-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ELKBrQ7KjXZ8pQKxwzajXbItPAmJs96SF/uLf7RC94/XC4Mv3y8lUhkhv3gpk+OG dGkfhI8kKyvKIQX0TSQKdQ== 0000950117-97-001128.txt : 19970703 0000950117-97-001128.hdr.sgml : 19970703 ACCESSION NUMBER: 0000950117-97-001128 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970702 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER MULTI SECTOR INCOME TRUST CENTRAL INDEX KEY: 0000829801 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133448960 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05473 FILM NUMBER: 97635347 BUSINESS ADDRESS: STREET 1: MITCHELL HUTCHINS ASSET MANAGEMENT INC STREET 2: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2123230248 MAIL ADDRESS: STREET 1: MITCHELL HUTCHISN ASSET MANAGEMENT INC STREET 2: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 N-30D 1 OPPENHEIMER MULTI-SECTOR INCOME TRUST SAR Dear Shareholder: Continued U.S. economic growth and low inflation meant modest to strong returns across Oppenheimer Multi-Sector Income Trust's three investment sectors--U.S. government securities, high yield domestic corporate bonds and foreign fixed income securities. The diversification among these sectors worked well, and the Trust's six-month return was 3.48%, without deducting sales charges. Its dividend return was 8.99% as of April 30, 1997.(1) Of course, there were some strategic moves, in response to economic changes, that helped the Trust's performance. Because the yield on U.S. government bonds fell during the period, we reduced the duration of our U.S. Treasury holdings to protect the Trust from excess interest-rate exposure. We've also increased the Trust's holdings of foreign government bonds. Investment Breakdown: Oppenheimer Multi-Sector Income Trust as of 4/30/97(4) [GRAPH] U.S. corporate bonds & notes: 31.0% U.S. government obligations -- Agency: 20.2% Foreign government obligations: 17.1% U.S. government obligations -- Treasury: 13.1% Structured notes: 6.8% Foreign corporate bonds & notes: 6.6% Short-term securities: 3.6% Equity securities: 1.6% Another factor that benefited the Trust during the period was that we were heavily exposed to high yield corporate bonds in the telecommunications sector. The break-up of monopolies, both in the United States and abroad, has been beneficial for new companies in the high yield sector.(2) In addition, our investments in dollar-denominated emerging market bonds, particularly in Latin America, returned exceptional performance. Although yields remain attractive, we are beginning to see high valuations and are looking to diversify into other foreign debt instruments, such as those found in the developing economies of Eastern Europe. Of course, any foreign investment, especially emerging markets investment, entails greater expenses and risks, such as adverse market changes due to currency fluctuations. But, by diversifying the portfolio by country and industry, we aim to reduce those risks. Finally, as the real estate market improved and strong economic growth helped to lower office vacancy rates, we increased our exposure to a new source of mortgage-backed bonds called commercial mortgage-backed securities. These bonds are attractive because they provide higher yield for the same credit risk as a comparable industrial corporate bond. In addition, the Trust's exposure to the government sector was concentrated in mortgage-backed bonds, which maintained a positive spread to Treasuries and provided respectable return.(3) On the other hand, oversupply and regulatory changes hurt the performance of our gaming sector holdings. Returns for these holdings were respectable but disappointing when compared with some of the Trust's best performers. Also, weaker growth in Asia and Europe dampened demand for our holdings in the metal/ mining and paper product industries. Although our investments in these three industries underperformed our expectations, the Trust's low exposure minimized the impact on performance. Looking to the months ahead, we expect continued, modest economic growth, but are cautious about too much inflation. Employment rates are reaching levels that historically have begun applying upward pressure on wages. Although the Federal Reserve didn't raise interest rates at its last meeting, rising wage pressure--which is a key component of inflation--could tempt the Federal Reserve to raise rates in the near future. Since we believe that the first rate hike by the Fed will not be the last, we are taking steps to diversify the portfolio away from interest-rate-sensitive investments. We remain confident that opportunities exist both domestically and internationally to provide solid performance in 1997. Thank you for your confidence in OppenheimerFunds, The Right Way to Invest. We look forward to helping you meet your financial goals in the future. Sincerely, /s/ BRIDGET A. MACASKILL Bridget A. Macaskill President Oppenheimer Multi-Sector Income Trust May 21, 1997 1. Total return is based on the change in net asset value per share from 10/31/96 to 4/30/97, without deducting any brokerage costs. Dividend return is determined by annualizing the April 1997 dividend of $0.074 and dividing by the closing market price on the New York Stock Exchange of $9.875 per share on 4/25/97 (payment date). Past performance does not guarantee future results. 2. Investors in high yield bonds are subject to greater risk that the issuer will default in its principal or interest payments. 3. Mortgage-backed securities involve risks from early prepayment of underlying mortgages that can affect the Fund's income and principal value. 4. Portfolio composition is subject to change. Chart is based on total investments at market value rather than net assets. STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ U.S. GOVERNMENT SECTOR -- 14.0% TREASURY -- 14.0% U.S. Treasury Bonds: 7.125%, 2/15/23 (2)..................................................... $ 3,827,000 $ 3,853,314 STRIPS, Zero Coupon, 6.90%, 2/15/19 (3)................................. 11,000,000 2,364,580 U.S. Treasury Nts.: 6%, 8/31/97............................................................. 801,000 801,751 6.25%, 2/15/03.......................................................... 10,387,000 10,205,237 6.25%, 2/28/02.......................................................... 475,000 468,618 7%, 4/15/99 (4)......................................................... 24,500,000 24,829,230 ------------ 42,522,730 ------------
Date Strike Contracts ----- ------------ -------------- PUT OPTIONS PURCHASED -- 0.0% U.S. Treasury Bonds, 10-Yr. Futures Put Opt., 5/97........................................ 6/97 105% 40 1,875 ------------ Total U.S. Government Sector (Cost $43,153,722).......................... 42,524,605 ------------
