., 11/15/09(6) 1,000,000 1,020,000
-------------
9,039,160
-------------
Metals/Minerals—1.0%
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 500,000 460,000
9.125% Sr. Nts., 12/15/06 400,000 394,500
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 800,000 712,000
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(8) 1,000,000 265,000
Metallurg, Inc., 11% Sr. Nts., 12/1/07 200,000 164,000
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 600,000 541,500
Republic Technologies International, LLC/RTI Capital Corp.,
13.75% Sr. Sec. Nts., 7/15/09 400,000 94,000
-------------
2,631,000
-------------
Retail—0.3%
Finlay Enterprises, Inc., 9% Debs., 5/1/08 500,000 447,500
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 300,000 271,500
-------------
719,000
-------------
Service—1.0%
Allied Waste North America, Inc.:
7.625% Sr. Nts., Series B, 1/1/06 250,000 186,250
7.875% Sr. Unsec. Nts., Series B, 1/1/09 200,000 144,000
10% Sr. Unsec. Sub. Nts., Series B, 8/1/09 400,000 273,000
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(8) 150,000 18,750
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 400,000 190,000
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 200,000 107,000
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 600,000 471,750
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09(3) 250,000 226,875
Protection One, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 800,000 556,000
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09 50,000 1,750
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 500,000 453,750
US Unwired, Inc., 0%/13.375% Sr. Disc. Nts., 11/1/09(6)(8) 50,000 28,250
-------------
2,657,375
-------------
11
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Corporate Bonds and Notes (Continued)
Transportation—3.1%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 $ 1,000,000 $ 967,500
Amtran, Inc.:
10.50% Sr. Nts., 8/1/04 850,000 769,250
10.50% Sr. Nts., 8/1/04(6) 600,000 543,000
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 675,000 624,375
9.375% Sr. Unsec. Nts., 11/15/06 800,000 764,000
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 600,000 489,000
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04(GBP) 245,000 382,993
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 610,000 625,250
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(6) 750,000 318,750
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 600,000 561,000
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08 500,000 325,000
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 600,000 384,000
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts.,
Series B, 12/15/03 1,500,000 1,548,750
-------------
8,302,868
-------------
Utility—0.5%
Azurix Corp., 10.75% Sr. Nts., 2/15/10(6) 500,000 505,000
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 470,000 487,626
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11 500,000 425,212
-------------
1,417,838
-------------
89,108,552
-------------
Loan Participations—0.7%
Shoshone Partners Loan Trust Sr. Nts., 7.799%, 4/28/02
(representing a basket of reference loans and a total return
swap between Chase Manhattan Bank and the Trust)(3)(9) 2,500,000 2,033,557
-------------
Total Corporate Sector (Cost $103,376,229) 92,150,242
-------------
International Sector—32.0%
Corporate Bonds and Notes—12.2%
Energy—0.6%
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05 1,000,000 985,000
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 700,000 570,500
-------------
1,555,500
-------------
12
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Financial—4.8%
AB Spintab, 5.50% Bonds, Series 169, 9/17/03(SEK) 3,900,000 $ 431,002
Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/1999(3)(5)(7)(IDR) 3,160,000,000 59,811
Eurofima, 7.50% Sr. Unsec. Unsub. Nts., 11/4/02(DEM) 770,000 379,206
Hanvit Bank:
0%/12.75% Unsec. Sub. Nts., 3/1/10(6)(8) 765,000 774,562
0%/12.75% Unsec. Sub. Nts., 3/1/10(8) 270,000 273,375
International Bank for Reconstruction and Development,
4.50% Unsec. Unsub. Bonds, 6/20/00(JPY) 1,150,000,000 10,708,328
PT Polysindo Eka Perkasa:
20% Nts., 3/6/00(5)(7)(IDR) 3,000,000,000 49,211
24% Nts., 6/19/03(5)(7)(IDR) 1,314,400,000 21,561
SanLuis Corp., SA de CV, 8.875% Sr. Unsec. Nts., 3/18/08 176,000 160,160
-------------
12,857,216
-------------
Food/Tobacco—0.2%
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 565,000 443,525
Forest Products/Containers—0.3%
Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04 200,000 177,000
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 600,000 568,500
-------------
745,500
-------------
Gaming/Leisure—0.3%
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 800,000 768,000
