As Filed with the Securities and Exchange
Commission on February 28, 2000
Registration No. 811-5473
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 15 /X/
OPPENHEIMER MULTI-SECTOR INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, 34th Floor
New York, New York 10048-0203
(Address of Principal Executive Offices)
212-323-0200
- -
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, 34th Floor
New York, New York 10048-0203
(Name and Address of Agent for Service)
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FORM N-2
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Cross Reference Sheet
Part A of
Form N-2
Item No. Prospectus Heading
1 *
2 *
3 *
4 *
5 *
6 *
7 *
8 General Description of the Registrant
9 Management
10 Capital Stock, Long-Term Debt, and Other Securities
11 *
12 *
13 See Item 15 of the Statement of Additional Information
Part B of
Form N-2
Item No. Heading In Statement of Additional Information
14 Cover Page
15 Table of Contents
16 *
17 See Item 8 of the Prospectus
18 Management
19 Control Persons and Principal Holders of Securities
20 See Item 9 of the Prospectus
21 Brokerage Allocation and Other Practices
22 See Item 10 of the Prospectus
23 Financial Statements
* Not applicable or negative answer.
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97
OPPENHEIMER MULTI-SECTOR INCOME TRUST
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover.
Inapplicable.
Item 2. Inside Front and Outside Back Cover Page.
Inapplicable.
Item 3. Fee Table and Synopsis
Inapplicable.
Item 4. Financial Highlights.
Inapplicable.
Item 5. Plan of Distribution.
Inapplicable.
Item 6. Selling Shareholders.
Inapplicable.
Item 7. Use of Proceeds.
Inapplicable.
Item 8. General Description of the Registrant.
1. Oppenheimer Multi-Sector Income Trust (the "Fund" or "Registrant") is a
closed-end diversified management investment company organized as a
Massachusetts business trust on February 22, 1988.
2, 3, and 4. The Fund's primary investment objective is high current
income consistent with preservation of capital. Its secondary objective is
capital appreciation. In seeking those objectives, the Fund will allocate its
assets among seven sectors of the fixed-income securities market to take
advantage of opportunities anticipated by OppenheimerFunds, Inc., the Fund's
investment adviser (the "Adviser"), which arise in particular sectors in various
economic environments. The Adviser's opinion as to such opportunities will be
based on various factors which may affect the levels of income which can be
obtained from the different sectors, such as (i) the effect of interest rate
changes, on a relative and absolute basis, on yields of securities in the
particular sectors, (ii) the effect of changes in tax laws and other legislation
affecting securities in the various sectors, (iii) changes in the relative
values of foreign currencies, and (iv) perceived strengths of the abilities of
issuers in the various sectors to repay their obligations.
The sectors in which the Fund invests are not divided by industry but
instead differ by type of security and issuer and includes U.S. Government,
Corporate, International, Asset-Backed (including Mortgage-Backed), Municipal,
Convertible and Money Market sectors. The Adviser believes that investing the
Fund's assets in a portfolio comprised of three or more sectors, as opposed to
limiting investments to only one such sector, will enhance the Fund's ability to
achieve high current income consistent with preservation of capital or seek
capital appreciation. The range of yields of the securities in each sector will
differ from securities in the others both on an absolute and a relative basis.
It is not the intention of the Fund to always allocate its assets to the sector
with the highest range of yields as this may not be consistent with preservation
of capital. The Adviser will, however, monitor changes in relative yields of
securities in the various sectors to help formulate its decisions on which
sectors present attractive investment opportunities at a particular time.
Historically, the markets for the sectors identified below have tended to
behave somewhat independently and have at times moved in opposite directions.
For example, U.S. government securities (defined below) have generally been
affected negatively by concerns about inflation that might result from increased
economic activity. Corporate debt securities and convertible securities, on the
other hand, have generally benefited from increased economic activity due to the
resulting improvement in the credit quality of corporate issuers which, in turn,
has tended to cause a rise in the prices of common stock underlying convertible
securities. The converse has generally been true during periods of economic
decline. Similarly, U.S. government securities can be negatively affected by a
decline in the value of the dollar against foreign currencies, while the
non-dollar denominated securities of foreign issuers held by U.S. investors have
generally benefited from such decline. Investments in short-term money market
securities tend to decline less in value than long-term debt securities in
periods of rising interest rates but do not rise as much in periods of declining
rates. At times the difference between yields on municipal securities and
taxable securities does not fully reflect the tax advantage of municipal
securities. At such times investments in municipal securities tend to fare
better in value than taxable investments because the yield differential
generally can be expected to increase again to reflect the tax advantage.
The Adviser believes that when financial markets exhibit this lack of
correlation, an active allocation of investments among these seven sectors can
permit greater preservation of capital over the long term than would be obtained
by investing permanently in any one sector. To the extent that active allocation
of investments among market sectors by the Adviser is successful in preserving
or increasing capital, the Fund's capacity to meet its primary objective of high
current income should be enhanced over the longer term. The Adviser also will
utilize certain other investment techniques, including options and futures,
intended to enhance income and reduce market risk.
The Fund can invest in securities in the Corporate, International,
Asset-Backed and Convertible Sectors which are in the lowest rating category of
each of Standard & Poor's Rating Service ("Standard & Poor's") or Moody's
Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc. ("Fitch") or Duff &
Phelps, Inc. ("Duff & Phelps") or another nationally recognized rating
organization, or which are unrated. The description and characteristics of the
lowest rating category are discussed in the description of the Corporate Sector.
In all other sectors, the Fund will not invest in securities rated lower than
those considered investment grade, i.e. "Baa" by Moody's or "BBB" by Standard &
Poor's, Fitch's or Duff & Phelps. See "Investment Sectors in Which the Fund
Invests" and Appendix A (Securities Ratings) to the Statement of Additional
Information. Unrated securities will be of comparable quality to those that are
rated, in the opinion of the Adviser. The seven sectors of the fixed-income
securities market in which the Fund can invest are:
- - The U.S. Government Sector, consisting of debt obligations of the U.S.
government and its agencies and instrumentalities ("U.S. government
securities");
- - The Corporate Sector, consisting of non-convertible debt obligations or
preferred stock of U.S. corporate issuers and participation interests in
senior, fully-secured loans made primarily to U.S. companies;
- - The International Sector, consisting of debt obligations (which may be
denominated in foreign currencies) of foreign governments and their
agencies and instrumentalities, certain supranational entities and foreign
and U.S.
companies;
- - The Asset-Backed Sector, consisting of undivided fractional interests in
pools of consumer loans and participation interests in pools of
residential mortgage loans;
- - The Municipal Sector, consisting of debt obligations of states,
territories or possessions of the United States and the District of
Columbia or their political subdivisions, agencies, instrumentalities or
authorities;
- - The Convertible Sector, consisting of debt obligations and preferred
stock of U.S. corporations which are convertible into common stock; and
- - The Money Market Sector, consisting of U.S. dollar-denominated debt
obligations having a maturity of 397 days or less and issued by the U.S.
government or its agencies, certain domestic banks or corporations; or
certain foreign governments, agencies or banks; and repurchase agreements.
Current income, preservation of capital and, secondarily, possible capital
appreciation will be considerations in the allocation of assets among the seven
investment sectors described above. The Adviser anticipates that at all times
Fund assets will be spread among three or more sectors. Securities in the first
six sectors above have maturities in excess of 397 days. All securities
denominated in foreign currencies will be considered as part of the
International Sector, regardless of maturity. The Fund can also invest in
options and futures related to securities in each of the sectors.
INVESTMENT SECTORS IN WHICH THE FUND INVESTS
The Fund's assets allocated to each of the sectors will be managed in
accordance with the investment policies described above. The Fund's portfolio
might not always include all of the different types of investments described
below. The allocation among the different types of investments the Fund is
permitted to invest in will vary over time based on the Advisor's evaluation of
economic and market conditions.
The U.S. Government Sector
Assets in this sector will be invested in U.S. government securities,
which are obligations issued by or guaranteed by the United States government or
its agencies or instrumentalities. Certain of these obligations, including U.S.
Treasury notes and bonds, and Federal Housing Administration debentures, are
supported by the full faith and credit of the United States. Certain other U.S.
government securities, issued or guaranteed by Federal agencies or
government-sponsored enterprises, are not supported by the full faith and credit
of the United States. These latter securities include obligations supported by
the right of the issuer to borrow from the U.S. Treasury, such as obligations of
Federal Home Loan Banks, and obligations supported by the credit of the
instrumentality, such as Federal National Mortgage Association bonds. The
Adviser will adjust the average maturity of the investments held in this sector
from time to time, depending on its assessment of relative yields of securities
of different maturities and its expectations of future changes in interest
rates. U.S. government securities are considered among the most creditworthy of
fixed-income investments. Because of this, the yields available from U.S.
government securities are generally lower than the yields available from
corporate debt securities. Nevertheless, the values of U.S. government
securities (like those of fixed-income securities generally) will change as
interest rates fluctuate.
Zero Coupon Treasury Securities. The Fund can invest in "zero coupon"
Treasury securities which are (a) U.S. Treasury notes and bonds which have been
stripped of their unmatured interest coupons and receipts or (b) certificates
representing interests in such stripped debt obligations and coupons. A zero
coupon security pays no interest to its holder during its life. Accordingly,
such securities usually trade at a deep discount from their face or par value
and will be subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable maturities which
make current distribution of interest. Current Federal tax law requires that a
holder of a zero coupon security accrue a portion of the discount at which the
security was purchased as income each year even though the holder receives no
interest payment in cash on the security during the year. The Fund will not
invest more than 10% of its total assets at the time of purchase in zero coupon
Treasury securities.
The Corporate Sector
Assets allocated to this sector will be invested in secured or unsecured
non-convertible preferred stock and corporate debt obligations, such as bonds,
debentures and notes. The Fund can also acquire participation interests, as
described below.
Ratings. Certain corporate fixed-income securities in which the Fund can
invest may be unrated or in the lower rating categories of recognized rating
agencies, i.e., ratings below "Baa" by Moody's or below "BBB" by Standard &
Poor's or Duff & Phelps. Lower-rated securities, commonly called junk bonds,
will involve greater volatility of price and risk of principal and income
(including the possibility of default or bankruptcy of the issuer of such
securities) than securities in the higher rating categories. The Fund's
investments in lower-rated securities can not exceed 75% of the Fund's total
assets, with no more than 50% of the Fund's total assets in lower-rated foreign
securities (see "The International Sector," below).
The Fund's ability to increase its investments in high-yield securities
will enable it to seek higher investment return. However, high-yield securities,
whether rated or unrated, could be subject to greater market fluctuations and
risks of loss of income and principal and could have less liquidity than lower
yielding, higher-rated fixed-income securities. Principal risks of high-yield
securities include (i) limited liquidity and secondary market support, (ii)
substantial market price volatility resulting from changes in prevailing
interest rates, (iii) subordination of the holder's claims to the prior claims
of banks and other senior lenders in bankruptcy proceedings, (iv) the operation
of mandatory sinking fund or call/redemption provisions during periods of
declining interest rates, whereby the holder might receive redemption proceeds
at times when only lower-yielding portfolio securities are available for
investment, (v) the possibility that earnings of the issuer can be insufficient
to meet its debt service, and (vi) the issuer's low creditworthiness and
potential for insolvency during periods of rising interest rates and economic
downturn.
Participation Interests. The Fund can acquire participation interests in
loans that are made to U.S. or foreign companies (the "borrower"). They can be
interests in, or assignments of, the loan and are acquired from banks or brokers
that have made the loan or are members of the lending syndicate. No more than 5%
of the Fund's net assets can be invested in participation interests of the same
issuer. The Adviser has set certain creditworthiness standards for issuers of
loan participations, and monitors their creditworthiness. The value of loan
participation interests depends primarily upon the creditworthiness of the
borrower, and its ability to pay interest and principal. Borrowers could have
difficulty making payments. If the borrower fails to make scheduled principal or
interest payments, the Fund could experience a decline in net asset value of its
shares. Some borrowers could have senior securities rated as low as "C" by
Moody's or "D" by Standard & Poor's or Duff & Phelps, but can be deemed
acceptable credit risks. Participation interests are subject to the Fund's
limitations on investments in illiquid securities.
The International Sector
The assets allocated to this sector will be invested in debt obligations
(which may either be denominated in U.S. dollars or in non-U.S. currencies),
issued or guaranteed by foreign corporations, certain supranational entities
(described below), and foreign governments or their agencies or
instrumentalities, and in debt obligations issued by U.S. corporations
denominated in non-U.S. currencies. All such securities are referred to as
"foreign securities." The Fund's investments in foreign lower-rated securities
can not exceed 50% of the Fund's total assets. The Fund can invest in any
country where the Adviser believes there is a potential to achieve the Fund's
investment objectives. The Fund may not invest more than 15% of its total assets
in foreign securities of any one country.
The percentage of the Fund's assets that will be allocated to this sector
will vary on the relative yields of foreign and U.S. securities, the economies
of foreign countries, the condition of such countries' financial markets, the
interest rate climate of such countries and the relationship of such countries'
currencies to the U.S. dollar. These factors are judged on the basis of
fundamental economic criteria (e.g., relative inflation levels and trends,
growth rate forecasts, balance of payments status, and economic policies) as
well as technical and political data. The Fund's portfolio of foreign securities
can include those of a number of foreign countries or, depending upon market
conditions, those of a single country.
The obligations of foreign governmental entities, including supranational
entities, have various kinds of government support, and may or may not be
supported by the full faith and credit of a foreign government. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction or development and
international banking institutions and related government agencies. Examples
include the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development Bank and the
Inter-American Development Bank. The governmental members, or "stockholders,"
usually make initial capital contributions to the supranational entity and in
many cases are committed to make additional capital contributions if the
supranational entity is unable to repay its borrowings. Each supranational
entity's lending activities are limited to a percentage of its total capital
(including "callable capital" contributed by members at the entity's call),
reserves and net income. There can be no assurance that foreign governments will
be willing or able to honor their commitments.
Investing in foreign securities involves considerations and possible risks
not typically associated with investing in securities in the U.S. The values of
foreign securities investments will be affected by changes in currency rates or
exchange control regulations or currency blockage, application of foreign tax
laws, including withholding taxes, changes in governmental administration or
economic or monetary policy (in the U.S. or abroad) or changed circumstances in
dealings between nations. Costs will be incurred in connection with conversions
between various currencies. Foreign brokerage commissions are generally higher
than commissions in the U.S. and foreign securities markets can be less liquid,
more volatile and less subject to governmental supervision than in the U.S.
Investments in foreign countries could be affected by other factors not
generally thought to be present in the U.S., including expropriation or
nationalization, confiscatory taxation, lack of uniform accounting and auditing
standards, and potential difficulties in enforcing contractual obligations, and
could be subject to extended settlement periods. There could be less information
publicly available about foreign issuers than about U.S. issuers.
On January 1, 1999, eleven countries in the European Union adopted the euro
as their official currency. However, their current currencies (for example, the
franc, the mark, and the lira) will also continue in use until January 1, 2002.
After that date, it is expected that only the euro will be used in those
countries. A common currency is expected to confer some benefits in those
markets, by consolidating the government debt market for those countries and
reducing some currency risks and costs. But the conversion to the new currency
will affect the Fund operationally and also has potential risks, some of which
are listed below. Among other things, the conversion will affect:
o issuers in which the Fund invests, because of changes in the
competitive environment from a consolidated currency market and
greater operational costs from converting to the new currency. This
might depress securities values;
o vendors the Fund depends on to carry out its business, such as its
custodian (which holds the foreign securities the Fund buys), the
Adviser (which must price the Fund's investments to deal with the
conversion to the euro) and brokers, foreign markets and securities
depositories. If they are not prepared, there could be delays in
settlements and additional costs to the Fund;
o exchange contracts and derivatives that are outstanding during the
transition to the euro. The lack of currency rate calculations between
the affected currencies and the need to update the Fund's contracts
could pose extra costs to the Fund.
The Adviser upgraded (at its expense) its computer and bookkeeping systems
to deal with the conversion. The Fund's custodian bank has advised the Adviser
of its plans to deal with the conversion, including how it will update its
record keeping systems and handle the redenomination of outstanding foreign
debt. The Fund's portfolio manager will also monitor the effects of the
conversion on the issuers in which the Fund invests. The possible effect of
these factors on the Fund's investments cannot be determined with certainty at
this time, but they may reduce the value of some of the Fund's holdings and
increase its operational costs.
Because the Fund can purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income available for distribution. Because a portion of the Fund's
investment income can be received or realized in foreign currencies, the Fund
will be required to compute and distribute its income in U.S. dollars, and
absorb the cost of currency fluctuations. The Fund can engage in foreign
currency exchange transactions for hedging purposes to protect against changes
in future exchange rates.
The values of foreign investments and the investment income derived from
them can also be affected unfavorably by changes in currency exchange control
regulations. Although the Fund will invest only in securities denominated in
foreign currencies that at the time of investment do not have government-imposed
restrictions on conversion into U.S. dollars, there can be no assurance against
subsequent imposition of currency controls. In addition, the values of foreign
fixed-income investments will fluctuate in response to changes in U.S. and
foreign interest rates.
Special Risks of Emerging Market Countries. Investments in emerging market
countries can involve further risks in addition to those identified above for
investments in foreign securities. Securities issued by emerging market
countries and by companies located in those countries can be subject to extended
settlement periods, whereby the Fund might not receive principal and/or income
on a timely basis and its net asset value could be affected. There can be a lack
of liquidity for emerging market securities; interest rates and foreign currency
exchange rates could be more volatile; sovereign limitations on foreign
investments may be more likely to be imposed; there can be significant balance
of payment deficits; and their economies and markets can respond in a more
volatile manner to economic changes than those of developed countries.
<PAGE>
The Asset-Backed Sector
Asset-Backed Securities. The Fund can invest in securities that represent
undivided fractional interests in pools of consumer loans, similar in structure
to the mortgage-backed securities in which the Fund can invest described below.
Payments of principal and interest are passed through to holders of asset-backed
securities and are typically supported by some form of credit enhancement, such
as a letter of credit, surety bond, limited guarantee by another entity or
having a priority to certain of the borrower's other obligations. The degree of
credit enhancement varies and generally applies, until exhausted, to only a
fraction of the asset-backed security's par value. If the credit enhancement of
any asset-backed security held by the Fund has been exhausted, and if any
required payments of principal and interest are not made with respect to the
underlying loans, the Fund can then experience losses or delays in receiving
payment and a decrease in the value of the asset-backed security.
The value of asset-backed securities is affected by changes in the
market's perception of the asset backing the security, the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also affected if
any credit enhancement is exhausted. The risks of investing in asset-backed
securities are ultimately dependent upon payment of the underlying consumer
loans by the individuals, and the Fund would generally have no recourse to the
entity that originated the loans in the event of default by a borrower. The
underlying loans are subject to prepayments that shorten the weighted average
life of asset-backed securities and can lower their return in the same manner as
described below for prepayments of a pool of mortgage loans underlying
mortgage-backed securities.
Private and U.S. Government Issued Mortgage-Backed Securities and CMOs.
The Fund can invest in securities that represent participation interests in
pools of residential mortgage loans, including collateralized mortgage
obligations (CMOs). Some CMOs can be issued or guaranteed by agencies or
instrumentalities of the U.S. government (for example, Ginnie Maes, Freddie Macs
and Fannie Maes). Other CMOs are issued by private issuers, such as commercial
banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers. CMOs issued by such private
issuers are not issued or guaranteed by the U.S. government or its agencies and
are, therefore, also subject to credit risks. Credit risk relates to the ability
of the issuer or a debt security to make interest or principal payments on the
security as they become due. Securities issued or guaranteed by the U.S.
government are subject to little, if any, credit risk because they are backed by
the "full faith and credit of the U.S. government", which in general terms means
that the U.S. Treasury stands behind the obligation to pay interest and
principal.
The Fund's investments can include securities which represent
participation interests in pools of residential mortgage loans which may be
issued or guaranteed by private issuers or by agencies or instrumentalities of
the U.S. government. Such securities differ from conventional debt securities
which provide for periodic payment of interest in fixed or determinable amounts
(usually semi-annually) with principal payments at maturity or specified call
dates. Mortgage-backed securities provide monthly payments which are, in effect,
a "pass-through" of the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans.
The yield on mortgage-backed securities is based on the average expected
life of the underlying pool of mortgage loans, which is computed on the basis of
the maturities of the underlying instruments. The actual life of any particular
pool will be shortened by unscheduled or early payments of principal and
interest. The occurrence of prepayments is affected by a wide range of economic,
demographic and social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. The yield on such pools is
usually computed by using the historical record of prepayments for that pool, or
in the case of newly-issued mortgages, the prepayment history of similar pools.
The actual prepayment experience of a pool of mortgage loans can cause the yield
realized by the Fund to differ from the yield calculated on the basis of the
expected average life of the pool.
The price and yields to maturity of CMOs are, in part, determined by
assumptions about cash-flows from the rate of payments of underlying mortgages.
However, changes in prevailing interest rates can cause the rate of prepayments
of underlying mortgages to change. In general, prepayments on fixed rate
mortgage loans increase during periods of falling interest rates and decrease
during periods of rising interest rates. Faster than expected prepayments of
underlying mortgages will reduce the market value and yield to maturity of
issued CMOs. If prepayments of mortgages underlying a short-term or
intermediate-term CMO occur more slowly than anticipated because of rising
interest rates, the CMO effectively can become a longer-term security. The
prices of long-term debt securities generally fluctuate more widely than those
of shorter-term securities in response to changes in interest rates which, in
turn, can result in greater fluctuations in the Fund's share prices.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates prepayments will most likely
decline. When prevailing interest rates rise, the value of a pass-through
security can decrease as do other debt securities, but, when prevailing interest
rates decline, the value of pass-through securities is not likely to rise on a
comparable basis with other debt securities because of the pre-payment feature
of pass-through securities. The Fund's reinvestment of scheduled principal
payments and unscheduled prepayments it receives can occur at higher or lower
rates than the original investment, thus affecting the yield of the Fund.
Monthly interest payments received by the Fund have a compounding effect which
can increase the yield to shareholders more than debt obligations that pay
interest semi-annually.
Because of those factors, mortgage-backed securities can be less effective
than Treasury bonds of similar maturity at maintaining yields during periods of
declining interest rates. Accelerated prepayments adversely affect yields for
pass-through securities purchased at a premium (i.e., a price in excess of
principal amount) and can involve additional risk of loss of principal because
the premium may not have been fully amortized at the time the obligation is
repaid. The opposite is true for pass-through securities purchased at a
discount. The Fund can purchase mortgage-backed securities at a premium or at a
discount.
Some mortgage-backed securities issued or guaranteed by U.S. government
agencies or instrumentalities are backed by the full faith and credit of the
U.S. Treasury (e.g., direct pass-through certificates of the Government National
Mortgage Association); some are supported by the right of the issuer to borrow
from the U.S. government (e.g., obligations of Federal Home Loan Banks); and
some are backed by only the credit of the issuer itself (e.g., obligations of
the Federal National Mortgage Association). Such guarantees do not extend to the
value or yield of the mortgage-backed securities themselves or to the value of
the Fund's shares.
Interest Rate Risks. Although U.S. government securities involve little
credit risk, their market values will fluctuate until they mature, depending on
prevailing interest rates. When prevailing interest rates go up, the market
value of already issued debt securities tends to go down. When interest rates go
down, the market value of already issued debt securities tends to go up. The
magnitude of those fluctuations generally will be greater when the average
maturity of the Fund's portfolio securities is longer. Certain of the Fund's
investments, such as I/Os, P/Os and mortgage-backed securities such as CMOs, can
be very sensitive to interest rate changes and their values can be quite
volatile.