Shares -------------- CONVERTIBLE SECTOR -- 1.7% PREFERRED STOCKS -- 1.5% American Radio Systems Corp., 11.375% Cum. Exchangeable Preferred (5)(6).................................................................. 6,000 589,500 Fresenius Medical Care Trust, 9% Preferred Securities..................... 2,340,000 2,322,450 NEXTLINK Communications, Inc., 14% Cum., Units (each unit consists of one sr. exchangeable preferred share and one warrant) (5)(7)(8)............. 15,000 697,500 SD Warren Co., 14% Cum. Exchangeable, Series B (7)........................ 20,000 785,000 ------------ 4,394,450 ------------ Units -------------- RIGHTS, WARRANTS AND CERTIFICATES -- 0.2% American Communications Services, Inc. Wts., Exp. 11/05................... 700 24,500 American Telecasting, Inc. Wts., Exp. 6/99................................ 4,750 3,859 Ames Department Stores, Inc., Litigation Trust (9)........................ 128,889 1,289 Becker Gaming, Inc. Wts., Exp. 11/00 (9).................................. 25,000 6,250 Cellular Communications International, Inc. Wts., Exp. 8/03 (9)........... 2,500 42,500 Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99 (9)........................ 1,000 25,000 Gaylord Container Corp. Wts., Exp. 11/02.................................. 50,625 291,094 ICG Communications, Inc. Wts., Exp. 9/05.................................. 4,125 17,449 In-Flight Phone Corp. Wts., Exp. 8/02..................................... 900 --
3 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Units See Note 1 -------------- ------------ RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED) Protection One, Inc. Wts., Exp. 6/05 (9).................................. 6,400 $ 39,744 SD Warren Co. Wts., Exp. 12/06 (9)........................................ 20,000 85,000 SDW Holdings Corp., Cl. B Wts., Exp. 12/06 (9)............................ 1,875 22,500 Wireless One, Inc. Wts., Exp. 10/00 (9)................................... 1,500 15 ------------ Total Convertible Sector (Cost $4,370,096)................................ 559,200 ------------ 4,953,650 ------------ Shares -------------- CORPORATE SECTOR -- 33.2% COMMON STOCKS -- 0.0% Capital Gaming International, Inc. (7).................................... 7,198 90 Triangle Wire & Cable, Inc. (7)(9)........................................ 84,444 84,444 ------------ 84,534 ------------ Face Amount(1) -------------- CORPORATE BONDS AND NOTES -- 33.2% BASIC INDUSTRY -- 3.8% Chemicals -- 1.0% ISP Holdings, Inc., 9% Sr. Nts., 10/15/03................................. $ 770,000 781,550 NL Industries, Inc.: 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (10)............................... 670,000 624,775 11.75% Sr. Sec. Nts., 10/15/03.......................................... 120,000 128,700 Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06............ 690,000 729,675 Terra Industries, Inc., 10.50% Sr. Nts., Series B, 6/15/05................ 730,000 771,975 ------------ 3,036,675 ------------ Containers -- 1.8% Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05 (5)........... 750,000 781,875 Owens-Illinois, Inc., 11% Sr. Debs., 12/1/03.............................. 4,000,000 4,460,000 U.S. Can Corp., 10.125% Sr. Sub. Nts., 10/15/06........................... 250,000 261,250 ------------ 5,503,125 ------------ Paper -- 0.4% Buckeye Cellulose Corp., 9.25% Sr. Sub. Nts., 9/15/08..................... 500,000 505,000 Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03............................... 500,000 508,750 Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts., 2/1/02......... 300,000 298,500 ------------ 1,312,250 ------------ Steel -- 0.6% AK Steel Corp., 9.125% Sr. Nts., 12/15/06................................. 1,500,000 1,494,375
4 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Steel (Continued) Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01...................... $ 250,000 $ 246,250 ------------ 1,740,625 ------------ CONSUMER RELATED -- 7.6% Consumer Products -- 1.1% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 10.62%, 5/27/98 (3)............................................................. 1,000,000 902,500 E & S Holdings Corp., 10.375% Sr. Sub. Nts., 10/1/06...................... 750,000 774,375 Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., 13.37%, 3/15/01 (3)(5).................................................................. 1,250,000 825,000 Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 (9)....................... 735,000 815,850 ------------ 3,317,725 ------------ Food/Beverages/Tobacco -- 0.5% CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., 1/15/04 (9).................... 380,000 387,600 Foodbrands America, Inc., 10.75% Sr. Sub. Nts., 5/15/06................... 500,000 570,000 International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06............ 500,000 511,250 ------------ 1,468,850 ------------ Healthcare -- 2.1% Genesis Health Ventures, Inc., 9.25% Sr. Sub. Nts., 10/1/06............... 250,000 249,375 Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04... 1,500,000 1,659,375 Tenet Healthcare Corp.: 10.125% Sr. Sub. Nts., 3/1/05........................................... 3,200,000 3,448,000 8.625% Sr. Sub. Nts., 1/15/07........................................... 1,000,000 995,000 ------------ 6,351,750 ------------ Hotel/Gaming -- 2.1% Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 (9)(11)................................................................. 550,000 286,000 Boyd Gaming Corp., 9.25% Sr. Nts., 10/1/03................................ 500,000 485,625 Capital Gaming International, Inc., Promissory Nts., 8/1/95 (12).......... 5,500 -- Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00 (9)(12)................................................................. 200,000 34,000 Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03................ 750,000 766,875 HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05.............. 1,750,000 1,793,750 Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B, 11/15/02................................................................ 750,000 986,250 Rio Hotel & Casino, Inc., 9.50% Gtd. Sr. Sub. Nts., 4/15/07 (5)........... 500,000 492,500 Showboat Marina Casino Partnership/Showboat Marina Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03...................................... 1,000,000 1,145,000
5 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Hotel/Gaming (Continued) Trump Atlantic City Associates/Trump Atlantic City Funding, Inc., 11.25% First Mtg. Nts., 5/1/06................................................. $ 400,000 $ 390,000 ------------ 6,380,000 ------------ Restaurants -- 0.1% Ameriking, Inc., 10.75% Sr. Nts., 12/1/06................................. 230,000 238,050 ------------ Textile/Apparel -- 1.7% CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03........................ 475,000 463,125 Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03.......... 500,000 512,500 Dan River, Inc., 10.125% Sr. Sub. Nts., 12/15/03.......................... 500,000 516,250 GFSI, Inc., 9.625% Sr. Sub. Nts., 3/1/07 (5).............................. 1,000,000 985,000 Tultex Corp., 9.625% Sr. Nts., 4/15/07 (5)................................ 600,000 618,750 WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05.................. 1,500,000 1,541,250 William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06 (5).................... 550,000 555,500 ------------ 5,192,375 ------------ ENERGY -- 4.2% Chesapeake Energy Corp.: 12% Gtd. Sr. Exchangeable Nts., 3/1/01.................................. 1,000,000 1,082,500 9.125% Sr. Nts., 4/15/06................................................ 