<PAGE> 1
2000 ANNUAL REPORT
OPPENHEIMER
MULTI-SECTOR
INCOME TRUST
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
We are pleased to present this annual report for Oppenheimer Multi-Sector Income
Trust for the reporting period ended October 31, 2000. During the period, the
Trust provided a 2.53% average annual total return, which represents dividend
income plus the change in value of the underlying bond portfolio. At market
value, the Trust's average annual total return was 6.93%, which includes the
change in share price on the New York Stock Exchange. The Trust's dividend
return was 10.92%.(1)
In light of mixed conditions in the world's various bond markets, we are
generally pleased with the Fund's performance over the past 12 months. Our
returns were driven primarily by the emerging markets, especially bonds issued
by countries in Eastern Europe and Latin America. Conversely, returns from most
developed nations' bonds, including corporate bonds in the United States and
Europe, lagged because of concerns related to potential inflationary pressures
and rising interest rates.
INVESTMENT BREAKDOWN:
OPPENHEIMER MULTI-SECTOR INCOME TRUST
AS OF 10/31/00:(2)
[PIE CHART]
<TABLE>
<S> <C>
- Corporate: 35.0%
- International: 28.3%
- Asset-Backed: 19.0%
- Money Market: 8.3%
- U.S. Government: 7.1%
- Convertible: 2.3%
</TABLE>
The emerging markets in Asia, Latin America and Eastern Europe outperformed the
developed markets over the past year. That's primarily because the emerging
markets began the fiscal year in the midst of a recovery from their lows of
1998, when the global credit and currency crisis hit these regions' fixed-income
markets particularly hard. That recovery continued into 2000 as more developing
nations adopted long-awaited market reforms and solidified their economic
foundations. In contrast, most developed markets began the period enjoying
strong economic growth characterized by productivity improvements and low
inflation. These factors were already reflected in their bond markets when the
fiscal year began. When robust growth later threatened to rekindle long-dormant
inflationary pressures, their bond markets declined from relatively high levels.
In addition, as its economy has slowed, the U.S. market has recently experienced
a deterioration of corporate credit quality. Default rates have risen, as has
the number of companies receiving credit-rating downgrades from the major
bond-rating agencies. As would be expected, this trend was particularly severe
among high-yield bond issuers.
We attribute the recent deterioration of credit quality to two primary factors.
First, although consumer spending has remained strong, many U.S. businesses have
not been able to raise prices to offset higher costs for raw materials. If U.S.
companies try to raise prices, they are likely to be undercut by overseas
competitors whose exports have benefited from the relative strength of the U.S.
dollar. Second, many U.S. companies are encountering greater difficulty
obtaining financing as lenders have become more cautious in a slower economy.
This is a particularly serious problem for companies that need a regular
infusion of cash to complete the capital projects required by their business
BECAUSE OF ONGOING MARKET VOLATILITY, THE TRUST'S RETURNS MAY FLUCTUATE AND MAY
BE LESS THAN THE RESULTS SHOWN. For quarterly updates on the Trust's
performance, please contact your financial advisor or call us at 1.800.647.7374.
1. Total returns are based on changes in net asset value and market value,
respectively, per share from 10/31/99 to 10/30/00 without deducting any sales
charges or brokerage costs. Such performance would have been lower if sales
charges and brokerage costs were taken into account. Dividend return is
determined by annualizing the October 2000 dividend of $0.07 and dividing by the
closing market price on the New York Stock Exchange of $7.69 per share on
10/27/00 (payment date). Past performance does not guarantee future results.
2. Portfolio composition is subject to change. Chart is based on total market
value of investments.
<PAGE> 3
plans. Fortunately, we have currently focused primarily on industries that tend
not to come to the market for refinancing on a regular basis. Our high-yield
bond holdings include wireless telecom companies, which comprised the
best-performing sector of the high-yield market over the fiscal year.
On the other hand, our U.S. government bonds have been one of the bright spots
in the world bond markets over the past year. This is especially true of
long-term U.S. Treasury bonds, which have benefited from a federal budget
surplus. This is primarily because the government has been using a portion of
the budget surplus to buy back higher yielding, seasoned bonds, thereby reducing
the available supply of government-guaranteed securities. At the same time, U.S.
Treasury bonds have remained in demand by domestic and foreign investors seeking
a haven for their assets. As a result, prices of those bonds have remained
relatively high.
Our holdings of mortgage-backed securities issued by U.S. government agencies
have also provided positive returns, although not nearly as attractive as those
produced by U.S. Treasury securities. Mortgage-backed securities' yields have
basically been stable over the past 12 months, as a reduction in pre-payment
risk--the tendency of homeowners to refinance or repay their mortgages
early--generally offset the effects of higher interest rates.
In this environment, we have managed the Trust by generally reducing our
exposure to bonds denominated in the euro, and increasing our exposure to the
emerging markets. The former strategy was designed to limit our exposure to
adverse changes in exchange rates which effect the euro, the new currency of the
European Monetary Union. These changes were caused primarily by lackluster
economic growth in Europe, as well as by an imbalance in capital flows: European
investors have been investing in U.S. markets to a much greater extent than U.S.
investors have been investing in European markets.
As for our increased allocation to the emerging markets, we have focused
primarily on oil-producing nations such as Russia, Venezuela and Mexico. We
believe these nations may benefit from the high price of oil.
In addition, we have continued to use our proprietary quantitative models. These
models help us analyze interest-rate, currency and credit trends. Over the past
year, the models' interest-rate and currency forecasts have been particularly
helpful to the portfolio management team.
Currently, we believe that we are finding very attractive values, in the U.S.
high-yield bond market, which we believe has overreacted to recent economic and
credit concerns. We believe that the high-yield bond market will begin to rally
before default rates actually peak, as was the case after the 1990 recession. In
fact, the best high-yield bond market returns of the 1990s occurred as the
market recovered in 1991, which was the same year in which default rates peaked.
However, it is important to understand that we manage the Trust for the long
term, not just according to prevailing economic and market conditions.
Accordingly, we continue to evaluate the way the Trust's assets are allocated
among the various regions and sectors of the world's bond markets. Indeed, we
believe that participating in such a broad world of opportunity is part of what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
President
Oppenheimer Multi-Sector Income Trust
November 21, 2000
<PAGE> 4
STATEMENT OF INVESTMENTS October 31, 2000
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
------------- ------------
<S> <C> <C>
U.S. GOVERNMENT SECTOR -- 7.0%
U.S. Treasury Bonds:
6.375%, 8/15/27(1) .............................................................. $14,000,000 $14,769,734
STRIPS, 5.99%, 11/15/18(1)(2) ................................................... 1,100,000 376,043
U.S. Treasury Nts.:
5.25%, 5/15/04 .................................................................. 2,000,000 1,960,692
6.50%, 2/15/10 .................................................................. 990,000 1,036,640
-----------
Total U.S. Government Sector (Cost $17,712,549) 18,143,109
-----------
CONVERTIBLE SECTOR -- 2.3%
PREFERRED STOCKS -- 2.1% Shares
-------------
CGA Group Ltd., Series A(3)(4) .................................................... 48,419 1,210,475
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. ......................... 4,000 153,000
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(3) ............................................ 696 617,700
13% Sr. Exchangeable, Non-Vtg.(3) ............................................... 363 331,237
e.spire Communications, Inc., 12.75% Jr. Redeemable,
Non-Vtg.(3)(4) .................................................................. 241 41,874
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B,
Non-Vtg.(4)(5) .................................................................. 4,000 66,000
Global Crossing Holdings Ltd., 10.50% Sr. Exchangeable(3) ......................... 4,000 385,000
Intermedia Communications, Inc., 13.50% Exchangeable,
Series B(3) ..................................................................... 937 798,792
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable
Exchangeable, Non-Vtg.(3) ....................................................... 3,031 379
Nextel Communications, Inc., 11.125% Exchangeable, Series E,
Non-Vtg.(3) ..................................................................... 404 378,750
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable,
Non-Vtg.(3) ..................................................................... 25 225,625
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(3)(4) .................. 271 215,784
Sovereign Real Estate Investment Trust,
12% Non-Cum., Series A(6) ....................................................... 5,750 506,000
XO Communications, Inc.:
13.50%, Series B(3) ............................................................. 267 200,918
14% Cum. Sr. Exchangeable Redeemable(3) ......................................... 9,832 400,654
-----------
5,532,188
-----------
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Units See Note 1
-------------- ------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES -- 0.2%
Becker Gaming, Inc. Wts., Exp. 11/15/00(4) ........................................ 25,000 $ --
CellNet Data Systems, Inc. Wts., Exp. 10/1/07(6) .................................. 404 252
CGA Group Ltd. Wts., Exp. 6/16/07(4) .............................................. 32,000 9,600
Clearnet Communications, Inc. Wts., Exp. 9/15/05 .................................. 330 10,826
Concentric Network Corp. Wts., Exp. 12/15/07(4) ................................... 600 258,225
Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 ................................ 800 --
e.spire Communications, Inc. Wts., Exp. 11/1/05(4) ................................ 700 2,522
Equinix, Inc. Wts., Exp. 12/1/07(4) ............................................... 400 60,050
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(6) ............................. 500 5,500
Gothic Energy Corp. Wts.:
Exp. 1/23/03 .................................................................... 6,053 --
Exp. 1/23/03(4) ................................................................. 3,455 35
Exp. 9/1/04 ..................................................................... 10,150 --
ICG Communications, Inc. Wts., Exp. 9/15/05 ....................................... 4,125 547
In-Flight Phone Corp. Wts., Exp. 8/31/02 .......................................... 900 --
Insilco Corp. Wts., Exp. 8/15/07(4) ............................................... 720 720
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(4) .................................. 920 1,898
Leap Wireless International, Inc., Wts., Exp. 4/15/10(4) .......................... 400 4,450
Long Distance International, Inc. Wts., Exp. 4/13/08(4) ........................... 400 40
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(4) ........................... 975 5,058
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(4) ................................. 700 394
Pathmark Stores, Inc. Wts., Exp. 9/19/10 .......................................... 6,738 30,321
Protection One Alarm Monitoring, Inc. Wts., Exp. 6/30/05(4) ....................... 6,400 640
Republic Technologies International LLC Wts., Exp. 7/15/09(4) ..................... 200 2
WAM!NET, Inc. Wts., Exp. 3/1/05(4) ................................................ 1,500 17,625
-----------
408,705
-----------
Total Convertible Sector (Cost $7,035,644) 5,940,893
-----------
CORPORATE SECTOR -- 34.7%
COMMON STOCKS -- 0.1% Shares
--------------
Capital Gaming International, Inc.(5) ............................................. 18 --
OpTel, Inc., Non-Vtg.(4)(5) ....................................................... 815 8
Pathmark Stores, Inc.(5) .......................................................... 9,526 149,439
Purina Mills, Inc.(5) ............................................................. 2,094 15,705
Star Gas Partners LP .............................................................. 220 3,671
WRC Media Corp.(4)(5) ............................................................. 676 7
-----------
168,830
-----------
</TABLE>
4
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- 33.5%
Aerospace/Defense -- 0.7%
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08............................ $ 500,000 $ 492,500
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed
Nts., Series 1997-1, Cl. 1, 1/1/01(4)............................................ 500,000 485,000
Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts.,
Series B, 9/30/08................................................................ 800,000 732,000
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06......................... 250,000 187,500
-----------
1,897,000
-----------
Chemicals -- 1.2%
Georgia Gulf Corp., 10.375% Sr. Unsec. Sub. Nts., 11/1/07.......................... 325,000 320,125
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr.