The Fund can invest in "stripped" mortgage-backed securities or CMOs.
Stripped mortgage-backed securities usually have two classes. The classes
receive different proportions of the interest and principal distributions on the
pool of mortgage assets that act as collateral for the security. In certain
cases, one class will receive all of the interest payments (and is known as an
"I/O"), while the other class will receive all of the principal value on
maturity (and is known as a "P/O").
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the underlying
mortgages. Principal prepayments increase that sensitivity. Stripped securities
that pay "interest only" are therefore subject to greater price volatility when
interest rates change, and they have the additional risk that if the underlying
mortgages are prepaid, the Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages. That risk is increased when general interest
rates fall, and in times of rapidly falling interest rates, the Fund might
receive back less than its investment.
The value of "principal only" 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.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established trading
markets have not yet developed for these securities. Therefore, some stripped
securities could be deemed "illiquid." If the Fund holds illiquid stripped
securities, the amount it can hold will be subject to the Fund's investment
limitations set forth under "Direct Placements and Other Illiquid Securities."
The Fund can also enter into "forward roll" transactions with banks or
other buyers that provide for future delivery of the mortgage-backed securities
in which the Fund can invest. The Fund would be required to deposit liquid
assets of any type, including equity and debt securities of any grade to its
custodian bank in an amount equal to its purchase payment obligation under the
roll.
GNMA Certificates. Certificates of the Government National Mortgage
Association ("GNMA Certificates") are mortgage-backed securities which evidence
an undivided interest in a pool or pools of mortgages. The GNMA Certificates
that the Fund can purchase are of the "modified pass-through" type, which
entitle the holder to receive timely payment of all interest and principal
payments due on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether the mortgagor actually makes the payment.
The National Housing Act authorizes GNMA to guarantee the timely payment
of principal and interest on securities backed by a pool of mortgages insured by
the Federal Housing Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full faith and credit
of the U.S. government. GNMA is also empowered to borrow without limitation from
the U.S. Treasury if necessary to make any payments required under its
guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the greater part of principal investment long before the
maturity of the mortgages in the pool. Foreclosures impose no risk to principal
investment because of the GNMA guarantee, except to the extent that the Fund has
purchased the certificates at a premium in the secondary market.
FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC") was
created to promote development of a nationwide secondary market for conventional
residential mortgages. FHLMC issues two types of mortgage pass-through
securities ("FHLMC Certificates"): mortgage participation certificates ("PCS")
and guaranteed mortgage certificates ("GMCs"). PCS resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. FHLMC guarantees timely monthly payment of
interest on PCS and the ultimate payment of principal.
GMCs also represent a pro rata interest in a pool of mortgages. However,
these instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. The expected average life of these securities is
approximately ten years. The FHLMC guarantee is not backed by the full faith and
credit of the United States.
FNMA Securities. The Federal National Mortgage Association ("FNMA") was
established to create a secondary market in mortgages insured by the FHA. FNMA
issues guaranteed mortgage pass-through certificates ("FNMA Certificates"). FNMA
Certificates resemble GNMA Certificates in that each FNMA Certificate represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool. FNMA guarantees timely payment of interest and principal on
FNMA Certificates. The FNMA guarantee is not backed by the full faith and credit
of the United States.
The Municipal Sector
The assets of this sector will be invested in obligations issued by or on
behalf of states, territories or possessions of the United States and the
District of Columbia or their political subdivisions, agencies,
instrumentalities or authorities (municipal bonds). At the time of purchase, all
securities in this sector will be rated within the four highest grades assigned
by Moody's, Standard & Poor's, Fitch's or Duff & Phelps ("Baa" or better by
Moody's or "BBB" or better by Standard & Poor's or Duff & Phelps), or another
nationally recognized rating organization, or unrated securities which are of
comparable quality in the opinion of the Adviser. Any income earned on municipal
bonds which the Fund distributes to shareholders would be treated as taxable
income to such shareholders.
The Fund does not expect to invest in municipal bonds for tax-exempt
income to distribute to shareholders, but to take advantage of yield
differentials with other debt securities, which can be reflected in bond prices,
and thus reflect potential for capital appreciation. Because municipal bonds are
generally exempt from Federal taxation they normally yield much less than
taxable fixed-income securities. At times, however, the yield differential
narrows from its normal range. This can occur, for example, when the demand for
U.S. government securities substantially increases in times of economic stress
or when investors seeking safety are willing to pay more for such securities
thereby reducing the yield. It also can occur when investors perceive a threat
to the continuation of the tax-exempt status of municipal bonds through possible
Congressional or State action. When this happens, investors are not willing to
pay as much for municipal bonds, thereby reducing prices and increasing their
yield compared to taxable obligations. If such situations occur, investments in
the Municipal Sector can be more attractive than other sectors even though such
investments continue to offer lower yields than taxable securities because if
the yield differential returns to normal ranges, the value of municipal bonds
relative to taxable fixed-income securities will have increased, i.e.
depreciated less or appreciated more. Such an investment would help the Fund
achieve its objective of capital preservation or capital appreciation. It would
also help achieve its objective of high income because the Fund's net asset
value per share would be higher than it otherwise would have been, thereby
permitting it to earn additional income on those assets.
Municipal bonds include debt obligations issued to obtain funds for
various public purposes, including the construction of a wide range of public
facilities such as airports, highways, bridges, schools, hospitals, housing,
mass transportation, streets, and water and sewer works. Other public purposes
for which municipal bonds can be issued include the refunding of outstanding
obligations, obtaining funds for general operating expenses and obtaining funds
to lend to other public institutions and facilities.
The two principal classifications of municipal bonds are (1) "general
obligation" and (2) "revenue" (or "special tax") bonds. General obligation bonds
are secured by the issuer's pledge of its full faith, credit and unlimited
taxing power for the payment of principal and interest. Revenue or special tax
bonds are payable only from the revenues derived from a particular facility or
class of facilities or project or, in a few cases, from the proceeds of a
special excise or other tax but are not supported by the issuer's power to levy
general taxes. There are variations in the security of municipal bonds, both
within a particular classification and between classifications, depending on
numerous factors. The yields of municipal bonds depend on, among other things,
general money market conditions, general conditions of the Municipal Bond
market, size of a particular offering, the maturity of the obligation and rating
of the issue, and are generally lower than those of taxable investments.
The Convertible Sector
Assets allocated to this sector will be invested in securities (bonds,
debentures, corporate notes, preferred stocks and units with warrants attached)
which are convertible into common stock. Common stock received upon conversion
can be retained in the Fund's portfolio to permit orderly disposition or to
establish a holding period to avoid possible adverse federal income tax
consequences to the Fund or shareholders.
Convertible securities can provide a potential for current income through
interest and dividend payments and at the same time provide an opportunity for
capital appreciation by virtue of their convertibility into common stock. The
rating requirements to which the Fund is subject when investing in corporate
fixed-income securities and foreign securities (see above) also apply to the
Fund's investments in domestic and foreign convertible securities, respectively.
Convertible securities rank senior to common stock in a corporation's
capital structure and, therefore, can entail less risk than the corporation's
common stock. The value of a convertible security is a function of its
"investment value" (its value without considering its conversion privilege) and
its "conversion value" (the security's worth if it were to be exchanged pursuant
to its conversion privilege for the underlying security at the market value of
the underlying security).
To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise as with other fixed-income securities
(the credit standing of the issuer and other factors may also have an effect on
the convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, will sell at some premium over its conversion
value, which represents the price investors are willing to pay for the privilege
of purchasing a fixed-income security with a possibility of capital appreciation
due to the conversion privilege. At such times the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security. Convertible securities can be purchased by the Fund at varying price
levels above their investment values and/or their conversion values in keeping
with the Fund's objectives.
The Money Market Sector
Assets in this sector will be invested in the following U.S.
dollar-denominated debt obligations maturing in 397 days or less:
(1) U.S. government securities: Obligations issued or guaranteed
by the U.S. government or its agencies or instrumentalities.
(2) Bank Obligations: Certificates of deposit, bankers' acceptances,
loan participation agreements, time deposits, and letters of credit
if they are payable in the United States or London, England, and are
issued or guaranteed by a domestic or foreign bank having total
assets in excess of $1 billion.
(3) Commercial Paper: Obligations rated "A-1," "A-2" or "A-3" by
Standard & Poor's or Prime-1, Prime-2 or Prime-3 by Moody's or if
not rated, issued by a corporation having an existing debt security
rated "A" or better by Standard & Poor's or "A" or better by
Moody's.
Corporate Obligations: Corporate debt obligations (including master demand
notes but not including commercial paper) if they are issued by
domestic corporations and are rated "A" or better by Standard &
Poor's or "A" or better by Moody's or unrated securities which are
of comparable quality in the opinion of the Adviser.
(5) Other Obligations: Obligations of the type listed in (1) through (4)
above, but not satisfying the standards set forth therein, if they
are (a) subject to repurchase agreements or (b) guaranteed as to
principal and interest by a domestic or foreign bank having total
assets in excess of $1 billion, by a corporation whose commercial
paper can be purchased by the Fund, or by a foreign government
having an existing debt security rated "AA" or "Aa" or better.
(6) Board-Approved Instruments: Other short-term investments of a type
which the Board determines presents minimal credit risks and which
are of "high quality" as determined by any major rating service or,
in the case of an instrument that is not rated, of comparable
quality as determined by the Board.
Bank time deposits can be non-negotiable until expiration and can impose
penalties for early withdrawal. Master demand notes are corporate obligations
which permit the investment of fluctuating amounts by the Fund at varying rates
of interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. They permit daily changes in the amounts borrowed. The Fund has the
right to increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the borrower can
prepay up to the full amount of the note without penalty. These notes may or may
not be backed by bank letters of credit. Because these notes are direct lending
arrangements between the lender and borrower, it is not generally contemplated
that they will be traded, and there is no secondary market for them, although
they are redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time.
The Fund has no limitation on the type of issuer from whom these notes
will be purchased; however, in connection with such purchase and on an ongoing
basis, subject to policies established by the Board of Trustees, the Adviser
will consider the earning power, cash flow and other liquidity ratios of the
issuer, and its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand simultaneously.
Investments in bank time deposits and master demand notes are subject to the
investment limitation on securities that are not readily marketable set forth
under "Special Investment Techniques -- Direct Placements and Other Illiquid
Securities."
Because the Fund can invest in U.S. dollar-denominated securities of
foreign banks and foreign branches of U.S. banks, the Fund can be subject to
additional investment risks which can include future political and economic
developments of the country in which the bank is located, possible imposition of
withholding taxes on interest income payable on the securities, possible seizure
or nationalization of foreign deposits, the possible establishment of exchange
control regulations or the adoption of other governmental restrictions that
might affect the payment of principal and interest on such securities.
Additionally, not all of the U.S. Federal and state banking laws and regulations
applicable to domestic banks relating to maintenance of reserves, loan limits
and promotion of financial soundness apply to foreign branches of domestic
banks, and none of them apply to foreign banks.
SPECIAL INVESTMENT TECHNIQUES
In conjunction with the investments in the seven sectors described above,
the Fund can use the following special investment techniques, however, the
Fund's portfolio might not always include all of the different types of
investment described below.
Direct Placements and Other Illiquid Securities
The Fund can invest up to 20% of its assets in securities purchased in
direct placements which are subject to statutory or contractual restrictions and
delays on resale (restricted securities). This policy does not limit the
acquisition of restricted securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 that are determined to be liquid by the Board
of Trustees or the Adviser under Board-approved guidelines. Such guidelines take
into account trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of trading
interest in particular Rule 144A securities, the Fund's holdings of those
securities can be illiquid. Restricted securities may generally be resold only
in privately-negotiated transactions with a limited number of purchasers or in a
public offering registered under the Securities Act of 1933 and are, therefore,
unlike securities which are traded in the open market and can be expected to be
sold immediately if the market demand is adequate. If restricted securities are
substantially comparable to registered securities of the same issuer which are
readily marketable, the Fund can not purchase them unless they are offered at a
discount from the market price of the registered securities. Generally, no
restricted securities will be purchased unless the issuer has agreed to register
the securities at its expense within a specific time period. Adverse conditions
in the public securities market at certain times can preclude a public offering
of an issuer's unregistered securities. There can be undesirable delays in
selling restricted securities at prices representing fair value.
The Fund can invest up to an additional 10% of its assets in securities
which, although not restricted, are not readily marketable. Such securities can
include bank time deposits, master demand notes described in the Money Market
Sector and certain puts and calls which are traded in the over-the-counter
markets. The Adviser monitors holdings of illiquid securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity.
Illiquid securities include repurchase agreements maturing in more than seven
days, or certain participation interests other than those with puts exercisable
within seven days.
Repurchase Agreements
Any of the securities permissible for purchase for one of its sectors can
be acquired by the Fund subject to repurchase agreements with commercial banks
with total assets in excess of $1 billion or securities dealers with a net worth
in excess of $50 million. In a repurchase transaction, at the time the Fund
acquires a security, it simultaneously resells it to the vendor and must deliver
that security to the vendor on a specific future date. The repurchase price
exceeds the purchase price by an amount that reflects an agreed-upon interest
rate effective for the period during which the repurchase agreement is in
effect. The majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Fund will not enter into a repurchase transaction of more than
seven days. Repurchase agreements are considered "loans" under the Investment
Company Act of 1940 (the "1940 Act"), collateralized by the underlying security.
The Fund's repurchase agreements will require that at all times while the
repurchase agreement is in effect, the collateral's value must equal or exceed
the repurchase price to collateralize the loan fully. The Adviser will monitor
the collateral daily and, in the event its value declines below the repurchase
price, will immediately demand additional collateral be deposited. If such
demand is not met within one day, the existing collateral will be sold.
Additionally, the Adviser will consider the creditworthiness of the vendor. If
the vendor fails to pay the agreed-upon resale price on the delivery date, the
Fund's risks in such event can include any decline in value of the collateral to
an amount which is less than 100% of the repurchase price, any costs of
disposing of such collateral, and loss from any delay in foreclosing on the
collateral. There is no limit on the amount of the Fund's assets that can be
subject to repurchase agreements.
When-Issued and Delayed-Delivery Transactions
The Fund can purchase asset-backed securities, municipal bonds and other
debt securities on a "when-issued" basis, and can purchase or sell such
securities on a "delayed-delivery" basis. "When-issued" or "delayed-delivery"
refers to securities whose terms and indenture are available and for which a
market exists, but which are not available for immediate delivery. Although the
Fund will enter into such transactions for the purpose of acquiring securities
for its portfolio for delivery pursuant to option contracts it has entered into;
the Fund can dispose of a commitment prior to settlement. The Fund does not
intend to make such purchases for speculative purposes. When such transactions
are negotiated, the price (which is generally expressed in yield terms) is fixed
at the time the commitment is made, but delivery and payment for the securities
take place at a later date. During the period between commitment by the Fund and
settlement (generally within 45 days from the date the offer is accepted), no
payment is made for the securities purchased, and no interest accrues to the
Fund from the transaction until the Fund receives the security at settlement of
the trade. Such securities are subject to market fluctuations; the value at
delivery can be less than the purchase price. The Fund will identify to its
custodian, liquid assets on its records as segregated of any type, including
equity and debt securities of any grade at least equal to the value of purchase
commitments until payment is made. Such securities can bear interest at a lower
rate than longer term securities. The commitment to purchase a security for
which payment will be made on a future date can be deemed a separate security
and involve a risk of loss if the value of the security declines prior to the
settlement date, which risk is in addition to the risk of decline of the Fund's
other assets.
Hedging
The Fund can purchase futures contracts; forward contracts; call and put
options on securities, futures, indices and foreign currencies; and enter into
interest rate swap agreements. These are referred to as "Hedging Instruments".
The Fund is not obligated to use hedging instruments even though it is permitted
to use them in the Advisor's discretion, as described below.
Hedging Instruments can be used to attempt to protect against possible
declines in the market value of the Fund's portfolio from downward trends in
securities markets, to protect the Fund's unrealized gains in the value of its
securities which have appreciated, to facilitate selling securities for
investment reasons, to establish a position in the securities markets as a
temporary substitute for purchasing particular securities, or to reduce the risk
of adverse currency fluctuations.
The Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's activities in the underlying cash market. Covered calls
and puts can also be written on securities to attempt to increase the Fund's
income. The Fund will not use futures and options on futures for speculation.
The hedging instruments the Fund can use are described below. As of the date of
this Registration Statement, the Fund does not intend to enter into futures,
forward contracts and options on futures if after any such purchase, the sum of
margin deposits on futures and premiums paid on futures options would exceed 5%
of the value of the Fund's total assets.
|_| Futures. The Fund can buy and sell futures contracts that relate to
(1) stock indices (referred to as stock index futures), other securities indices
(together with stock index futures, referred to as financial futures), (3)
interest rates (referred to as interest rate futures), (4) foreign currencies
(referred to as forward contracts), or (5) commodities (referred to as commodity
futures.) An interest rate future obligates the seller to deliver and the
purchaser to take a specific type of debt security at a specific future date for
a fixed price. That obligation can be satisfied by actual delivery of the debt
security or by entering into an offsetting contract. A bond index assigns
relative values to the bonds included in that index and is used as a basis for
trading long-term bond index futures contracts. Bond index futures reflect the
price movements of bonds included in the index. They differ from interest rate
futures in that settlement is made in cash rather than by delivery; or
settlement can be made by entering into an offsetting contract.
|_| Put and Call Options. The Fund can buy and sell exchange-traded and
over-the-counter put and call options, including index options, securities
options, currency options, commodities options, and options on the other types
of futures described in "futures," above. A call or put can be purchased only
if, after the purchase, the value of all call and put options held by the Fund
will not exceed 5% of the Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be "covered."
That means the Fund must own the security subject to the call while the call is
outstanding, or, for other types of written calls, the Fund must segregate
liquid assets to enable it to satisfy its obligations if the call is exercised.
Up to 25% of the Fund's total assets can be subject to calls.
The Fund can buy puts whether or not it holds the underlying investment in
the portfolio. If the Fund writes a put, the put must be covered by segregated
liquid assets. The Fund will not write puts if more than 50% of the Fund's net
assets would have to be segregated to cover put options.
|_| Foreign Currency Options. The Fund can purchase and write puts and
calls on foreign currencies that are traded on a securities or commodities
exchange or quoted by major recognized dealers in such options, for the purpose
of protecting against declines in the dollar value of foreign securities and
against increases in the dollar cost of foreign securities to be acquired. If a
rise is anticipated in the dollar value of a foreign currency in which
securities to be acquired are denominated, the increased cost of such securities
can be partially offset by purchasing calls or writing puts on that foreign
currency. If a decline in the dollar value of a foreign currency is anticipated,
the decline in value of portfolio securities denominated in that currency can be
partially offset by writing calls or purchasing puts on that foreign currency.
However, in the event of currency rate fluctuations adverse to the Fund's
position, it would either lose the premium it paid and incur transaction costs,
or purchase or sell the foreign currency at a disadvantageous price.
|_| Forward Contracts. The Fund can enter into foreign currency exchange
contracts ("forward contracts"), which obligate the seller to deliver and the
purchaser to take a specific foreign currency at a specific future date for a
fixed price. The Fund can enter into a Forward Contract in order to "lock in"
the U.S. dollar price of a security denominated in a foreign currency, or to
protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and a foreign currency. There is a risk
that use of forward contracts can reduce the gain that would otherwise result
from a change in the relationship between the U.S. dollar and a foreign
currency. Forward contracts include standardized foreign currency futures
contracts which are traded on exchanges and are subject to procedures and
regulations applicable to other futures. The Fund can also enter into a Forward
Contract to sell a foreign currency denominated in a currency other than that in
which the underlying security is denominated. This is done in the expectation
that there is a greater correlation between the foreign currency of the Forward
Contract and the foreign currency of the underlying investment than between the
U.S. dollar and the currency of the underlying investment. This technique is
referred to as "cross hedging". The success of cross hedging is dependent on
many factors, including the ability of the Adviser to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar. To the
extent that the correlation is not identical, the Fund can experience losses or
gains on both the underlying security and the cross currency hedge.
The Fund will not speculate in foreign currency exchange contracts. There
is no limitation as to the percentage of the Fund's assets that can be committed
to foreign currency exchange contracts. The Fund does not enter into such
forward contracts or maintain a net exposure in such contracts to the extent
that the Fund would be obligated to deliver an amount of foreign currency in
excess of the value of the Fund's assets denominated in that currency or enter
into a cross hedge unless it is denominated in a currency or currencies that the
Adviser believes will have price movements that tend to correlate closely with
the currency in which the investment being hedged is denominated.
There are certain risks in writing calls. If a call written by the Fund is
exercised, the Fund foregoes any profit from any increase in the market price
above the call price of the underlying investment on which the call was written.
In addition, the Fund could experience capital losses that might cause
previously distributed short-term capital gains to be re-characterized as
non-taxable return of capital to shareholders. In writing puts, there is the
risk that the Fund could be required to buy the underlying security at a
disadvantageous price. The principal risks relating to the use of futures are:
(a) possible imperfect correlation between the prices of the futures and the
market value of the securities in the Fund's portfolio; (b) possible lack of a
liquid secondary market for closing out a futures position; (c) the need for
additional skills and techniques beyond those required for normal portfolio
management; and (d) losses on futures resulting from interest rate movements not
anticipated by the Adviser.
Interest Rate Swaps and Total Return Swaps. In an interest rate swap,
the Fund and another party exchange their right to receive or their obligation
to pay interest on a security. For example, they might swap the right to receive
fixed rate payments for floating rate payments. The Fund enters into swaps only
on securities it owns. The Fund can not enter into swaps with respect to more
than 25% of its total assets. Also, the Fund will identify on its books liquid
assets of any type, including equity and debt securities of any grade, to cover
any amounts it could owe under swaps that exceed the amounts it is entitled to
receive, and it will adjust that amount daily, as needed.
In addition, the Fund may invest in total return swaps with appropriate
counterparties. In a total return swap, one party pays a rate of interest in
exchange for the total rate of return on another investment. For example, if the
Fund wished to invest in a particular security, it could instead enter into a
total return swap and receive the total return of that security, less the
"funding cost," which would be a floating interest rate payment to the
counterparty.
Under a swap agreement, the Fund typically will pay a fee determined by
multiplying the face value of the swap agreement by an agreed-upon interest
rate. If the underlying asset value declines over the term of the swap, the Fund
would be required to pay the dollar value of that decline to the counterparty in
addition to its fee payments.
Swap agreements entail both interest rate risk and credit risk. There is a
risk that, based on movements of interest rates in the future, the payments made
by the Fund under a swap agreement will be greater than the payments it
receives. Credit risk arises from the possibility that the counterparty will
default. If the counterparty defaults, the Fund's loss will consist of the net
amount of contractual interest payments that the Fund has not yet received. The
Manager will monitor the creditworthiness of counterparties to the Fund's
interest rate swap transactions on an ongoing basis.
|_| Derivative Investments. The Fund can invest in a number of different
kinds of "derivative investments." In general, a "derivative investment" is a
specially designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index, currency or
commodity. The Fund can not purchase or sell physical commodities or commodity
contracts; however this does not prevent the Fund from buying or selling options
and futures contracts or from investing in securities or other instruments
backed by physical commodities. In the broadest sense, derivative investments
include exchange-traded options and futures contracts. The risks of investing in
derivative investments include not only the ability of the company issuing the
instrument to pay the amount due on the maturity of the instrument, but also the
risk that the underlying investment or security might not perform the way the
Adviser expected it to perform. The performance of derivative investments can
also be influenced by interest rate changes in the U.S. and abroad. All of this
can mean that the Fund will realize less principal and/or income than expected.