2,340,000 2,375,100 J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06....................... 100,000 97,000 Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06........................ 1,500,000 1,511,250 Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (10)...... 3,600,000 2,623,500 Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (5)..................... 450,000 427,500 Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 (9)........... 2,635,000 2,358,325 TransTexas Gas Corp., 11.50% Gtd. Sr. Sec. Nts., 6/15/02.................. 2,000,000 2,230,000 ------------ 12,705,175 ------------ FINANCIAL SERVICES -- 1.5% Banks & Thrifts -- 0.4% First Nationwide Holdings, Inc.: 10.625% Sr. Sub. Nts., 10/1/03.......................................... 1,000,000 1,060,000 9.125% Sr. Sub. Nts., 1/15/03........................................... 250,000 251,250 ------------ 1,311,250 ------------ Diversified Financial -- 0.7% Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04.................... 250,000 247,500 Neodata Services, Inc., 12% Sr. Nts., Series B, 5/1/03.................... 900,000 963,000 Olympic Financial Ltd., Units (each unit consists of $1,000 principal amount of 11.50% sr. nts., 3/15/07 and one warrant to purchase 6.84 shares of common stock) (8)............................................. 250,000 236,250
6 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Diversified Financial (Continued) Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts., Series B, 4/1/02.................................................................. $ 750,000 $ 802,500 ------------ 2,249,250 ------------ Insurance -- 0.4% Americredit Corp., 9.25% Sr. Nts., 2/1/04 (5)............................. 1,135,000 1,078,250 ------------ HOUSING RELATED -- 0.8% Building Materials -- 0.3% Building Materials Corp. of America, 8.625% Sr. Nts., 12/15/06............ 500,000 490,000 Nortek, Inc., 9.25% Sr. Nts., 3/15/07 (5)................................. 475,000 473,812 ------------ 963,812 ------------ Homebuilders/Real Estate -- 0.5% Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds, 4/15/06........... 180,000 180,900 Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04............................ 500,000 515,625 NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03..................................... 500,000 522,500 U.S. Home Corp., 9.75% Sr. Nts., 6/15/03.................................. 300,000 309,000 ------------ 1,528,025 ------------ MANUFACTURING -- 3.4% Aerospace -- 0.7% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05...................... 1,360,000 1,366,800 Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02 (9)............ 500,000 547,500 GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98............................. 300,000 304,500 ------------ 2,218,800 ------------ Automotive -- 0.8% Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06......... 600,000 660,000 Harvard Industries, Inc., 12% Sr. Nts., 7/15/04........................... 250,000 116,250 Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06.............. 500,000 541,875 Lear Corp., 9.50% Sub. Nts., 7/15/06...................................... 1,000,000 1,045,000 ------------ 2,363,125 ------------ Capital Goods -- 1.9% Clark-Schwebel, Inc., 10.50% Sr. Nts., 4/15/06............................ 750,000 795,000 Farley, Inc., Zero Coupon Sub. Debs., 14.15%, 12/30/12 (3)(9)............. 198,000 23,575 Foamex LP/Foamex Capital Corp.: 11.875% Sr. Sub. Debs., 10/1/04......................................... 2,000,000 2,155,000 0%/14% Sr. Disc. Nts., Series B, 7/1/04 (10)............................ 750,000 660,000 Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06................... 1,000,000 1,035,000 Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07 (5).............. 250,000 253,125
7 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Capital Goods (Continued) Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07.............. $ 425,000 $ 423,542 Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03 (9).................... 525,000 539,437 ------------ 5,884,679 ------------ MEDIA -- 2.4% Broadcasting -- 0.6% American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06.................... 200,000 199,000 SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06........... 750,000 787,500 Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05................ 500,000 506,875 Young Broadcasting, Inc., 9% Sr. Sub. Nts., Series B, 1/15/06............. 500,000 477,500 ------------ 1,970,875 ------------ Cable Television -- 0.7% Cablevision Systems Corp., 9.875% Sr. Sub. Nts., 5/15/06.................. 500,000 498,750 EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04 (10)............................................................ 800,000 594,000 Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03 (11)............................................................ 250,000 255,000 TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (5)..... 765,000 730,575 ------------ 2,078,325 ------------ Diversified Media -- 0.8% Jacor Communications Co., 9.75% Gtd. Unsec. Sr. Sub. Nts., 12/15/06....... 250,000 255,625 Katz Media Corp., 10.50% Sr. Sub. Nts., 1/15/07 (5)....................... 750,000 708,750 Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06...................... 750,000 750,000 Universal Outdoor, Inc.: 9.75% Sr. Sub. Nts., 10/15/06........................................... 590,000 588,525 9.75% Sr. Sub. Nts., Series B, 10/15/06 (5)............................. 70,000 69,300 ------------ 2,372,200 ------------ Publishing/Printing -- 0.3% Hollinger International Publishing, Inc.: 9.25% Gtd. Sr. Sub. Nts., 2/1/06........................................ 500,000 496,250 9.25% Gtd. Sr. Sub. Nts., 3/15/07....................................... 500,000 498,750 ------------ 995,000 ------------ OTHER -- 1.1% Environmental -- 0.1% Allied Waste North America, Inc., 10.25% Sr. Sub. Nts., 12/1/06 (5)....... 250,000 263,437 ------------ Services -- 1.0% Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 (5)............. 650,000 638,625
8 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Services (Continued) Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 (5)....... $ 500,000 $ 475,625 Protection One Alarm Monitoring, Inc., 0%/13.625% Sr. Disc. Nts., 6/30/05 (10).................................................................... 2,000,000 1,950,000 ------------ 3,064,250 ------------ RETAIL -- 1.2% Specialty Retailing -- 0.3% Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B, 9/1/03..... 250,000 261,875 Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03.................. 165,000 174,900 Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03....................... 250,000 262,500 ------------ 699,275 ------------ Supermarkets -- 0.9% Grand Union Co., 12% Sr. Nts., 9/1/04..................................... 200,000 190,500 Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06.......... 750,000 815,625 Ralph's Grocery Co.: (New), 11% Sr. Sub. Nts., 6/15/05 (5)................................... 625,000 667,188 10.45% Sr. Nts., 6/15/04................................................ 625,000 665,625 Smith's Food & Drug Centers, Inc., 11.25% Sr. Unsec. Sub. Nts., 5/15/07... 