Unsec. Disc. Nts., 13.08%, 12/31/09(2)........................................... 1,150,000 345,000
Lyondell Chemical Co.:
9.625% Sr. Sec. Nts., Series A, 5/1/07........................................... 250,000 243,125
9.875% Sec. Nts., Series B, 5/1/07............................................... 500,000 488,750
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07........................ 400,000 182,000
Polymer Group, Inc.:
8.75% Sr. Sub. Nts., 3/1/08(4)................................................... 500,000 352,500
9% Sr. Unsec. Sub. Nts., Series B, 7/1/07........................................ 500,000 357,500
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06............................................. 350,000 194,250
12.375% Sr. Sec. Nts., Series B, 7/15/06......................................... 750,000 723,750
-----------
3,207,000
-----------
Consumer Durables -- 0.2%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts.,
Series B, 5/15/08(4)............................................................. 293,000 273,955
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts.,
Series B, 11/15/07............................................................... 400,000 210,000
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(4)..................... 300,000 100,500
-----------
584,455
-----------
Consumer Non-Durables -- 0.7%
AKI, Inc., 10.50% Sr. Unsec. Nts., 7/1/08.......................................... 600,000 480,000
Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03........................ 370,000 264,550
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts.,
Series B, 8/1/08(4)(7)........................................................... 400,000 42,000
Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06............................... 775,000 569,625
</TABLE>
5
<PAGE> 7
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Consumer Non-Durables (continued)
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05................................ $400,000 $ 390,000
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(7).................. 400,000 34,000
-----------
1,780,175
-----------
Energy -- 2.6%
Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05.................. 550,000 554,812
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07................ 600,000 424,500
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08................................. 400,000 362,000
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09...................................... 600,000 612,000
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05................... 900,000 949,500
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08.................. 380,000 218,500
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07......................... 790,000 770,250
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06.................................. 400,000 470,000
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08.................................. 600,000 459,000
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06........................................ 500,000 571,250
Statia Terminals International NV/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03....................................... 200,000 202,500
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07................................... 535,000 529,650
Universal Compression Holdings, Inc., 0%/9.875%
Sr. Disc. Nts., 2/15/08(8)....................................................... 700,000 570,500
-----------
6,694,462
-----------
Financial -- 0.6%
AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05.......................... 400,000 218,000
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04[GBP]............... 245,000 357,668
LaBranche & Co., Inc., 12% Sr. Unsec. Sub. Nts., 3/1/07............................ 250,000 267,500
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08................................................................. 700,000 603,750
-----------
1,446,918
-----------
Food & Drug -- 0.5%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02................................... 300,000 67,500
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07....................... 600,000 453,000
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07................................. 775,000 716,875
-----------
1,237,375
-----------
Food/Tobacco -- 0.5%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08.......................... 300,000 229,500
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts.,
Series B, 12/15/07(4)(8)......................................................... 327,000 245,250
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05........................ 650,000 542,750
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08....................... 400,000 362,000
-----------
1,379,500
-----------
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Forest Products/Containers -- 1.2%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06.................................................... $300,000 $ 287,250
8.25% Sr. Unsec. Sub. Nts., 8/1/08............................................... 400,000 376,000
Gaylord Container Corp., 9.75% Sr. Unsec. Nts., Series B, 6/15/07.................. 100,000 63,500
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09.................... 300,000 307,500
Riverwood International Corp.:
10.25% Sr. Nts., 4/1/06.......................................................... 600,000 588,000
10.625% Sr. Unsec. Nts., 8/1/07.................................................. 450,000 443,250
10.875% Sr. Sub. Nts., 4/1/08.................................................... 400,000 363,000
SD Warren Co., 14% Unsec. Nts., 12/15/06(3)........................................ 556,199 610,428
-----------
3,038,928
-----------
Gaming/Leisure -- 1.7%
Capital Gaming International, Inc., 11.50% Promissory Nts.,
8/1/1995(4)(5)(7)................................................................ 5,500 --
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07.................................... 435,000 406,181
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08............................ 500,000 477,500
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07................................ 700,000 704,375
Mandalay Resort Group, 10.25% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07................................................................. 750,000 770,625
Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts.,
1/1/09........................................................................... 500,000 490,000
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(8)................................................. 500,000 331,250
9.25% Sr. Nts., 4/1/06........................................................... 300,000 277,500
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06............................. 440,000 407,000
Station Casinos, Inc.:
9.75% Sr. Sub. Nts., 4/15/07..................................................... 300,000 301,500
10.125% Sr. Sub. Nts., 3/15/06................................................... 200,000 202,000
-----------
4,367,931
-----------
Healthcare -- 1.0%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08(4).................... 600,000 559,500
ICN Pharmaceutical, Inc., 9.75% Sr. Nts., 11/15/08(6).............................. 415,000 413,962
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08.......................... 550,000 363,000
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05............................ 250,000 273,750
Tenet Healthcare Corp.:
8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08................................... 250,000 242,187
8.625% Sr. Sub. Nts., 1/15/07.................................................... 750,000 750,000
-----------
2,602,399
-----------
</TABLE>
7
<PAGE> 9
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Housing -- 0.6%
Building Materials Corp. of America, 8.625% Sr. Nts.,
Series B, 12/15/06............................................................... $ 250,000 $ 76,250
D.R. Horton, Inc., 9.75% Sr. Sub. Nts., 9/15/10.................................... 625,000 591,406
Nortek, Inc.:
9.125% Sr. Unsec. Nts., Series B, 9/1/07......................................... 420,000 378,000
9.25% Sr. Nts., Series B, 3/15/07................................................ 600,000 537,000
-----------
1,582,656
-----------
Information Technology -- 1.7%
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05............................... 400,000 389,500
EchoStar Broadband Corp., 10.375% Sr. Nts., 10/1/07(6)............................. 3,000,000 3,022,500
Fairchild Semiconductor International, Inc., 10.375%
Sr. Unsec. Nts., 10/1/07......................................................... 500,000 492,500
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08............. 185,000 169,737
Flextronics International Ltd., 9.875% Sr. Sub. Nts., 7/1/10(6).................... 400,000 406,000
-----------
4,480,237
-----------
Manufacturing -- 1.7%
Actuant Corp., 13% Sr. Sub. Nts., 5/1/09(4)........................................ 300,000 295,500
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09............................................ 400,000 340,000
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07................................. 700,000 227,500
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08................. 350,000 252,000
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08................................... 700,000 98,000
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07................. 600,000 450,000
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07.......................................... 800,000 788,000
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05............. 700,000 696,500
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08......................... 280,000 77,000
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B,
6/15/07.......................................................................... 500,000 447,500
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08(4)................................ 100,000 88,500
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(1)(4)........................... 525,000 494,813
-----------
4,255,313
-----------
Media/Entertainment: Broadcasting -- 1.0%
Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07.............. 700,000 715,750
Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08.......................... 500,000 402,500
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts.,
Series B, 3/15/09................................................................ 600,000 558,000