Media/Entertainment: Cable/Wireless Video—2.5%
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(8) 1,600,000 1,512,000
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 200,000 190,000
NTL Communications Corp.:
0%/9.78% Sr. Nts., 11/15/09(6)(8)(EUR) 750,000 395,561
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(8) 1,500,000 986,250
9.875% Sr. Nts., 11/15/09(6)(EUR) 500,000 439,702
11.50% Sr. Unsec. Nts., Series B, 10/1/08 500,000 510,000
NTL, Inc., 10% Sr. Nts., Series B, 2/15/07 550,000 536,250
Telewest Communications plc:
0%/9.25% Sr. Nts., 4/15/09(6)(8) 250,000 143,125
0%/9.875% Sr. Nts., 4/15/09(6)(8)(GBP) 450,000 410,173
0%/11% Sr. Disc. Debs., 10/1/07(8) 500,000 472,500
11.25% Sr. Nts., 11/1/08 1,035,000 1,066,050
-------------
6,661,611
-------------
13
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Corporate Bonds and Notes (Continued)
Media/Entertainment: Diversified Media—0.5%
Imax Corp., 7.875% Sr. Nts., 12/1/05(3) $ 700,000 $ 640,500
IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(8)(GBP) 800,000 697,901
-------------
1,338,401
-------------
Media/Entertainment: Telecommunications—2.8%
360networks, Inc.:
13% Sr. Unsec. Nts., 5/1/08(6) 400,000 395,000
13% Sr. Unsec. Nts., 5/1/08(6)(EUR) 600,000 539,945
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(8) 100,000 86,750
Units (each unit consists of $1,000 principal amount of
0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase
7.8 ordinary shares)(8)(10) 900,000 1,089,000
FLAG Telecom Holdings Ltd., 11.625% Sr. Nts., 3/30/10(6) 400,000 372,000
Jazztel plc, 13.25% Sr. Nts., 12/15/09(6)(EUR) 1,250,000 1,136,277
Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(EUR) 550,000 525,023
RSL Communications plc:
10.50% Sr. Unsec. Nts., 11/5/08 500,000 417,500
12.875% Sr. Unsec. Nts., 3/1/10(6) 1,000,000 960,000
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09(6)(EUR) 425,000 390,207
United Pan-Europe Communications NV:
0%/13.75% Sr. Disc. Nts., 2/1/10(6)(8) 1,000,000 485,000
10.875% Sr. Nts., 8/1/09(EUR) 750,000 637,340
Versatel Telecom International NV:
11.25% Sr. Nts., 3/30/10(6)(EUR) 400,000 358,141
11.875% Sr. Nts., 7/15/09(EUR) 250,000 231,242
-------------
7,623,425
-------------
Media/Entertainment: Wireless Communications—0.1%
Polska Telefoniz Cyfrowa International Financial II SA,
11.25% Sr. Sub. Nts., 12/1/09(6)(EUR) 400,000 374,544
Metals/Minerals—0.1%
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 200,000 167,000
Transportation—0.0%
Pacific & Atlantic Holdings, Inc., 10.50% Sec. Nts., 12/31/07(3) 117,187 76,757
-------------
32,611,479
-------------
Foreign Government Obligations—18.6%
Argentina—1.2%
Argentina (Republic of) Bonds:
12%, 2/1/20 755,000 742,769
12.125%, 2/25/19 165,000 162,937
14
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Argentina (Continued)
Argentina (Republic of) Bonds: (Continued)
Bonos de Consolidacion de Deudas, Series I, 2.951%, 4/1/07(9)(ARP) 2,257 $ 1,659
Series PRE3, 2.951%, 9/1/02(9)(ARP) 198,530 178,545
Argentina (Republic of) Disc. Bonds, 6.875%, 3/31/23(9) 89,000 75,984
Argentina (Republic of) Global Unsec. Unsub. Bonds,
Series BGL5, 11.375%, 1/30/17 465,000 442,912
Argentina (Republic of) Nts., 11%, 12/4/05 560,000 549,640
Argentina (Republic of) Unsec. Unsub. Medium-Term Nts.,
8.75%, 7/10/02(ARP) 578,000 533,289
Argentina (Republic of) Unsec. Unsub. Nts., 11.75%, 4/7/09 415,000 408,567
-------------
3,096,302
-------------
Brazil—3.2%
Brazil (Federal Republic of) Bonds, Series 15 yr., 7.437%, 4/15/09(9) 1,000 822
Brazil (Federal Republic of) Debt Conversion Bonds:
Series 18 yr., 7.437%, 4/15/12(9) 1,683,000 1,215,967
Series 20 yr., 6.916%, 4/15/14 942,028 678,261
Series D, 7.437%, 4/15/12(9) 820,000 592,450
Brazil (Federal Republic of) Eligible Interest Bonds,
7.375%, 4/15/06(9) 1,717,710 1,537,350
Brazil (Federal Republic of) Unsub. Bonds, 14.50%, 10/15/09 4,317,000 4,558,752
-------------
8,583,602
-------------
Canada—0.7%
Canada (Government of) Bonds:
7%, 12/1/06(CAD) 1,115,000 783,834
Series J24, 10.25%, 2/1/04(CAD) 1,500,000 1,144,989
-------------
1,928,823
-------------
Colombia—0.3%
Colombia (Republic of) Unsec. Unsub. Bonds, 7.625%, 2/15/07 430,000 312,825
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 570,000 457,425
-------------
770,250
-------------
Denmark—0.1%
Nykredit AS, 7% Cv. Bonds, 10/1/29(DKK) 3,035,000 369,290
Finland—0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04(EUR) 500,000 524,784
France—0.2%
France (Government of) Obligations Assimilables du Tresor Bonds,
5.50%, 4/25/10(EUR) 545,000 500,299
15
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Foreign Government Obligations (Continued)
Germany—0.9%
Germany (Republic of) Bonds:
6.25%, 3/4/04(EUR) 160,000 $ 152,063