420,000 470,400 ------------ 2,809,338 ------------ TECHNOLOGY -- 5.6% Information Technology -- 4.0% Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05 (10).................................................................... 500,000 390,000 CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts., 6/15/05 (9)(10)........ 400,000 256,000 Cellular Communications International, Inc., Zero Coupon Sr. Disc. Nts., 24.03%, 8/15/00 (3)..................................................... 2,000,000 1,440,000 Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (10)................ 2,000,000 1,850,000 Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 (5)................. 650,000 620,750 Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 (5)............................ 550,000 533,500 Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., 7/15/05 (10)..... 200,000 119,000 Globalstar LP/Globalstar Capital Corp., Units (each unit consists of $1,000 principal amount of 11.375% sr. nts., 2/15/04 and one warrant to purchase 2.0645 ordinary shares) (5)(8)................................. 410,000 407,950 McCaw International Ltd., Units (each unit consists of $1,000 principal amount of 0%/13% sr. disc. nts., 4/15/07 and one warrant to purchase 0.10616 share of common stock) (5)(8)(10)............................... 500,000 248,750 Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07........................... 500,000 415,000
9 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Information Technology (Continued) Omnipoint Corp.: 11.625% Sr. Nts., 8/15/06............................................... $ 200,000 $ 159,000 11.625% Sr. Nts., Series A, 8/15/06..................................... 500,000 397,500 Pierce Leahy Corp., 11.125% Sr. Sub. Nts., 7/15/06........................ 1,000,000 1,092,500 PriCellular Wireless Corp., 0%/12.25% Sr. Sub. Disc. Nts., 10/1/03 (10)... 1,250,000 1,112,500 Sprint Spectrum LP/Sprint Spectrum Finance Corp.: 0%/12.50% Sr. Disc. Nts., 8/15/06 (10).................................. 1,000,000 695,000 11% Sr. Nts., 8/15/06................................................... 500,000 547,500 Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 (5)............................. 750,000 735,000 Unisys Corp., 11.75% Sr. Nts., 10/15/04................................... 500,000 528,750 USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04................. 450,000 459,000 ------------ 12,007,700 ------------ Telecommunications/Technology -- 1.6% Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (10).... 1,000,000 625,000 ICG Holdings, Inc.: 0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06 (10).............................. 600,000 366,000 0%/13.50% Sr. Disc. Nts., 9/15/05 (10).................................. 300,000 205,500 McLeod, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5)(10).................... 250,000 142,188 MFS Communications Co., Inc.: 0%/8.875% Sr. Disc. Nts., 1/15/06 (10).................................. 500,000 374,375 0%/9.375% Sr. Disc. Nts., 1/15/04 (10).................................. 1,400,000 1,272,250 NTL, Inc., 10% Sr. Nts., 2/15/07 (5)...................................... 250,000 244,375 Teleport Communications Group, Inc., 0%/11.125% Sr. Disc. Nts., 7/1/07 (10).................................................................... 1,000,000 692,500 UNIFI Communications, Inc., Units (each unit consists of $1,000 principal amount of 14% sr. nts., 3/1/04 and one warrant to purchase 27.52 ordinary shares) (5)(8)................................................. 1,000,000 990,000 ------------ 4,912,188 ------------ TRANSPORTATION -- 0.4% Railroads -- 0.4% Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03 (10)................................................. 1,500,000 1,245,000 ------------ UTILITIES -- 1.2% Electric Utilities -- 1.2% CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06.................................. 135,000 140,400 California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04................... 750,000 798,750
10 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Electric Utilities (Continued) Calpine Corp.: 10.50% Sr. Nts., 5/15/06................................................ $ 1,005,000 $ 1,065,300 9.25% Sr. Nts., 2/1/04.................................................. 185,000 185,000 El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11............ 1,250,000 1,331,250 ------------ 3,520,700 ------------ 100,782,079 ------------ Total Corporate Sector (Cost $100,706,862)................................ 100,866,613 ------------ INTERNATIONAL SECTOR -- 33.6% FOREIGN CERTIFICATES OF DEPOSIT -- 0.8% Bank Dagang Nasional Indonesia, Zero Coupon Negotiable CD, 13.37%, 11/20/97 (3)(13) IDR.................................................... 1,500,000,000 572,491 Citibank Malaysia Banker's Acceptance, Zero Coupon Negotiable CD: 7.12%, 5/12/97 (3)(13) MYR.............................................. 2,600,000 1,034,630 7.16%, 7/18/97 (3)(13) MYR.............................................. 736,000 288,967 Deutsche Bank Malaysia, Zero Coupon Negotiable CD, 6.94%, 7/18/97 (3)(13) MYR..................................................................... 1,500,000 589,073 ------------ 2,485,161 ------------ FOREIGN SHORT-TERM NOTES -- 0.2% Bakrie Investindo, Zero Coupon Indonesian Commercial Paper, 16.63%, 7/30/97 (3) IDR......................................................... 1,263,000,000 502,614 ------------ CORPORATE BONDS AND NOTES -- 7.1% BASIC INDUSTRY -- 0.9% Metals/Mining -- 0.2% Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06......................... 500,000 500,000 ------------ Paper -- 0.6% APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05.......... 750,000 787,500 Indah Kiat International Finance Co. BV, 11.375% Gtd. Sec. Nts., 6/15/99................................................................. 487,000 514,394 QUNO Corp., 9.125% Sr. Nts., 5/15/05...................................... 500,000 526,250 ------------ 1,828,144 ------------ Steel -- 0.1% Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05...................... 400,000 444,000 ------------ CONSUMER RELATED -- 0.3% Consumer Products -- 0.0% International Semi-Tech Microelectronics, Inc., 0%/11.50% Sr. Sec. Disc. Nts., 8/15/03 (10)...................................................... 250,000 139,375 ------------