Radio One, Inc., 12% Sr. Sub. Nts., Series B, 5/15/04(9)........................... 700,000 728,000
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07............................ 300,000 271,500
-----------
2,675,750
-----------
</TABLE>
8
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Cable/Wireless Video -- 1.3%
Adelphia Communications Corp.:
8.125% Sr. Nts., Series B, 7/15/03............................................... $250,000 $ 228,750
8.375% Sr. Nts., Series B, 2/1/08................................................ 100,000 82,500
9.875% Sr. Nts., Series B, 3/1/07................................................ 565,000 511,325
10.875% Sr. Unsec. Nts., 10/1/10................................................. 500,000 470,000
Charter Communications Holdings LLC/Charter Communications
Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(8)........................................ 850,000 496,188
8.625% Sr. Unsec. Nts., 4/1/09................................................... 500,000 452,500
Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10.................................. 300,000 249,000
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09................................. 500,000 493,750
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(8)............................................................. 600,000 369,000
-----------
3,353,013
-----------
Media/Entertainment: Diversified Media -- 0.6%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11........................ 500,000 237,500
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07............................... 500,000 492,500
Mail-Well I Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08(4)............... 325,000 242,125
WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp.,
12.75% Sr. Sub. Nts., 11/15/09................................................... 500,000 442,500
-----------
1,414,625
-----------
Media/Entertainment: Telecommunications -- 4.1%
Colo.com, Units (each unit consists of $1,000 principal amount of
13.875% sr. nts., 3/15/10 and one warrant to purchase 19.9718
shares of common stock at $.01 per share)(6)(10)................................. 300,000 226,500
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07......................... 495,000 470,250
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts.,
3/15/08(8)....................................................................... 300,000 85,500
Equinix, Inc., 13% Sr. Unsec. Nts., 12/1/07........................................ 400,000 320,000
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08............................... 765,000 715,275
Focal Communications Corp.:
0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(8)..................................... 100,000 50,500
11.875% Sr. Unsec. Nts., Series B, 1/15/10....................................... 600,000 465,000
Global Crossing Holdings Ltd., 9.625% Sr. Unsec. Nts., 5/15/08..................... 400,000 384,000
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(8).................................... 500,000 322,500
8.50% Sr. Nts., Series B, 1/15/08................................................ 500,000 472,500
8.60% Sr. Unsec. Nts., Series B, 6/1/08.......................................... 300,000 284,250
</TABLE>
9
<PAGE> 11
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Telecommunications (continued)
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts.,
2/15/08(8)....................................................................... $ 700,000 $ 73,500
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(8)............................................. 250,000 136,250
9.125% Sr. Unsec. Nts., 5/1/08................................................... 250,000 203,125
11% Sr. Unsec. Nts., 3/15/08..................................................... 250,000 226,250
11.25% Sr. Unsec. Nts., 3/15/10.................................................. 500,000 452,500
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09........................................................... 250,000 223,125
10% Sr. Unsec. Nts., Series B, 11/15/08.......................................... 600,000 534,000
MGC Communications, Inc./Mpower Holding Corp.,
13% Sr. Unsec. Nts., 4/1/10...................................................... 600,000 339,000
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10....................... 300,000 280,500
OpTel, Inc., 13% Sr. Nts., Series B, 2/15/05(4)(7)................................. 250,000 156,250
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05........................................... 400,000 193,000
10.50% Sr. Nts., 12/1/06(6) [EUR]................................................ 500,000 226,733
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10........................................ 250,000 171,250
Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts.,
Series B, 2/15/10................................................................ 400,000 194,000
Teligent, Inc., 11.50% Sr. Nts., 12/1/07........................................... 200,000 87,000
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08................................... 500,000 445,000
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08........................................ 195,000 98,475
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(8)................ 750,000 341,250
Williams Communications Group, Inc., 11.875% Sr. Unsec. Nts.,
8/1/10(6)........................................................................ 1,000,000 892,500
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(6).......................... 300,000 213,000
XO Communications, Inc.:
9% Sr. Unsec. Nts., 3/15/08...................................................... 250,000 203,750
9.625% Sr. Nts., 10/1/07......................................................... 300,000 253,500
10.75% Sr. Unsec. Nts., 11/15/08................................................. 450,000 396,000
10.75% Sr. Unsec. Nts., 6/1/09................................................... 500,000 441,250
-----------
10,577,483
-----------
Media/Entertainment: Wireless Communications -- 5.4%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07................................. 100,000 54,500
CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts.,
10/1/07(4)(5)(7)(8).............................................................. 554,000 3,463
CFW Communications Co., Units (each unit consists of $1,000
principal amount of 13% sr. nts., 8/15/10 and one warrant to
purchase 1.8 shares of common stock at $47.58 per share)(8)(10).................. 500,000 417,500
</TABLE>
10
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Wireless Communications (continued)
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(8)............................................ $ 550,000 $ 353,375
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(8).................................... 800,000 612,000
10.75% Sr. Nts., 8/1/11.......................................................... 450,000 463,500
Exodus Communications, Inc., 11.625% Sr. Nts., 7/15/10(6).......................... 1,250,000 1,162,500
Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10....................................... 600,000 333,000
Horizon PCS, Inc., Units (each unit consists of $1,000 principal
amount of 0%/14% sr. disc. nts., 10/1/10 and one warrant to
purchase 12.9 shares of Cl. A common stock at
$5.88 per share)(6)(8)(10)....................................................... 1,000,000 480,000
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)(4)(5)(7)(10)................... 400,000 240,000
Leap Wireless International, Inc., 12.50% Sr. Nts., 4/15/10........................ 400,000 294,000
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts.,
6/1/06(8)........................................................................ 205,000 167,075
Nextel Communications, Inc.:
0%/9.75% Sr. Disc. Nts., 10/31/07(8)............................................. 250,000 191,875
0%/10.65% Sr. Disc. Nts., 9/15/07(8)............................................. 250,000 201,875
9.375% Sr. Unsec. Nts., 11/15/09................................................. 750,000 725,625
Omnipoint Corp., 11.50% Sr. Nts., 9/15/09(6)....................................... 200,000 222,750
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts.,
8/15/04(4)(7).................................................................... 175,000 27,125
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(4)(8)............... 1,150,000 287,500
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(8).................. 900,000 517,500
Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07................. 100,000 107,000
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08...................... 700,000 640,500
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(8).................. 1,300,000 968,500
Spectrasite Holdings, Inc.:
0%/12% Sr. Disc. Nts., 7/15/08(8)................................................ 600,000 394,500
10.75% Sr. Nts., 3/15/10(8)...................................................... 250,000 231,250
TeleCorp PCS, Inc.:
0%/11.625% Sr. Unsec. Sub. Disc. Nts., 4/15/09(8)................................ 200,000 130,000
10.625% Sr. Unsec. Sub. Nts., 7/15/10............................................ 800,000 802,000
Tritel PCS, Inc., 0%/12.75% Sr. Unsec. Sub. Disc. Nts., 5/15/09(8)................. 400,000 261,000
Triton PCS, Inc., 0%/11% Sr. Unsec. Sub. Disc. Nts., 5/1/08(8)..................... 250,000 190,625
US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B,
11/1/09(8)....................................................................... 1,200,000 591,000
</TABLE>
11
<PAGE> 13
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Wireless Communications (continued)
VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09...................... $2,611,885 $ 2,807,776
Williams Communications Group, Inc., 10.875% Sr. Unsec. Nts.,
10/1/09.......................................................................... 100,000 84,750
-----------
13,964,064
-----------
Metals/Minerals -- 1.1%
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09.................................................. 500,000 455,000
9.125% Sr. Nts., 12/15/06........................................................ 400,000 394,000
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08.................. 800,000 616,000
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03..................... 500,000 377,500
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(8)..................... 500,000 130,000
Metallurg, Inc., 11% Sr. Nts., 12/1/07............................................. 200,000 160,000