Series 95, 6.50%, 10/14/05(EUR) 375,799 363,596
Series 95, 7.375%, 1/3/05(EUR) 890,000 885,188
Series 97, 6%, 1/4/07(EUR) 220,000 208,646
Series 125, 5%, 11/12/02(EUR) 850,000 778,478
-------------
2,387,971
-------------
Great Britain—0.5%
United Kingdom Treasury Bonds, 9%, 10/13/08(GBP) 670,000 1,293,221
Greece—0.2%
Hellenic (Republic of) Bonds, 8.60%, 3/26/08(GRD) 207,200,000 646,679
Hungary—0.3%
Hungary (Government of) Bonds, Series 01/H, 13.50%, 6/12/01(HUF) 219,660,000 801,289
Italy—1.5%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
6.75%, 2/1/07(EUR) 2,180,000 2,134,638
8.75%, 7/1/06(EUR) 1,700,000 1,820,322
-------------
3,954,960
-------------
Ivory Coast—0.0%
Ivory Coast (Government of) Past Due Interest Bonds,
Series F, 1.90%, 3/29/18(7)(FRF) 4,569,500 107,920
Japan—0.6%
Japan (Government of) 10 yr. Bonds:
Series 135, 7.20%, 12/20/00(JPY) 26,200,000 252,630
Series 136, 6.90%, 12/20/00(JPY) 134,500,000 1,293,042
-------------
1,545,672
-------------
Jordan—0.0%
Hashemite (Kingdom of Jordan) Disc. Bonds, 7%, 12/23/23(9) 125,000 99,063
Mexico—1.7%
United Mexican States Bonds:
11.375%, 9/15/16 1,750,000 1,984,500
Series A, 7.313%, 12/31/19(9) 795,000 781,088
United Mexican States Collateralized Fixed Rate Par Bonds:
Series W-A, 6.25%, 12/31/19 415,000 342,375
Series W-B, 6.25%, 12/31/19 227,000 187,275
16
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Mexico (Continued)
United Mexican States Disc. Bonds:
Series B, 6.942%, 12/31/19(9) $ 430,000 $ 422,072
Series C, 6.836%, 12/31/19(9) 430,000 422,475
United Mexican States Nts., 9.875%, 2/1/10 375,000 387,188
-------------
4,526,973
-------------
Norway—0.4%
Norway (Government of) Bonds, 9.50%, 10/31/02(NOK) 10,245,000 1,218,590
Panama—0.3%
Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(9) 360,000 284,400
Panama (Republic of) Past Due Interest Debs., 6.381%, 7/17/16(9) 708,555 572,159
-------------
856,559
-------------
Peru—0.7%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.75%, 3/7/17(9) 3,090,000 1,892,625
Philippines—0.1%
Philippines (Republic of) Unsec. Bonds, 9.875%, 1/15/19 340,000 301,750
Poland—0.7%
Poland (Republic of) Bonds:
12%, 6/12/01(PLZ) 3,902,000 824,299
13%, 2/12/01(PLZ) 358,000 77,089
Series 0205, 8.50%, 2/12/05(PLZ) 3,339,000 614,067
Series 1000, 13%, 10/12/00(PLZ) 290,000 63,325
Series 1201, Zero Coupon, 13.83%, 12/21/01(2)(PLZ) 1,200,000 206,300
-------------
1,785,080
-------------
Russia—2.6%
Russia (Government of) Debs., 12/15/15(5)(7) 1,293,840 359,041
Russia (Government of) Principal Loan Debs., Series 24 yr., 12/15/20(5)(7) 8,564,000 2,355,100
Russia (Government of) Unsec. Bonds, 11%, 7/24/18 1,772,000 1,271,410
Russian Federation Bonds, 2.25%, 3/31/30(9)(11) 2,400,000 805,500
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 164,000 116,850
10%, 6/26/07 1,610,000 1,155,175
12.75%, 6/24/28 1,004,000 818,260
-------------
6,881,336
-------------
Sweden—1.2%
Sweden (Kingdom of) Bonds, Series 1034, 9%, 4/20/09(SEK) 22,900,000 3,191,542
17
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Foreign Government Obligations (Continued)
Turkey—0.2%
Turkey (Republic of) Sr. Unsec. Unsub. Nts., 11.875%, 1/15/30 $ 545,000 $ 591,352
Venezuela—0.8%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27 137,000 87,468
Venezuela (Republic of) Disc. Bonds, Series DL, 7%, 12/18/07(9) 1,022,476 802,644
Venezuela (Republic of) New Money Bonds, Series A, 7.125%, 12/18/05(9) 1,439,999 1,136,700
-------------
2,026,812
-------------
49,882,744
-------------
Loan Participations—0.5%
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 7.188%, 9/4/06(3)(9) 344,272 278,000
Algeria (Republic of) Trust III Nts., Tranche 3:
1%, 3/4/10(3)(9)(JPY) 22,654,000 124,196
7.188%, 3/4/10(3)(9) 598,000 453,732
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 6.844%, 1/1/09(3)(9) 385,000 344,575
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.058%, 9/30/00(3)(9)(JPY) 11,999,999 101,041
-------------
1,301,544
-------------
Units
--------------
Rights, Warrants and Certificates—0.1%
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/15/00(3) 80 —
Mexico Value Rts., Exp. 6/30/03 646,000 —
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(6) 2,800 238,000
-------------
238,000
-------------
Principal
Amount
--------------
Structured Instruments—0.6%
Citibank NA (Nassau Branch), Mexican Peso Linked Nts.,
18.70%, 3/3/03(MXN) 6,658,621 678,488
Citibank NA, Polish Zloty Linked Nts., 16.10%, 11/3/00(PLZ) 2,621,667 574,293
ING Barings LLC, Zero Coupon USD Russian Equity Linked Nts., 4/19/01 3,400 313,106
-------------
1,565,887
-------------
Date Strike Contracts
-------- ------------- --------------
Options Purchased—0.0%
Australian Dollar Call 7/3/00 0.630(AUD) 630,000 435