11 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Hotel/Gaming -- 0.2% Grupo Posadas SA de CV, 10.375% Bonds, 2/13/02 (5)........................ $ 475,000 $ 478,414 ------------ Textile/Apparel -- 0.1% Polysindo International Finance Co. BV, 11.375% Gtd. Sec. Nts., 6/15/06... 250,000 265,312 ------------ FINANCIAL SERVICES -- 1.9% Banks & Thrifts -- 0.4% Banco de Colombia, 5.20% Cv. Jr. Unsec. Sub. Nts., 2/1/99 (9)............. 850,000 786,250 Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04 (5)......... 400,000 405,125 ------------ 1,191,375 ------------ Diversified Financial -- 1.2% Bakrie Investindo, Zero Coupon Promissory Nts., 17.25%, 3/16/98 (3) IDR... 3,160,000,000 1,127,898 PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts., 16.37%, 3/16/98 (3) IDR..................................................................... 3,200,000,000 1,144,500 Snap Ltd., 11.50% Sec. Bonds, 1/29/09 DEM................................. 2,200,000 1,338,740 ------------ 3,611,138 ------------ Insurance -- 0.3% Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 (5)..................... 1,000,000 1,013,750 ------------ MANUFACTURING -- 0.3% Capital Goods -- 0.3% Consorcio Ecuatoriano Nts., 14%, 5/1/02 (9)(14)........................... 855,000 855,000 ------------ MEDIA -- 0.5% Entertainment/Film -- 0.3% Imax Corp., 10% Sr. Nts., 3/1/01.......................................... 1,000,000 1,015,000 ------------ Publishing/Printing -- 0.2% Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07 (5)......................... 645,000 632,100 ------------ OTHER -- 0.4% Conglomerates -- 0.4% Empresas ICA Sociedad Controladora SA de CV, 5% Cv. Sub. Debs., 3/15/04... 400,000 297,000 Mechala Group Jamaica Ltd.: 12% Bonds, 2/15/02 (5).................................................. 200,000 205,875 12.75% Bonds, 12/30/99 (5).............................................. 600,000 627,000 ------------ 1,129,875 ------------
12 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ RETAIL -- 0.2% Specialty Retailing -- 0.2% Central Termica Guemes, 12% Bonds, 11/26/01 (9)........................... $ 598,000 $ 624,910 ------------ TECHNOLOGY -- 2.0% Information Technology -- 0.4% Comunicacion Celular SA, 0%/13.125% Sr. Deferred Coupon Bonds, 11/15/03 (10).................................................................... 1,250,000 875,000 Rogers Cantel, Inc., 9.375% Sr. Sec. Debs., 6/1/08........................ 500,000 518,750 ------------ 1,393,750 ------------ Telecommunications/Technology -- 1.6% Bell Cablemedia plc, 0%/11.95% Sr. Disc. Nts., 7/15/04 (10)............... 2,000,000 1,775,000 Colt Telecom Group plc, Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase 7.8 ordinary shares) (8)(10)............................................ 800,000 468,000 Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (10)... 735,000 510,825 Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05 (10).................................................................... 1,250,000 868,750 TeleWest plc: 0%/11% Sr. Disc. Debs., 10/1/07 (10).................................... 1,250,000 851,563 9.625% Sr. Debs., 10/1/06............................................... 250,000 247,500 ------------ 4,721,638 ------------ TRANSPORTATION -- 0.4% Shipping -- 0.3% Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04........................... 750,000 821,250 ------------ Trucking -- 0.1% Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11 (5).......... 500,000 417,500 ------------ UTILITIES -- 0.2% Gas Utilities -- 0.2% CE Casecnan Water & Energy, Inc., 11.45% Sr. Nts., Series A, 11/15/05..... 500,000 537,188 ------------ 21,619,719 ------------ FOREIGN GOVERNMENT OBLIGATIONS -- 15.6% Argentina -- 0.4% Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I, 3.308%, 4/1/01 (6)(11) ARP.............................................. 621,897 560,419 Banco Hipotecario Nacional (Argentina) Medium-Term Nts., 10.625%, 8/7/06.................................................................. 700,000 732,812 ------------ 1,293,231 ------------
13 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Australia -- 1.1% South Australia Government Finance Authority Bonds, 10%, 1/15/03 AUD...... 2,280,000 $ 1,976,902 Western Australia Treasury Corp.: Bonds, 9%, Series 99, 4/15/99 AUD....................................... 485,000 396,176 Gtd. Bonds, 12%, 8/1/01 AUD............................................. 1,010,000 925,295 ------------ 3,298,373 ------------ Brazil -- 0.2% Brazil (Federal Republic of) Multi-Year Discount Facility Agreement Trust Certificates, Series REGS, 6.563%, 9/15/07 (5)(11)...................... 611,370 544,120 ------------ Canada -- 1.5% Canada (Government of) Debs., 10.50%, 7/1/00 CAD.......................... 5,530,000 4,522,810 ------------ Costa Rica -- 0.3% Central Bank of Costa Rica Interest Claim Bonds, Series B, 6.312%, 5/21/05 (11).................................................................... 872,492 811,418 ------------ Ecuador -- 0.7% Ecuador (Republic of): Bonds, 10.75%, 4/25/04 (5)(11)(14)...................................... 750,000 760,313 Disc. Bonds, 6.437%, 2/28/25 (11)....................................... 2,000,000 1,340,100 ------------ 2,100,413 ------------ Finland -- 0.8% Finland (Republic of) Treasury Bills, Zero Coupon, 2.89%, 5/15/97 (3) FIM..................................................................... 13,100,000 2,516,596 ------------ Great Britain -- 1.5% United Kingdom Treasury Nts., 12.50%, 11/21/05 GBP........................ 2,200,000 4,502,315 ------------ Hong Kong -- 0.2% Hong Kong & Shanghai Bank Banker's Acceptance, Zero Coupon: 6.92%, 7/25/97 (3) MYR.................................................. 925,000 362,604 7.03%, 7/3/97 (3) MYR................................................... 530,000 208,679 ------------ 571,283 ------------ Italy -- 1.4% Italy (Republic of): Sr. Unsec. Unsub. Global Bonds, 0.633%, 7/26/99 (11) JPY................ 305,000,000 2,416,015 Treasury Bonds, Buoni del Tesoro Poliennali, 10.50%, 11/1/98 ITL........ 2,905,000,000 1,784,024 ------------ 4,200,039 ------------
14 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Jordan -- 0.2% Hashemite (Kingdom of) Jordan Disc. Bonds, 6.50%, 12/23/23 (11)........... $ 750,000 $ 596,250 ------------ Mexico -- 1.6% Bonos de la Tesoreria de la Federacion, Zero Coupon: 24.43%, 12/31/97 (3) MXP................................................ 9,617,060 1,046,412 24.60%, 12/4/97 (3) MXP................................................. 9,915,000 1,095,163 22.90%, 2/4/98 (3) MXP.................................................. 2,887,000 308,030 28.59%, 7/31/97 (3) MXP................................................. 6,200,000 739,903 27.80%, 9/4/97 (3) MXP.................................................. 9,750,000 1,138,730 Petroleos Mexicanos Debs., 14.50%, 3/31/06 GBP............................ 280,000 538,379 ------------ 4,866,617 ------------ New Zealand -- 0.9% New Zealand (Government of): Bonds, 10%, 3/15/02 NZD................................................. 2,080,000 1,563,762 Index Linked Bonds, 4.60%, 2/15/16 NZD.................................. 1,665,000 1,077,092 ------------ 2,640,854 ------------ Norway -- 0.3% Norway (Government of) Bills, 3.50%, 5/20/97 NOK.......................... 7,000,000 983,037 ------------ Panama -- 0.2% Panama (Government of) Past Due Interest Debs., 6.098%, 7/17/16 (11)...... 760,545 645,039 ------------ Peru -- 0.3% Peru (Republic of) Past Due Interest Bonds, 4%, 3/7/17 (11)............... 1,580,000 949,975 ------------ Poland -- 1.3% Poland (Republic of) Bonds: 12%, 6/12/01 PLZ........................................................ 4,800,000 1,223,272 16%, 10/12/98 PLZ....................................................... 3,000,000 885,579 16%, 2/12/99 PLZ........................................................ 3,000,000 885,199 21%, 6/5/97 PLZ......................................................... 3,075,000 971,084 ------------ 3,965,134 ------------ Portugal -- 0.7% Portugal (Republic of) Bonds, Obrigicion do tes Medio Prazo, 11.875%, 2/23/00 PTE............................................................. 309,500,000 2,057,454 ------------ Romania -- 0.6% Romanian Commercial Bank: Bonds, 9.125%, 3/10/00 (9).............................................. 950,000 938,125 SA Bonds, 9.125%, 3/10/00............................................... 800,000 790,000 ------------ 1,728,125 ------------