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09.................... 250,000 108,750
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08................... 600,000 586,500
Republic Technologies International LLC/RTI Capital Corp., 13.75%
Sr. Sec. Nts., 7/15/09........................................................... 200,000 31,250
-----------
2,859,000
-----------
Retail -- 0.5%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(3).......................... 1,000,000 507,500
Finlay Enterprises, Inc., 9% Debs., 5/1/08......................................... 500,000 452,500
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08................................. 300,000 274,500
-----------
1,234,500
-----------
Service -- 1.0%
Allied Waste North America, Inc.:
7.625% Sr. Nts., Series B, 1/1/06................................................ 250,000 223,750
7.875% Sr. Unsec. Nts., Series B, 1/1/09......................................... 200,000 173,500
10% Sr. Unsec. Sub. Nts., Series B, 8/1/09....................................... 600,000 516,000
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(4)(8)......................... 150,000 11,438
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08(4)................................ 400,000 142,500
Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07(4)....................... 200,000 90,000
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07......................................... 600,000 462,000
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09.................... 250,000 228,750
Protection One, Inc., 7.375% Sr. Unsec. Nts., 8/15/05.............................. 600,000 417,000
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09(4)(7)........................... 50,000 750
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09................ 500,000 412,500
-----------
2,678,188
-----------
</TABLE>
12
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Transportation -- 2.8%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05............................... $1,000,000 $ 965,000
Amtran, Inc., 10.50% Sr. Nts., 8/1/04.............................................. 1,450,000 1,330,375
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08.......................................................... 675,000 666,563
9.375% Sr. Unsec. Nts., 11/15/06................................................. 800,000 788,000
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06................................. 600,000 225,000
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts.,
8/15/08.......................................................................... 610,000 613,050
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts.,
6/30/07(8)....................................................................... 750,000 356,250
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D,
6/15/07.......................................................................... 600,000 477,000
Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08...................................... 500,000 337,500
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04......................... 600,000 399,000
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts.,
Series B, 12/15/03............................................................... 1,000,000 995,000
-----------
7,152,738
-----------
Utility -- 0.8%
Azurix Corp., 10.75% Sr. Unsec. Nts., Series B, 2/15/10............................ 300,000 277,500
CMS Energy Corp., 9.875% Sr. Unsec. Nts., 10/15/07................................. 800,000 808,374
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11................. 470,000 496,115
ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds,
Series B, 12/30/11............................................................... 500,000 451,965
-----------
2,033,954
-----------
86,497,664
-----------
LOAN PARTICIPATIONS -- 0.8%
Shoshone Partners Loan Trust Sr. Nts., 8.461%, 4/28/02
(representing a basket of reference loans and a total return
swap between Chase Manhattan Bank and the Trust)(4)(9)........................... 2,500,000 1,957,402
-----------
STRUCTURED INSTRUMENTS -- 0.3%
Alpha Wind 2000-A Ltd. Nts.:
11.25%, 5/23/01(4)(9)............................................................ 250,000 250,000
13.69%, 5/23/01(4)(9)............................................................ 400,000 400,000
-----------
650,000
-----------
Total Corporate Sector (Cost $104,136,358) 89,273,896
-----------
</TABLE>
13
<PAGE> 15
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
INTERNATIONAL SECTOR -- 28.0%
CORPORATE BONDS AND NOTES -- 7.2%
Energy -- 0.6%
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05.............................. $ 1,000,000 $1,020,000
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08.................................. 700,000 598,500
-----------
1,618,500
-----------
Financial -- 0.6%
Bakrie Investindo, Zero Coupon Promissory Nts.,
3/16/1999(4)(5)(7) [IDR]......................................................... 3,160,000,000 50,641
Eurofima, 7.50% Sr. Unsec. Unsub. Nts., 11/4/02[DEM]............................... 770,000 346,693
Hanvit Bank:
0%/12.75% Unsec. Sub. Nts., 3/1/10(6)(8)......................................... 765,000 747,787
0%/12.75% Unsec. Sub. Nts., 3/1/10(8)............................................ 405,000 395,887
PT Polysindo Eka Perkasa:
20% Nts., 3/6/01(5)(7) [IDR]..................................................... 3,000,000,000 41,667
24% Nts., 6/19/03(5)(7) [IDR].................................................... 1,314,400,000 18,256
-----------
1,600,931
-----------
Food/Tobacco -- 0.2%
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts.,
11/15/07......................................................................... 565,000 411,037
-----------
Forest Products/Containers -- 0.4%
Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04..................................... 750,000 444,375
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts.,
4/15/05.......................................................................... 600,000 619,500
-----------
1,063,875
-----------
Gaming/Leisure -- 0.3%
Intrawest Corp., 9.75% Sr. Nts., 8/15/08........................................... 800,000 784,000
-----------
Media/Entertainment: Cable/Wireless Video -- 2.3%
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(8)...................................................................... 1,600,000 1,496,000
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(4)................................... 200,000 175,000
NTL Communications Corp.:
0%/9.78% Sr. Nts., 11/15/09(6)(8) [EUR].......................................... 750,000 321,029
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(8)................................. 1,500,000 885,000
9.875% Sr. Unsec. Nts., Series B, 11/15/09[EUR].................................. 500,000 355,992
11.50% Sr. Unsec. Nts., Series B, 10/1/08........................................ 500,000 460,000
NTL, Inc., 10% Sr. Nts., Series B, 2/15/07......................................... 550,000 486,750
</TABLE>
14
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Media/Entertainment: Cable/Wireless Video (continued)
Telewest Communications plc:
0%/9.25% Sr. Disc. Nts., 4/15/09(8).............................................. $ 250,000 $ 113,125
0%/9.875% Sr. Nts., 4/15/09(6)(8) [GBP].......................................... 450,000 280,981
11% Sr. Disc. Debs., 10/1/07..................................................... 500,000 437,500
11.25% Sr. Nts., 11/1/08......................................................... 1,035,000 905,625
-----------
5,917,002
-----------
Media/Entertainment: Diversified Media -- 0.4%
Imax Corp., 7.875% Sr. Nts., 12/1/05(4)............................................ 700,000 395,500
IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(4)(8) [GBP]...................... 800,000 714,433
-----------
1,109,933
-----------
Media/Entertainment: Telecommunications -- 1.8%
360networks, Inc.:
12% Sr. Unsec. Sub. Nts., 8/1/09................................................. 200,000 159,000
13% Sr. Unsec. Nts., 5/1/08[EUR]................................................. 600,000 415,748
COLT Telecom Group plc, 0%/12% Sr. Unsec. Disc. Nts.,
12/15/06(8)...................................................................... 1,000,000 910,000
FLAG Telecom Holdings Ltd.:
11.625% Sr. Nts., 3/30/10(4) [EUR]............................................... 200,000 139,854
11.625% Sr. Unsec. Nts., 3/30/10................................................. 200,000 169,000
Global TeleSystems, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06[EUR].................... 500,000 209,781
Jazztel plc, 13.25% Sr. Unsec. Nts., 12/15/09[EUR]................................. 1,250,000 715,163
RSL Communications plc:
10.50% Sr. Unsec. Nts., 11/5/08.................................................. 500,000 91,250
12.875% Sr. Unsec. Nts., 3/1/10.................................................. 1,000,000 205,000
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09[EUR].................................... 425,000 300,792
United Pan-Europe Communications NV:
0%/13.75% Sr. Unsec. Disc. Nts., Series B, 2/1/10(8)............................. 1,000,000 375,000
10.875% Sr. Nts., 8/1/09[EUR].................................................... 750,000 483,132
Versatel Telecom International NV:
11.25% Sr. Nts., 3/30/10(6) [EUR]................................................ 400,000 246,652
11.875% Sr. Nts., 7/15/09[EUR]................................................... 250,000 158,925
-----------
4,579,297
-----------
Media/Entertainment: Wireless Communications -- 0.2%
Microcell Telecommunications, Inc., 0%/12% Sr. Unsec. Disc. Nts.,
6/1/09(8)........................................................................ 750,000 532,500
-----------
Metals/Minerals -- 0.1%
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08(4)............ 200,000 145,000
-----------
</TABLE>
15
<PAGE> 17
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Service -- 0.1%
Petroleos Mexicanos Bonds, 9.50%, 9/15/27.......................................... $ 157,000 $ 159,355
-----------
Transportation -- 0.0%
Pacific & Atlantic Holdings, Inc., 10.50% Sec. Nts., 12/31/07(4)................... 122,176 61,088
-----------
Utility -- 0.2%
AES Drax Energy Ltd., 11.50% Sr. Sec. Bonds, 8/30/10(6)............................ 600,000 633,000
-----------
18,615,518
-----------
Shares
--------------
PREFERRED STOCKS -- 0.0%
Pacific & Atlantic Holdings, Inc., 7.50% Cum. Cv., Series A(3)(5).................. 16,406 90,233
-----------
COMMON STOCKS -- 0.4%