Certain derivative investments held by the Fund can trade in the
over-the-counter market and can be illiquid. Derivative investments used by the
Fund are used in some cases for hedging purposes and in other cases for
"non-hedging" investment purposes to seek income or total return. In the
broadest sense, exchange-traded options and futures contracts (discussed in
"Hedging," above) can be considered "derivative investments."
The Fund can invest in different types of derivatives, generally known as
"Structured Investments." "Index-linked" or "commodity -linked" notes are debt
securities of companies that call for interest payments and/or payment on the
maturity of the note in different terms than the typical note where the borrower
agrees to make fixed interest payments and to pay a fixed sum on the maturity of
the note. Principal and/or interest payments on an index-linked note depend on
the performance of one or more market indices, such as the S&P 500 Index or a
weighted index of commodity futures, such as crude oil, gasoline and natural
gas. Further examples of derivative investments the Fund can invest in include
"debt exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the principal amount of the security is
exchanged for common stock of the issuer or is payable in an amount based on the
issuer's common stock price at the time of maturity. In either case there is a
risk that the amount payable at maturity will be less than the principal amount
of the debt.
The Fund can also invest in currency-indexed securities. Typically these
are short-term or intermediate-term debt securities having a value at maturity,
and/or interest rates determined by reference to one or more specified foreign
currencies. Certain currency-indexed securities purchased by the Fund can have a
payout factor tied to a multiple of the movement of the U.S. dollar (or the
foreign currency in which the security is denominated) against the movement in
the U.S. dollar, the foreign currency, another currency, or an index. Such
securities can be subject to increased principal risk and increased volatility
than comparable securities without a payout factor in excess of one, but the
Adviser believes the increased yield justifies the increased risk.
|_| Participation Interests. The Fund can acquire interests in loans that
are made to U.S. companies, foreign companies and foreign governments (the
"borrower"). They can be interests in, or assignments of, the loan and are
acquired from banks or brokers that have made the loan or have become members of
the lending syndicate. The Fund will not invest, at the time of investment, more
than 5% of its net assets in participation interests of the same borrower. The
Adviser has set certain creditworthiness standards for borrowers, and monitors
their creditworthiness. The value of loan participation interests depends
primarily upon the creditworthiness of the borrower, and its ability to pay
interest and principal. Borrowers can have difficulty making payments. If a
borrower fails to make scheduled interest or principal payments, the Fund could
experience a decline in the net asset value of its shares. Some borrowers can
have senior securities rated as low as "C" by Moody's or "D" by Standard &
Poor's or Duff & Phelps, but can be deemed acceptable credit risks.
Participation interests are subject to the Fund's limitations on investments in
illiquid securities.
Loans of Portfolio Securities
To attempt to increase its income, the Fund can lend its portfolio
securities if, after any loan, the value of the securities loaned does not
exceed 25% of the total value of its assets. Under applicable regulatory
requirements (which are subject to change), the loan collateral must, on each
business day, be at least equal to the value of the loaned securities and must
consist of cash, bank letters of credit or U.S. government securities. To be
acceptable as collateral, letters of credit must obligate a bank to pay amounts
demanded by the Fund if the demand meets the terms of the letter. Such terms and
the issuing bank must be satisfactory to the Fund. The Fund receives an amount
equal to the dividends or interest on loaned securities and also receives one or
more of (a) negotiated loan fees, (b) interest on securities used as collateral,
or (c) interest on short-term debt securities purchased with such loan
collateral; either type of interest may be shared with the borrower. The Fund
can also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet certain tests under the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code" or the "Code"),
and permit the Fund to reacquire loaned securities on five days' notice or in
time to vote on any important matter. The Fund will make such loans only to
banks and securities dealers with whom it can enter into repurchase
transactions. If the borrower fails to return this loaned security the Fund's
risks include: (1) any costs in disposing of the collateral; (2) loss from a
decline in value of the collateral to an amount less than 100% of the securities
loaned; (3) being unable to exercise its voting or consent rights with respect
to the security; and (4) any loss arising from the Fund being unable to timely
settle a sale of such securities.
Borrowing
From time to time, the Fund can increase its ownership of securities by
borrowing up to 10% of the value of its net assets from banks and investing the
borrowed funds (on which the Fund will pay interest). After any such borrowing,
the Fund's total assets, less its liabilities other than borrowings, must remain
equal to at least 300% of all borrowings, as set forth in the Investment Company
Act. Interest on borrowed money is an expense the Fund would not otherwise
incur, so that it can have substantially reduced net investment income during
periods of substantial borrowings. The Fund's ability to borrow money from banks
subject to the 300% asset coverage requirement is a fundamental policy.
The Fund can also borrow to finance repurchases and/or tenders of its
shares and can also borrow for temporary purposes in an amount not exceeding 5%
of the value of the Fund's total assets. Any investment gains made with the
proceeds obtained from borrowings in excess of interest paid on the borrowings
will cause the net income per share or the net asset value per share of the
Fund's shares to be greater than would otherwise be the case. On the other hand,
if the investment performance of the securities purchased fails to cover their
cost (including any interest paid on the money borrowed) to the Fund, then the
net income per share or net asset value per share of the Fund's shares will be
less than would otherwise have been the case. This speculative factor is known
as "leverage."
Although such borrowings would therefore involve additional risk to the
Fund, the Fund will only borrow if such additional risk of loss of principal is
considered by the Adviser to be appropriate in relation to the Fund's primary
investment objective of high current income consistent with preservation of
capital. The Adviser will make this determination by examining both the market
for securities in which the Fund invests and interest rates in general to
ascertain that the climate is sufficiently stable to warrant borrowing.
Portfolio Turnover
Because the Fund will actively use trading to benefit from short-term
yield disparities among different issues of fixed-income securities or otherwise
to achieve its investment objective and policies, the Fund can be subject to a
greater degree of portfolio turnover than might be expected from investment
companies which invest substantially all of their assets on a long-term basis.
The Fund cannot accurately predict its portfolio turnover rate, but it is
anticipated that its annual turnover rate generally will not exceed 400%
(excluding turnover of securities having a maturity of one year or less).
The Adviser will monitor the Fund's tax status under the Internal Revenue
Code during periods in which the Fund's annual turnover rate exceeds 100%.
Higher portfolio turnover results in increased Fund expenses, including
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of securities and on the reinvestment in other securities. To the extent that
increased portfolio turnover results in sales of securities held less than three
months, the Fund's ability to qualify as a "regulated investment company" under
the Internal Revenue Code can be affected.
Defensive Strategies
There can be times when, in the Adviser's judgment, conditions in the
securities markets would make pursuing the Fund's primary investment strategy
inconsistent with the best interests of its shareholders. At such times, the
Fund may employ alternative strategies primarily seeking to reduce fluctuations
in the value of the Fund's assets. In implementing these defensive strategies,
the Fund can invest all or any portion of its assets in nonconvertible
high-grade debt securities, or U.S. government and agency obligations. The Fund
can also hold a portion of its assets in cash or cash equivalents. It is
impossible to predict when, or for how long, alternative strategies will be
utilized.
Effects of Interest Rate Changes
During periods of falling interest rates, the values of outstanding long
term fixed-income securities generally rise. Conversely, during periods of
rising interest rates, the values of such securities generally decline. The
magnitude of these fluctuations will generally be greater for securities with
longer maturities. If the Adviser's expectation of changes in interest rates or
its evaluation of the normal yield relationships in the fixed-income markets
proves to be incorrect, the Fund's income, net asset value and potential capital
gain can be decreased or its potential capital loss can be increased.
Although changes in the value of the Fund's portfolio securities
subsequent to their acquisition are reflected in the net asset value of the
Fund's shares, such changes will not affect the income received by the Fund from
such securities. The dividends paid by the Fund will increase or decrease in
relation to the income received by the Fund from its investments, which will in
any case be reduced by the Fund's expenses before being distributed to the
Fund's shareholders.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions, which together
with its investment objectives, are fundamental policies changeable only with
the approval of the holders of a "majority" of the Fund's outstanding voting
securities, defined in the 1940 Act as the affirmative vote of the lesser of (a)
more than 50% of the outstanding shares of the Fund, or (b) 67% or more of the
shares present or represented by proxy at a meeting if more than 50% of the
Fund's outstanding shares are represented at the meeting in person or by proxy.
Unless it is specifically stated that a percentage restriction applies on an
ongoing basis, it applies only at the time the Fund makes an investment, and the
Fund need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Under these
restrictions, the Fund will not do any of the following:
|_| As to 75% of its total assets, the Fund will not invest in securities
of any one issuer (other than the United States government, its agencies or
instrumentalities) if after any such investment either (a) more than 5% of the
Fund's total assets would be invested in the securities of that issuer, or (b)
the Fund would then own more than 10% of the voting securities of that issuer;
|_| The Fund will not concentrate investments to the extent of 25% or more
of its total assets in securities of issuers in the same industry; provided that
this limitation shall not apply with respect to investments in U.S. government
securities.
|_| The Fund will not make loans except through (a) the purchase of debt
securities in accordance with its investment objectives and policies; (b) the
lending of portfolio securities as described above; or (c) the acquisition of
securities subject to repurchase agreements;
|_| The Fund will not borrow money, except in conformity with the
restrictions stated above under "Borrowing."
|_| The Fund will not pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings or for the escrow arrangements
contemplated in connection with the use of Hedging Instruments;
|_| The Fund will not participate on a joint or joint and several basis in
any securities trading account;
|_| The Fund will not invest in companies for the purpose of exercising
control or management thereof;
|_| The Fund will not make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an equal
amount of such securities or by virtue of ownership of other securities has the
right, without payment of any further consideration, to obtain an equal amount
of the securities sold short ("short sales against the box"). Because changes in
Federal income tax laws would not enable the Fund to defer realization of gain
or loss for Federal income tax purposes, short sales against the box therefore
would not be used by the Fund;
|_| The Fund will not invest in (a) real estate, except that it can
purchase and sell securities of companies which deal in real estate or interests
therein; (b) commodities or commodity contracts (except that the Fund can
purchase and sell hedging instruments whether or not they are considered to be a
commodity or commodity contract); or (c) interests in oil, gas or other mineral
exploration or development programs;
|_| The Fund will not act as an underwriter of securities, except insofar
as the Fund might be deemed to be an underwriter for purposes of the Securities
Act of 1933 in the resale of any securities held for its own portfolio;
|_| The Fund will not purchase securities on margin, except that the Fund
can make margin deposits in connection with any of the Hedging Instruments it
can use; or
|_| The Fund will not issue "senior securities," but this does not
prohibit certain investment activities for which assets of the Fund are
designated as segregated, or margin, collateral, or escrow arrangements are
established, to cover the related obligations. Examples of those activities
include borrowing money, reverse repurchase agreements, delayed-delivery
agreements and when-issued arrangements for portfolio securities transactions
and contracts to buy or sell derivatives, hedging instruments or options or
futures.
Theshares of beneficial interest of the Fund, $.01 par value per share
(the "shares"), are listed and traded on The New York Stock Exchange
(the "NYSE"). The following table sets forth for the shares for the
periods indicated: (a) the per share high sales price on the NYSE, the
net asset value per share as of the last day of the week immediately
preceding such day and the premium or discount (expressed as a
percentage of net asset value) represented by the difference between
such high sales price and the corresponding net asset value and (b) the
per share low sales price on the NYSE, the net asset value per share as
of the last day of the week immediately preceding such day and the
premium or discount (expressed as a percentage of net asset value)
represented by the difference between such low sales price and the
corresponding net asset value.
Market Price High;(1) Market Price Low;(1)
NAV and Premium/ NAV and Premium/
Ended Discount That Day(2) Discount That Day(2)
- -------- ---------------------------- ----------------------------
10/31/96 Market: $10.00 Market: $ 9.63
NAV: $10.52 NAV: $10.25
Premium//Discount: -4.94% Premium//Discount: -6.10%
1/31/97 Market: $10.00 Market: $9.63
NAV: $10.66 NAV: $10.50
Premium//Discount: -6.19% Premium//Discount: -8.33%
4/30/97 Market: $10.25 Market: $9.88
NAV: $10.40 NAV: $10.38
Premium//Discount: -1.44% Premium//Discount: -4.87%
7/31/97 Market: $10.75 Market: $10.00
NAV: $10.66 NAV: $10.52
Premium//Discount: 0.84% Premium//Discount: -4.94%
10/31/97 Market: $10.63 Market: $10.13
NAV: $10.64 NAV: $10.62
Premium//Discount: -0.14% Premium//Discount: -4.66%
1/31/98 Market: $10.63 Market: $10.00
NAV: $10.71 NAV: $10.57
Premium//Discount: -0.79% Premium//Discount: -5.39%
4/30/98 Market: $10.56 Market: $10.13
NAV: $10.76 NAV: $10.74
Premium//Discount: -1.86% Premium//Discount: -5.68%
7/31/98 Market: $10.44 Market: $10.00
NAV: $10.59 NAV: $10.64
Premium//Discount: -1.42% Premium//Discount: -6.02%
10/31/98 Market: $10.13 Market: $8.50
NAV: $10.33 NAV: $9.80
Premium//Discount: -1.94% Premium//Discount: -13.27%
1/31/99 Market: $9.56 Market: $8.50
NAV: $9.87 NAV: $9.94
Premium//Discount: -3.14% Premium//Discount: -14.49%
4/30/99 Market: $8.94 Market: $8.50
NAV: $9.79 NAV: $10.00
Premium//Discount: -8.71% Premium//Discount: -17.65%
7/31/99 Market: $8.88 Market: $8.50
NAV: $10.07 NAV: $9.67
Premium//Discount: -11.87% Premium//Discount: -12.10%
10/31/99 Market: $8.75 Market: $7.87
NAV: $9.54 NAV: $9.41
Premium//Discount: -8.28% Premium//Discount: -16.37%
1/31/00 Market: $8.19 Market: $7.38
NAV: $9.55 NAV: $9.49
Premium//Discount: -14.24% Premium//Discount: -22.23%
- ---------------
1. As reported by the NYSE.
2. The Fund's computation of net asset value (NAV) is as of the close of trading
on the last day of the week immediately preceding the day for which the high and
low market price is reported and the premium or discount (expressed as a
percentage of net asset value) is calculated based on the difference between the
high or low market price and the corresponding net asset value for that day,
divided by the net asset value.
The Board of Trustees of the Fund has determined that it could be in the
interests of Fund shareholders for the Fund to take action to attempt to reduce
or eliminate a market value discount from net asset value. To that end, the Fund
could, from time to time, either repurchase shares in the open market or,
subject to conditions imposed from time to time by the Board, make a tender
offer for a portion of the Fund's shares at their net asset value per share.
Subject to the Fund's fundamental policy with respect to borrowings, the Fund
could incur debt to finance repurchases and/or tenders. Interest on any such
borrowings will reduce the Fund's net income. In addition, the acquisition of
shares by the Fund will decrease the total assets of the Fund and therefore will
have the effect of increasing the Fund's expense ratio. If the Fund must
liquidate portfolio securities to purchase shares tendered, the Fund could be
required to sell portfolio securities for other than investment purposes and
could realize gains and losses. Gains realized on securities held for less than
three months could affect the Fund's ability to retain its status as a regulated
investment company under the Internal Revenue Code.
In addition to open-market share purchases and tender offers, the Board
could also seek shareholder approval to convert the Fund to an open-end
investment company if the Fund's shares trade at a substantial discount. If the
Fund's shares have traded on the NYSE at an average discount from net asset
value of more than 10%, determined on the basis of the discount as of the end of
the last trading day in each week during the period of 12 calendar weeks ending
October 31 in such year, the Trustees will consider recommending to shareholders
a proposal to convert the Fund to an open-end company. If during a year in which
the Fund's shares trade at the average discount stated, and for the period
described, in the preceding sentence the Fund also receives written requests
from the holders of 10% or more of the Fund's outstanding shares that a proposal
to convert to an open end company be submitted to the Fund's shareholders,
within six months the Trustees will submit a proposal to the Fund's
shareholders, to the extent consistent with the 1940 Act, to amend the Fund's
Declaration of Trust to convert the Fund from a closed-end to an open-end
investment company. If the Fund converted to an open-end investment company, it
would be able continuously to issue and offer its shares for sale, and each
share of the Fund could be tendered to the Fund for redemption at the option of
the shareholder, at a redemption price equal to the current net asset value per
share. To meet such redemption request, the Fund could be required to liquidate
portfolio securities. It shares would no longer be listed on the NYSE. The Fund
cannot predict whether any repurchase of shares made while the Fund is a
closed-end investment company would decrease the discount from net asset value
at which the shares trade. To the extent that any such repurchase decreased the
discount from net asset value to an amount below 10% during the measurement
period described above, the Fund would not be required to submit to shareholders
a proposal to convert the Fund to an open-end investment company.
Item 9. Management
1(a). The Fund is governed by a Board of Trustees, which is
responsible under Massachusetts law for protecting the interests of
shareholders. The Trustees meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions of the
Adviser. The Fund is required to hold annual shareholder meetings for the
election of trustees and the ratification of its independent auditors. The Fund
can also hold shareholder meetings from time to time for other important
matters, and shareholders have the right to call a meeting to remove a Trustee
or to take other action described in the Fund's Declaration of Trust.
1(b). The Adviser, a Colorado corporation with its principal offices
at Two World Trade Center, New York, New York 10048-0203, acts as investment
adviser for the Fund under an investment advisory agreement (the "Advisory
Agreement") under which it provides ongoing investment advice and conducts the
investment operations of the Fund, including purchases and sales of its
portfolio securities, under the general supervision and control of the Trustees
of the Fund. The Adviser also acts as accounting agent for the Fund.
The Adviser has operated as an investment advisor since January 1960. The
Adviser (including subsidiaries and affiliates) managed more than $120 billion
in assets as of December 31, 1999, including other Oppenheimer funds with more
than 5 million shareholder accounts. The Adviser is located at Two World Trade
Center, 34th Floor, New York, New York 10048-0203.
The Adviser provides office space and investment advisory services
for the Fund and pays all compensation of those Trustees and officers of the
Fund who are affiliated persons of the Adviser. Under the Advisory Agreement,
the Fund pays the Adviser an advisory fee computed and paid weekly at an annual
rate of 0.65 of 1% of the net assets of the Fund at the end of that week. The
Fund also pays the Adviser an annual fee of $24,000 plus out-of-pocket costs and
expenses reasonably incurred, for performing limited accounting services for the
Fund. During the fiscal years ended October 31, 1997, 1998 and 1999, the Fund
paid management fees to the Adviser of $1,997,563, $1,980,152 and $1,857,232,
respectively. The Fund incurred approximately $45,641 in expenses for the fiscal
year ended October 31, 1999 for services provided by Shareholder Financial
Services, Inc., a subsidiary of the Adviser that acts as transfer agent,
shareholder servicing agent and dividend paying agent for the Fund.
Under the Advisory Agreement, the Fund pays certain of its other costs not
paid by the Adviser, including: (a) brokerage and commission expenses,
federal, state, local and foreign taxes, including issue and transfer taxes,
incurred by or levied on the Fund,
(c) interest charges on borrowings,
(d) the organizational and offering expenses of the Fund, whether or not
advanced by the Adviser,
(e) fees and expenses of registering the shares of the Fund under the
appropriate federal securities laws and of qualifying shares of the
Fund under applicable state securities laws,
(f) fees and expenses of listing and maintaining the listings of the Fund's
shares on any national securities exchange,
(g) expenses of printing and distributing reports to shareholders, (h) costs of
shareholder meetings and proxy solicitation, (i) charges and expenses of the
Fund's custodian bank and Registrar, Transfer and
Dividend Disbursing Agent,
(j) compensation of the Fund's Trustees who are not interested persons of
the Adviser, (k) legal and auditing expenses, (l) the cost of certificates
representing the Fund's shares, (m) costs of stationery and supplies, and
(n) insurance premiums.
The Adviser has advanced certain of the Fund's organizational and offering
expenses, which were repaid by the Fund. There is no expense limitation
provision.
1(c). The Portfolio managers of the Fund are Arthur Steinmetz and
Caleb Wong, Mr. Steinmetz is a Vice President of the Fund and a Senior Vice
President of the Adviser and Mr. Wong is a Vice President of both the Fund and
the Adviser. 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 Adviser since July 1996, prior
to which we was enrolled in the Ph.D. program for Economics as the University of
Chicago. Other members of the Adviser's fixed-income portfolio department,
particularly portfolio analysts, traders and other portfolio managers provide
the Fund's portfolio managers with support in managing the Fund's portfolio.
1(d). Inapplicable.
1(e). The Bank of New York, 48 Wall Street, New York, New York, acts
as the custodian bank for the Fund's assets held in the United States. The
Adviser and its affiliates have banking relationships with the custodian bank.
The Adviser has represented to the Fund that its banking relationships with the
custodian bank have been and will continue to be unrelated to and unaffected by
the relationship between the Fund and the custodian bank. It will be the
practice of the Fund to deal with the custodian bank in a manner uninfluenced by
any banking relationship the custodian bank may have with the Adviser and its
affiliates. Rules adopted under the 1940 Act permit the Fund to maintain its
securities and cash in the custody of certain eligible banks and securities
depositories. Pursuant to those Rules, the Fund's portfolio of securities and
cash, when invested in foreign securities, will be held in foreign banks and
securities depositories approved by the Trustees of the Fund in accordance with
the rules of the Securities and Exchange Commission.
Shareholder Financial Services, Inc. ("SFSI"), a subsidiary of the
Adviser, acts as primary transfer agent, shareholder servicing agent and
dividend paying agent for the Fund. Fees paid to SFSI are based on the number of
shareholder accounts and the number of shareholder transactions, plus
out-of-pocket costs and expenses. United Missouri Trust Company of New York acts
as co-transfer agent and co-registrar with SFSI to provide such services as SFSI
may request.
1(f). See 1(b) above.
1(g). Inapplicable.
2. Inapplicable.
3. None as of February 7, 2000.
Item 10. Capital Stock, Long-Term Debt, and Other Securities.
1. The Fund is authorized to issue an unlimited number of shares of
beneficial interest, $.01 par value. The Fund's shares have no preemptive,
conversion, exchange or redemption rights. Each share has equal voting,
dividend, distribution and liquidation rights. All shares outstanding are, and,
when issued, those offered hereby will be, fully paid and nonassessable.
Shareholders are entitled to one vote per share. All voting rights for the
election of Trustees are noncumulative, which means that the holders of more
than 50% of the shares can elect 100% of the Trustees then nominated for
election if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Under the rules of the
NYSE applicable to listed companies, the Fund is required to hold an annual
meeting of shareholders in each year.
Under Massachusetts law, under certain circumstances shareholders could be
held personally liable for the obligations of the Fund. However, the Declaration
of Trust disclaims shareholder liability for actions or obligations of the Fund
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund. The Declaration
of Trust provides for indemnification by the Fund for all losses and expenses of
any shareholder held personally liable for obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet
its obligations. The likelihood of such circumstances is remote.
Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), all dividends and capital gains distributions ("Distributions")
declared by the Trust will be automatically reinvested in additional full and
fractional shares of the Trust ("shares") unless (i) a shareholder elects to
receive cash or (ii) shares are held in nominee name, in which event the nominee
should be consulted as to participation 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"), and a service fee of $0.75.