15 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ South Africa -- 0.5% South Africa (Republic of) Bonds, Series 162, 12.50%, 1/15/02 ZAR......... 6,832,000 $ 1,424,974 Telkom SA Ltd. Bonds, Series TK05, 12%, 3/31/98 ZAR....................... 1,346,000 293,318 ------------ 1,718,292 ------------ Spain -- 0.6% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 ESP............................................................. 225,000,000 1,806,007 ------------ Venezuela -- 0.3% Venezuela Synthetic Sovereign Sec. Bonds, 10.125%, 12/29/03 DEM........... 1,750,000 1,030,800 ------------ 47,348,182 ------------ LOAN PARTICIPATIONS -- 2.6% Algeria (Republic of) Reprofiled Debt Loan Participation, Tranche A, 6.977%, 9/4/06 (11)..................................................... 4,370,000 3,490,538 AO Rostelecom Loan Facility Nts., 9.50%, 2/15/00 (14)..................... 1,000,000 1,000,000 Colombia (Republic of) Concorde Loan Participation, 8.625%, 1/31/98 (9)(11)................................................................. 338,941 333,010 Jamaica (Government of) 1990 Refinancing Agreement Nts.: Tranche A, 6.625%, 10/16/00 (9)(11)..................................... 500,000 482,500 Tranche B, 6.312%, 11/15/04 (9)(11)..................................... 678,957 614,456 Morocco (Kingdom of) Loan Participation Agreement, Tranche B, 6.375%, 1/1/04 (11)............................................................. 823,529 811,177 Trinidad & Tobago Loan Participation Agreement: Tranche A, 1.625%, 9/30/00 (9)(11) JPY.................................. 84,000,000 608,935 Tranche B, 1.625%, 9/30/00 (9)(11) JPY.................................. 84,000,000 608,935 United Mexican States, Combined Facility 3, Loan Participation Agreement, Tranche A, 6.463%, 9/20/97 (9)(11)...................................... 82,929 77,125 ------------ 8,026,676 ------------ Units -------------- RIGHTS, WARRANTS AND CERTIFICATES -- 0.0% Australis Media Ltd. Wts., Exp. 5/00 (9).................................. 80 -- Comunicacion Celular SA Wts., Exp. 11/03 (9).............................. 1,250 93,750 ------------ 93,750 ------------ Face Amount(1) -------------- STRUCTURED INSTRUMENTS -- 7.3% Bayerische Landesbank (New York Branch) CD, 13.75%, 8/18/97 (indexed to the cross currency rates of Greek Drachma & Chilean Peso)............... $ 1,000,000 971,700
16 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ STRUCTURED INSTRUMENTS (CONTINUED) Bayerische Landesbank Girozentrale (New York Branch): Deutsche Mark Currency Protected Yield Curve CD, 6.28%, 7/25/97......... $ 1,000,000 $ 1,023,350 Lehman Brothers High Yield Bond Index Nts., 12.50%, 7/8/97.............. 2,000,000 1,938,000 Nikkei 225 Equity-Linked Nts., 6.03%, 4/23/98........................... 1,500,000 1,569,450 Business Development Bank of Canada, Goldman Sachs Commodity Index Non Energy Excess Return Index Linked Commercial Paper, 5.556%, 8/22/97..... 1,000,000 1,056,030 Canadian Imperial Bank of Commerce (New York Branch): Canadian Dollar Three Month Banker's Acceptance Linked Maximum Rate Nts., 8.66%, 4/13/98................................................. 1,000,000 996,900 CD, 11.25%, 9/4/97 (indexed to the Russian Federation GKO, Zero Coupon, 8/27/97) (9)......................................................... 600,000 595,854 U.S. Dollar CD Linked to South African Rand, 17%, 1/21/98............... 350,000 367,220 First of Boston Corp. (The), Russian GKO Linked Nts., Zero Coupon, 10.79%, 6/30/97 (3)............................................................. 2,300,000 2,251,093 German Bank (New York Branch) 2x High Yield Index Nts., 11.95%, 8/5/97 (9)..................................................................... 1,500,000 1,447,500 ING (U.S.) Financial Holdings Corp.: Korean Won/U.S. Dollar Linked Nts., Zero Coupon, 10.88%, 6/9/97 (3)..... 400,000 365,068 South African Rand/U.S. Dollar Linked Nts., Zero Coupon, 16.10%, 2/25/98 (3).................................................................. 600,000 535,860 Lehman Brothers Holdings plc, U.S. Dollar Nts. Linked to South African Rand, 16%, 7/23/97...................................................... 2,000,000 1,997,600 Lehman Brothers Holdings, Inc., U.S. Dollar Nts. Linked to Greek Drachma/Swiss Franc, Zero Coupon: 15.64%, 12/23/97 (3).................................................... 1,000,000 1,049,500 15.06%, 12/26/97 (3).................................................... 1,000,000 1,048,500 15.24%, 12/30/97 (3).................................................... 1,000,000 1,042,500 Morgan Guaranty Trust of New York, Japanese Government Bond 193 Currency Protected Bank Nts., 8.14%, 4/29/98..................................... 330,000 360,525 Salomon, Inc., Russian S-Account Credit Linked Nts., Zero Coupon: 11.40%, 7/17/97 (3)..................................................... 1,000,000 974,400 11.51%, 8/7/97 (3)...................................................... 420,000 406,140 11.40%, 8/8/97 (3)...................................................... 1,000,000 966,500 Swiss Bank Corp. (New York Branch) CD, 6.05%, 6/20/97 (indexed to the closing Nikkei 225 Index on 1/23/97, 5 yr. & 3 mos. Japanese Yen Swap rate & New Zealand Dollar).............................................. 1,000,000 1,053,650 ------------ 22,017,340 ------------
17 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Date Strike Contracts See Note 1 ---- ---------- -------------- ------------ PUT OPTIONS PURCHASED -- 0.0% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali, 9.50%, 2/1/06 Put Opt........................................ 7/97 99.96% ITL 2,548 $ 255 New Zealand Dollar Put Opt................... 6/97 1.432 NZD 574,000 5,987 New Zealand Dollar Put Opt................... 6/97 1.44 NZD 314,500 2,572 New Zealand Dollar Put Opt................... 6/97 1.447 NZD 1,910,000 12,052 New Zealand Dollar Put Opt................... 6/97 1.463 NZD 1,155,000 3,962 ------------ 24,828 ------------ Total International Sector (Cost $102,885,582).............................. 102,118,270 ------------