South Korean Won Call 6/1/00 1100.000(KRW) 1,573,000,000 4,514
-------------
4,949
-------------
Total International Sector (Cost $89,766,382) 85,604,603
-------------
18
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Mortgage-Backed Sector—17.6%
Government Agency—13.6%
FHLMC/FNMA/Sponsored—13.0%
Federal Home Loan Mortgage Corp., 8%, 5/15/27(11) $ 3,500,000 $ 3,499,440
Federal Home Loan Mortgage Corp., Certificates of Participation,
12%, 5/1/10-10/1/14 847,597 921,798
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 2054, Cl. TE, 6.25%, 4/15/24 534,000 495,782
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 197, Cl. IO, 11.248%, 4/1/28(12) 4,444,439 1,411,457
Series 199, Cl. IO, 18.28%, 8/1/28(12) 12,388,413 4,070,755
Federal National Mortgage Assn.:
6.50%, 1/1/29 11,144,991 10,412,543
7.50%, 6/1/10-9/1/29 12,461,191 12,206,632
11%, 7/1/16 339,151 369,000
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates,
13%, 6/1/15(13)(14) 616,934 696,747
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1995-4, Cl. PC, 8%, 5/25/25 664,690 669,050
-------------
34,753,204
-------------
GNMA/Guaranteed—0.6%
Government National Mortgage Assn.:
6.625%, 7/20/27 284,376 286,242
7%, 1/15/28-3/15/28 790,079 760,255
11%, 10/20/19 227,898 245,442
12%, 11/20/13-9/20/15 239,826 264,049
-------------
1,555,988
-------------
Private—4.0%
Commercial—1.7%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates,
Series 1996-D3, Cl. A5, 8.331%, 10/13/26(9) 500,000 466,562
Capital Lease Funding Securitization LP, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-CTL1, 11.338%, 6/22/24(3)(12) 10,496,934 387,074
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 25.531%, 12/25/20(3)(12) 10,006,263 125,078
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1997-C1, Cl. E, 7.50%, 3/1/11(3) 710,000 631,900
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, Cl. C, 7.993%, 7/25/06(3)(9) 800,000 730,500
First Union-Lehman Brothers Commercial Mortgage Trust,
Commercial Mtg. Pass-Through Certificates, Series 1997-C2,
Cl. F, 7.50%, 9/18/15 600,000 443,437
19
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal Market Value
Amount See Note 1
------------ -------------
Private (Continued)
Commercial (Continued)
GMAC Commercial Mtg. Securities, Inc., Mtg. Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1,
Cl. X, 8.427%, 7/15/27(12) $ 3,303,565 $ 253,962
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D, 7.42%, 4/25/28 800,000 762,563
NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series DMC:
Cl. B, 8.562%, 8/12/11(3) 400,000 354,375
Cl. C, 8.921%, 8/12/11(3) 400,000 351,000
--------------
4,506,451
--------------
Residential—2.3%
Residential Asset Securitization Trust, Collateralized Mtg. Obligations,
Non-Accelerated Security, Series 1997-A2, Cl. A8, 7.75%, 4/25/27 2,000,000 1,940,000
Salomon Brothers Mortgage Securities VII, Commercial Mtg. Pass-Through
Certificates, Series 1996-B, Cl. 1, 6.792%, 4/25/26(3) 1,270,074 833,486
Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1999-1, 10%, 8/25/28(3) 3,555,406 3,512,075
--------------
6,285,561
--------------
Total Mortgage-Backed Sector (Cost $48,020,261) 47,101,204
--------------
Money Market Sector—7.6%
Short-Term Notes—4.1%
Heller Financial, Inc., 6.13%, 6/9/00 5,000,000 4,966,823
Tyco International Group:
6%, 6/20/00 1,000,000 991,333
6.22%, 6/23/00 5,000,000 4,954,214
--------------
10,912,370
--------------
Repurchase Agreements—3.5%
Repurchase agreement with Paine Webber, Inc., 5.70%, dated
4/28/00, to be repurchased at $9,404,465 on 5/1/00, collateralized
by U.S. Treasury Nts., 5.625%-7.875%, 5/15/01-5/15/08, with a value
of $639,642 and U.S. Treasury Bonds, 12%, 8/15/13,
with a value of $8,983,425 9,400,000 9,400,000
--------------
Total Money Market Sector (Cost $20,312,370) 20,312,370
--------------
Total Investments, at Value (Cost $282,479,799) 99.3% 265,622,666
Other Assets Net of Liabilities 0.7 1,908,356
------------- --------------
Net Assets 100.0% $267,531,022
============= ==============
20
Statement of Investments (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Principal amount is reported in U.S. Dollars, except for those
denoted in the following currencies:
ARP—Argentine Peso HUF—Hungarian Forint
AUD—Australian Dollar IDR—Indonesian Rupiah
CAD—Canadian Dollar JPY—Japanese Yen
DEM—German Mark KRW—South Korean Won
DKK—Danish Krone MXN—Mexican Nuevo Peso
EUR—euro NOK—Norwegian Krone
FRF—French Franc PLZ—Polish Zloty
GBP—British Pound Sterling SEK—Swedish Krona
GRD—Greek Drachma
1. Securities with an aggregate market value of $13,969,735 are held in collateralized accounts to cover initial
margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements.
2. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase.
3. Identifies issues considered to be illiquid or restricted—See Note 8 of Notes to Financial Statements.
4. Interest or dividend is paid in kind.
5. Non-income-producing security.
6. Represents a security 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 $17,992,717 or 6.73% of the Trust’s net assets as of April 30, 2000.
7. Issuer is in default.
8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future
date.
9. Represents the current interest rate for a variable or increasing rate security.
10. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some
point in the future. For units that represent debt securities, principal amount disclosed represents total underlying
principal.
11. When-issued security to be delivered and settled after April 30, 2000.
12. 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.
13. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:
Contracts Expiration Exercise Premium Market Value
Subject to Put Date Price Received See Note 1
-------------------------------------------------------------------------------------------------------------
Australian Dollar Put 630,000 7/3/00 0.583 $2,782 $6,262
14. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5
of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
21
Statement of Assets and Liabilities April 30, 2000 (Unaudited)
Oppenheimer Multi-Sector Income Trust
ASSETS
Investments, at value (cost $282,479,799)—see accompanying statement $265,622,666
Unrealized appreciation on foreign currency contracts 205,907
Receivables and other assets:
Interest, dividends and principal paydowns 5,044,778
Investments sold 4,054,893
Closed foreign currency contracts 37,974
Other 34,944
--------------
Total assets 275,001,162
--------------
LIABILITIES
Bank overdraft 713,075
Unrealized depreciation on foreign currency contracts 14,350
Options written, at value (premiums received $2,782)—see accompanying statement 6,262
Payables and other liabilities:
Investments purchased (including $4,412,780 purchased on a when-issued basis) 5,952,622
Closed foreign currency contracts 249,591
Trustees’ compensation 188,809
Dividends 135,941
Daily variation on futures contracts 54,658
Management and administrative fees 52,198
Other 102,634
--------------
Total liabilities 7,470,140
--------------
NET ASSETS $267,531,022
==============
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest $ 291,161
Additional paid-in capital 312,129,416
Overdistributed net investment income (38,276)
Accumulated net realized loss on investments and foreign currency transactions (28,309,344)
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (16,541,935)
--------------
NET ASSETS—applicable to 29,116,068 shares of beneficial interest outstanding $267,531,022
==============
NET ASSET VALUE PER SHARE $9.19
======
See accompanying Notes to Financial Statements.
22
Statement of Operations For the Six Months Ended April 30, 2000 (Unaudited)
Oppenheimer Multi-Sector Income Trust
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $6,871) $13,412,437
Dividends (net of foreign withholding taxes of $70) 443,283
-------------
Total income 13,855,720
-------------
EXPENSES
Management fees 891,178
Administrative fees 208,080
Legal, auditing and other professional fees 30,588
Shareholder reports 29,763
Custodian fees and expenses 21,302
Accounting service fees 12,000
Trustees’ compensation 5,804
Other 54,503
-------------
Total expenses 1,253,218
Less expenses paid indirectly (6,539)
-------------
Net expenses 1,246,679
-------------
NET INVESTMENT INCOME 12,609,041
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (3,947,810)
Closing of futures contracts (958,563)
Closing and expiration of option contracts written 64,280
Foreign currency transactions (1,458,226)
-------------
Net realized loss (6,300,319)
-------------
Net change in unrealized appreciation or depreciation on:
Investments 555,698
Translation of assets and liabilities denominated in foreign currencies (2,285,372)
-------------
Net change (1,729,674)
-------------
Net realized and unrealized loss (8,029,993)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,579,048
=============
See accompanying Notes to Financial Statements.
23
Statement of Changes in Net Assets
Oppenheimer Multi-Sector Income Trust
Six Months Ended
April 30, 2000 Year Ended
(Unaudited) October 31, 1999
----------------- ----------------
OPERATIONS
Net investment income $ 12,609,041 $ 25,280,414
Net realized loss (6,300,319) (14,050,016)
Net change in unrealized appreciation or depreciation (1,729,674) 1,481,823
-------------- --------------
Net increase in net assets resulting from operations 4,579,048 12,712,221
-------------- --------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (12,228,749) (23,438,435)
-------------- --------------
NET ASSETS
Total decrease (7,649,701) (10,726,214)
Beginning of period 275,180,723 285,906,937
-------------- --------------
End of period (including overdistributed net investment
income of $38,276 and $418,568, respectively) $267,531,022 $275,180,723
============== ==============
See accompanying Notes to Financial Statements.