COLT Telecom Group plc, ADR(5)..................................................... 7,020 916,988
-----------
Units
--------------
RIGHTS, WARRANTS AND CERTIFICATES -- 0.1%
Mexico Value Rts., Exp. 6/30/03.................................................... 779,000 --
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(6)............................ 2,800 161,876
-----------
161,876
-----------
Principal
FOREIGN GOVERNMENT OBLIGATIONS -- 18.0% Amount
--------------
Argentina -- 1.3%
Argentina (Republic of) Bonds:
11.375%, 3/15/10................................................................. $ 545,000 456,437
11.75%, 6/15/15.................................................................. 305,000 260,165
12.125%, 2/25/19................................................................. 165,000 141,075
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas:
Series PRO1, 2.735%, 4/1/07(9) [ARP]............................................. 2,596,987 1,763,034
Series PRO2, 6.62%, 4/1/07(3)(9)................................................. 227,796 183,327
Argentina (Republic of) Par Bonds, 6%, 3/31/23(9).................................. 205,000 134,787
Argentina (Republic of) Unsec. Unsub. Nts., 11.75%, 4/7/09......................... 390,000 341,250
Buenos Aires (Province of) Bonds, Bonos de Consolidacion
de Deudas, Series PBA1, 2.735%, 4/1/07(9) [ARP].................................. 134,450 87,475
-----------
3,367,550
-----------
Belgium -- 0.9%
Belgium (Kingdom of) Bonds, Series 35, 5.75%, 9/28/10[EUR]......................... 2,800,000 2,401,759
-----------
</TABLE>
16
<PAGE> 18
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Brazil -- 1.6%
Brazil (Federal Republic of) Bonds:
12.25%, 3/6/30................................................................... $ 285,000 $ 248,805
12.75%, 1/15/20.................................................................. 280,000 258,300
Brazil (Federal Republic of) Debt Capitalization Bonds,
8%, 4/15/14...................................................................... 123,141 91,894
Brazil (Federal Republic of) Eligible Interest Bonds,
7.625%, 4/15/06(9)............................................................... 274,560 250,536
Brazil (Federal Republic of) Gtd. Disc. Bonds, 7.625%, 4/15/24(9).................. 515,000 395,262
Brazil (Federal Republic of) Par Bonds, 6%, 4/15/24(9)............................. 595,000 388,981
Brazil (Federal Republic of) Unsec. Unsub. Bonds, 11%, 8/17/40..................... 2,081,400 1,587,068
Brazil (Federal Republic of) Unsub. Bonds, 14.50%, 10/15/09........................ 705,000 751,883
-----------
3,972,729
-----------
Bulgaria -- 0.2%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 7.75%, 7/28/24(9)................... 510,000 383,775
Bulgaria (Republic of) Front-Loaded Interest Reduction
Bearer Bonds, Tranche A, 3%, 7/28/12 (9)......................................... 145,000 104,219
-----------
487,994
-----------
Canada -- 0.4%
Canada (Government of) Bonds, Series J24, 10.25%, 2/1/04[CAD]...................... 1,500,000 1,106,953
-----------
Colombia -- 0.3%
Colombia (Republic of) Bonds, 9.75%, 4/23/09....................................... 93,000 74,633
Colombia (Republic of) Unsec. Unsub. Bonds, 7.625%, 2/15/07........................ 430,000 326,263
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06(4)......................... 570,000 451,725
-----------
852,621
-----------
Ecuador -- 0.3%
Ecuador (Republic of) Bonds, 4%, 8/15/30(6)(9)..................................... 802,000 305,161
Ecuador (Republic of) Unsec. Bonds:
4%, 8/15/30(9)................................................................... 778,000 296,029
12%, 11/15/12(6)................................................................. 105,000 71,400
12%, 11/15/12.................................................................... 75,000 51,000
-----------
723,590
-----------
Finland -- 0.9%
Finland (Republic of) Bonds, 5.75%, 2/23/11[EUR]................................... 2,700,000 2,342,003
-----------
France -- 0.6%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 4/25/07[EUR].............................................................. 1,750,000 1,505,683
-----------
</TABLE>
17
<PAGE> 19
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Germany -- 0.4%
Germany (Republic of) Bonds:
5.375%, 1/4/10[EUR].............................................................. 1,130,000 $ 968,515
Series 95, 6.50%, 10/14/05[EUR].................................................. 799 717
-----------
969,232
-----------
Great Britain -- 1.4%
United Kingdom Treasury Bonds, 8%, 6/10/03[GBP].................................... 2,300,000 3,516,841
-----------
Greece -- 0.2%
Hellenic (Republic of) Bonds, 8.60%, 3/26/08[GRD].................................. 207,200,000 597,687
-----------
Italy -- 1.0%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
5.25%, 12/15/05[EUR]............................................................. 300,000 253,339
5.50%, 11/1/10[EUR].............................................................. 2,800,000 2,370,195
-----------
2,623,534
-----------
Ivory Coast -- 0.0%
Ivory Coast (Government of) Past Due Interest Bonds,
Series F, 1.90%, 3/29/18(7) [FRF]................................................ 4,569,500 84,877
-----------
Japan -- 1.7%
Japan (Government of) Bonds, Series 187, 3.30%, 6/20/06[JPY]....................... 429,000,000 4,338,326
-----------
Mexico -- 0.7%
United Mexican States Bonds, 11.375%, 9/15/16...................................... 1,520,000 1,725,200
-----------
Norway -- 0.5%
Norway (Government of) Bonds, 5.50%, 5/15/09[NOK].................................. 11,970,000 1,214,915
-----------
Panama -- 0.2%
Panama (Republic of) Bonds, 8.875%, 9/30/27........................................ 347,000 293,215
Panama (Republic of) Interest Reduction Bonds, 4.50%, 7/17/14(9)................... 265,000 210,675
-----------
503,890
-----------
Peru -- 0.6%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.75%, 3/7/17(9)................................................................. 3,090,000 1,645,425
-----------
Philippines -- 0.2%
Philippines (Republic of) Nts., 10.625%, 3/16/25................................... 470,000 359,550
Philippines (Republic of) Unsec. Bonds, 9.875%, 1/15/19............................ 85,000 63,538
-----------
423,088
-----------
</TABLE>
18
<PAGE> 20
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
Portugal -- 0.1%
Portugal (Republic of) Obrig Do Tes Medio Prazo Unsub. Nts.,
5.85%, 5/20/10[EUR].............................................................. 305,000 $ 263,314
-----------
Russia -- 2.6%
Russian Federation Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03......................... 300,000 287,156
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05................................................................... 1,134,000 893,025
10%, 6/26/07..................................................................... 160,000 120,200
12.75%, 6/24/28.................................................................. 3,269,000 2,754,133
Russian Federation Unsub. Nts.:
2.50%, 3/31/30(9)................................................................ 7,028,750 2,655,550
8.25%, 3/31/10(4)................................................................ 110,731 71,283
-----------
6,781,347
-----------
South Africa -- 0.4%
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10[ZAR].................... 7,860,000 998,441
-----------
Spain -- 0.3%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
5.15%, 7/30/09[EUR].............................................................. 815,000 675,127
-----------
Turkey -- 0.1%
Turkey (Republic of) Bonds, 11.75%, 6/15/10........................................ 254,000 246,221
-----------
Venezuela -- 1.1%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27(11).................................. 737,000 488,263
Venezuela (Republic of) Collateralized Par Bonds:
Series W-A, 6.75%, 3/31/20....................................................... 1,310,000 975,950
Series W-B, 6.75%, 3/31/20....................................................... 125,000 93,125
Venezuela (Republic of) Debs., Series DL, 7.875%, 12/18/07(9)...................... 1,590,719 1,334,216
-----------
2,891,554
-----------
46,259,901
-----------
LOAN PARTICIPATIONS -- 0.4%
Algeria (Republic of) Trust III Nts., Tranche 3, 2.387%, 3/4/10(4)(9) [JPY]........ 129,496,000 800,529
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 7.75%, 1/1/09(4)(9)................................................... 363,611 317,251
-----------
1,117,780
-----------
</TABLE>
19
<PAGE> 21
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
STRUCTURED INSTRUMENTS -- 1.9%
Citibank NA (Nassau Branch), Mexican Nuevo Peso Linked Nts.:
18.70%, 3/3/03[MXN].............................................................. 6,658,621 $ 662,209
19.75%, 6/27/02[MXN]............................................................. 3,600,000 374,727
20.90%, 6/23/03[MXN]............................................................. 3,540,000 368,740
21.20%, 6/16/03[MXN]............................................................. 7,038,000 735,900
21.30%, 6/23/03[MXN]............................................................. 1,775,000 186,059
Deutsche Bank AG, Mexican Nuevo Peso Linked Nts., Zero Coupon,
16.38%, 6/20/03(2) [MXN]......................................................... 8,452,927 582,639
ING Barings LLC, Zero Coupon USD Russian Equity Linked Nts.,
4/19/01.......................................................................... 3,400 249,764
Salomon Brothers, Inc., Zero Coupon Brazilian Eligible Interest
Linked Nts., 11.24%, 4/9/01(9)................................................... 1,380,000 1,075,986
Salomon Smith Barney, Inc. Turkish Lira Linked Nts., 11%, 1/17/01.................. 768,000 781,455
----------
5,017,479
----------
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
--------- --------- ---------
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED -- 0.0%
European Monetary Unit Call................................ 12/5/00 0.937EUR 2,809,500 2,666
South Korean Won Call...................................... 11/28/00 100.00KRW 740,000 296
----------
2,962
----------
Total International Sector (Cost $78,885,491) 72,182,737
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
--------------
<S> <C> <C>
ASSET-BACKED SECTOR -- 18.8%
ASSET-BACKED SECURITIES -- 0.8%
Home Equity Loans -- 0.8%
Asset Backed Securities Corp. Long Beach Home Equity Loan Trust,
Home Equity Loan Pass-Through Certificates, Series 2000-LB1,
Cl. M2F, 8.70%, 3/21/29.......................................................... $1,000,000 1,015,625
Principal Residential Mortgage Capital Trust, Collateralized Mtg.