Face Amount(1) -------------- MORTGAGE-BACKED SECTOR -- 21.6% GOVERNMENT AGENCY -- 18.8% FHLMC/FNMA/Sponsored -- 14.3% Federal Home Loan Mortgage Corp., Certificates of Participation: 12%, 10/1/11............................................................ $ 353,198 399,962 12%, 10/1/14............................................................ 189,361 211,515 12%, 5/1/10............................................................. 593,490 669,427 12%, 6/1/15............................................................. 247,424 281,984 12%, 8/1/13............................................................. 44,483 50,697 12%, 8/1/14............................................................. 556,449 634,174 Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 1343, Cl. LA, 8%, 8/15/22....................... 1,000,000 1,025,700 Interest-Only Stripped Mtg.-Backed Security, Series 177, Cl. B, 13.428%-13.793%, 7/1/26 (15)......................................... 24,632,510 8,983,168 Federal National Mortgage Assn.: 11%, 7/1/16............................................................. 902,130 1,025,046 7%, 11/1/25............................................................. 4,031,989 3,916,312 7.50%, 5/25/07 (14)..................................................... 17,100,000 16,971,750 7.50%, 5/25/12 (14)..................................................... 3,900,000 3,929,250 7.50%, 6/1/10........................................................... 1,772,290 1,790,014 Gtd. Mtg. Pass-Through Certificates, 13%, 6/1/15........................ 1,154,835 1,352,093 Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1995-4, Cl. PC, 8%, 5/25/25................................... 664,690 683,175 Principal-Only Stripped Mtg.-Backed Security, Series 267, Cl. 1, 7.757%, 10/1/24 (16)......................................................... 1,975,538 1,406,336 ------------ 43,330,603 ------------
18 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ GNMA/Guaranteed -- 4.5% Government National Mortgage Assn.: 11%, 10/20/19........................................................... $ 711,326 $ 800,903 12%, 11/20/13-9/20/15................................................... 750,253 863,684 6%, 5/20/27 (14)........................................................ 7,550,000 7,535,844 7.50%, 6/1/27 (14)...................................................... 3,642,028 3,603,350 Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 1994-5, Cl. PQ, 7.493%, 7/16/24.............................................................. 750,000 742,350 ------------ 13,546,131 ------------ PRIVATE -- 2.8% Commercial -- 2.2% Asset Securitization Corp., Commercial Mtg. Pass Through Certificates: Series 1996-D3, Cl. A5, 8.351%, 10/13/26 (9)(11)........................ 500,000 507,031 Series 1996-MD6, Cl. A-5, 7.225%, 11/13/26 (11)......................... 800,000 785,250 Series 1997-MD7, Cl. A-6, 7.976%, 1/13/30 (11).......................... 150,000 148,922 BKB Commercial Mortgage Trust, Commercial Mtg. Obligations, Series 1997-C1, Cl. C, 7.45%, 10/25/00......................................... 250,000 250,625 Capital Lease Funding Securitization LP, Interest-Only Stripped Mtg.-Backed Security, Series 1997-CT1, 5.49%, 6/22/24 (9)(15)........... 11,575,522 522,056 Commercial Mortgage Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 9.81%, 12/25/20 (9)(15).............. 12,416,600 434,581 Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates, Series 1996-C1, 7.42%, 4/25/28.......................................... 800,000 788,250 Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-C1, Cl. D-1, 7.51%, 2/15/28 (9)(11)......................... 1,000,000 986,875 NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates, Series-DMC: Cl. B, 8.562%, 8/12/11 (9).............................................. 400,000 401,219 Cl. C, 8.921%, 8/12/11 (9).............................................. 400,000 406,625 Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1994-MD1, Cl. B2, 8.418%, 3/15/18 (5)(11)........................ 500,000 449,648 Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates, Cl. D, 7.68%, 12/21/26 (9).............................................. 500,000 495,938 Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1996-C3, Cl. D, 8%, 6/1/30 (9)................................... 650,000 643,094 ------------ 6,820,114 ------------
19 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 -------------- ------------ Other -- 0.1% Mortgage Securities Corp. I, Collateralized Mtg. Obligations, Interest-Only Stripped Mtg.-Backed Security, Cl. 1, 7.42%, 2/15/17 (15).................................................................... $ 4,000,000 $ 318,400 ------------ Residential -- 0.5% First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, 8.11%, 4/30/39........................................ 800,000 806,000 Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.136%, 4/25/26................................................................. 1,337,079 883,726 ------------ 1,689,726 ------------ Total Mortgage-Backed Sector (Cost $65,196,767)........................... 65,704,974 ------------ MONEY MARKET SECTOR -- 2.8% Repurchase agreement with PaineWebber, Inc., 5.43%, dated 4/30/97, to be repurchased at $8,601,297 on 5/1/97, collateralized by U.S. Treasury Nts., 5.875%-8.25%, 7/15/98-11/15/05, with a value of $7,450,031 and U.S. Treasury Bonds, 7.625%, 2/15/25, with a value of $1,349,144 (Cost $8,600,000)............................................................. 8,600,000 8,600,000 ------------ Total Investments, at Value (Cost $324,913,029)........................... 106.9% 324,768,112 Liabilities in Excess of Other Assets..................................... (6.9) (20,864,769) -------------- ------------ Net Assets................................................................ 100.0% $303,903,343 -------------- ------------ -------------- ------------
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP -- Argentine Peso JPY -- Japanese Yen AUD -- Australian Dollar MXP -- Mexican Peso CAD -- Canadian Dollar MYR -- Malaysian Ringgit DEM -- German Deutsche Mark NOK -- Norwegian Krone ESP -- Spanish Peseta NZD -- New Zealand Dollar FIM -- Finnish Markka PLZ -- Polish Zloty GBP -- British Pound Sterling PTE -- Portuguese Escudo IDR -- Indonesian Rupiah ZAR -- South African Rand ITL -- Italian Lira
2. Securities with an aggregate market value of $1,107,563 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 3. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 20 STATEMENT OF INVESTMENTS April 30, 1997 (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust 4. A sufficient amount of securities has been designated to cover outstanding written call and put options, as follows:
Face/Contracts Expiration Exercise Premium Market Value Subject to Call Date Price Received See Note 1 --------------- ---------- -------- -------- ------------ Australia (Commonwealth of) Bonds, 10%, 10/15/07 Call Opt. 450 7/15/97 114.159% AUD $ 6,014 $ 5,183 Australia (Commonwealth of) Bonds, 10%, 10/15/07 Put Opt. 270 6/23/97 111.966% AUD 3,393 1,305 Banco Hipotecario Nacional (Argentina) Medium-Term Nts., 10.625%, 8/7/06 Call Opt. $ 700 8/7/00 100.00% 6,440 38,500 British Pound Sterling Call Opt. 1,470,000 5/15/97 0.611 GBP 13,377 8,232 Canadian Dollar Put Opt. 550,000 5/27/97 1.375 CAD 1,600 5,516 Mexican Peso Call Opt. 3,500,000 5/8/97 8.017 MXP 24,850 24,605 Mexican Peso Call Opt. 300,000 5/12/97 8.043 MXP 2,325 2,970 New Zealand Dollar Call Opt. 574,000 6/17/97 1.416 NZD 4,161 1,096 New Zealand Dollar Call Opt. 314,500 6/17/97 1.421 NZD 2,217 796 New Zealand Dollar Call Opt. 1,910,000 6/17/97 1.432 NZD 14,325 7,602 New Zealand Dollar Call Opt. 1,155,000 6/17/97 1.449 NZD 8,201 8,928 New Zealand (Government of) Bonds, 10%, 3/15/02 Put Opt. 540 7/15/97 106.639% NZD 4,125 1,080 South African Rand Call Opt. 1,702,780 5/8/97 4.479 ZAR 12,005 13,452 South African Rand Call Opt. 1,000,000 5/22/97 4.65 ZAR 35,000 40,000 -------- ---------- $138,033 $159,265 -------- ---------- -------- ----------