24
Financial Highlights
Oppenheimer Multi-Sector Income Trust
Six Months Ended
April 30, 2000 Year Ended October 31,
-----------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ------ ------ ------ ------ ------
PER SHARE OPERATING DATA
Net asset value, beginning of period $9.45 $9.82 $10.61 $10.52 $10.14 $10.17
----- ----- ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income .43 .87 .79 .89 .91 .94
Net realized and unrealized gain (loss) (.27) (.43) (.75) .08 .37 (.04)
----- ----- ------ ------ ------ ------
Total income from investment operations .16 .44 .04 .97 1.28 .90
----- ----- ------ ------ ------ ------
Dividend and/or distributions to shareholders:
Dividends from net investment income (.42) (.81) (.78) (.88) (.90) (.91)
Tax return of capital — — (.05) — — (.02)
----- ----- ------ ------ ------ ------
Total dividends and/or distributions
to shareholders (.42) (.81) (.83) (.88) (.90) (.93)
----- ----- ------ ------ ------ ------
Net asset value, end of period $9.19 $9.45 $ 9.82 $10.61 $10.52 $10.14
===== ===== ====== ====== ====== ======
Market value, end of period $7.56 $8.06 $ 9.38 $10.13 $ 9.88 $10.00
===== ===== ====== ====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1) (1.95)% (6.64)% 0.17% 11.40% 7.85% 15.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $267,531 $275,181 $285,907 $308,972 $306,181 $295,128
Average net assets (in thousands) $274,631 $285,213 $304,773 $308,712 $298,496 $288,884
Ratios to average net assets:(2)
Net investment income 9.23% 8.86% 7.56% 8.42% 8.87% 9.51%
Expenses 0.92% 1.03% 1.01%(3) 0.99%(3) 1.04%(3) 1.05%(3)
Portfolio turnover rate(4) 39% 159% 402% 259% 225% 240%
1. Assumes a $1,000 hypothetical purchase at the current market
price on the business day before the first day of the fiscal period, with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and a sale at the current market price on the last business day of the
period. Total return does not reflect sales charges or brokerage commissions.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly.
4. The lesser of purchases or sales of portfolio securities for
a period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or expiration
date at the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding short-term
securities and mortgage dollar-rolls) for the period ended April 30, 2000 were
$98,344,344 and $113,337,307, respectively. Prior to the period ended October
31, 1996, purchases and sales of investment securities included mortgage
dollar-rolls.
See accompanying Notes to Financial Statements.
25
Notes to Financial Statements (Unaudited)
Oppenheimer Multi-Sector Income Trust
1. Significant Accounting Policies
Oppenheimer Multi-Sector Income Trust (the Trust) is registered
under the Investment Company Act of 1940, as amended, as a closed-end management
investment company. The Trust’s investment objective is to seek high
current income consistent with preservation of capital. The Trust’s
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Trust.
Securities Valuation. Securities for which quotations are
readily available are valued at the last sale price, or if in the absence of a
sale, at the last sale price on the prior trading day if it is within the spread
of the closing bid and asked prices, and if not, at the closing bid price.
Securities (including restricted securities) for which quotations are not
readily available are valued primarily using dealer-supplied valuations, a
portfolio pricing service authorized by the Board of Trustees, or at their fair
value. Fair value is determined in good faith under consistently applied
procedures under the supervision of the Board of Trustees. Foreign currency
contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank, dealer or pricing service. Short-term “money
market type” debt securities with remaining maturities of 60 days or less
are valued at cost (or last determined market value) and adjusted for
amortization or accretion to maturity of any premium or discount.
Structured Notes. The Trust invests in foreign currency-linked
structured notes whose market value and redemption price are linked to foreign
currency exchange rates. The structured notes may be leveraged, which increases
the notes’ volatility relative to the face of the security. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying financial statements. As of April 30, 2000, the market value of
these securities comprised 1.35% of the Trust’s net assets and resulted in
realized and unrealized losses of $734,238. The Trust also hedges a portion of
the foreign currency exposure generated by these securities, as discussed in
Note 5.
Securities Purchased on a When-Issued Basis. Delivery and payment for
securities that have been purchased by the Truston a forward commitment or
when-issued basis can take place a month or more after the transaction date.
Normally the settlement date occurs within six months after the transaction
date; however, the Trust may, from time to time, purchase securities whose
settlement date extends beyond six months and possibly as long as two years or
more beyond trade date. During this period, such securities do not earn
interest, are subject to market fluctuation and may increase or decrease in
value prior to their delivery. The Trust maintains segregated assets with a
market value equal to or greater than the amount of its purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Trust’s net asset value to the extent the
Trust makes such purchases while remaining substantially fully invested. As of
April 30, 2000, the Trust had entered into net outstanding when-issued or
forward commitments of $4,412,780.
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
26
Notes to Financial Statements (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
date. The Trust records each dollar-roll as a sale and a new
purchase transaction.
Security Credit Risk. The Trust invests in high yield
securities, which may be subject to a greater degree of credit risk, greater
market fluctuations and risk of loss of income and principal, and may be more
sensitive to economic conditions than lower yielding, higher rated fixed income
securities. The Trust may acquire securities in default, and is not obligated to
dispose of securities whose issuers subsequently default. As of April 30, 2000,
securities with an aggregate market value of $3,456,829, representing 1.29% 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 Fund’s Statement of Operations.
Repurchase Agreements. The Trust requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book Entry System
or to have segregated within the custodian’s vault, all securities held as
collateral for repurchase agreements. The market value of the underlying
securities is required to be at least 102% of the resale price at the time of
purchase. If the seller of the agreement defaults and the value of the
collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Trust may be delayed or
limited.
Federal Taxes. The Trust intends to continue to comply with
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments not offset by loss carryovers to shareholders.
Therefore, no federal income or excise tax provision is required. As of October
31, 1999, the Trust had available for federal income tax purposes an unused
capital loss carryover of approximately $21,079,000, which expires between 2003
and 2007.