Obligations, Series 2000-1, Cl. B, 8.27%, 6/20/05(4)(9).......................... 1,000,000 1,000,000
-----------
2,015,625
-----------
GOVERNMENT AGENCY -- 16.1%
FHLMC/FNMA/Sponsored -- 15.6%
Federal Home Loan Mortgage Corp.:
8%, 11/15/30(12)................................................................. 3,500,000 3,547,040
12%, 5/1/10-10/1/14.............................................................. 671,346 737,333
</TABLE>
20
<PAGE> 22
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
FHLMC/FNMA/Sponsored (continued)
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 1331, Cl. Z,
8%, 4/15/07...................................................................... $ 2,747,594 $ 2,781,940
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 2054, Cl. TE,
6.25%, 4/15/24................................................................... 534,000 506,964
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 194, Cl. IO, 9.41%, 4/1/28(13)............................................ 1,707,718 521,388
Series 197, Cl. IO, 8.85%, 4/1/28(13)............................................ 4,242,346 1,288,613
Series 199, Cl. IO, 21.45%, 8/1/28(13)........................................... 11,792,270 3,696,140
Series 202, Cl. IO, 10.46%, 4/1/29(13)........................................... 1,965,121 618,706
Federal National Mortgage Assn.:
6.50%, 1/1/29.................................................................... 10,640,522 10,233,948
7%, 9/25/29-12/25/29............................................................. 2,998,708 2,938,496
7.50%, 6/1/10-9/1/29............................................................. 12,275,809 12,266,888
11%, 7/1/16...................................................................... 294,847 322,849
Federal National Mortgage Assn.,
Gtd. Mtg. Pass-Through Certificates, 13%, 6/1/15(14)............................. 571,091 652,472
-----------
40,112,777
-----------
GNMA/Guaranteed -- 0.5%
Government National Mortgage Assn.:
6.75%, 7/20/27................................................................... 246,380 248,383
7%, 1/15/28-3/15/28.............................................................. 734,133 723,856
11%, 10/20/19.................................................................... 196,864 213,598
12%, 11/20/13-9/20/15............................................................ 163,972 179,704
-----------
1,365,541
-----------
PRIVATE -- 1.9%
Commercial -- 1.6%
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-MD4, Cl. A5, 7.384%, 8/13/29........................... 1,500,000 1,405,430
Capital Lease Funding Securitization LP, Interest-Only
Corporate-Backed Pass-Through Certificates, Series 1997-CTL1,
11.31%, 6/22/24(4)(13)........................................................... 10,345,760 378,267
Commercial Mortgage Acceptance Corp., Interest-Only
Stripped Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 33.19%,
12/25/20(4)(13).................................................................. 9,436,906 117,961
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, Cl. C, 8.125%, 7/25/06(4)(9)..................... 800,000 762,000
</TABLE>
21
<PAGE> 23
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
-------------- ------------
<S> <C> <C>
Commercial (continued)
First Union-Lehman Brothers Commercial Mortgage Trust,
Commercial Mtg. Pass-Through Certificates, Series 1997-C2, Cl. F,
7.50%, 9/18/15................................................................... $ 600,000 $ 467,437
General Motors Acceptance Corp. Commercial Mortgage Securities,
Inc., Mtg. Pass-Through Certificates, Interest-Only Stripped
Mtg.-Backed Security, Series 1997-C1, Cl. X, 8.10%, 7/15/27(13)(14).............. 3,249,847 243,739
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates:
Series DMC, Cl. B, 8.562%, 8/12/11(4)............................................ 400,000 366,375
Series DMC, Cl. C, 8.921%, 8/12/11(4)............................................ 400,000 363,625
------------
4,104,834
------------
Residential -- 0.3%
Salomon Brothers Mortgage Securities VII, Commercial Mtg.
Pass-Through Certificates, Series 1996-B, Cl. 1, 7.136%, 4/25/26(4).............. 1,253,087 832,520
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1999-1, 10%, 8/25/28........................................ 22,449 19,980
------------
852,500
------------
46,435,652
------------
Total Asset-Backed Sector (Cost $48,450,244) 48,451,277
------------
MONEY MARKET SECTOR -- 8.2%
Short-Term Notes -- 4.2%
Eaton Corp., 6.70%, 12/11/00....................................................... 6,000,000 5,955,334
Heller Financial, Inc., 6.60%, 2/15/01............................................. 5,000,000 4,902,833
------------
10,858,167
------------
Repurchase Agreements -- 4.0%
Repurchase agreement with Deutsche Bank Securities Inc., 6.51%,
dated 10/31/00, to be repurchased at $10,351,872 on 11/1/00,
collateralized by U.S. Treasury Nts., 6.125%--6.625%,
7/31/01--8/15/07, with a value of $2,305,649 and U.S. Treasury Bonds,
3.875%--8.875%, 8/15/17--4/15/29, with a value of $8,285,201..................... 10,350,000 10,350,000
------------
Total Money Market Sector (Cost $21,208,167) 21,208,167
------------
TOTAL INVESTMENTS, AT VALUE (COST $277,428,453).................................... 99.0% 255,200,079
----- ------------
OTHER ASSETS NET OF LIABILITIES.................................................... 1.0 2,428,666
----- ------------
NET ASSETS......................................................................... 100.0% $257,628,745
===== ============
</TABLE>
22
<PAGE> 24
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C>
ARP -- Argentine Peso IDR -- Indonesian Rupiah
CAD -- Canadian Dollar JPY -- Japanese Yen
DEM -- German Mark KRW -- South Korean Won
EUR -- Euro MXN -- Mexican Nuevo Peso
FRF -- French Franc NOK -- Norwegian Krone
GBP -- British Pound Sterling ZAR -- South African Rand
GRD -- Greek Drachma
</TABLE>
1. Securities with an aggregate market value of $13,662,665 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
2. Zero coupon bond reflects the effective yield on the date of purchase.
3. Interest or dividend is paid in kind.
4. Identifies issues considered to be illiquid or restricted -- See Note 8 of
Notes to Financial Statements.
5. Non-income-producing security.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $11,551,083 or 4.48% of the Trust's
net assets as of October 31, 2000.
7. Issuer is in default.
8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
9. Represents the current interest rate for a variable or increasing rate
security.
10. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
11. A sufficient amount of liquid assets has been designated to cover
outstanding written options, as follows:
<TABLE>
<CAPTION>
Principal/Contracts Expiration Exercise Premium Market Value
Subject to Call/Put Date Price Received See Note 1
-------------------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
European Monetary Unit Put $2,566,500 12/5/00 $0.856 $ 26,692 $67,802
Venezuela (Republic of) Bonds
9.25%, 9/15/27 Call 415 11/13/00 68.800% 4,897 261
-------- -------
$ 31,589 $68,063
======== =======
</TABLE>
12. When-issued security to be delivered and settled after October 31, 2000.
13. 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.
14. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
23
<PAGE> 25
STATEMENT OF ASSETS AND LIABILITIES October 31, 2000
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $277,428,453) -- see accompanying statement........................................ $255,200,079
Cash........................................................................................................... 337,984
Unrealized appreciation on foreign currency contracts.......................................................... 60,912
Receivables and other assets:
Investments sold............................................................................................. 5,377,960
Interest, dividends and principal paydowns................................................................... 5,069,010
Closed foreign currency contracts............................................................................ 26,498
Other........................................................................................................ 16,617
------------
Total assets............................................................................................... 266,089,060
------------
LIABILITIES
Unrealized depreciation on foreign currency contracts.......................................................... 49,367
Options written, at value (premiums received $31,589) -- see accompanying statement............................ 68,063
Payables and other liabilities:
Investments purchased (including $3,546,521 purchased on a when-issued basis)................................ 7,786,251
Daily variation on futures contracts......................................................................... 166,152
Trustees' compensation....................................................................................... 136,855
Dividends.................................................................................................... 128,085
Management and administrative fees........................................................................... 11,294
Other........................................................................................................ 114,248
------------
Total liabilities.......................................................................................... 8,460,315
------------
NET ASSETS..................................................................................................... $257,628,745
============
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest..................................................................... $ 291,161
Additional paid-in capital..................................................................................... 307,440,476
Overdistributed net investment income.......................................................................... (297,342)
Accumulated net realized loss on investments and foreign currency transactions................................. (27,734,618)
Net unrealized depreciation on investments and translation of assets and liabilities
denominated in foreign currencies............................................................................ (22,070,932)
------------
NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding............................... $257,628,745
============
NET ASSET VALUE PER SHARE...................................................................................... $8.85
=====
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE> 26
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
Oppenheimer Multi-Sector Income Trust
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $18,194)......................................................... $ 26,536,943
Dividends (net of foreign withholding taxes of $70)............................................................ 737,697
------------
Total income............................................................................................... 27,274,640
------------
EXPENSES
Management fees................................................................................................ 1,761,032
Administrative fees............................................................................................ 208,080
Shareholder reports............................................................................................ 76,788
Custodian fees and expenses.................................................................................... 64,702
Transfer agent and accounting services fees.................................................................... 46,108
Accounting service fees........................................................................................ 24,600
Other.......................................................................................................... 90,248
------------
Total expenses............................................................................................. 2,271,558
Less expenses paid indirectly.................................................................................. (15,245)
------------
Net expenses............................................................................................... 2,256,313
------------
NET INVESTMENT INCOME.......................................................................................... 25,018,327
------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (including premiums on options exercised)........................................................ (5,529,324)
Closing of futures contracts................................................................................. (134,909)
Closing and expiration of option contracts written........................................................... 74,608
Foreign currency transactions................................................................................ (5,264,512)
------------
Net realized loss.......................................................................................... (10,854,137)
------------
Net change in unrealized depreciation on:
Investments ................................................................................................. (5,948,714)
Translation of assets and liabilities denominated in foreign currencies...................................... (1,309,957)
------------
Net change................................................................................................. (7,258,671)
------------
Net realized and unrealized loss............................................................................... (18,112,808)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................................... $ 6,905,519
============
</TABLE>
See accompanying Notes to Financial Statements.