Depending upon the circumstances hereinafter described, Plan shares will
be acquired by the Agent for the Participant's account through receipt of newly
issued shares or the purchase of outstanding shares on the open market. If the
market price of shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional shares at the greater of the Trust's net asset
value determined as of the date of purchase or 95% of the then-current market
price. If the market price is lower than net asset value, the Distribution will
be paid in cash, which the Agent will use to buy shares on The New York Stock
Exchange (the "NYSE"), or otherwise on the open market to the extent available.
If the market price exceeds the net asset value before the Agent has completed
its purchases, the average purchase price per share paid by the Agent may exceed
the net asset value, resulting in fewer shares being acquired than if the
Distribution had been paid in shares issued by the Trust.
Participants may elect to withdraw from the Plan at any time and thereby
receive cash in lieu of shares by sending appropriate written instructions to
the Agent. Elections received by the Agent will be effective only if received
more than ten days prior to the record date for any Distribution; otherwise,
such termination will be effective shortly after the investment of such
Distribution with respect to any subsequent Distribution. Upon withdrawal from
or termination of the Plan, all shares acquired under the Plan will remain in
the Participant's account unless otherwise requested. For full shares, the
Participant may either: (1) receive without charge a share certificate for such
shares; or (2) request the Agent (after receipt by the Agent of signature
guaranteed instructions by all registered owners) to sell the shares acquired
under the Plan and remit the proceeds less any brokerage commissions and a $2.50
service fee. Fractional shares may either remain in the Participant's account or
be reduced to cash by the Agent at the current market price with the proceeds
remitted to the Participant. Shareholders who have previously withdrawn from the
Plan may rejoin at any time by sending written instructions signed by all
registered owners to the Agent.
There is no direct charge for participation in the Plan; all fees of the
Agent are paid by the Trust. There are no brokerage charges for shares issued
directly by the Trust. However, each Participant will pay a pro rata share of
brokerage commissions incurred with respect to open market purchases of shares
to be issued under the Plan. Participants will receive tax information annually
for their personal records and to assist in Federal income tax return
preparation. The automatic reinvestment of Distributions does not relieve
Participants of any income tax that may be payable on Distributions.
The Plan may be terminated or amended at any time upon 30 days' prior
written notice to Participants which, with respect to a Plan termination, must
precede the record date of any Distribution by the Trust. Additional information
concerning the Plan may be obtained by shareholders holding shares registered
directly in their names by writing the Agent, 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.
The Fund presently has provisions in its Declaration of Trust and By-Laws
(together, the "Charter Documents") which could have the effect of limiting (i)
the ability of other entities or persons to acquire control of the Fund, (ii)
the Fund's freedom to engage in certain transactions or (iii) the ability of the
Fund's Trustees or shareholders to amend the Charter Documents or effect changes
in the Fund's management. Those provisions of the Charter Documents may be
regarded as "anti-takeover" provisions. Specifically, under the Fund's
Declaration of Trust, the affirmative vote of the holders of not less than two
thirds (66-2/3%) of the Fund's shares outstanding and entitled to vote is
required to authorize the consolidation of the Fund with another entity, a
merger of the Fund with or into another entity (except for certain mergers in
which the Fund is the successor), a sale or transfer of all or substantially all
of the Fund's assets, the dissolution of the Fund, the conversion of the Fund to
an open-end company, and any amendment of the Fund's Declaration of Trust that
would affect any of the other provisions requiring a two-thirds vote. However, a
"majority" shareholder vote, as defined in the Charter Documents, shall be
sufficient to approve any of the foregoing transactions that have been
recommended by two-thirds of the Trustees. Notwithstanding the foregoing, if a
corporation, person or entity is directly, or indirectly through its affiliates,
the beneficial owner of more than 5% of the outstanding shares of the Fund, the
affirmative vote of 80% (which is higher than that required under the 1940 Act)
of the outstanding shares of the Fund is required generally to authorize any of
the following transactions or to amend the provisions of the Declaration of
Trust relating to transactions involving: (i) a merger or consolidation of the
Fund with or into any such corporation or entity, (ii) the issuance of any
securities of the Fund to any such corporation, person or entity for cash; (iii)
the sale, lease or exchange of all or any substantial part of the assets of the
Fund to any such corporation, entity or person (except assets having an
aggregate market value of less than $1,000,000); or (iv) the sale, lease or
exchange to the Fund, in exchange for securities of the Fund, of any assets of
any such corporation, entity or person (except assets having an aggregate fair
market value of less than $1,000,000). If two-thirds of the Board of Trustees
has approved a memorandum of understanding with such beneficial owner, however,
a majority shareholder vote will be sufficient to approve the foregoing
transactions. Reference is made to the Charter Documents of the Fund, on file
with the Securities and Exchange Commission, for the full text of these
provisions.
2. Inapplicable.
3. Inapplicable.
4. The Fund qualified for treatment as, and elected to be, a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code for
its taxable year ended October 31, 1999, and intends to continue to qualify as a
RIC for each subsequent taxable year. However, the Fund reserves the right not
to qualify under Subchapter M as a RIC in any year or years.
For each taxable year that the Fund qualifies for treatment as a RIC, the
Fund (but not its shareholders) will not be required to pay federal income tax.
Shareholders will normally have to pay federal income taxes, and any state
income taxes, on the dividends and distributions they receive from the Fund.
Such dividends and distributions derived from net investment income or
short-term capital gains are taxable to the shareholder as ordinary dividend
income regardless of whether the shareholder receives such distributions in
additional shares or in cash. Since the Fund's income is expected to be derived
primarily from interest rather than dividends, only a small portion, if any, of
such dividends and distributions is expected to be eligible for the Federal
dividends-received deduction available to corporations. The Fund does not
anticipate that any portion of its dividends or distributions will qualify for
pass-through treatment as "exempt-interest dividends" since less than 50% of its
assets is permitted to be invested in municipal obligations.
Long-term or short-term capital gains may be generated by the sale of
portfolio securities and by transactions in options and futures contracts.
Distributions of long-term capital gains, if any, are taxable to shareholders as
long-term capital gains regardless of how long a shareholder has held the Fund's
shares and regardless of whether the distribution is received in additional
shares or in cash. For Federal income tax purposes, if a capital gain
distribution is received with respect to shares held for six months or less, any
loss on a subsequent sale or exchange of such shares will be treated as
long-term capital loss to the extent of such long-term capital gain
distribution. Capital gains distributions are not eligible for the
dividends-received deduction.
Any dividend or capital gains distribution received by a shareholder from
an investment company will have the effect of reducing the net asset value of
the shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, capital gains distributions and
dividends are subject to Federal income taxes. If prior distributions made by
the Fund must be re-characterized as a non-taxable return of capital at the end
of the fiscal year as a result of the effect of the Fund's investment policies,
they will be identified as such in notices sent to shareholders.
The tax treatment of listed put and call options written or purchased by
the Fund on debt securities and of future contracts entered into by the Fund
will be governed by Section 1256 of the Internal Revenue Code. Absent a tax
election to the contrary, each such position held by the Fund will be
marked-to-market (i.e., treated as if it were closed out) on the last business
day of each taxable year of the Fund, and all gain or loss associated with
transactions in such positions will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Positions of the Fund which
consist of at least one debt security and at least one option or futures
contract which substantially diminishes the Fund's risk of loss with respect of
such debt security could be treated as "mixed straddles" which are subject to
the straddle rules of Section 1092 of the Code, the operation of which may cause
deferral of losses, adjustments in the holding periods of debt securities and
conversion of short-term capital losses into long-term capital losses. Certain
tax elections exist for mixed straddles which reduce or eliminate the operation
of the straddle rules. The Fund will monitor its transactions in options and
futures contracts and may make certain tax elections in order to mitigate the
effect of these rules and prevent disqualification of the Fund as a regulated
investment company under Subchapter M of the Code. Such tax election may result
in an increase in distribution of ordinary income (relative to long-term capital
gains) to shareholders.
The Internal Revenue Code requires that a holder (such as the Fund) of a
zero coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the Fund receives no interest payment
in cash on the security during the year. As an investment company, the Fund must
pay out substantially all of its net investment income each year. Accordingly,
the Fund may be required to pay out as an income distribution each year an
amount which is greater than the total amount of cash interest the Fund actually
received. Such distributions will be made from the cash assets of the Fund or by
liquidation of portfolio securities, if necessary. If a distribution of cash
necessitates the liquidation of portfolio securities, the Adviser will select
which securities to sell. The Fund may realize a gain or loss from such sales.
In the event the Fund realizes net capital gains from such transactions, its
shareholders may receive a larger capital gain distribution than they would in
the absence of such transactions.
It is the Fund's present policy, which may be changed by the Board of
Trustees, to pay monthly dividends to shareholders from net investment income of
the Fund. The Fund intends to distribute all of its net investment income on an
annual basis. The Fund will distribute all of its net realized long-term and
short-term capital gains, if any, at least once per year. The Fund may, but is
not required to, make such distributions on a more frequent basis to the extent
permitted by applicable law and regulations.
Under the Internal Revenue Code, by December 31 each year, the Fund must
distribute a specified minimum percentage (currently 98%) of its taxable
investment income earned from January 1 through December 31 of that year and 98%
of its capital gains realized in the period from November 1 of the prior year
through October 31 of that year, or else the Fund must pay an excise tax on
amounts not distributed. While it is presently anticipated that the Fund will
meet those requirements, the Fund's Board and the Adviser might determine in a
particular year it would be in the best interests of the Fund not to make such
distributions at the mandated level and to pay the excise tax which would reduce
the amount available for distributions to shareholders. If the Fund pays a
dividend in January which was declared in the previous December to shareholders
of record on a date in December, then such dividend or distribution will be
treated for tax purposes as being paid in December and will be taxable to
shareholders as if received in December.
Under the Fund's Dividend Reinvestment Plan (the "Plan"), all of the
Fund's dividends and distributions to shareholders will be reinvested in full
and fractional shares. With respect to distributions made in shares issued by
the Fund pursuant to the Plan, the amount of the distribution for tax purposes
is the fair market value of the shares issued on the reinvestment date. In the
case of shares purchased on the open market, a participating shareholder's tax
basis in each share is its cost. In the case of shares issued by the Fund, the
shareholder's tax basis in each share received is its fair market value on the
reinvestment date.
Distributions of investment company taxable income to shareholders who are
nonresident alien individuals or foreign corporations will generally be subject
to a 30% United States withholding tax under provisions of the Internal Revenue
Code applicable to foreign individuals and entities, unless a reduced rate of
withholding or a withholding exemption is provided under an applicable treaty.
Under Section 988 of the Code, foreign currency gain or loss with
respect to foreign currency-denominated debt instruments and other foreign
currency-denominated positions held or entered into by the Fund will be ordinary
income or loss. In addition, foreign currency gain or loss realized with respect
to certain foreign currency "hedging" transactions will be treated as ordinary
income or loss.
5. The following information is provided as of February 7, 2000:
(1) (2) (3) (4)
Amount
Amount Held Outstanding
by Registrant Exclusive of
Amount or for its Amount Shown
Title of Class Authorized Account Under (3)
- -------------- ---------- ------------- ------------
Shares of Unlimited None 29,116,067
Beneficial
Interest, $.01
par value
Item 11. Defaults and Arrears on Senior Securities.
Inapplicable.
Item 12. Legal Proceedings.
Inapplicable.
Item 13. Table of Contents of the Statement of Additional Information.
Reference is made to Item 15 of the Statement of Additional Information.
<PAGE>
Oppenheimer Multi-Sector Income Trust
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 28, 2000
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated February 28, 2000. It should be read
together with the Prospectus, and the Registration Statement on Form N-2, of
which the Prospectus and this Statement of Additional Information are a part,
can be inspected and copied at public reference facilities maintained by the
Securities and Exchange Commission (the "SEC") in Washington, D.C. and certain
of its regional offices, and copies of such materials can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C., 20549.
TABLE OF CONTENTS
Page
Investment Objective and Policies.......................................*
Management..............................................................35
Control Persons and Principal Holders of Securities.....................41
Investment Advisory and Other Services..................................41
Brokerage Allocation and Other Practices................................41
Tax Status .............................................................42
Financial Statements....................................................42
- -----------------
*See Prospectus
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page.
Reference is made to the preceding page.
Item 15. Table of Contents.
Reference is made to the preceding page and to Items 16 through 23
of the Statement of Additional Information set forth below.
Item 16. General Information and History.
Inapplicable.
Item 17. Investment Objective and Policies.
Reference is made to Item 8 of the Prospectus.
Item 18. Management.
1. and 2. The Fund's Trustees and officers and their principal occupations and
business affiliations during the past five years are set forth below. The
address for each Trustee and officer is Two World Trade Center, New York, New
York 10048-0203, unless another address is listed below. Each of the Trustees
are Trustees or Directors of the following New York-based Oppenheimer funds1:
Oppenheimer California Municipal Fund Oppenheimer Large Cap Growth Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Money Market Fund, Inc.
Oppenheimer Capital Preservation Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Developing Markets Fund Oppenheimer Multi-Sector Income Trust
Oppenheimer Discovery Fund Oppenheimer Multi-State Municipal Trust Oppenheimer
Enterprise Fund Oppenheimer Municipal Bond Fund Oppenheimer Europe Fund
Oppenheimer New York Municipal Fund Oppenheimer Global Fund Oppenheimer Series
Fund, Inc. Oppenheimer Global Growth & Income Fund Oppenheimer U.S. Government
Trust Oppenheimer Gold & Special Minerals Fund Oppenheimer Trinity Core Fund
Oppenheimer Growth Fund Oppenheimer Trinity Growth Fund Oppenheimer
International Growth Fund Oppenheimer Trinity Value Fund Oppenheimer
International Small Compan Fund y Oppenheimer World Bond Fund
Ms. Macaskill and Messrs. Spiro, Donohue, Wixted, Zack, Bishop and Farrar
respectively hold the same offices with the other New York-based Oppenheimer
funds as with the Fund. As of February 7, 2000, the Trustees and officers of the
Fund as a group owned less than 1% of the Fund's outstanding shares. That
statement does not include ownership of shares held of record by an employee
benefit plan for employees of the Adviser (one of the Trustees of the Fund
listed below, Ms. Macaskill, and one of the officers, Mr. Donohue, are trustees
of that plan) other than the shares beneficially owned under that plan by the
officers of the Fund listed above.
1 Ms. Macaskill is not a Director of Oppenheimer Money Market Fund, Inc.
Leon Levy, Chairman of the Board of Trustees, Age: 74.
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee, Age: 66.
19750 Beach Road, Jupiter, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the following
positions: Vice Chairman of the Adviser, OppenheimerFunds, Inc. (October 1995 -
December 1997); Executive Vice President of the Adviser (December 1977 - October
1995); Executive Vice President and a director (April 1986 - October 1995) of
HarbourView Asset Management Corporation, an investment Adviser subsidiary of
the Adviser.
Phillip A. Griffiths, Trustee, Age: 61.
97 Olden Lane, Princeton, N. J. 08540
The Director of the Institute for Advanced Study, Princeton, N.J. (since 1991)
and a member of the National Academy of Sciences (since 1979); formerly a
director of Bankers Trust Corporation (1994 through June, 1999), Provost and
Professor of Mathematics at Duke University (1983 - 1991), a director of
Research Triangle Institute, Raleigh, N.C. (1983 - 1991), and a Professor of
Mathematics at Harvard University (1972 - 1983).
Benjamin Lipstein, Trustee, Age: 76.
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
Bridget A. Macaskill, President and Trustee, Age: 51
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Adviser; President and director (since
June 1991) of HarbourView Asset Management Corporation, Chairman and a director
of Shareholder Services, Inc. (since August 1994) and Shareholder Financial
Services, Inc. (since September 1995), transfer agent subsidiaries of the
Adviser; President (since September 1995) and a director (since October 1990) of
Oppenheimer Acquisition Corp., the Adviser's parent holding company; President
(since September 1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Adviser; a
director of Oppenheimer Real Asset Management, Inc. (since July 1996), an
investment Adviser subsidiary of the Adviser; President and a director (since
October 1997) of OppenheimerFunds International Ltd., an offshore fund
management subsidiary of the Adviser and of Oppenheimer Millennium Funds plc;
President and a director of other Oppenheimer funds; a director of Prudential
Corporation plc (a U.K. financial service company).
Elizabeth B. Moynihan, Trustee, Age: 70.
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institute); Executive Committee of Board of Trustees of the
National Building Museum; a member of the Trustees Council, Preservation League
of New York State.
Kenneth A. Randall, Trustee, Age: 72.
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), and Prime Retail,
Inc. (real estate investment trust); formerly President and Chief Executive
Officer of The Conference Board, Inc. (international economic and business
research) and a director of Lumbermens Mutual Casualty Company, American
Motorists Insurance Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee, Age: 69
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a director of RBAsset
(real estate manager); a director of OffitBank; Trustee, Financial Accounting
Foundation (FASB and GASB); formerly New York State Comptroller and trustee, New
York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee, Age: 68.
8 Sound Shore Drive, Greenwich, Connecticut 06830
Chairman of The Directorship Group, Inc. (corporate governance consulting and
executive recruiting); a director of Professional Staff Limited (a U.K.
temporary staffing company); a life trustee of International House (non-profit
educational organization), and a trustee of the Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Trustee, Age: 74.
399 Ski Trail, Smoke Rise, New Jersey 07405
Formerly he held the following positions: Chairman Emeritus (August 1991 -
August 1999), Chairman (November 1987 - January 1991) and a director (January
1969 - August 1999) of the Adviser; President and Director (July 1978 - January
1992) of OppenheimerFunds Distributor, Inc, an affiliate of the Adviser.
Clayton K. Yeutter, Trustee, Age: 69.
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan & Hartson (a law firm); a director of Zurich Financial
Services (financial services), Zurich Allied AG and Allied Zurich p.l.c.
(insurance investment management); Caterpillar, Inc. (machinery), ConAgra, Inc.
(food and agricultural products), Farmers Insurance Company (insurance), FMC
Corp. (chemicals and machinery) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order), Counselor to the President (Bush)
for Domestic Policy, Chairman of the Republican National Committee, Secretary of
the U.S. Department of Agriculture, U.S. Trade Representative.
Arthur P. Steinmetz, Vice President and Portfolio Manager, Age: 41.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Adviser (since March 1993); an officer of other
Oppenheimer funds.
Caleb Wong, Vice President and Portfolio Manager, Age: 33
Assistant Vice President of the Adviser (since January 1997); worked in
fixed-income quantitative research and risk management for the Adviser (Since
July 1996) prior to which he was enrolled in the Ph.D. program for Economics at
the University of Chicago.
Andrew J. Donohue, Secretary, Age: 49.
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Adviser; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of OppenheimerFunds Distributor, Inc.; Executive Vice President,
General Counsel and a director of HarbourView Asset Management Corporation,
Shareholder Services, Inc., Shareholder Financial Services, Inc. and (since
September 1995) Oppenheimer Partnership Holdings, Inc.; President and a director
of Centennial Asset Management Corporation (since September 1995), an investment
Adviser subsidiary of the Adviser; President, General Counsel and a director of
Oppenheimer Real Asset Management, Inc. (since July 1996); General Counsel
(since May 1996) and Secretary (since April 1997) of Oppenheimer Acquisition
Corp.; Vice President and a director of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Adviser/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Adviser/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Adviser.
Scott T. Farrar, Assistant Treasurer, Age: 34.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Adviser/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer Funds; formerly an Assistant Vice President of the
Adviser/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Adviser.
Brian W. Wixted, Treasurer, Age: 40.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since April 1999) of the Adviser; Treasurer
of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc.
(since April 1999); Assistant Treasurer of Oppenheimer Acquisition Corp. (since
April 1999); Assistant Secretary of Centennial Asset Management Corporation
(since April 1999); formerly Principal and Chief Operating Officer, Bankers
Trust Company - Mutual Fund Services Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS First Boston Investment Management
Corp. (September 1991 - March 1995); and Vice President and Accounting Manager,
Merrill Lynch Asset Management (November 1987 - September 1991).
Robert G. Zack, Assistant Secretary, Age: 51.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Adviser, Assistant Secretary of Shareholder Services, Inc. (since
May 1985), and Shareholder Financial Services, Inc. (since November 1989);
Assistant Secretary of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
The Board of Trustees does not have an executive or investment committee.
The Trustees of the Fund have appointed a study committee consisting of Mr.
Lipstein (Chairman), Mrs. Moynihan and Mr. Galli, none of whom is an "interested
person" of the Adviser or the Fund. The study committee's function is to report
to the Board on matters that include (i) legal and regulatory developments, (ii)
periodic renewals of the Advisory Agreement, (iii) review of the transfer agent
and registrar agreement, (iv) portfolio management, (v) valuation of portfolio
securities, (vi) custodian relationships and use of foreign subcustodians, (vii)
code of ethics matters, (viii) policy on use of insider information, (ix)
consideration of tender offers and other repurchases of fund shares and possible
conversion to open-end status, and (x) indemnification and insurance of the
Fund's officers and trustees.
3. Inapplicable.
4. The officers of the Fund and one Trustee of the Fund (Ms. Macaskill) who are
affiliated with the Adviser receive no salary or fee from the Fund. The
remaining Trustees of the Fund received the compensation shown below. The
compensation from the Fund was paid during its fiscal year ended October 31,
1999. The compensation from all of the New York-based Oppenheimer funds
(including the Fund) was received as a director, trustee or member of a
committee of the boards of those funds during the calendar year 1999.
<PAGE>
Total
Compensation
Retirement from all
Benefits New York based
Aggregate Accrued as Part Oppenheimer
Trustee's Name Compensation Of Fund Funds (24
and Other Positions from Fund1 Expenses Funds)2
Leon Levy
Chairman $19,916 $13,755 $166,700
Robert G. Galli
Study Committee Member $3,593 None $176,2153
Phillip A. Griffiths $8014 None $17,835
Benjamin Lipstein
Study Committee Chairman,
Audit Committee Member $20,808 $15,482 $144,100
Elizabeth B. Moynihan
Study Committee Member $5,282 $1,531 $101,500
Kenneth A. Randall
Audit Committee Member $11,867 $8,426 $93,100
Edward V. Regan
Proxy Committee Chairman,
Audit Committee Member $3,404 None $92,100
Russell S. Reynolds, Jr.
Proxy Committee
Member $5,129 $2,582 $68,900
Donald W. Spiro5 None None $10,250
Clayton K. Yeutter
Proxy Committee
Member $2,5466 None $68,900
1 Aggregate compensation includes fees, deferred compensation, if any, and
retirement plan benefits accrued for a Trustee.
2 For the 1999 calendar year.
Total Compensation for the 1999 calendar year includes compensation received
for serving as a Trustee or Director of 10 other Oppenheimer funds.
4 Includes $769 deferred under Deferred Compensation Plan described below.
5 Prior to August 1, 1999, Mr. Spiro was not an independent Trustee.
Includes $861 deferred under Deferred Compensation Plan described below.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the New York-based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits.
Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation Plan for disinterested trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Fund. Under the plan, the compensation deferred by a Trustee is periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Trustee. 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
Fund's assets, liabilities or net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an Order issued by the Securities and
Exchange Commission, the Fund may invest in the funds selected by the Trustee
under the plan without shareholder approval for the limited purpose of
determining the value of the Trustee's deferred fee account.
Item 19. Control Persons and Principal Holders of Securities.