Trustees’ Compensation. The Trust has adopted an unfunded
retirement plan for the Trust’s independent Board of Trustees. Benefits are
based on years of service and fees paid to each trustee during the years of
service. During the six months ended April 30, 2000, a credit of $6,177 was made
for the Trust’s projected benefit obligations and payments of $7,859 were
made to retired trustees, resulting in an accumulated liability of $191,506 as
of April 30, 2000.
The Board of Trustees has adopted a deferred compensation plan
for independent trustees that enables trustees to elect to defer receipt of all
or a portion of annual compensation they are entitled to receive from the Trust.
Under the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees under the plan will be determined based upon the performance of the
selected funds. Deferral of trustees’ fees under the plan will not affect
the net assets of the Trust, and will not materially affect the Trust’s
assets, liabilities or net investment income per share.
27
Notes to Financial Statements (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
1. Significant Accounting Policies
(continued)
Dividends and Distributions to Shareholders. Dividends and
distributions to shareholders, which are determined in accordance with income
tax regulations, are recorded on the ex-dividend date.
Classification of Distributions to Shareholders. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and tax
purposes primarily because of the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes. The character of
distributions made during the year from net investment income or net realized
gains may differ from its ultimate characterization for federal income tax
purposes. Also, due to timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the fiscal year in which the
income or realized gain was recorded by the Trust.
Expense Offset Arrangements. Expenses paid indirectly represent a
reduction of custodian fees for earnings on cash balances maintained by the
Trust.
Other.Investment transactions are accounted for as of trade
date and dividend income is recorded on the ex-dividend date. Discount on
securities purchased is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and losses on
investments and options written and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes. Dividends-in-kind are recognized as income on the
ex-dividend date, at the current market value of the underlying security.
Interest on payment-in-kind debt instruments is accrued as income at the coupon
rate and a market adjustment is made periodically.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
2. Shares of Beneficial Interest
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. There were no transactions in shares of beneficial interest
for the six months ended April 30, 2000, and the year ended October 31, 1999.
3. Unrealized Gains and Losses on Securities
As of April 30, 2000, net unrealized depreciation on securities
and options written of $16,860,613 was composed of gross appreciation of
$5,338,193, and gross depreciation of $22,198,806.
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in
accordance with the investment advisory agreement with the Trust which provides
for an annual fee of 0.65% on the Trust’s average annual net assets.
Administration Fees. 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. Effective March 11, 2000,
Mitchell Hutchins Asset Management Inc. no longer serves as the Trust’s
Administrator.
28
Notes to Financial Statements (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
Accounting Fees. 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.
Transfer Agent Fees. Shareholder Financial Services, Inc. (SFSI), a
wholly owned subsidiary of the Manager, is the transfer agent and registrar for
the Trust. Fees paid to SFSI are based on the number of accounts and the number
of shareholder transactions, plus out-of-pocket costs and expenses.
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell
a foreign currency at a future date, at a negotiated rate. The Trust may enter
into foreign currency contracts for operational purposes and to seek to protect
against adverse exchange rate fluctuations. Risks to the Trust include the
potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Trust and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Trust may realize a gain or loss upon the closing or
settlement of the foreign currency transactions. Realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of April 30, 2000, the Trust had outstanding foreign currency
contracts as follows:
Valuation
Contract as of
Expiration Amount April 30, Unrealized Unrealized
Contract Description Date (000s) 2000 Appreciation Depreciation
------------------------------------------------------------------------------------------------------------------------
Contracts to Sell
-----------------
British Pound Sterling (GBP) 5/18/00 830 (GBP) $1,298,933 $ 7,960 $ —
Euro (EUR) 5/4/00-5/25/00 6,492 (EUR) 5,926,192 183,445 1,413
Japanese Yen (JPY) 6/5/00 31,300 (JPY) 291,485 14,502 —
South African Rand (ZAR) 5/4/00 7,793 (ZAR) 1,148,925 — 12,937
--------- --------
Total Unrealized Appreciation and Depreciation $205,907 $14,350
========= ========
29
Notes to Financial Statements (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
6. Futures Contracts
The Trust may buy and sell futures contracts in order to gain
exposure to or to seek to protect against changes in interest rates. The Trust
may also buy or write put or call options on these futures contracts.