25
<PAGE> 27
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
2000 1999
----------- ----------
<S> <C> <C>
OPERATIONS
Net investment income.............................................................. $ 25,018,327 $ 25,280,414
Net realized gain (loss)........................................................... (10,854,137) (14,050,016)
Net change in unrealized appreciation (depreciation)............................... (7,258,671) 1,481,823
------------ ------------
Net increase in net assets resulting from operations .............................. 6,905,519 12,712,221
------------ ------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income............................................... (19,768,847) (23,438,435)
Distributions from return of capital .............................................. (4,688,650) --
------------ ------------
NET ASSETS
Total decrease..................................................................... (17,551,978) (10,726,214)
Beginning of period................................................................ 275,180,723 285,906,937
------------ ------------
End of period (including overdistributed net investment income
of $297,342 and $418,568, respectively).......................................... $257,628,745 $275,180,723
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 28
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period.................. $9.45 $9.82 $10.61 $10.52 $10.14
----- ----- ------ ------ ------
Income (loss) from investment operations:
Net investment income .............................. .86 .87 .79 .89 .91
Net realized and unrealized gain (loss) ............ (.62) (.43) (.75) .08 .37
----- ----- ------ ------ ------
Total income from investment operations .......... .24 .44 .04 .97 1.28
----- ----- ------ ------ ------
Dividend and/or distributions to shareholders:
Dividends from net investment income ............... (.68) (.81) (.78) (.88) (.90)
Tax return of capital .............................. (.16) -- (.05) -- --
----- ----- ------ ------ ------
Total dividends and/or distributions
to shareholders ................................ (.84) (.81) (.83) (.88) (.90)
----- ----- ------ ------ ------
Net asset value, end of period ....................... $8.85 $9.45 $ 9.82 $10.61 $10.52
===== ===== ====== ====== ======
Market value, end of period .......................... $7.88 $8.06 $ 9.38 $10.13 $ 9.88
===== ===== ====== ====== ======
TOTAL RETURN, AT MARKET VALUE(1) ..................... 6.93% (6.64)% 0.17% 11.40% 7.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) ............. $257,629 $275,181 $285,907 $308,972 $306,181
Average net assets (in thousands) .................... $269,849 $285,213 $304,773 $308,712 $298,496
Ratios to average net assets:(2)
Net investment income .............................. 9.27% 8.86% 7.56% 8.42% 8.87%
Expenses, net of indirect expenses ................. 0.84% 1.03% 1.01%(3) 0.99%(3) 1.04%(3)
Portfolio turnover rate .............................. 104% 159% 402% 259% 225%
</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) Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
27
<PAGE> 29
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 closed-end management
investment company. The Trust's investment objective is to seek high current
income consistent with preservation of capital. The Trust's investment advisor
is OppenheimerFunds, Inc. (the Manager). The following is a summary of
significant accounting policies consistently followed by the Trust.
Securities Valuation -- Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Trust's
assets are valued. In the absence of a sale, the security is valued at the last
sale price on the prior trading day, if it is within the spread of the closing
bid and asked prices, and if not, at the closing bid price. Securities
(including restricted securities) for which quotations are not readily available
are valued primarily using dealer-supplied valuations, a portfolio pricing
service authorized by the Board of Trustees, or at their fair value. Fair value
is determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
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 are leveraged, which increases the notes'
volatility relative to the principal 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, 2000, the market value of these
securities comprised 2.2% of the Trust's net assets and resulted in unrealized
losses in the current period of $62,454. 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 when-issued basis can take
place a month or more after the trade date. Normally the settlement date occurs
within six months after the trade date; however, the Trust may, from time to
time, purchase securities whose settlement date extends beyond six months and
possibly as long as two years or more beyond trade date. During this period,
such securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Trust maintains
segregated assets with a market value equal to or greater than the amount of its
purchase commitments. The purchase of securities on a when-issued or forward
commitment basis may increase the volatility of the Trust's net asset value to
the extent the Trust makes such purchases while remaining substantially fully
invested. As of October 31, 2000, the Trust had entered into net outstanding
when-issued or forward commitments of $3,546,521.
In connection with its ability to purchase securities on a when-issued 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.
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
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, 2000, securities with an
aggregate market value of $699,029, representing 0.27% 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, 2000, the Trust had available for federal income tax purposes
an unused capital loss carryover as follows:
<TABLE>
<CAPTION>
EXPIRING
--------
<S> <C>
2003 $ 7,982,990
2006 1,509,541
2007 11,561,894
2008 5,450,403
</TABLE>
Trustees' Compensation -- The Trust has adopted an unfunded retirement plan for
the Trust's independent Board of Trustees. Benefits are based on years of
service and fees paid to each trustee during the years of service. During the
year ended October 31, 2000, a credit of $66,070 was made for the Trust's
projected benefit obligations and payments of $7,859 were made to retired
trustees, resulting in an accumulated liability of $131,613 as of October 31,
2000.
The Board of Trustees has adopted a deferred compensation plan for independent
trustees that enables trustees to elect to defer receipt of all or a portion of
annual compensation they are entitled to receive from the Trust. Under the plan,
the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Board of Trustees in shares of one or more
Oppenheimer funds selected by the trustee. The amount paid to the Board of
Trustees under the plan will be determined based upon the performance of the
selected funds. Deferral of trustees' fees under the plan will not affect the
net assets of the Trust, and will not materially affect the Trust's assets,
liabilities or net investment income per share.
Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders,
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
Classification of Dividends and 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 dividends and distributions made during the fiscal 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
dividends and 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, 2000, amounts have been reclassified to reflect a decrease in
paid-in capital of $4,688,940, a decrease in undistributed net investment income
of $439,604, and a decrease in accumulated net realized loss on investments of
$5,128,544. Net assets of the Trust were unaffected by the reclassifications. As
noted in the Statement of Changes in Net Assets, the Trust realized a tax return
of capital of $4,688,650.
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
accreted 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 year ended October 31, 2000.
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2000, were
$257,933,020 and $274,428,757, respectively.
As of October 31, 2000, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $278,030,580 was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 4,215,321
Gross unrealized depreciation (27,045,823)
------------
Net unrealized depreciation $(22,830,502)
============
</TABLE>
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fees -- Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Trust which provides for an annual
fee of 0.65% of the Trust's average annual net assets.
Administration Fees -- Mitchell Hutchins Asset Management Inc. served as the
Trust's Administrator. The Trust paid the Administrator an annual fee of 0.20%
of the Trust's average annual net assets. Effective March 11, 2000, Mitchell
Hutchins Asset Management Inc. no longer served as the Trust Administrator.
Accounting Fees -- The Manager acts as the accounting agent for the Trust at an
annual fee of $24,000, plus out-of-pocket costs and expenses reasonably
incurred.
Transfer Agent Fees -- Shareholder Financial Services, Inc. (SFSI), a
wholly-owned subsidiary of the Manager, is the transfer agent and registrar for
the Trust. Fees paid to SFSI are based on the number of accounts and the number
of shareholder transactions, plus out-of-pocket costs and expenses.
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Trust may enter into
foreign currency contracts for operational purposes and to seek to protect
against adverse exchange rate fluctuations. Risks to the Trust include the
potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Trust and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Trust may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on outstanding
foreign currency contracts are noted in the Statement of Investments where
applicable.
As of October 31, 2000, the Trust had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Contract Amount Valuation as of Unrealized Unrealized
CONTRACT DESCRIPTION Expiration Date (000s) October 31, 2000 Appreciation Depreciation
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONTRACTS TO SELL
-----------------
British Pound Sterling (GBP)........ 11/13/00-11/27/00 2,140 GBP $3,108,738 $ 7,039 $25,972
Canadian Dollar (CAD) .............. 11/30/00 1,710 CAD 1,120,364 -- 594
Euro (EUR) ......................... 11/20/00 3,090 EUR 2,621,618 21,259 --
Japanese Yen (JPY) ................. 11/30/00-9/10/01 321,300 JPY 2,993,013 32,614 --
South African Rand (ZAR) ........... 1/22/01 7,437 ZAR 975,216 -- 16,655
------- -------
60,912 43,221
------- -------
CONTRACTS TO PURCHASE
----------------------
Japanese Yen (JPY) ................. 12/11/00-12/12/00 289,600 JPY 2,672,189 -- 6,146
------- -------
Total Unrealized Appreciation and Depreciation $60,912 $49,367
======= =======
</TABLE>
31
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Trust may buy and sell futures contracts that relate to
broadly-based securities indices "financial futures" or debt securities
"interest rate futures" in order to gain exposure to or to seek to protect
against changes in market value of stock and bonds or 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 decreases in market value of portfolio securities. The Trust
may also purchase futures contracts to gain exposure to changes in interest
rates as it may be more efficient or cost effective than actually buying fixed
income securities.