1. Inapplicable.
2. As of February 7, 2000, the only persons who owned of record or was
known by the Fund to own beneficially 5% or more of the outstanding shares of
the Fund were Donaldson Lufkin and Jenrette Securities Corp., PO Box 2052,
Jersey City, New Jersey 07303, which owned 1,654,473 shares (5.7% of the
shares); Charles Schwab & CO, Inc. C/O ADP Proxy Services, which owned 1,769,429
shares (6.1% of the shares); AG Edwards & Sons, Inc., Thomas Navarria, 125 Broad
Street 40th Floor, New York, NY 10004 which owned 2,026,157 shares (6.9% of the
shares); Paine Webber Inc., 1000 Harbor Boulevard, Weehawken, New Jersey 07087,
which owned 3,945,701 shares (13.5% of the shares); Salomon Smith Barney, Inc.,
333 W. 34th Street New York, New York 10001, which owned 2,103,090 shares (7.2%
of the shares); and Prudential Securities, Inc., C/O ADP Proxy Services, 51
Mercedes Way, Edgewood, New York 11717, which owned 1,768,987 shares (6.1% of
the shares).
3. As of February 7, 2000, the trustees and officers of the Fund as a
group owned less than 1% of the outstanding shares.
Item 20. Investment Advisory and Other Services.
Reference is made to Item 9 of the Prospectus.
Item 21. Brokerage Allocation and Other Practices.
1 and 2. During the fiscal years ended October 31, 1997, 1998 and 1999,
the Fund paid approximately $93,433, $245,257 and $99,598 respectively, in
brokerage commissions. The Fund will not effect portfolio transactions through
any broker (i) which is an affiliated person of the Fund, (ii) which is an
affiliated person of such affiliated person or (iii) an affiliated person of
which is an affiliated person of the Fund or its Adviser. There is no principal
underwriter of shares of the Fund. As most purchases of portfolio securities
made by the Fund are principal transactions at net prices, the Fund incurs
little or no brokerage costs. The Fund deals directly with the selling or
purchasing principal or market maker without incurring charges for the services
of a broker on its behalf unless it is determined that a better price or
execution may be obtained by using the services of a broker. Purchases of
portfolio securities from underwriters include a commission or concession paid
by the issuer to the underwriter, and purchases from dealers include a spread
between the bid and asked price. Transactions in foreign securities markets
generally involve the payment of fixed brokerage commissions, which are usually
higher than those in the United States. The Fund seeks to obtain prompt
execution of orders at the most favorable net price.
3. The advisory agreement between the Fund and the Adviser (the "Advisory
Agreement") contains provisions relating to the selection of brokers, dealers
and futures commission merchants (collectively referred to as "brokers") for the
Fund's portfolio transactions. The Adviser is authorized by the Advisory
Agreement to employ brokers as may, in its best judgment based on all relevant
factors, implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable price
obtainable) of such transactions. The Adviser need not seek competitive bidding
but is expected to minimize the commissions paid to the extent consistent with
the interests and policies of the Fund. The Fund will not effect portfolio
transactions through affiliates of the Adviser.
Certain other investment companies advised by the Adviser and its
affiliates have investment objectives and policies similar to those of the Fund.
If possible, concurrent orders to purchase or sell the same security by more
than one of the accounts managed by the Adviser or its affiliates are combined.
The transactions effected pursuant to such combined orders are averaged as to
price and allocated in accordance with the purchase or sale orders actually
placed for each account. If transactions on behalf of more than one fund during
the same period increase the demand for securities being purchased or the supply
of securities being sold, there may be an adverse effect on price or quantity.
When the Fund engages in an option transaction, ordinarily the same broker will
be used for the purchase or sale of the option and any transactions in the
security to which the option relates.
Under the Advisory Agreement, if brokers are used for portfolio
transactions, the Adviser may select brokers for their execution and/or research
services, on which no dollar value can be placed. Information received by the
Adviser for those other accounts may or may not be useful to the Fund. The
commissions paid to such dealers may be higher than another qualified dealer
would have charged if a good faith determination is made by the Adviser that the
commission is reasonable in relation to the services provided. Subject to
applicable regulations, sales of shares of the Fund and/or investment companies
advised by the Adviser or its affiliates may also be considered as a factor in
directing transactions to brokers, but only in conformity with the price,
execution and other considerations and practices discussed above.
Such research, which may be provided by a broker through a third party,
includes information on particular companies and industries as well as market,
economic or institutional activity areas. It serves to broaden the scope and
supplement the research activities of the Adviser, to make available additional
views for consideration and comparisons, and to enable the Adviser to obtain
market information for the valuation of securities held in the Fund's portfolio
or being considered for purchase.
4. During the fiscal years ended October 31, 1998 and 1999, no money was
paid to brokers as commissions in return for research services. During the
fiscal year ended October 31, 1997, $509 was paid to brokers as commissions in
return for research services.
5. Inapplicable.
Item 22. Tax Status.
Reference is made to Item 10 of the Prospectus.
Item 23. Financial Statements at fiscal year-end October 31, 1999.
<PAGE>
<PAGE>
A-115
Appendix A
- --------------------------------------------------------------------------------
RATINGS DEFINITIONS
- --------------------------------------------------------------------------------
Below are summaries of the rating definitions used by the nationally-recognized
rating agencies listed below. Those ratings represent the opinion of the agency
as to the credit quality of issues that they rate. The summaries below are based
upon publicly-available information provided by the rating organizations.
Moody's Investors Service, Inc.
- --------------------------------------------------------------------------------
Long-Term (Taxable) Bond Ratings
Aaa: Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk. Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as with Aaa securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than those of Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered medium grade obligations; that is, they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered well-assured. Often the protection of interest and principal
payments may be very moderate and not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B: Bonds rated B generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing and may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree
and are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest class of rated bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier "1" indicates that the
obligation ranks in the higher end of its category; the modifier "2" indicates a
mid-range ranking and the modifier "3" indicates a ranking in the lower end of
the category.
Short-Term Ratings - Taxable Debt
These ratings apply to the ability of issuers to repay punctually senior debt
obligations having an original maturity not exceeding one year:
Prime-1: Issuer has a superior ability for repayment of senior short-term debt
obligations.
Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage, while sound, may be subject to
variation. Capitalization characteristics, while appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.
Not Prime: Issuer does not fall within any Prime rating category.
Standard & Poor's Rating Services
- --------------------------------------------------------------------------------
Long-Term Credit Ratings
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: Bonds rated "A" are somewhat more susceptible to adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong.
BBB: Bonds rated BBB exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
Bonds rated BB, B, CCC, CC and C are regarded as having significant speculative
characteristics. BB indicates the least degree of speculation and C the highest.
While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: Bonds rated BB are less vulnerable to nonpayment than other speculative
issues. However, these face major uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B: A bond rated B is more vulnerable to nonpayment than an obligation rated BB,
but the obligor currently has the capacity to meet its financial commitment on
the obligation.
<PAGE>
CCC: A bond rated CCC is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may used where a bankruptcy petition has been filed or similar
action has been taken, but payments on this obligation are being continued.
D: Bonds rated D are in default. Payments on the obligation are not being made
on the date due.
The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories. The
"r" symbol is attached to the ratings of instruments with significant noncredit
risks.
Short-Term Issue Credit Ratings
A-1: Rated in the highest category. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category, a plus (+) sign
designation indicates the issuer's capacity to meet its financial obligation is
very strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is satisfactory.
A-3: Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
B: Regarded as having significant speculative characteristics. The obligor
currently has the capacity to meet its financial commitment on the obligation.
However, it faces major ongoing uncertainties which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
C: Currently vulnerable to nonpayment and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation.
D: In payment default. Payments on the obligation have not been made on the due
date. The rating may also be used if a bankruptcy petition has been filed or
similar actions jeopardize payments on the obligation.
<PAGE>
Fitch IBCA, Inc.
- --------------------------------------------------------------------------------
International Long-Term Credit Ratings
Investment Grade:
AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade:
BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met.
B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.
DDD, DD, and D: Default. Securities are not meeting current obligations and are
extremely speculative. "DDD" designates the highest potential for recovery of
amounts outstanding on any securities involved.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the rating category. Plus and minus signs are not added
to the "AAA" category or to categories below "CCC."
International Short-Term Credit Ratings
F1: Highest credit quality. Strongest capacity for timely payment. May have an
added "+" to denote exceptionally strong credit feature.
F2: Good credit quality. A satisfactory capacity for timely payment, but the
margin of safety is not as great as in higher ratings.
F3: Fair credit quality. Capacity for timely payment is adequate. However,
near-term adverse changes could result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment, plus vulnerability to
near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility, Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
D: Default. Denotes actual or imminent payment default.
Duff & Phelps Credit Rating Co. Ratings
- --------------------------------------------------------------------------------
Long-Term Debt and Preferred Stock
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
A+, A & A-: Protection factors are average but adequate. However, risk factors
are more variable in periods of greater economic stress.
BBB+, BBB & BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
BB+, BB & BB-: Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according to
industry conditions. Overall quality may move up or down frequently within the
category.
B+, B & B-: Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a higher of
lower rating grade.
CCC: Well below investment-grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD: Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.
DP: Preferred stock with dividend arrearages.
Short-Term Debt:
High Grade:
D-1+: Highest certainty of timely payment. Safety is just below risk-free U.S.
Treasury short-term debt.
D-1: Very high certainty of timely payment. Risk factors are minor.
D-1-: High certainty of timely payment. Risk factors are very small.
Good Grade:
D-2: Good certainty of timely payment. Risk factors are small.
Satisfactory Grade:
D-3: Satisfactory liquidity and other protection factors qualify issues as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
Non-Investment Grade:
D-4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service.
Default:
D-5: Issuer failed to meet scheduled principal and/or interest payments.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial Statements at fiscal year-end October 31, 1999.
(a) Statement of Investments - (See Part B, Statement of Additional
Information): Filed herewith.
(b) Statement of Assets and Liabilities - (See Part B, Statement of
Additional Information): Filed herewith.
(c) Statement of Operations - (See Part B, Statement of Additional
Information): Filed herewith.
(d) Statements of Changes in Net Assets - (See Part B, Statement of
Additional Information): Filed herewith.
(e) Financial Highlights - (See Part B, Statement of Additional
Information): Filed herewith.
(f) Notes to Financial Statements - (See Part B, Statement of
Additional Information): Filed herewith.
2. Exhibits:
(a) (1) Declaration of Trust of Registrant: Filed with
Registrant's Registration Statement, 2/2/88, refiled with Registrant's Amendment
No. 8, 2/27/95, and incorporated herein by reference.
(2) Amendment No. 1 dated as of March 10, 1988 to Declaration of
Trust of Registrant: Filed with Amendment No. 2 to Registrant's Registration
Statement, 3/24/88, refiled with Registrant's Amendment No. 8, 2/27/95, pursuant
to Item 102 of Regulation S-T, and incorporated herein by reference.
(3) Amendment No. 2 dated November 6, 1989 to Declaration of
Trust of Registrant: Filed with Registrant's Post-Effective Amendment No. 8,
2/27/95, and incorporated herein by reference.
(b) By-Laws of Registrant (amended by-laws): Declaration of Trust of
Registrant: Filed with Registrant's Registration Statement, 2/2/88, refiled with
Post-Effective Registrant's Amendment No. 8, 2/27/95, and incorporated herein by
reference; amended By-Laws dated June 4, 1998, Filed with Registrant's
Registration Statement 2/24/99.
(c) Inapplicable
(d) Specimen certificate for shares of Beneficial Interest, $.01 par
value: Previously Filed with Amendment No. 10 to Registrant's Registration
Statement, and Filed herewith.
(e) Inapplicable
(f) Inapplicable
(g) (1) Investment Advisory Agreement with Oppenheimer Management
Corporation dated 10/22/90 - Filed with Amendment No. 5 to Registrant's
Registration Statement dated 2/27/91, refiled with Amendment No. 8 to
Registrant's Registration Statement, and incorporated herein by reference.
(h) Form of Underwriting Agreement: Filed with Amendment No. 2 to
Registrant's Registration Statement, 3/24/88, refiled with Registrant's
Post-Effective Amendment No. 8, 2/27/95, pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(i) (1) Retirement Plan for Non-Interested Trustees (adopted by
Registrant on 6/7/90) - previously filed with Post-Effective Amendment No. 97 of
Oppenheimer Fund (Reg. No. 2-14586), 8/30/90, refiled with Post-Effective
Amendment No. 45 of Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.
(2) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Filed with Post-Effective Amendment No. 33, of the
Registration Statement for Oppenheimer Gold & Special Minerals Fund (Reg. No.
2-82590), 10/28/98, and incorporated herein by reference.
(j) Co-Custody Agreement, dated 8/18/92 - Previously filed with
Amendment No. 8 to Registrant's Registration Statement, and incorporated herein
by reference.
(k) Accounting Service Agreement previously filed with Registrant's
Amendment No.9 under the Investment Company Act of 1940, 2/29/96, and
incorporated herein by reference.
(l) Inapplicable
(m) Inapplicable
(n) Inapplicable
(o) Inapplicable
(p) Inapplicable
(q) Inapplicable
Item 25. Marketing Arrangements.
Inapplicable.
Item 26. Other Expenses of Issuance and Distribution.
Inapplicable.
Item 27. Persons Controlled by or under Common Control.
None.
Item 28. Number of Holders of Securities.
(1) (2)
Number of Record Holders
Title of Class at February 7, 2000
- -------------- ------------------------
Shares of Beneficial Interest,
$.01 par value 29,116,067
Item 29. Indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or controlling person,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that it will apply the indemnification
provision of its By-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation therein of Sections 17(h) and 17(i) of the Investment
Company Act remains in effect.
Registrant, in conjunction with the Registrant's Trustees, and other
registered management investment companies managed by the Adviser, generally
maintains insurance on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant. However, in no event will Registrant pay that
portion of the premium, if any, for insurance to indemnify any such person for
any act for which Registrant itself is not permitted to indemnify him.
Item 30. Business and Other Connections of Investment Adviser
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and
certain subsidiaries and affiliates act in the same capacity to other registered
investment companies as described in Parts A and B hereof and listed in Item
29(b) below.
(b) There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each officer and
director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal
years has been, engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
<S> <C>
Name and Current Position with Other Business and Connections
OppenheimerFunds, Inc.("OFI") During the Past Two Years
Charles E. Albers,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds (since April 1998); a
Chartered Financial Analyst; formerly, a Vice
President and portfolio manager for Guardian
Investor Services, the investment management
subsidiary of The Guardian Life Insurance
Company (since 1972).
Edward Amberger,
Assistant Vice President Formerly Assistant Vice President, Securities
Analyst for Morgan Stanley Dean Witter (May
1997 - April 1998); and Research Analyst (July
1996 - May 1997), Portfolio Manager (February
1992 - July 1996) and Department Manager (June
1988 to February 1992) for The Bank of New York.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial
Analyst; Senior Vice President of HarbourView
Asset Management Corporation; prior to March
1996 he was the senior equity portfolio manager
for the Panorama Series Fund, Inc. (the
"Company") and other mutual funds and pension
funds managed by G.R. Phelps & Co. Inc. ("G.R.
Phelps"), the Company's former investment
adviser, which was a subsidiary of Connecticut
Mutual Life Insurance Company; he was also
responsible for managing the common stock
department and common stock investments of
Connecticut Mutual Life Insurance Co.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Formerly, a Vice President and Senior
Portfolio Manager at First of America
Investment Corp.
George Batejan,
Executive Vice President,
Chief Information Officer Formerly Senior Vice
President, Group Executive, and Senior
Systems Officer for American International
Group (October 1994 - May 1998).
Richard Bayha,
Senior Vice President None.
John R. Blomfield,
Vice President Formerly Senior Product Manager
(November 1995 - August 1997) of
International Home Foods and American Home
Products (March 1994 - October 1996).
Connie Bechtolt,
Assistant Vice President None.
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President Formerly, Vice President (January
1992 - February, 1996) of Asian Equities for
Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting (since
May 1996); an officer of other Oppenheimer
funds; formerly, an Assistant Vice President of
OppenheimerFunds, Inc./Mutual Fund Accounting
(April 1994 - May 1996), and a Fund Controller
for OppenheimerFunds, Inc.
Mark Binning None.
Chad Boll,
Assistant Vice President None
Scott Brooks,
Vice President None.
Kevin Brosmith,
Vice President None.
Jeffrey Burns Stradley, Ronen Stevens and Young, LLP (February
1998-September 1999) Morgan Lewis and Bockius,
LLP (April 1995- February 1998)
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of Rochester
Fund Services, Inc.
Christopher Capot,
Assistant Vice President Assistant Vice President of
Public Relations at Webster Financial
Corporation (December 1995 - December 1998).
Michael Carbuto,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of Centennial Asset Management
Corporation.
John Cardillo,
Assistant Vice President None.
Mark Curry,
Assistant Vice President None.
H.C. Digby Clements,
Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President
and Chief Investment Officer Chief Investment
Officer (since 6/99); Chief Executive
Officer and Senior Manager of HarbourView
Asset Management Corporation; Trustee (1993
- present) of Awhtolia College - Greece;
formerly Chief Executive Officer (1993-June
1999).
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Vice President None.
Craig P. Dinsell
Executive Vice President Formerly, Senior Vice President of Human
Resources for Fidelity Investments-Retail
Division (January 1995 - January 1996),
Fidelity Investments FMR Co. (January 1996 -
June 1997) and Fidelity Investments FTPG (June
1997 - January 1998).
John Doney,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since September
1993), and a director (since January 1992) of
the Distributor; Executive Vice President,
General Counsel and a director of HarbourView
Asset Management Corporation Shareholder
Services, Inc., Shareholder Financial Services,
Inc. and Oppenheimer Partnership Holdings, Inc.
since (September 1995); President and a
director of Centennial Asset Management
Corporation (since September 1995); President
and a director of Oppenheimer Real Asset
Management, Inc (since July 1996); General
Counsel (since May 1996) and Secretary (since
April 1997) of Oppenheimer Acquisition Corp.;
Vice President and Director of OppenheimerFunds
International, Ltd. and Oppenheimer Millennium
Funds plc (since October 1997); an officer of
other Oppenheimer funds.
Bruce Dunbar, None.
Vice President
Daniel Engstrom,
Assistant Vice President None.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
George Fahey,
Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer Millennium
Funds plc (since October 1997); an officer of
other Oppenheimer funds; formerly an Assistant
Vice President of OppenheimerFunds, Inc./Mutual
Fund Accounting (April 1994 - May 1996), and a
Fund Controller for OppenheimerFunds, Inc.
Leslie A. Falconio,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds (since
6/99).
Katherine P. Feld,
Vice President and Secretary Vice President and
Secretary of the Distributor; Secretary of
HarbourView Asset Management Corporation,
and Centennial Asset Management Corporation;
Secretary, Vice President and Director of
Centennial Capital Corporation; Vice
President and Secretary of Oppenheimer Real
Asset Management, Inc.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio manager
of certain Oppenheimer funds; Presently he
holds the following other positions: Director
(since 1995) of ICI Mutual Insurance Company;
Governor (since 1994) of St. John's College;
Director (since 1994 - present) of
International Museum of Photography at George
Eastman House. Formerly, he held the following
positions: formerly, Chairman of the Board and
Director of Rochester Fund Distributors, Inc.
("RFD"); President and Director of Fielding
Management Company, Inc. ("FMC"); President and
Director of Rochester Capital Advisors, Inc.
("RCAI"); Managing Partner of Rochester Capital
Advisors, L.P., President and Director of
Rochester Fund Services, Inc. ("RFS");
President and Director of Rochester Tax Managed
Fund, Inc.; Director (1993 - 1997) of VehiCare
Corp.; Director (1993 - 1996) of VoiceMode.
David Foxhoven,
Assistant Vice President Formerly Manager, Banking Operations Department
(July 1996 - November 1998).
Jennifer Foxson,
Vice President None.
Dan Gangemi,
Vice President None.
Erin Gardiner,
Assistant Vice President None.
Daniel Garrity,
Vice President None.
Charles Gilbert,
Assistant Vice President None.
Alan Gilston,
Vice President Formerly, Vice President (1987 - 1997) for
Schroder Capital Management International.
Jill Glazerman,
Vice President None.
Robyn Goldstein-Liebler
Assistant Vice President None.
Mikhail Goldverg
Assistant Vice President None.
Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and
Director Chief Financial Officer and Treasurer (since
March1998) of Oppenheimer Acquisition Corp.; a
Member and Fellow of the Institute of Chartered
Accountants; formerly, an accountant for Arthur
Young (London, U.K.).
Robert Grill,
Senior Vice President Formerly, Marketing Vice
President for Bankers Trust Company (1993 -
1996); Steering Committee Member,
Subcommittee Chairman for American Savings
Education Council (1995 - 1996).
Robert Haley
Assistant Vice President Formerly, Vice President of
Information Services for Bankers Trust
Company (January 1991 - November 1997).
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Chairman of OppenheimerFunds Formerly Executive Vice President and
Services, a Division of OFI Chief Executive Officer of
OppenheimerFunds Services, a division of the
Adviser.
Dorothy Hirshman, None.
Assistant Vice President
Merryl Hoffman,
Vice President and None.
Senior Counsel
Merrell Hora,
Assistant Vice President Research Fellow for the University of Minnesota
(July 1997- July 1998).
Scott T. Huebl,
Vice President None.
James Hyland,
Assistant Vice President Formerly Manager of Customer
Research for Prudential Investments
(February 1998 - July 1999).
Kathleen T. Ives,
Vice President None.
William Jaume,
Vice President None.
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Andrew Jordan,
Assistant Vice President None.
Deborah Kaback,
Vice President Senior Vice President and Deputy General
Counsel of Oppenheimer Capital (April
1989-November 1999).
Lewis Kamman,
Vice President Senior Consultant for Bell Atlantic Network
Integration, Inc. (June 1997-December 1998) and
Vice President for JP Morgan, Inc. (August
1994-June 1997).
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President None.
Walter Konops,
Assistant Vice President None.
Avram Kornberg,
Vice President None.
Jimmy Kourkoulakos,
Assistant Vice President. None.
John Kowalik,
Senior Vice President An officer and/or portfolio
manager for certain OppenheimerFunds;
formerly, Managing Director and Senior
Portfolio Manager at Prudential Global
Advisors (1989 - 1998).
Joseph Krist,
Assistant Vice President None.
Michael Levine,
Vice President None.
Shanquan Li,
Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager for certain
Oppenheimer funds; a Chartered Financial
Analyst; a Vice President of HarbourView Asset
Management Corporation; prior to March 1996,
the senior bond portfolio manager for Panorama
Series Fund Inc., other mutual funds and
pension accounts managed by G.R. Phelps; also
responsible for managing the public
fixed-income securities department at
Connecticut Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Vice President None.
Steve Macchia,
Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since September 1995);
President and director (since June 1991) of
HarbourView Asset Management Corporation; and a
director of Shareholder Services, Inc. (since
August 1994), and Shareholder Financial
Services, Inc. (September 1995); President
(since September 1995) and a director (since
October 1990) of Oppenheimer Acquisition Corp.;
President (since September 1995) and a director
(since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company
subsidiary of OppenheimerFunds, Inc.; a
director of Oppenheimer Real Asset Management,
Inc. (since July 1996); President and a
director (since October 1997) of
OppenheimerFunds International Ltd., an
offshore fund manager subsidiary of
OppenheimerFunds, Inc. and Oppenheimer
Millennium Funds plc (since October 1997);
President and a director of other Oppenheimer
funds; a director of Hillsdown Holdings plc (a
U.K. food company); formerly, an Executive Vice
President of OFI.