The Trust generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Trust may also purchase futures contracts to gain
exposureto changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Trust is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Trust each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Trust may recognize a realized gain or loss when the
contract is closed or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of April 30, 2000, the Trust had outstanding futures contracts as follows:
Valuation
as of Unrealized
Expiration Number of April 30, Appreciation
Contract Description Date Contracts 2000 (Depreciation)
--------------------------------------------------------------------------------------------------------------
Contracts to Purchase
---------------------
Euro-Bobl 6/8/00 43 $4,046,728 $ 20,377
Standard & Poor’s 500 6/15/00 18 6,570,000 135,000
---------
155,377
---------
Contracts to Sell
------------------
Crude Oil 5/22/00 110 2,831,400 51,430
Euro-Schatz 6/5/00 70 6,520,716 (5,741)
U.S. Treasury Bonds, 10 yr. 6/21/00 80 7,756,250 6,641
U.S. Treasury Nts., 5 yr. 6/21/00 64 6,245,000 (20,500)
---------
31,830
---------
$187,207
=========
30
Notes to Financial Statements (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
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 fora written call option, the purchase cost for a written
put option or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are
noted in the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Trust gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Trust may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Trust pays a premium whether
or not the option is exercised. The Trust also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the six months ended April 30, 2000, was as follows:
Call Options
------------------------------------------------------------------------------------------------------
Number of Options Amount of Premium
--------------------- ----------------------
Options outstanding as of October 31, 1999 — $ —
Options written 143,000,000 14,806
Options closed or expired (143,000,000) (14,806)
------------ --------
Options outstanding as of April 30, 2000 — $ —
============ ========
Put Options
------------------------------------------------------------------------------------------------------
Number of Options Amount of Premium
--------------------- ----------------------
Options outstanding as of October 31, 1999 3,388,275 $ 56,100
Options written 630,000 2,782
Options closed or expired (3,388,275) (56,100)
------------ --------
Options outstanding as of April 30, 2000 630,000 $ 2,782
============ ========
31
Notes to Financial Statements (Unaudited) (Continued)
Oppenheimer Multi-Sector Income Trust
8. Illiquid or Restricted Securities
As of April 30, 2000, investments in securities included issues
that are illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities Act of
1933, may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may also
be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Trust intends to
invest no more than 10% of its net assets (determined at the time of purchase
and reviewed periodically) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limitation. The aggregate value of illiquid or
restricted securities subject to this limitation as of April 30, 2000 was
$16,243,455, which represents 6.07% of the Trust’s net assets, of which
$1,179,850 is considered restricted. Information concerning restricted
securities is as follows:
Valuation
Acquisition Cost per Unit as of
Security Date per Unit April 30, 2000
----------------------------------------------------------------------------------------------
Stocks and Warrants
-------------------
Becker Gaming, Inc. Wts., Exp. 11/15/00 11/18/93 $ 2.00 $ —
CGA Group Ltd., Preferred, Series A 6/17/97 25.00 25.00
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 — 0.30
32
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 Arthur Steinmetz and Caleb Wong. Mr.
Steinmetz is a Vice President of the Trust and a Senior Vice President of the
Advisor and Mr. Wong is an Assistant Vice President of the Advisor. Messrs.
Steinmetz and Wong have been the persons principally responsible for the
day-to-day management of the Trust’s portfolio since February 1, 1999. Prior to
February 1999, Mr. Steinmetz served as a portfolio manager and officer of other
Oppenheimer funds. Mr. Wong worked on fixed income quantitative research and
risk management for the Advisor since July 1996, prior to which he was enrolled
in the Ph.D. program for economics at the University of Chicago. Other
members of the Advisor’s fixed income portfolio department,
particularly portfolio analysts, traders and other portfolio managers provide
the Trust’s Portfolio Managers with support in managing the Trust’s
portfolio.
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
33
Oppenheimer Multi-Sector Income Trust
General Information Concerning the Trust (Continued)
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 10 days prior to the record date for any
Distribution; otherwise, such termination will be effective shortly after the
investment of such Distribution with respect to any subsequent Distribution.
Upon withdrawal from or termination of the Plan, all Shares acquired under the
Plan will remain in the Participant’s account unless otherwise requested.
For full Shares, the Participant may either: (1) receive without charge a share
certificate for such Shares; or (2) request the Agent (after receipt by the
Agent of signature guaranteed instructions by all registered owners) to sell the
Shares acquired under the Plan and remit the proceeds less any brokerage
commissions and a $2.50 service fee.
Fractional Shares may either remain in the Participant’s
account or be reduced to cash by the Agent at the current market price with the
proceeds remitted to the Participant. Shareholders who have previously withdrawn
from the Plan may rejoin at any time by sending written instructions signed by
all registered owners to the Agent.
There is no direct charge for participation in the Plan; all
fees of the Agent are paid by the Trust. There are no brokerage charges for
Shares issued directly by the Trust. However, each Participant will pay a pro
rata share of brokerage commissions incurred with respect to open market
purchases of Shares to be issued under the Plan. Participants will receive tax
information annually for their personal records and to assist in federal income
tax return preparation. The automatic reinvestment of Distributions does not
relieve Participants of any income tax that may be payable on Distributions.
The Plan may be terminated or amended at any time upon 30 days’ prior
written notice to Participants which, with respect to a Plan termination, must
precede the record date of any Distribution by the Trust. Additional information
concerning the Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1.800.647.7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
Shareholder Information—The Shares are traded on the NYSE.
Daily market prices for the Trust’s shares are published in the New York
Stock Exchange Composite Transaction section of newspapers under the designation
“OppenMlti.” The Trust’s NYSE trading symbol is OMS. Weekly net
asset value (NAV) and market price information about the Trust is published each
Monday in The Wall Street Journal and each Sunday in The New York
Times and each Saturday in Barron’s, and other newspapers in a
table called “Closed-End Bond Funds.
34
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[BACK COVER PANEL]
Oppenherimer Multi-Sector Income Trust
Officers and Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board
of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Phillip A. Griffiths, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Clayton K. Yeutter, Trustee
Arthur P. Steinmetz, Vice President
Caleb Wong, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Advisor
OppenheimerFunds, Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
The Bank of New York
Independent Auditors
KPMG LLP
Legal Counsel
Mayer, Brown & Platt
The financial statements included herein have been taken from the records of the Trust without examination of those records by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Multi-Sector Income Trust. It does not offer for sale or solicit orders to buy any securities.
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that periodically the Trust may purchase its shares of beneficial interest in the open market at prevailing market prices.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the
FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
RS0680.001.0400 [recycling symbol] Printed on recycled paper