Upon entering into a futures contract, the Trust is required to deposit either
cash or securities (initial margin) in an amount equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Trust each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Trust recognizes a realized gain or loss when the contract is closed
or expires.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of October 31, 2000, the Trust had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Valuation
as of Unrealized
Expiration Number of October 3l, Appreciation
CONTRACT DESCRIPTION Date Contracts 2000 (Depreciation)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
----------------------
Crude Oil ............................................ 11/17/00 1,000 $ 2,943,000 $ 24,560
DAX Index ............................................ 12/15/00 25 603,830 38,958
Euro-Bundesobligation ................................ 12/7/00 100,000 893,879 2,331
Japan (Government of) Bonds, 10 yr. .................. 12/11/00 100,000,000 1,221,174 11,173
Standard & Poor's 500 Index .......................... 12/14/00 250 3,600,500 197,125
United Kingdom Long Gilt ............................. 12/27/00 100,000 329,975 349
U.S. Treasury Nts., 2 yr. ............................ 12/28/00 200,000 32,420,250 44,859
U.S. Long Bond ....................................... 12/19/00 100,000 11,382,188 (5,930)
--------
313,425
--------
CONTRACTS TO SELL
-----------------
New Financial Times Stock Exchange 100 Index ......... 12/15/00 10 (94,241) (726)
NASDAQ 100 Index ..................................... 12/14/00 100 (1,980,000) (26,700)
U.S. Treasury Nts., 10 yr. ........................... 12/19/00 100,000 (4,028,125) (18,750)
U.S. Treasury Nts., 5 yr. ............................ 12/19/00 100,000 (6,444,000) (56,563)
--------
(102,739)
--------
$210,686
========
</TABLE>
32
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
7. OPTION ACTIVITY
The Trust may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Trust generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Trust receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Trust will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales 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. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Trust gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Trust may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Trust pays a premium whether or not the
option is exercised. The Trust also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended October 31, 2000 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
-----------------------------------------------------
NUMBER OF CONTRACTS AMOUNT OF PREMIUMS
---------------------- ------------------
<S> <C> <C>
Options outstanding as of October 31, 1999................. -- $ --
Options written ........................................... 143,001,748 33,993
Options closed or expired.................................. (143,000,705) (20,094)
Options exercised.......................................... (628) (9,002)
------------ ----------
Options outstanding as of October 31, 2000 ................ 415 $ 4,897
============ ==========
</TABLE>
<TABLE>
<CAPTION>
PUT OPTIONS
------------------------------------------------------
NUMBER OF CONTRACTS AMOUNT OF PREMIUMS
--------------------- -------------------
<S> <C> <C>
Options outstanding as of October 31, 1999 ................ 3,388,275 $ 56,100
Options written ........................................... 5,697,205 71,944
Options closed or expired.................................. (4,018,275) (58,882)
Options exercised.......................................... (2,500,705) (42,470)
---------- ---------
Options outstanding as of October 31, 2000 ................ 2,566,500 $ 26,692
========== =========
</TABLE>
33
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
8. ILLIQUID OR RESTRICTED SECURITIES
As of October 31, 2000, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Trust intends to invest no
more than 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of October 31, 2000, was $15,784,530,
which represents 6.13% of the Trust's net assets, of which $1,220,075 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation Per Unrealized
Acquisition Cost Unit as of Appreciation
SECURITY Date Per Unit October 31, 2000 (Depreciation)
--------------------------------------------------------------------------------------------------------------------------
STOCKS AND WARRANTS
-------------------
<S> <C> <C> <C> <C>
Becker Gaming, Inc. Wts., Exp. 11/15/00............... 11/18/93 $ 2.00 $ 0.01 $(50,000)
CGA Group Ltd., Series A.............................. 6/17/97 25.00 25.00 --
CGA Group Ltd. Wts., Exp. 6/16/07..................... 6/17/97 -- 0.30 9,600
</TABLE>
34
<PAGE> 36
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, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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, 2000, 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
accounting principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
November 21, 2000
35
<PAGE> 37
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer Multi-Sector Income Trust
In early 2001 shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 2000. Regulations
of the U.S. Treasury Department require the Trust to report this information to
the Internal Revenue Service.
Dividends paid by the Trust during the fiscal year ended October 31, 2000, which
are not designated as capital gain distributions should be multiplied by 3.73%
to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
36
<PAGE> 38
OPPENHEIMER MULTI-SECTOR INCOME TRUST
GENERAL INFORMATION CONCERNING THE TRUST
Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end diversified
management investment company with a primary investment objective of seeking
high current income consistent with preservation of capital. The Trust's
secondary investment objective is capital appreciation. In seeking its
objectives, the Trust may invest any percentage of its assets in at least three
of the following seven fixed-income sectors: U.S. Government, Corporate,
International, Asset-Backed, Municipal, Convertible and Money Market. Current
income, preservation of capital and, secondarily, possible capital appreciation
may be considerations in the allocation of assets among such sectors. The Trust
can invest in a number of different kinds of "derivative investments" and can
also engage in certain special investment techniques, including repurchase
transactions, when-issued and delayed delivery transactions and hedging.
Although the Trust is not required to invest in any of these types of securities
at all times. The investment advisor to the Trust is OppenheimerFunds, Inc. (the
Manager).
The Portfolio Managers of the Trust are Arthur Steinmetz and Caleb Wong. Mr.
Steinmetz is a Vice President of the Trust and a Senior Vice President of the
Advisor and Mr. Wong is an Assistant Vice President of the Advisor. Messrs.
Steinmetz and Wong have been the persons principally responsible for the
day-to-day management of the Trust's portfolio since February 1, 1999. Prior to
February 1999, Mr. Steinmetz served as a portfolio manager and officer of other
Oppenheimer funds. Mr. Wong worked on fixed-income quantitative research and
risk management for the Advisor since July 1996, prior to which he was enrolled
in the Ph.D. program for Economics at the University of Chicago. Other members
of the Advisor's fixed-income portfolio department, particularly portfolio
analysts, traders and other portfolio managers provide the Trust's Portfolio
Managers with support in managing the Trust's portfolio.
Dividend Reinvestment and Cash Purchase Plan--Pursuant to the Trust's Dividend
Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust
(Shares) not registered in a nominee's name, all dividends and capital gains
distributions (Distributions) declared by the Trust will be automatically
reinvested in additional full and fractional Shares unless a shareholder elects
to receive cash. If Shares are registered in a nominee's name, the shareholder
should consult the nominee if the shareholder desires to participate in the
Plan. Shareholders that participate in the Plan (Participants) may, at their
option, make additional cash investments in shares, semi-annually in amounts of
at least $100, through payment to Shareholder Financial Services, Inc., the
agent for the Plan (the Agent), accompanied by a service fee of $0.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional Shares at the greater of the Trust's net asset
value determined as of the date of purchase or 95% of the then-current market
price. If the market price is lower than net asset value, the Distribution will
be paid in cash, which the Agent will use to buy Shares on The New York Stock
Exchange (the NYSE), or otherwise on the open market to the extent available. If
the market price exceeds the net asset value before the Agent has completed its
purchases, the average purchase price per Share paid by the Agent
37
<PAGE> 39
OPPENHEIMER MULTI-SECTOR INCOME TRUST
General Information Concerning the Trust (Continued)
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 to the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1.800.647.7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
Shareholder Information--The Shares are traded on the NYSE. Daily market prices
for the Trust's shares are published in the New York Stock Exchange Composite
Transaction section of newspapers under the designation "OppenMlti." The Trust's
NYSE trading symbol is OMS. Weekly net asset value (NAV) and market price
information about the Trust is published each Monday in The Wall Street Journal
and each Sunday in The New York Times and each Saturday in Barron's, and other
newspapers in a table called "Closed-End Bond Funds."
38
<PAGE> 40
(This page has been intentionally left blank.)
<PAGE> 41
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Officers and Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board
of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Phillip A. Griffiths, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Clayton K. Yeutter, Trustee
Arthur P. Steinmetz, Vice President
Caleb Wong, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Advisor
OppenheimerFunds, Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
The Bank of New York
Independent Auditors
KPMG LLP
Legal Counsel
Mayer, Brown & Platt
For more complete information about Oppenheimer Multi-Sector Income Trust,
please refer to the Prospectus. To obtain a copy, call your financial
advisor, or call OppenheimerFunds Distributor, Inc. at 1.800.525.7048.
Shares of Oppenheimer funds are not deposits or obligations of any bank,
are not guaranteed by any bank, and are not insured by the FDIC or any
other agency, and involve investment risks, including the possible loss of
the principal amount invested.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203
(C) Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
RA0680.001.1000 Printed on recycled paper