Philip T. Masterson,
Vice President Formerly an Associate at Davis,
Graham, & Stubbs (January 1998 - July 1998);
Associate; Myer, Swanson, Adams & Wolf, P.C.
(May 1996 - December 1997).
Loretta McCarthy,
Executive Vice President None.
Beth Michnowski,
Assistant Vice President Formerly Senior Marketing
Manager (May 1996 - June 1997) and Director
of Product Marketing (August 1992 - May
1996) with Fidelity Investments.
Lisa Migan,
Assistant Vice President None.
Andrew J. Mika
Senior Vice President Formerly a Second Vice
President for Guardian Investments (June
1990 - October 1999).
Denis R. Molleur,
Vice President and
Senior Counsel None.
Nikolaos Monoyios,
Vice President A Vice President and/or portfolio manager of
certain Oppenheimer funds (since April 1998); a
Certified Financial Analyst; formerly, a Vice
President and portfolio manager for Guardian
Investor Services, the management subsidiary of
The Guardian Life Insurance Company (since
1979).
Linda Moore,
Vice President Formerly, Marketing Manager (July 1995
-November 1996) for Chase Investment Services
Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds (since
6/99).
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Frank Pavlak,
Vice President Branch Chief of Investment Company Examinations
at U.S. Securities and Exchange Commission
(January 1981 - December 1998).
James Phillips
Assistant Vice President None.
David Pellegrino None.
Vice President.
Stephen Puckett,
Vice President None.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Michael Quinn,
Assistant Vice President Formerly, Assistant Vice
President (April 1995 - January 1998) of Van
Kampen American Capital.
Julie Radtke,
Vice President Formerly Assistant Vice President
and Business Analyst for Pershing, Jersey
City (August 1997 -November 1997); Senior
Business Consultant, American International
Group (January 1996 - July 1997).
Russell Read,
Senior Vice President Vice President of Oppenheimer Real Asset
Management, Inc. (since March 1995).
Thomas Reedy,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds;
formerly, a Securities Analyst for the
Manager.
John Reinhardt,
Vice President: Rochester Division None
Jeffrey Rosen,
Vice President None.
Michael S. Rosen,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Marci Rossell,
Vice President and
Corporate Economist Economist with Federal Reserve Bank of Dallas
(April 1996 - March 1999).
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President & Director None.
Andrew Ruotolo,
Executive Vice President
and President of
Oppenheimer Funds Services, a
division of OFI Formerly Chief Operations Officer for American
International Group (1997-August 1999).
Rohit Sah,
Assistant Vice President None.
Valerie Sanders,
Vice President None.
Jeff Schneider,
Vice President Director, Personal Decisions International.
Ellen Schoenfeld,
Assistant Vice President None.
David Schultz,
Senior Vice President
and Chief Executive Officer Senior Managing
Director, President (since April 1999) and
Chief Executive Officer of HarbourView Asset
Management Corporation (since June 1999).
Stephanie Seminara,
Vice President None.
Martha Shapiro,
Assistant Vice President None.
Christian D. Smith
Senior Vice President Formerly Co-head of the
Municipal Portfolio Management Team,
Portfolio Manager for Prudential Global
Asset Management (January 1990 - September
1999).
Connie Song,
Assistant Vice President None.
Richard Soper,
Vice President None.
Keith Spencer Equity trader.
Vice President
Cathleen Stahl,
Vice President Assistant Vice President & Manager of Women &
Investing Program
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of
Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Jayne Stevlingson,
Vice President None.
Marlo Stil,
Vice President Investment Specialist and Career
Agent/Registered
Representative for MML Investor services,
Inc.
John Stoma,
Senior Vice President None.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView Asset Management
Corporation.
Kevin Surrett,
Assistant Vice President Assistant Vice President of Product Development
At Evergreen Investor Services, Inc. (June 1995
- -
May 1999).
Wayne Strauss,
Assistant Vice President: Rochester
Division Formerly Senior Editor, West Publishing Company
(January 1997 - March 1997).
James C. Swain,
Vice Chairman of the Board Chairman, CEO and
Trustee, Director or Managing Partner of the
Denver-based Oppenheimer Funds; formerly,
President and Director of Centennial Asset
Management Corporation and Chairman of the
Board of Shareholder Services, Inc.
Susan Switzer,
Assistant Vice President None.
Anthony A. Tanner,
Vice President: Rochester Division None.
Jay Tracey,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
James Turner,
Assistant Vice President None.
Angela Uttaro,
Assistant Vice President None.
Mark Vandehey,
Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Annette Von Brandis,
Assistant Vice President None.
Phillip Vottiero,
Vice President Chief Financial officer for the Sovlink Group
(April 1996 - June 1999).
Teresa Ward,
Vice President None.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt fixed
income Oppenheimer funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; a
Chartered Financial Analyst; Vice President
of HarbourView Asset Management Corporation.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of HarbourView Asset Management
Corporation.
Donna Winn, Senior Vice President/Distribution Marketing.
Senior Vice President
Brian W. Wixted, Formerly Principal and Chief Operating Officer,
Senior Vice President and Bankers Trust Company - Mutual Fund Services
Treasurer Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS
First Boston Investment Management Corp.
(September 1991 - March 1995); and Vice
President and Accounting Manager, Merrill
Lynch Asset Management (November 1987 -
September 1991).
Carol Wolf,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial
Asset Management Corporation; Vice President,
Finance and Accounting; Point of Contact:
Finance Supporters of Children; Member of the
Oncology Advisory Board of the Childrens
Hospital.
Caleb Wong,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds (since
6/99).
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of Shareholder Services,
Inc. (since May 1985), Shareholder Financial
Services, Inc. (since November 1989),
OppenheimerFunds International Ltd. (since
1998), Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer
funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Mark Zavanelli,
Assistant Vice President None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of Centennial Asset Management
Corporation.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer Quest /Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Preservation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Europe Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Large Cap Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Trinity Core Fund
Oppenheimer Trinity Growth Fund
Oppenheimer Trinity Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Capital Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds, the
Quest Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset Management
Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition Corp.
is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New York
14625-2807.
Item 29. Principal Underwriter
Inapplicable.
Item 31. Location of Accounts and Records.
All accounts, books and other documents, required to be maintained by the
Registrant under Section 31(a) of the Investment Company Act of 1940 and the
Rule thereunder are maintained by OppenheimerFunds, Inc. at its offices at 6803
South Tucson Way, Englewood, Colorado 80112.
Item 32. Management Services.
The Registrant is not a party to any management-related service contract not
discussed in Part A of this Registration Statement.
Item 33. Undertakings.
1. The Registrant undertakes to suspend the offering of the shares covered
hereby until it amends its prospectus if (1) subsequent to the effective date of
this Registration Statement, its net asset value per share declines more than 10
percent from its net asset value per share as of the effective date of this
Registration Statement, or (2) its net asset value increases to an amount
greater than its net proceeds as stated in the prospectus.
2. Inapplicable
3. Inapplicable
4. Inapplicable
5. Inapplicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 28th day of February, 2000.
Oppenheimer Multi-Sector Income Trust
By: /s/ Bridget A. Macaskill*
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy* Chairman of the
Board of Trustees February 28, 2000
Leon Levy
/s/ Donald W. Spiro* Principal Executive
Officer and Trustee February 28, 2000
Donald W. Spiro
/s/ Bridget A. Macaskill* President and Trustee February 28, 2000
Bridget A. Macaskill
/s/ Brian Wixted* Treasurer and
Principal Financial
Brian Wixted and Accounting Officer February 28, 2000
/s/ Robert G. Galli* Trustee February 28, 2000
Robert G. Galli
/s/ Benjamin Lipstein* Trustee February 28, 2000
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee February 28, 2000
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee February 28, 2000
Kenneth A. Randall
/s/ Edward V. Regan* Trustee February 28, 2000
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee February 28, 2000
Russell S. Reynolds, Jr.
/s/ Clayton K. Yeutter* Trustee February 28, 2000
Clayton K. Yeutter
*By: /s/ Robert G. Zack
Robert G. Zack
<PAGE>
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Registration No. 811-5473
Post-Effective Amendment No. 15
Index to Exhibits
Exhibit No. Description
24(1) Financial Statements
24(2)(a) Specimen Certificate of Shares
Financial Highlights
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year
Ended October 31,
- -----------------------------------------------------------
1999 1998
1997 1996 1995
------ -------
- ------- ------- ------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period .............. $9.82 $10.61
$10.52 $10.14 $10.17
----- ------
- ------ ------ ------
Income (loss) from investment operations:
Net investment income ........................... .87
.79 .89 .91 .94
Net realized and unrealized gain (loss) ......... (.43)
(.75) .08 .37 (.04)
----- ------
- ------ ------ ------
Total income from investment operations ....... .44
.04 .97 1.28 .90
----- ------
- ------ ------ ------
Dividend and/or distributions to shareholders:
Dividends from net investment income ............ (.81) (.78)
(.88) (.90) (.91)
Tax return of capital ........................... --
(.05) -- -- (.02)
----- ------
- ------ ------ ------
Total dividends and/or distributions
to shareholders ............................. (.81) (.83)
(.88) (.90) (.93)
----- ------
- ------ ------ ------
Net asset value, end of period .................... $9.45 $ 9.82
$10.61 $10.52 $10.14
===== ======
====== ====== ======
Market value, end of period ....................... $8.06 $ 9.38
$10.13 $ 9.88 $10.00
===== ======
====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1) .................. (6.64)% 0.17%
11.40% 7.85% 15.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) .......... $275,181 $285,907
$308,972 $306,181 $295,128
Average net assets (in thousands) ................. $285,213 $304,773
$308,712 $298,496 $288,884
Ratios to average net assets:(2)
Net investment income ........................... 8.86% 7.56%
8.42% 8.87% 9.51%
Expenses ........................................ 1.03% 1.01%(3)
0.99%(3) 1.04%(3) 1.05%(3)
Portfolio turnover rate(4) ........................ 159%
402% 259% 225% 240%
</TABLE>
1. Assumes a $1,000 hypothetical purchase at the current market price on the
business day before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date, and a
sale at the current market price on the last business day of the period. Total
return does not reflect sales charges or brokerage commissions.
2. Annualized for periods of less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust. 4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and mortgage
dollar-rolls) for the period ended October 31, 1999, were $418,867,882 and
$494,995,156, respectively. Prior to the period ended October 31, 1996,
purchases and sales of investment securities included mortgage dollar-rolls.
<PAGE>
Independent Auditors' Report
Oppenheimer Multi-Sector Income Trust
The Board of Trustees and Shareholders of Oppenheimer
Multi-Sector Income Trust:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Multi-Sector Income Trust as of
October 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1999, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Multi-Sector Income Trust as of October 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
November 19, 1999
Statement of Investments October 31, 1999
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ------------- ------------
U.S. Government Sector--10.2%
U.S. Treasury Bonds:
<S>
<C> <C>
6%, 8/15/04 .................................................................
$ 5,260,000 $ 5,273,150
6.375%, 8/15/27
.............................................................
18,200,000 18,137,447
11.875%, 11/15/03(2)
........................................................ 3,500,000
4,212,033
STRIPS, 5.99%, 11/15/18(3)
.................................................. 1,100,000 318,353
- -----------
Total U.S. Government Sector (Cost $28,954,659)
................................ 27,940,983
- -----------
Shares
- -------------
Convertible Sector--2.1%
Preferred Stocks--1.9%
CGA Group Ltd., Series A(4)(5)
................................................. 39,531 988,275
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(4)
....................................................... 234
222,885
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg.
...................... 4,000 160,000
Dobson Communications Corp., 12.25% Sr. Exchangeable(4)
........................ 616 599,060
Dobson Communications Corp., 13% Sr. Exchangeable(4)
........................... 309 312,862
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(4)
............... 213 64,432
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable,
Series B, 3/1/08, Non-Vtg.(6)
............................................... 4,000 193,000
Global Crossing Ltd., 10.50% Sr. Exchangeable, 12/1/08(4)
...................... 4,000 423,000
Intermedia Communications, Inc., 13.50% Exchangeable, Series B(4)
.............. 821 749,162
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable
Preferred Stock, Non-Vtg.(4)
................................................ 2,948 89,177
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(4)
....... 364 375,830
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(4)
........................... 8,570 439,213
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(4)
......... 22 239,250
Spanish Broadcasting Systems, Inc., 14.25% Cum.
Exchangeable, Non-Vtg.(4)(7)
................................................ 230 245,525
Star Gas Partners, LP
..........................................................
220 3,658
- -----------
5,105,329
- -----------
Units
- -------------
Rights, Warrants and Certificates--0.2%
Ames Department Stores, Inc., Litigation Trust Wts.(5)
......................... 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/15/00(5)
..................................... 25,000 --
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(7)
............................... 404 1,565
CGA Group Ltd. Wts., Exp. 12/31/49(5)
.......................................... 32,000 9,600
Clearnet Communications, Inc. Wts., Exp. 9/15/05
............................... 330 6,976
Concentric Network Corp. Wts., Exp. 12/15/07(5)
................................ 600 150,075
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08
............................. 800 --
e.spire Communications, Inc. Wts., Exp. 11/1/05
................................ 700 43,858
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(5)
.......................... 500 35,062
Globix Corp. Wts., Exp. 5/1/05(5)
.............................................. 600 42,000
3
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Market Value
Units See Note 1
- ------------ ------------
Rights, Warrants and Certificates (Continued)
Gothic Energy Corp. Wts.:
Exp. 1/23/03
................................................................
6,053 $ --
Exp. 1/23/03(5)
.............................................................
3,455 35
Exp. 9/1/04(5)
..............................................................
10,150 10,789
ICG Communications, Inc. Wts., Exp. 9/15/05
.................................... 4,125 45,950
In-Flight Phone Corp. Wts., Exp. 8/31/02
....................................... 900 --
Insilco Corp. Wts., Exp. 8/15/07(5)
............................................ 720 --
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(5)
............................... 920 2,818
Long Distance International, Inc. Wts., Exp. 4/15/08(5)
........................ 400 400
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(5)
........................ 975 11,822
Millennium Seacarriers, Inc. Wts., Exp. 7/15/05(5)
............................. 700 963
Protection One, Inc. Wts., Exp. 6/30/05(5)
..................................... 6,400 1,600
WAM!NET, Inc. Wts., Exp. 3/1/05(7)
............................................. 1,500 33,563
Wireless One, Inc. Wts., Exp. 10/19/20(5)
...................................... 1,500 15
- ----------
398,380
- ----------
Total Convertible Sector (Cost $5,856,242)
..................................... 5,503,709
- ----------
Shares
- -------------
Corporate Sector--32.5%
Common Stocks--0.5%
Capital Gaming International, Inc.(6)
.......................................... 18 --
Intermedia Communications, Inc.(6)
............................................. 756 19,656
Optel, Inc.(6)
.................................................................
815 8
Price Communications Corp.(6)
.................................................. 45,734 994,719
Viatel, Inc.(6)
................................................................
2,356 78,632
Weatherford International, Inc.
................................................ 7,581 256,806
- ----------
1,349,821
- ----------
Face
Amount(1)
- -------------
Corporate Bonds and Notes--31.2%
Aerospace/Defense--1.8%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04
.......................................... $ 850,000 838,312
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08
..................................................... 675,000 621,000
9.375% Sr. Unsec. Nts., 11/15/06
............................................ 800,000 744,000
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08
........................ 1,000,000 950,000
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 9.80%, 1/1/01(5)
............................................. 500,000 465,000
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts.,
Series B, 9/30/08
........................................................... 800,000
772,000
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(5)
............................................ 418,823 432,267
- ----------
4,822,579
- ----------
4
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Chemicals--0.8%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07
..................... $ 300,000 $ 247,500
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon
Sr. Disc. Nts., 13.08%, 12/31/09(3)(7)
...................................... 1,250,000 340,625
Lyondell Chemical Co., 9.875% Sec. Nts., Series B, 5/1/07
...................... 500,000 500,000
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07
.................... 200,000 157,000
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07
............................................................ 600,000
596,250
Sterling Chemicals, Inc., 12.375% Sec. Nts., 7/15/06(7)
........................ 250,000 251,250
- ----------
2,092,625
- ----------
Consumer Durables--0.1%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07
......... 400,000 358,000
- ----------
Consumer Non-Durables--1.2%
AKI Holdings, Inc., 10.50% Sr. Unsec. Nts., 7/1/08
............................. 600,000 531,750
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08
................. 400,000 395,000
Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03
.................... 370,000 371,850
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06
....................... 300,000 61,500
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08
.......... 400,000 214,000
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08(5)
............... 360,000 336,600
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08
......................................... 300,000 165,000
9% Sr. Nts., 11/1/06
........................................................ 775,000
623,875
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05
............................ 400,000 410,000
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08
................. 400,000 262,000
- ----------
3,371,575
- ----------
Energy--2.1%
Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05
.............. 550,000 522,500
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07
............ 845,000 663,325
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08
............................. 400,000 363,000
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(7)
............ 750,000 637,500
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08
.............. 380,000 229,900
National Energy Group, Inc., 10.75% Sr. Nts., Series D, 11/1/06(8)
............. 180,000 72,000
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08
............... 600,000 580,500
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07
..................... 790,000 754,450
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06
.............................. 400,000 426,000
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06
.................................... 500,000 527,500
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03
.................................. 200,000 209,000
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07
............................... 535,000 510,925
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(9)
..... 700,000 437,500
- ----------
5,934,100
- ----------
5
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Corporate Bonds and Notes (Continued)
Financial--0.4%
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08
............................................................ $ 865,000 $
800,125
Veritas Capital Trust, 10% Nts., 1/1/28
........................................ 525,000 395,062
- ----------
1,195,187
- ----------
Food & Drug--0.5%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02
............................... 300,000 143,250
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07
................... 640,000 576,000
Pathmark Stores, Inc.:
0%/10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(9)
......................... 515,000 504,700
12.625% Sub. Nts., 6/15/02
.................................................. 200,000 195,000
- ----------
1,418,950
- ----------
Food/Tobacco--0.8%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08
...................... 200,000 191,500
Chiquita Brands International, Inc., 10% Sr. Nts., 6/15/09
..................... 325,000 245,375
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(9)
........... 327,000 250,155
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06
................. 500,000 515,000
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05
.................... 650,000 537,875
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(8)
........................ 100,000 24,500
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08
................... 400,000 358,000
- ----------
2,122,405
- ----------
Forest Products/Containers--1.0%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06
............................................... 300,000 292,500
8.25% Sr. Unsec. Sub. Nts., 8/1/08
.......................................... 400,000 388,000
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07
............................... 250,000 234,375
Mail-Well Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08(5)
............. 325,000 306,312
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07
............................................. 450,000 457,875
10.875% Sr. Sub. Nts., 4/1/08
............................................... 250,000 245,000
SD Warren Co., 14% Unsec. Nts., 12/15/06(4)
.................................... 556,199 628,505
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06
...................... 250,000 254,375
- ----------
2,806,942
- ----------
Gaming/Leisure--1.8%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(9)
........................ 150,000 72,937
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08
............................... 400,000 334,500
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(8)
.......... 5,500 --
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07
................................ 435,000 394,762
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05
............................. 550,000 415,250
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08
........................ 800,000 720,000
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(10)
........................ 1,000,000 990,000
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09
............ 500,000 490,000
6
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Gaming/Leisure (Continued)
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(9)
............................................ $ 500,000 $ 331,250
9.25% Sr. Nts., 4/1/06
...................................................... 300,000
288,375
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06
......................... 440,000 422,400
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07
................................................ 300,000 304,500
10.125% Sr. Sub. Nts., 3/15/06
.............................................. 200,000 205,000
- ----------
4,968,974
- ----------
Healthcare--0.6%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08
................... 600,000 546,000
ICN Pharmaceutical, Inc., 8.75% Sr. Nts., 11/15/08(7)
.......................... 415,000 379,725
Integrated Health Services, Inc.:
9.50% Sr. Sub. Nts., 9/15/07(8)(10)
......................................... 100,000 7,500
10.25% Sr. Sub. Nts., Series A, 4/30/06(8)
.................................. 15,000 1,125
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08
...................... 250,000 213,750
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05
........................ 250,000 236,250
Tenet Healthcare Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08
......... 250,000 221,875
- ----------
1,606,225
- ----------
Housing--0.6%
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06
........... 300,000 281,250
Engle Homes, Inc., 9.25% Sr. Unsec. Nts., Series C, 2/1/08
..................... 400,000 350,000
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07
........................................... 420,000 403,200
9.25% Sr. Nts., Series B, 3/15/07
........................................... 600,000 583,500
- ----------
1,617,950
- ----------
Information Technology--1.0%
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05
........................... 400,000 368,000
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07
..................................... 600,000 567,000
Fairchild Semiconductor International, Inc.,
10.375% Sr. Unsec. Nts., 10/1/07
............................................ 500,000 500,625
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08
......... 185,000 173,900
Unisys Corp., 11.75% Sr. Nts., 10/15/04
........................................ 500,000 555,000
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07
.................................. 800,000 680,000
- ----------
2,844,525
- ----------
Manufacturing--1.7%
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08
...................................... 150,000 138,750
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07
............................. 700,000 353,500
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08
............. 350,000 299,250
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08
............................... 315,000 118,125
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07
............. 600,000 525,000
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07(5)
................................... 720,000 702,000
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05
......... 700,000 719,250
7
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Corporate Bonds and Notes (Continued)
Manufacturing (Continued)
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08
..................... $ 280,000 $ 177,800
Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08
............................... 500,000 472,500
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts.,
Series B, 6/15/07
........................................................... 500,000
442,500
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08
............................... 210,000 195,300
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(2)
.......................... 525,000 517,125
- ----------
4,661,100
- ----------
Media/Entertainment: Broadcasting--1.5%
Chancellor Media Corp.:
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07
............................... 700,000 700,000
9% Sr. Unsec. Sub. Nts., 10/1/08
............................................ 800,000 822,000
10.50% Sr. Sub. Nts., Series B, 1/15/07
..................................... 735,000 797,475
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts.,
Series B, 3/15/09
........................................................... 600,000
573,000
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(11)
....................... 700,000 733,250
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., Series B, 3/15/04
............ 475,000 526,063
- ----------
4,151,788
- ----------
Media/Entertainment: Cable/Wireless Video--2.2%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03
.......................................... 250,000 242,813
8.375% Sr. Nts., Series B, 2/1/08
........................................... 100,000 94,500
9.875% Sr. Nts., Series B, 3/1/07
........................................... 565,000 577,713
Charter Communication Holdings LLC/Charter
Communication Holdings Capital Corp.:
0%/9.92% Sr. Disc. Nts., 4/1/11(9)
.......................................... 500,000 300,000
8.625% Sr. Unsec. Nts., 4/1/09
.............................................. 500,000 475,000
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06
.............................. 1,000,000 1,042,500
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09
............................. 1,705,000 1,698,606
Falcon Holding Group LP, 8.375% Sr. Unsec. Debs., Series B, 4/15/10
............ 1,000,000 1,007,500
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(12)
....................................................... 250,000
258,750
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(9)
........................................................ 600,000
343,500
- ----------
6,040,882
- ----------
Media/Entertainment: Diversified Media--0.5%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11
.................... 350,000 306,250
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10
....................................... 500,000 352,500
9.50% Sr. Unsec. Sub. Nts., 6/1/08
.......................................... 200,000 151,000
SFX Entertainment, Inc., 9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08
......... 600,000 552,000
- ----------
1,361,750
- ----------
8
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Media/Entertainment: Telecommunications--4.1%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(9) ......................
$ 1,165,000 $ 763,075
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07
..................... 495,000 517,275
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(9)
......... 1,000,000 565,000
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08
........................... 365,000 375,038
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(9)
............. 500,000 270,000
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(9)
....... 100,000 58,500
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08
................................. 100,000 102,000
Globix Corp., 13% Sr. Unsec. Nts., 5/1/05
...................................... 500,000 437,500
GST Network Funding, Inc., 0%/10.50% Sr. Disc. Nts., 5/1/08(9)
................. 250,000 116,250
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(9)
...... 480,000 252,000
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(9)
............................... 200,000 109,000
8.50% Sr. Nts., Series B, 1/15/08
........................................... 500,000 443,750
8.60% Sr. Unsec. Nts., Series B, 6/1/08
..................................... 300,000 267,000
ITC Deltacom, Inc.:
8.875% Sr. Nts., 3/1/08
..................................................... 500,000
477,500
11% Sr. Nts., 6/1/07
........................................................ 250,000
263,750
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(9)
........ 920,000 501,400
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(9)
........................................ 250,000 147,500
9.125% Sr. Unsec. Nts., 5/1/08
.............................................. 250,000 234,375
Metromedia Fiber Network, Inc., 10% Sr. Unsec. Nts., Series B, 11/15/08
........ 600,000 592,500
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08
........................................................ 250,000
236,250
9.625% Sr. Nts., 10/1/07(10)
................................................ 500,000 482,500
10.75% Sr. Unsec. Nts., 11/15/08
............................................ 600,000 609,000
10.75% Sr. Unsec. Nts., 6/1/09
.............................................. 300,000 307,500
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(8)
................................ 480,000 122,400
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05
........................... 400,000 393,000
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08
............................... 500,000 515,000
US Xchange LLC, 15% Sr. Unsec. Nts., 7/1/08
.................................... 400,000 395,000
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05
............................................. 645,000 651,450
11.25% Sr. Unsec. Nts., 12/1/08
............................................. 500,000 525,000
13.50% Sr. Unsec. Nts., 6/15/04
............................................. 165,000 181,088
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08
.................................... 195,000 184,275
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(5)(9)
......... 500,000 302,500
- -----------
11,398,376
- -----------
9
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Corporate Bonds and Notes (Continued)
Media/Entertainment: Wireless Communications--2.6%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07
............................. $ 100,000 $ 71,000
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(9)
.................. 554,000 113,570
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(9)
....................................... 550,000 328,625
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(9)
............................... 800,000 580,000
ICO Global Communications (Holdings) Ltd., Units (each unit consists
of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant
to purchase 19.85 shares of common stock)(8)(13)
............................ 400,000 90,000
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06
..................... 500,000 402,500
Microcell Telecommunications, Inc., 0%/12% Sr. Unsec. Disc. Nts., 6/1/09(9)
.... 750,000 455,625
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(9)
........ 205,000 149,138
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 10/31/07(9)
.............. 425,000 308,125
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(7)
................................................. 200,000 210,000
11.625% Sr. Nts., 8/15/06
................................................... 300,000 315,000
11.625% Sr. Nts., Series A, 8/15/06(10)
..................................... 1,200,000 1,260,000
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04
................. 175,000 144,375
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(9)
.............. 1,275,000 567,375
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(9)
.............. 900,000 549,000
Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07
............. 100,000 109,750
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08
.................. 700,000 721,000
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(9)
.............. 1,000,000 565,000
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(9)
.................. 600,000 340,500
- ----------
7,280,583
- ----------
Metals/Minerals--1.0% AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09
............................................. 500,000 460,000
9.125% Sr. Nts., 12/15/06
................................................... 400,000 399,000
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08
.............. 800,000 728,000
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(9)
................. 1,200,000 378,000
Metallurg, Inc., 11% Sr. Nts., 12/1/07
......................................... 365,000 326,675
Republic Technologies International, Units (each unit consists
of $1,000 principal amount of 13.75% sr. nts., 7/15/09 and one
warrant to purchase Cl. D common stock at $0.01 per share)(13)
.............. 400,000 372,000
- ----------
2,663,675
- ----------
Retail--0.9%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08
........ 293,000 286,408
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08
......... 500,000 362,500
Finlay Enterprises, Inc., 9% Debs., 5/1/08
..................................... 500,000 442,500
10
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Retail (Continued)
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08
............................. $ 300,000 $ 271,500
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08
.................... 400,000 328,000
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07(5)
.......................... 775,000 740,125
- -----------
2,431,033
- -----------
Service--1.4%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09
..................................... 200,000 169,000
10% Sr. Sub. Nts., 8/1/09(7)
................................................. 500,000 425,625
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(7)
..................................... 600,000 616,500
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07
...................... 200,000 137,500
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08
.......... 445,000 451,675
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09
................ 250,000 235,000
Lamar Media Corp., 8.625% Sr. Sub. Nts., 9/15/07
............................... 500,000 486,250
Newcor, Inc., 9.875% Sr. Unsec. Sub. Nts., Series B, 3/1/08
.................... 500,000 277,500
Packaging Corp. of America, 9.625% Sr. Sub. Nts., 4/1/09(7)
.................... 300,000 301,500
Protection One Alarm Monitoring, Inc., 13.625%
Sr. Sub. Disc. Nts., 6/30/05
................................................ 655,000 153,925
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09
............................. 50,000 47,125
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09
............ 500,000 462,500
US Unwired, Inc., 0%/13.375% Sr. Disc. Nts., 11/1/09(7)(9)
..................... 50,000 27,000
- -----------
3,791,100
- -----------
Transportation--2.0%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05(10)
....................... 1,000,000 977,500
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06
............................. 250,000 217,500
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07
.................... 775,000 616,125
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(7)
............................. 1,250,000 618,750
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(7)(13)
......... 100,000 16,500
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07
....... 600,000 543,000
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08
.................................. 500,000 432,500
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04
..................... 600,000 429,000
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(9)
....................................... 1,500,000 1,485,000
- -----------
5,335,875
- -----------
Utility--0.6%
Calpine Corp., 10.50% Sr. Nts., 5/15/06
........................................ 565,000 593,250
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11(10)
......... 570,000 623,609
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11
.......... 500,000 445,530
- -----------
1,662,389
- -----------
85,938,588
- -----------
11
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Loan Participations--0.8%
Shoshone Partners Loan Trust Sr. Nts., 7.063%, 4/28/02
(representing a basket of reference loans and a total return swap
between Chase Manhattan Bank and the Trust)(5)(12) ..........................
$ 2,500,000 $ 2,141,359
- -----------
Date Strike
Contracts
-------- --------
- ---------------
Options Purchased--0.0%
Morgan Guaranty Trust Co. of New York,
The Emerging Markets
Bond Index Linked Nts. Call Opt.(5) ............ 1/19/00
$349.73 1,600 80,160
- -----------
Total Corporate Sector (Cost $99,192,254)
......... 89,509,928
- -----------
Face
Amount(1)
- ---------------
International Sector--31.4%
Corporate Bonds and Notes--8.7%
Energy--0.5%
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05 ..........................
$ 1,000,000 972,500
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08
.............................. 700,000 577,500
- -----------
1,550,000
- -----------
Financial--2.6%
AB Spintab, 5.50% Bonds, Series 169, 9/17/03SEK
................................ 3,900,000 467,096
Allgemeine Hypobk AG, 5% Sec. Nts., Series 501, 9/2/09EUR
...................... 850,000 849,299
Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/99(5)(8) IDR ..............
3,160,000,000 69,451
Deutsche Pfandbrief & Hypobank, 5.50% Sec. Nts., 1/15/10EUR
.................... 580,000 603,664
Eurofima, 7.50% Sr. Unsec. Unsub. Nts., 11/4/02DEM
............................. 770,000 446,255
Hypothekenbk in Essen, 3.50% Sec. Debs., 3/17/04EUR
............................ 3,955,000 3,928,668
KBC Bank Funding Trust IV, 8.22% Nts., 11/29/49(14)(15)EUR
..................... 650,000 697,672
PT Polysindo Eka Perkasa:
20% Nts., 3/6/00(8)IDR .......................................................
3,000,000,000 57,143
24% Nts., 6/19/03(8)IDR ......................................................
1,314,400,000 25,036
- -----------
7,144,284
- -----------
Food/Tobacco--0.2%
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07
......... 565,000 443,525
- -----------
Forest Products/Containers--0.1%
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05
...... 400,000 354,000
- -----------
Gaming/Leisure--0.3%
Intrawest Corp., 9.75% Sr. Nts., 8/15/08
....................................... 800,000 778,000
- -----------
Media/Entertainment: Diversified Media--0.2%
Imax Corp., 7.875% Sr. Nts., 12/1/05
........................................... 700,000 654,500
- -----------
12
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Media/Entertainment: Telecommunications--4.0%
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(9)
................................... $ 100,000 $ 83,500
Units (each unit consists of $1,000 principal amount of
0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase
7.8 ordinary shares)(9)(13)
............................................... 900,000 760,500
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(9)
........ 1,600,000 1,468,000
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08
.................................. 200,000 198,000
Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(7)EUR
........................... 1,850,000 1,993,148
NTL, Inc.:
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(9)
............................ 1,500,000 1,005,000
10% Sr. Nts., Series B, 2/15/07
............................................. 550,000 563,750
11.50% Sr. Unsec. Nts., Series B, 10/1/08
................................... 500,000 536,250
RSL Communications plc:
9.125% Sr. Unsec. Nts., 3/1/08
.............................................. 500,000 422,500
10.50% Gtd. Sr. Nts., 11/15/08
.............................................. 500,000 462,500
Telewest Communications plc:
0%/9.25% Sr. Nts., 4/15/09(7)(9)
............................................ 250,000 155,000
0%/9.875% Sr. Nts., 4/15/09(7)(9)GBP
........................................ 575,000 570,828
0%/11% Sr. Disc. Debs., 10/1/07(9)
.......................................... 500,000 456,875
11.25% Sr. Nts., 11/1/08
.................................................... 1,035,000 1,115,213
United Pan-Europe Communications NV, 10.875% Sr. Nts., 8/1/09(7)EUR
............ 750,000 778,471
Versatel Telecom International BV, 11.875% Sr. Nts., 7/15/09EUR
................ 250,000 260,147
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(7)
................................. 250,000 251,250
- -----------
11,080,932
- -----------
Media/Entertainment: Wireless Communications--0.4%
Orange plc:
8% Sr. Nts., 8/1/08
......................................................... 800,000
805,000
8.75% Sr. Unsec. Bonds, 6/1/06(7)
........................................... 250,000 257,500
- -----------
1,062,500
- -----------
Metals/Minerals--0.1%
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08
........... 200,000 179,000
- -----------
Transportation--0.3%
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04GBP
............. 545,000 880,429
Pacific & Atlantic Holdings, Inc., 11.50% First Preferred Ship Mtg. Nts.,
5/30/08
.....................................................................
300,000 114,375
- -----------
994,804
- -----------
24,241,545
- -----------
13
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
U.S. Government Obligations--0.2%
Federal National Mortgage Assn.:
Sr. Unsub. Medium-Term Nts., 6.50%, 7/10/02AUD
.............................. 430,000 $ 273,840
Sr. Unsub. Nts., 6.375%, 8/15/07AUD
......................................... 460,000 280,157
- ----------
553,997
- ----------
Foreign Government Obligations--19.7%
Argentina--2.0%
Argentina (Republic of) Bonds:
12.125%, 2/25/19
............................................................ 165,000
169,348
Series D, Zero Coupon, 9.87%, 10/15/02(3)
................................... 1,200,000 906,000
Series L, 6.812%, 3/31/05(12)
............................................... 1,584,000 1,405,800
Argentina (Republic of) Global Unsec. Unsub. Bonds,
Series BGL5, 11.375%, 1/30/17
............................................... 1,235,000 1,182,512
Argentina (Republic of) Unsec. Unsub. Medium-Term Nts.,
8.75%, 7/10/02ARP
........................................................... 1,490,000
1,285,768
Banco Hipotecario Nacional (Argentina) Medium-Term Unsec. Nts.,
Series 3, 10.625%, 8/7/06
................................................... 546,000 546,000
- ----------
5,495,428
- ----------
Australia--0.1%
Australia Postal Corp. Unsec. Unsub. Nts., 6%, 3/25/09AUD
...................... 580,000 338,930
- ----------
Brazil--2.2%
Brazil (Federal Republic of) Bonds:
11.625%, 4/15/04
............................................................ 160,000
152,848
Series RG, 5.938%, 4/15/12(12)
.............................................. 820,000 537,100
Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14
............. 3,718,488 2,500,684
Brazil (Federal Republic of) Debt Conversion Bonds, 7%, 4/15/12(12)
............ 3,623,000 2,373,065
Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(12)
...... 359,080 293,548
Brazil (Federal Republic of) Gtd. Bonds, 7%, 4/15/09(12)
....................... 110,000 80,850
- ----------
5,938,095
- ----------
Bulgaria--0.6%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.50%, 7/28/24(12)
.............. 576,000 428,400
Bulgaria (Republic of) Front-Loaded Interest Reduction
Bearer Bonds, Tranche A, 2.75%, 7/28/12(11)
................................. 10,000 6,750
Bulgaria (Republic of) Interest Arrears Bonds, 6.50%, 7/28/11(12)
.............. 1,540,000 1,178,100
- ----------
1,613,250
- ----------
Canada--0.1%
Canada (Government of) Bonds, Series J24, 10.25%, 2/1/04CAD
.................... 200,000 157,317
- ----------
Colombia--0.2%
Colombia (Republic of) Nts., 8.625%, 4/1/08
.................................... 135,000 115,594
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06
........................ 570,000 468,825
- ----------
584,419
- ----------
14
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Ecuador--0.0%
Ecuador (Republic of) Past Due Interest Bonds, 2/27/15(8)
...................... $ 25,615 $ 5,507
- ----------
Finland--0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04EUR
................................. 500,000 621,031
- ----------
France--0.5%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 10/25/07EUR
.......................................................... 1,300,000
1,400,591
- ----------
Germany--1.7%
Germany (Republic of) Bonds:
6.25%, 4/26/06EUR
........................................................... 120,460
135,049
6.75%, 5/13/04EUR
........................................................... 635,000
719,710
6.75%, 7/15/04EUR
........................................................... 2,815,000
3,200,584
Series 95, 6.50%, 10/14/05EUR
............................................... 375,799 426,129
Germany (Republic of) Nts., Series 98, 4%, 3/17/00EUR
.......................... 140,605 148,234
- ----------
4,629,706
- ----------
Great Britain--1.3%
United Kingdom Treasury Nts.:
8%, 6/10/03GBP
.............................................................. 850,000
1,469,385
10%, 9/8/03GBP
.............................................................. 1,105,000
2,036,217
- ----------
3,505,602
- ----------
Hungary--0.3%
Hungary (Government of) Bonds, Series 01/H, 13.50%, 6/12/01HUF .................
219,660,000 906,860
- ----------
Italy--1.1%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
8.75%, 7/1/06EUR
............................................................ 2,000,000
2,507,084
10.50%, 9/1/05EUR
........................................................... 467,392
619,745
- ----------
3,126,829
- ----------
Ivory Coast--0.1%
Ivory Coast (Government of) Front Loaded Interest
Reduction Bonds, 2%, 3/29/18(11)
............................................ 641,000 161,852
Ivory Coast (Government of) Past Due Interest Bonds,
Series 20 yr., 2%, 3/29/18(11)
.............................................. 885,500 267,864
- ----------
429,716
- ----------
Japan--0.6%
Japan (Government of) Bonds, Series 141, 6.50%, 6/20/01JPY .....................
155,000,000 1,633,322
- ----------
Jordan--0.1%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5.50%, 12/23/23(11)
........... 365,000 230,862
Hashemite (Kingdom of Jordan) Disc. Bonds, 6.188%, 12/23/23(12)
................ 125,000 84,062
- ----------
314,924
- ----------
15
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Foreign Government Obligations (Continued)
Mexico--2.6%
United Mexican States Bonds:
11.375%, 9/15/16 ............................................................
$ 3,710,000 $3,974,337
11.50%, 5/15/26
............................................................. 2,690,000
3,014,818
United Mexican States Collateralized Fixed Rate Par Bonds,
Series W-A, 6.25%, 12/31/19
................................................. 170,000 127,500
- ----------
7,116,655
- ----------
Nigeria--0.2%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20
................. 750,000 436,875
- ----------
Norway--0.9%
Norway (Government of) Bonds, 9.50%, 10/31/02NOK
............................... 17,300,000 2,419,918
- ----------
Panama--0.5%
Panama (Republic of) Past Due Interest Debs., 5.819%, 7/17/16(12)
.............. 1,705,956 1,283,733
- ----------
Peru--0.7%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.75%, 3/7/17(11)
........................................................... 3,490,000
1,928,225
- ----------
Philippines--0.2%
Philippines (Republic of) Bonds, 8.75%, 10/7/16
................................ 710,000 637,225
- ----------
Poland--0.7%
Poland (Republic of) Bonds:
12%, 6/12/01PLZ
.............................................................
4,077,000 925,537
Series 1000, 13%, 10/12/00PLZ
............................................... 3,965,000 921,193
- ----------
1,846,730
- ----------
Russia--1.0%
Russia (Government of) Debs., 12/15/15(8)
...................................... 1,293,840 150,409
Russia (Government of) Principal Loan Debs., Series 24 yr., 12/15/20(8)
........ 7,800,000 723,938
Russia (Government of) Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03
................. 665,000 407,313
Russia (Government of) Unsec. Bonds, 11%, 7/24/18
.............................. 602,000 294,980
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05
..............................................................
320,000 154,400
12.75%, 6/24/28
............................................................. 1,903,000
1,006,782
- ----------
2,737,822
- ----------
16
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
South Africa--0.4%
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10ZAR
.................. 8,410,000 $ 1,236,458
- -----------
Venezuela--1.4%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27
.................................. 1,450,000 967,948
Venezuela (Republic of) Disc. Bonds, Series DL, 6.312%, 12/18/07(12)
........... 2,337,089 1,884,278
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series A, 6.875%, 3/31/07(12)
............................................... 892,857 712,054
Venezuela (Republic of) New Money Bonds,
Series A, 6.437%, 12/18/05(12)
.............................................. 382,357 308,993
- -----------
3,873,273
- -----------
54,218,441
- -----------
Loan Participations--1.0%
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 6.812%, 9/4/06(5)(12)
............................................ 344,272 252,610
Algeria (Republic of) Trust III Nts., Tranche 3:
1.063%, 3/4/10(5)(12)JPY ....................................................
152,654,000 705,783
6.812%, 3/4/10(5)(12)
....................................................... 598,000
414,115
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 5.906%, 1/1/09(5)(12)
............................................. 519,190 451,696
Tranche B, 5.906%, 1/1/09(5)(12)
............................................. 689,411 635,120
Trinidad & Tobago Loan Participation Agreement,
Tranche B, 1.148%, 9/30/00(5)(12)JPY
........................................ 23,999,999 209,276
- -----------
2,668,600
- -----------
Mortgage-Backed Obligations--0.2%
Nykredit AS, 7% Cv. Bonds, 10/1/29DKK
.......................................... 3,055,000 423,173
- -----------
Units
- -------------
Rights, Warrants and Certificates--0.0%
Australis Holdings PTY Ltd./Australia Media Ltd. Wts., Exp. 5/15/00(5)
......... 80 1
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(5)
........................ 2,800 119,700
Central Bank of Nigeria Wts., Exp. 11/15/20
.................................... 750 --
Venezuela (Republic of) Oil Linked Payment Obligation Wts.,
Exp. 4/15/20
................................................................
2,856 --
- -----------
119,701
- -----------
17
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Structured Instruments--1.6%
Citibank NA (Nassau Branch):
Mexican Peso Linked Nts., 26.10%, 10/29/01MXN
................................ 5,726,875 $ 601,790
Polish Zloty Linked Nts., 16.10%, 11/3/00
.................................... 620,660 620,660
Deutsche Bank AG, Indonesian Rupiah Linked Nts., 13.667%, 6/30/00
.............. 485,000 471,371
Deutsche Morgan Grenfell, Turkish Lira Treasury Bill Linked Nts.,
Zero Coupon, 82.04%, 5/24/00(3)TRL
..........................................350,557,900,000 503,120
Merrill Lynch & Co., Inc. Turkey Treasury Bond Linked Nts.:
87.282%, 1/9/01(12)TRL ......................................................
87,600,000,000 211,507
87.283%, 1/7/01(12)TRL
......................................................185,000,000,000
446,675
Salomon Smith Barney, Inc. Turkey Treasury Bill Linked Nts.:
91.86%, 8/24/00(12)
......................................................... 330,000
295,059
92.10%, 8/24/00(12)
......................................................... 330,000
294,664
Salomon, Inc. Indonesian Rupiah Linked Nts., 29.55%, 4/12/00
................... 750,000 988,950
- -----------
4,433,796
- -----------
Total International Sector (Cost
$90,243,759) 86,659,253
- -----------
Mortgage-Backed Sector--20.7%
Government Agency--15.4%
FHLMC/FNMA/Sponsored--14.8%
Federal Home Loan Mortgage Corp., Certificates of Participation,
12%, 5/1/10-6/1/15
.......................................................... 1,004,776
1,113,791
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 1343, Cl. LA,
8%, 8/15/22
.................................................................
1,000,000 1,024,060
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 2054, Cl. TE, 6.25%, 4/15/24
...... 534,000 510,637
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 190, Cl. IO, 10.779%, 8/1/28(16)
...................................... 7,727,269 2,512,570
Series 197, Cl. IO, 11.092%, 4/1/28(16)
...................................... 4,587,074 1,460,696
Series 199, Cl. IO, 22.32%, 8/1/28(16)
....................................... 5,113,475 1,662,679
Federal National Mortgage Assn.:
6.50%, 1/1/29
................................................................
11,508,974 11,032,387
7%, 11/25/27(15)
............................................................. 7,000,000
6,873,160
7.50%, 6/1/10(10)
............................................................
693,229 702,762
7.50%, 9/1/29
................................................................
3,922,345 3,933,210
7.50%, 9/1/29
................................................................
8,077,655 8,100,030
11%, 7/1/16(10)
..............................................................
390,671 430,441
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through
Certificates, 13%, 6/1/15(10)(17)
........................................... 673,309 768,220
18
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
FHLMC/FNMA/Sponsored (Continued)
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Trust 1995-4, Cl. PC, 8%, 5/25/25
................ $ 664,690 $ 677,771
- -----------
40,802,414
- -----------
GNMA/Guaranteed--0.6%
Government National Mortgage Assn.:
6%, 7/20/27
.................................................................
329,438 331,293
7%, 1/15/28
.................................................................
578,280 567,790
7%, 3/15/28
.................................................................
243,417 239,001
11%, 10/20/19
...............................................................
259,102 286,531
12%, 11/20/13
...............................................................
99,746 111,124
12%, 2/20/15
................................................................
61,256 68,427
12%, 9/20/15
................................................................
109,675 122,700
- -----------
1,726,866
- -----------
Private--5.3%
Commercial--3.7%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1996-D3, Cl. A5, 8.142%, 10/13/26(12)
................................ 500,000 445,469
Series 1996-MD6, Cl. A5, 7.163%, 11/13/26(12)
............................... 800,000 768,250
Capital Lease Funding Securitization LP, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-CTL1, 11.378%, 6/22/24(5)(16)
............. 10,665,693 439,960
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 29.86%, 12/25/20(5)(16)
...... 12,416,600 162,968
General Motors Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1997-C1, Cl. X, 8.985%, 7/15/27(16)
............ 3,363,976 260,708
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D, 7.42%, 4/25/28
....................................... 800,000 767,375
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D1, 7.421%, 2/15/28(5)(12)
.............................. 1,000,000 953,750
NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series DMC:
Cl. B, 8.562%, 8/12/11(5)
................................................... 400,000 378,250
Cl. C, 8.921%, 8/12/11(5)
................................................... 400,000 379,750
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates,
Series 1, Cl. D, 7.68%, 12/21/26(5)
......................................... 500,000 482,188
Structured Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1997-LLI, Cl. E, 7.30%, 4/12/12
...................................... 500,000 434,063
Structured Asset Securities Corp., Multiclass Pass-Through Certificates:
Series 1996-C3, Cl. D, 8%, 6/25/30(5)
....................................... 650,000 653,656
Series 1999-1, 10%, 8/25/28
................................................. 3,985,392 3,962,974
- -----------
10,089,361
- -----------
19
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
Face Market Value
Amount(1) See Note 1
- ------------- ------------
Private (Continued)
Residential--1.6%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1997-C1, Cl. E, 7.50%, 3/1/11(5)
..................................... $ 710,000 $ 592,184
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, Cl. C, 8.227%, 7/25/06(5)(12)
............................. 800,000 734,000
Residential Asset Securitization Trust, Collateralized Mtg. Obligations,
Non-Accelerated Security, Series 1997-A2, Cl. A8, 7.75%, 4/25/27
............ 2,000,000 1,997,500
Salomon Brothers Mortgage Securities VII, Series 1996-B,
Cl. 1, 6.581%, 4/25/26(5)
................................................... 1,282,666 865,399
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(5)
............. 250,000 236,328
- ------------
4,425,411
- ------------
Total Mortgage-Backed Sector (Cost $57,304,147)
................................ 57,044,052
- ------------
Money Market Sector--4.0%
Repurchase agreement with PaineWebber, Inc., 5.20%, dated 10/29/99, to be
repurchased at $10,904,723 on 11/1/99, collateralized by U.S. Treasury Nts.,
5.75%-6.875%, 3/31/01-10/15/06, with a value of $2,795,793 and U.S. Treasury
Bonds, 5.50%-12%, 8/15/13-8/15/28,
with a value of $8,432,354 (Cost $10,900,000)
............................... 10,900,000 10,900,000
- ------------
Total Investments, at Value (Cost $292,451,061)
................................ 100.9% 277,557,925
Liabilities in Excess of Other Assets
.......................................... (0.9) (2,377,202)
- ---------- ------------
Net Assets
.....................................................................
100.0% $275,180,723
========== ============
</TABLE>
20
<PAGE>
Statement of Investments (Continued)
Oppenheimer Multi-Sector Income Trust
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C> <C> ARP -- Argentine Peso IDR -- Indonesian Rupiah AUD -- Australian
Dollar JPY -- Japanese Yen BRR -- Brazilian Real MXN -- Mexican Nuevo Peso CAD
- -- Canadian Dollar NOK -- Norwegian Krone DEM -- German Mark PLZ -- Polish Zloty
DKK -- Danish Krone SEK -- Swedish Krona EUR -- Euro TRL -- Turkish Lira GBP --
British Pound Sterling ZAR -- South African Rand HUF -- Hungarian Forint
</TABLE> 2. Securities with an aggregate market value of $4,729,158 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements. 3. For zero coupon
bonds, the interest rate shown is the effective yield on the date of purchase.
4. Interest or dividend is paid in kind. 5. Identifies issues considered to be
illiquid or restricted--See Note 8 of Notes to Financial Statements. 6.
Non-income-producing security. 7. Represents securities sold under Rule 144A,
which are exempt from registration under the Securities Act of 1933, as amended.
These securities have been determined to be liquid under guidelines established
by the Board of Trustees. These securities amount to $8,111,825 or 2.95% of the
Trust's net assets as of October 31, 1999. 8. Non-income-producing--issuer is in
default. 9. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date. 10. A sufficient amount of
securities has been designated to cover outstanding foreign currency exchange
contracts. See Note 5 of Notes to Financial Statements. 11. Represents the
current interest rate for an increasing rate security. 12. Represents the
current interest rate for a variable rate security. 13. Units may be comprised
of several components, such as debt and equity and/or warrants to purchase
equity at some point in the future. For units which represent debt securities,
face amount disclosed represents total underlying principal. 14. Represents the
current interest rate for a decreasing rate security. 15. When-issued security
to be delivered and settled after October 31, 1999. 16. Interest-Only Strips
represent the right to receive the monthly interest payments on an underlying
pool of mortgage loans. These securities typically decline in price as interest
rates decline. Most other fixed income securities increase in price when
interest rates decline. The principal amount of the underlying pool represents
the notional amount on which current interest is calculated. The price of these
securities is typically more sensitive to changes in prepayment rates than
traditional mortgage-backed securities (for example, GNMA pass-throughs).
Interest rates disclosed represent current yields based upon the current cost
basis and estimated timing and amount of future cash flows. 17. A sufficient
amount of liquid assets has been designated to cover outstanding written
options, as follows:
<TABLE>
<CAPTION>
Contracts Expiration
Exercise Premium Market Value
Subject to Put Date
Price Received See Note 1
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
<C> <C> <C>
Brazilian Real Put Opt. 3,388,275 1/28/00 2.054
BRR $56,100 $42,353
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE>
Statement of Assets and Liabilities October 31, 1999
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S>
<C>
ASSETS
Investments, at value (cost $292,451,061)--see accompanying statement
.......................... $277,557,925
Cash
...........................................................................................
24,089
Unrealized appreciation on foreign currency exchange contracts
................................. 44,630
Receivables and other assets:
Interest, dividends and principal paydowns
.................................................. 5,443,999
Investments sold
............................................................................
2,076,643
Daily variation on futures contracts
........................................................ 186,944
Closed foreign currency exchange contracts
.................................................. 18,000
Other
.......................................................................................
16,436
- ------------
Total assets
..............................................................................
285,368,666
- ------------
LIABILITIES
Unrealized depreciation on foreign currency exchange contracts
................................. 8,809
Options written, at value (premiums received $56,100)--see accompanying statement
.............. 42,353
Payables and other liabilities:
Investments purchased (including $7,560,083 purchased on a when-issued basis)
............... 9,211,457
Daily variation on futures contracts
........................................................ 508,469
Trustees' compensation
......................................................................
206,071
Management and administrative fees
.......................................................... 51,946
Closed foreign currency exchange contracts
.................................................. 29,909
Other
.......................................................................................
128,929
- ------------
Total liabilities
.........................................................................
10,187,943
- ------------
NET ASSETS
.....................................................................................
$275,180,723
============
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest
..................................................... $ 291,161
Additional paid-in capital
.....................................................................
312,129,416
Overdistributed net investment income
.......................................................... (418,568)
Accumulated net realized loss on investments and foreign currency transactions
................. (22,009,025)
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies
..................................... (14,812,261)
- ------------
NET ASSETS--applicable to 29,116,068 shares of beneficial interest outstanding
................. $275,180,723
============
NET ASSET VALUE PER SHARE
......................................................................
$9.45
=====
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE>
Statement of Operations For the Year Ended October 31, 1999
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S>
<C>
INVESTMENT INCOME
Interest
..................................................................................
$ 27,434,883
Dividends
.................................................................................
784,345
- ------------
Total income
.........................................................................
28,219,228
- ------------
EXPENSES
Management fees
...........................................................................
1,857,232
Administrative fees
.......................................................................
571,349
Shareholder reports
.......................................................................
191,217
Custodian fees and expenses
............................................................... 79,349
Trustees' compensation
....................................................................
78,917
Transfer and shareholder servicing agent fees
............................................. 45,641
Accounting service fees
................................................................... 24,000
Other
.....................................................................................
103,510
- ------------
Total expenses
.......................................................................
2,951,215
Less expenses paid indirectly
............................................................. (12,401)
- ------------
Net expenses
..............................................................................
2,938,814
- ------------
NET INVESTMENT INCOME
.....................................................................
25,280,414
- ------------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments
............................................................................
(11,162,893)
Closing of futures contracts
........................................................... (569,134)
Closing and expiration of option contracts written
..................................... 35,078
Foreign currency transactions
.......................................................... (2,353,067)
- ------------
Net realized loss
....................................................................
(14,050,016)
- ------------
Net change in unrealized appreciation or depreciation on:
Investments
............................................................................
1,581,442
Translation of assets and liabilities denominated in foreign currencies
................ (99,619)
- ------------
Net change
...........................................................................
1,481,823
- ------------
Net realized and unrealized loss
.......................................................... (12,568,193)
- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
...................................... $ 12,712,221
============
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE>
Statements of Changes in Net Assets
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998
- ------------ ------------
<S>
<C> <C>
OPERATIONS
Net investment income .......................................................... $
25,280,414 $ 23,029,394
Net realized loss ..............................................................
(14,050,016) (1,954,051)
Net change in unrealized appreciation or depreciation ..........................
1,481,823 (20,031,594)
- ------------ ------------
Net increase in net assets resulting from operations .........................
12,712,221 1,043,749
- ------------ ------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ...........................................
(23,438,435) (22,561,595)
Tax return of capital
.......................................................... --
(1,547,363)
- ------------ ------------
NET ASSETS
Total decrease .................................................................
(10,726,214) (23,065,209)
Beginning of period ............................................................
285,906,937 308,972,146
- ------------ ------------
End of period [including undistributed (overdistributed) net investment
income of $(418,568) and $169,342, respectively] .............................
$275,180,723 $285,906,937
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE>
Financial Highlights
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year
Ended October 31,
- -----------------------------------------------------------
1999 1998
1997 1996 1995
------ -------
- ------- ------- ------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period .............. $9.82 $10.61
$10.52 $10.14 $10.17
----- ------
- ------ ------ ------
Income (loss) from investment operations:
Net investment income ........................... .87
.79 .89 .91 .94
Net realized and unrealized gain (loss) ......... (.43)
(.75) .08 .37 (.04)
----- ------
- ------ ------ ------
Total income from investment operations ....... .44
.04 .97 1.28 .90
----- ------
- ------ ------ ------
Dividend and/or distributions to shareholders:
Dividends from net investment income ............ (.81) (.78)
(.88) (.90) (.91)
Tax return of capital ........................... --
(.05) -- -- (.02)
----- ------
- ------ ------ ------
Total dividends and/or distributions
to shareholders ............................. (.81) (.83)
(.88) (.90) (.93)
----- ------
- ------ ------ ------
Net asset value, end of period .................... $9.45 $ 9.82
$10.61 $10.52 $10.14
===== ======
====== ====== ======
Market value, end of period ....................... $8.06 $ 9.38
$10.13 $ 9.88 $10.00
===== ======
====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1) .................. (6.64)% 0.17%
11.40% 7.85% 15.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) .......... $275,181 $285,907
$308,972 $306,181 $295,128
Average net assets (in thousands) ................. $285,213 $304,773
$308,712 $298,496 $288,884
Ratios to average net assets:(2)
Net investment income ........................... 8.86% 7.56%
8.42% 8.87% 9.51%
Expenses ........................................ 1.03% 1.01%(3)
0.99%(3) 1.04%(3) 1.05%(3)
Portfolio turnover rate(4) ........................ 159%
402% 259% 225% 240%
</TABLE>
1. Assumes a $1,000 hypothetical purchase at the current market price on the
business day before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date, and a
sale at the current market price on the last business day of the period. Total
return does not reflect sales charges or brokerage commissions. 2. Annualized
for periods of less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust. 4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and mortgage
dollar-rolls) for the period ended October 31, 1999, were $418,867,882 and
$494,995,156, respectively. Prior to the period ended October 31, 1996,
purchases and sales of investment securities included mortgage dollar-rolls.
See accompanying Notes to Financial Statements.
25
<PAGE>
Notes to Financial Statements
Oppenheimer Multi-Sector Income Trust
1. Significant Accounting Policies
Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's investment objective is to seek high
current income consistent with preservation of capital. The Trust's investment
advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of
significant accounting policies consistently followed by the Trust.
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
Structured Notes. The Trust invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes may be leveraged, which increases the notes'
volatility relative to the face of the security. Fluctuations in value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of October 31, 1999, the market value of these
securities comprised 1.82% of the Trust's net assets and resulted in realized
and unrealized losses of $889,943. The Trust also hedges a portion of the
foreign currency exposure generated by these securities, as discussed in Note 5.
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Trust on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the Trust may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
date. During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Trust maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the volatility of the
Trust's net asset value to the extent the Trust makes such purchases while
remaining substantially fully
26
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
invested. As of October 31, 1999, the Trust had entered into net outstanding
when-issued or forward commitments of $7,560,083.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Trust may enter into mortgage dollar-rolls in
which the Trust sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Trust records each dollar-roll as a sale and a new purchase
transaction.
Security Credit Risk. The Trust invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Trust
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of October 31, 1999, securities with an
aggregate market value of $1,349,009, representing 0.49% of the Trust's net
assets, were in default.
Foreign Currency Translation. The accounting records of the Trust are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Trust's Statement of Operations.
Repurchase Agreements. The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Trust may be delayed or limited.
Federal Taxes. The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. Therefore, no federal
income or excise tax provision is required. As of October 31, 1999, the Trust
had available for federal income tax purposes an unused capital loss carryover
of approximately $21,079,000, which expires between 2003 and 2007.
Trustees' Compensation. The Trust has adopted a nonfunded retirement plan for
the Trust's independent Trustees. Benefits are based on years of service and
fees paid to each Trustee during the years of service. During the year ended
October 31, 1999, a provision of $45,330 was made for the Trust's projected
benefit obligations and payments of $8,387 were made to retired trustees,
resulting in an accumulated liability of $205,542 as of October 31, 1999.
The Board of Trustees has adopted a deferred compensation plan for independent
Trustees that enables Trustees to elect to defer receipt of all or a portion of
annual compensation they are entitled to receive from the Trust. Under the plan,
the
27
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
1. Significant Accounting Policies
(continued)
compensation deferred is periodically adjusted as though an equivalent amount
had been invested for the Trustees in shares of one or more Oppenheimer funds
selected by the Trustee. The amount paid to the Trustee under the plan will be
determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Trust, and
will not materially affect the Trust's assets, liabilities or net income per
share.
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of distributions made
during the year from net investment income or net realized gains may differ from
its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Trust.
The Trust adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
October 31, 1999, amounts have been reclassified to reflect a decrease in
additional paid-in capital of $11,431, a decrease in undistributed net
investment income of $2,429,889, and a decrease in accumulated net realized loss
on investments of $2,441,320.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. Shares of Beneficial Interest
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. There were no transactions in shares of beneficial interest
for the years ended October 31, 1999 and 1998.
28
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
3. Unrealized Gains and Losses on Securities
As of October 31, 1999, net unrealized depreciation on securities and options
written of $14,879,389 was composed of gross appreciation of $5,248,782, and
gross depreciation of $20,128,171.
4. Management and Administrative Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for an annual fee of
0.65% on the Trust's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The
Trust pays the Administrator an annual fee of 0.20% of the Trust's average
annual net assets.
The Manager acts as the accounting agent for the Trust at an annual fee of
$24,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the
Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI
are based on the number of accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses.
5. Foreign Currency Contracts
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. The Trust may enter
into foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuations. Risks to the Trust include
the potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Trust and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Trust may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on outstanding
foreign currency contracts are noted in the Statement of Investments where
applicable.
29
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
5. Foreign Currency Contracts (continued)
As of October 31, 1999, the Trust had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Valuation
Contract As of
Expiration Amount October 31,
Unrealized Unrealized
Contract Description Date (000s) 1999
Appreciation Depreciation
- ----------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
<S> <C> <C> <C>
<C> <C>
Canadian Dollar (CAD) ......... 11/29/99 1,380 CAD $ 938,744
$ -- $1,407
Euro (EUR) .................... 11/10/99 650 EUR
683,687 -- 568
Japanese Yen (JPY) ............ 12/6/99 136,900 JPY
1,319,226 3,575 --
Polish Zloty (PLZ) ............ 11/3/99 2,775 PLZ
657,044 -- 2,956
- ------- ------
3,575 4,931
- ------- ------
Contracts to Sell
- -----------------
Australian Dollar (AUD) ....... 11/17/99 1,040 AUD
662,933 10,662 --
British Pound Sterling (GBP) .. 11/22/99-12/13/99 1,630 GBP
2,674,836 -- 3,878
Euro (EUR) .................... 11/22/99-12/1/99 2,533 EUR
2,667 20,210 --
Japanese Yen (JPY) ............ 11/24/99 134,118 JPY
1,289,713 9,894 --
New Zealand Dollar (NZD) ...... 11/24/99 15 NZD
7,597 289 --
- ------- ------
41,055 3,878
- ------- ------
Total Unrealized Appreciation and Depreciation
$44,630 $8,809
======= ======
</TABLE>
6. Futures Contracts
The Trust may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Trust may also buy or
write put or call options on these futures contracts.
The Trust generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Trust may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Trust is required to deposit either
cash or securities (initial margin) in an amount equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Trust each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Trust may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
30
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
As of October 31, 1999, the Trust had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Valuation
As of Unrealized
Expiration Number of
October 31, Appreciation
Contract Description Date Contracts
1999 (Depreciation)
- -----------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
<S> <C> <C>
<C> <C>
Euro-Bund ........................................ 12/8/99 9 $
1,001,709 $ 23,177
Euro-Schatz ...................................... 12/8/99 28
3,039,613 12,066
Standard & Poor's 500 Index ...................... 12/16/99 20
6,881,000 416,250
- ---------
451,493
- ---------
Contracts to Sell
- -----------------
Euro-Bobl ........................................ 12/8/99 35
3,839,616 (38,470)
Japanese Treasury Bond, 10 yr. ................... 3/8/00 1
627,396 718
Japanese Treasury Bond, 10 yr. ................... 3/9/00 2
2,509,199 2,875
U.K. Long Gilt ................................... 12/24/99 5
885,676 (14,522)
U.S. Treasury Bond, 5 yr. ........................ 12/20/99 84
9,068,063 26,328
U.S. Long Bond ................................... 12/20/99 250
28,398,438 (361,094)
U.S. Treasury Bond, 10 yr. ....................... 12/20/99 88
9,655,250 (22,383)
- ---------
(406,548)
- ---------
$ 44,945
=========
</TABLE>
7. Option Activity
The Trust may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Trust generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Trust receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Trust will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Gains and losses are reported in the
Statement of Operations.
The risk in writing a call option is that the Trust gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Trust may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Trust pays a premium whether or not the
option is exercised. The Trust also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
31
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer Multi-Sector Income Trust
7. Option Activity (continued)
Written option activity for the year ended October 31, 1999 was as follows:
<TABLE>
<CAPTION>
Call
Options
- --------------------------------------------------------------------------------------------------------
Number of
Options Amount of Premium
---------------------
- --------------------
<S>
<C> <C>
Options outstanding as of October 31, 1998 ........
- -- $ --
Options written ...................................
150,000 10,500
Options closed or expired .........................
(150,000) (10,500)
Options exercised .................................
- -- --
- -------- --------
Options outstanding as of October 31, 1999 ........
- -- $ --
======== ========
<CAPTION>
Put
Options
- --------------------------------------------------------------------------------------------------------
Number of
Options Amount of Premium
---------------------
- --------------------
<S>
<C> <C>
Options outstanding as of October 31, 1998 ........
- -- $ --
Options written ...................................
20,498,888 215,931
Options closed or expired .........................
(17,107,840) (83,359)
Options exercised .................................
(2,773) (76,472)
- ----------- --------
Options outstanding as of October 31, 1999 ........
3,388,275 $ 56,100
=========== ========
</TABLE>
8. Illiquid or Restricted Securities
As of October 31, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Trust intends to invest no
more than 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of October 31, 1999, was $15,497,251,
which represents 5.63% of the Trust's net assets, of which $997,875 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation
Acquisition
Cost Per Unit as of
Security Date Per
Unit October 31, 1999
- -----------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C>
Stocks and Warrants
- -------------------
Becker Gaming, Inc. Wts., Exp. 11/15/00 ........... 11/18/1993 $
2.00 $ --
CGA Group Ltd., Preferred, Series A ............... 6/17/1997
25.00 25.00
CGA Group Ltd. Wts., Exp. 12/31/49 ................ 6/17/1997
- -- 0.30
</TABLE>
32
<PAGE>
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4"
--------------------
decorative border, 5/16" wide)
(at left) (at right)
ORGANIZED UNDER THE THIS CERTIFICATE IS
LAWS OF THE COMMONWEALTH TRANSFERABLE IN DENVER,
OF MASSACHUSETTS COLORADO OR IN THE CITY
OF NEW YORK, NEW YORK
NUMBER OF SHARES SHARES
(at left, box for (at right, box for
share certificate number) number of shares)
(at right)
CUSIP 683933 10 5
SEE REVERSE FOR
CERTAIN
DEFINITIONS
(centered, the following text)
OPPENHEIMER MULTI-SECTOR INCOME TRUST
(at left, the following text)
This Is to Certify That
(at left, the following text)
is the owner of
(beginning at left, the following text)
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST $.01 PAR VALUE , OF
OPPENHEIMER MULTI-SECTOR INCOME TRUST (hereinafter called the "Fund"),
transferable on the books of the Fund by the holder hereof in person or by duly
authorized attorney, upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of Trust and By-Laws of the
Fund, each as from time to time amended, to all of which the holder by
acceptance hereof expressly assents. This Certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
(at left, the following text) (at right, following text)
Dated:
(signature at left of seal) Countersigned and Registered:
/s/ Donald Spiro SHAREHOLDER FINANCIAL SERVICES, INC.
- ----------------------- (Denver) Transfer Agent and President
Registrar
/s/ George C. Bowen By:
- ------------------------ Authorized Signature
Treasurer
UNITED MISSOURI TRUST CO. OF NEW YORK
(New York) Co-Transfer Agent
and Co-Registrar
By:
Authorized Signature
(centered)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER MULTI-SECTOR INCOME TRUST
1988
SEAL
COMMONWEALTH OF MASSACHUSETTS
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
-------------------
(beginning at left, the following text)
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN WROS - as joint tenants with
NOT TC - right of survivorship and not
as tenants in common
(at right, the following text,
parallel with the above abbreviations)
UNIF GIFT MIN ACT - ( ) Custodian ( )
-------- --------
(Cust)
(Minor)
Under UGMA/UTMA
( )
--------------
(State)
(centered, the following text)
Additional abbreviations may also be used though not in the above list.
(beginning at left, the following text)
For value received ----------------- hereby sell, assign and transfer unto
- --------------------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND
PROVIDE CERTIFICATION BY TRANSFEREE)
- ------------------------------------------------------------------------(PLEASE
PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------
- ------------------------------------------------------------------- Shares of
the beneficial interest represented by the written Certificate and do hereby
irrevocably constitute and appoint ---------------------------- Attorney to
transfer the said shares on the books of the within-named Fund, with full power
of substitution in the premises.
Dated: ------------------------- Signed: -------------------------
--------------------------------
(both must sign if joint owners)
Signature(s) guaranteed by --------------------------------
(Firm or Bank)
--------------------------------
(Officer)
----------------------------------------------
The signature(s) to this assignment must correspond with the name as written
upon the face for the certificate in every particular, without alteration or
enlargement or any change whatever.
(beginning at left, the following text)
Signatures must be guaranteed by a financial institution of the type identified
in the policies and procedures of Shareholder Financial Servcies, Inc.
CERTIFIC\680CERT
680Certificate.doc