5. 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 $20,788,170 or 6.84% of the Trust's net assets, at April 30, 1997. 6. Interest or dividend is paid in kind. 7. Non-income producing security. 8. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units which represent debt securities, face amount disclosed represents total underlying principal. 9. Identifies issues considered to be illiquid or restricted -- See Note 8 of Notes to Financial Statements. 10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 11. Represents the current interest rate for a variable rate security. 12. Non-income producing -- issuer is in default of interest payment. 13. Indexed instrument for which the prinicipal amount and/or interest due at maturity is affected by the relative value of a foreign index. 14. When-issued security to be delivered and settled after April 30, 1997. 15. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage- backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. 16. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. See accompanying Notes to Financial Statements. 21 STATEMENT OF ASSETS AND LIABILITIES April 30, 1997 (Unaudited) Oppenheimer Multi-Sector Income Trust ASSETS: Investments, at value (cost $324,913,029) -- see accompanying statement................. $324,768,112 Cash...................................................................................... 3,336,991 Unrealized appreciation on forward foreign currency exchange contracts -- Note 5........ 44,915 Receivables: Investments sold and options written.................................................... 19,116,293 Interest, dividends and principal paydowns.............................................. 4,862,960 Closed forward foreign currency exchange contracts...................................... 268,598 Daily variation on futures contracts -- Note 6........................................ 59,877 Other..................................................................................... 14,308 ------------ Total assets......................................................................... 352,472,054 ------------ LIABILITIES: Unrealized depreciation on forward foreign currency exchange contracts -- Note 5........ 1,457 Options written, at value (premiums received $138,033) -- see accompanying statement -- Note 7................................................................... 159,265 Payables and other liabilities: Investments purchased (including $42,041,615 purchased on a when-issued basis) -- Note 1.................................................................................... 47,417,474 Closed forward foreign currency exchange contracts...................................... 325,151 Trustees' fees -- Note 1.............................................................. 142,606 Management and administrative fees...................................................... 102,913 Daily variation on futures contracts -- Note 6........................................ 3,438 Other................................................................................... 416,407 ------------ Total liabilities.................................................................... 48,568,711 ------------ NET ASSETS................................................................................ $303,903,343 ------------ ------------ COMPOSITION OF NET ASSETS: Par value of shares of beneficial interest................................................ $ 291,161 Additional paid-in capital................................................................ 315,440,767 Undistributed net investment income....................................................... 786,828 Accumulated net realized loss on investments, options written and foreign currency transactions............................................................................ (12,546,264) Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies....................................................... (69,149) ------------ NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding........ $303,903,343 ------------ ------------ NET ASSET VALUE PER SHARE................................................................. $10.44 ------ ------
See accompanying Notes to Financial Statements. 22 STATEMENT OF OPERATIONS For the Six Months Ended April 30, 1997 (Unaudited) Oppenheimer Multi-Sector Income Trust INVESTMENT INCOME: Interest (net of foreign withholding taxes of $710)......................................... $14,686,740 Dividends................................................................................... 11,843 ----------- Total income...................................................................... 14,698,583 ----------- EXPENSES: Management fees -- Note 4................................................................. 990,100 Administrative fees -- Note 4............................................................. 304,614 Shareholder reports......................................................................... 104,911 Transfer agent and accounting service fees -- Note 4...................................... 40,540 Trustees' fees and expenses -- Note 1..................................................... 34,145 Legal and auditing fees..................................................................... 33,010 Registration and filing fees................................................................ 10,339 Custodian fees and expenses................................................................. 6,414 Other....................................................................................... 17,114 ----------- Total expenses.................................................................... 1,541,187 ----------- NET INVESTMENT INCOME....................................................................... 13,157,396 ----------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments (including premiums on options exercised)..................................... 6,988,044 Closing of futures contracts -- Note 6.................................................. (236,381) Closing and expiration of options written -- Note 7..................................... (174,237) Foreign currency transactions............................................................. (1,615,171) ----------- Net realized gain................................................................. 4,962,255 ----------- Net change in unrealized appreciation or depreciation on: Investments............................................................................... (5,685,150) Translation of assets and liabilities denominated in foreign currencies................... (1,784,949) ----------- Net change........................................................................ (7,470,099) ----------- NET REALIZED AND UNREALIZED LOSS............................................................ (2,507,844) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................ $10,649,552 ----------- -----------
See accompanying Notes to Financial Statements. 23 STATEMENTS OF CHANGES IN NET ASSETS Oppenheimer Multi-Sector Income Trust
Six Months Ended Year Ended April 30, 1997 October 31, (Unaudited) 1996 ---------------- ---------------- OPERATIONS: Net investment income....................................................... $ 13,157,396 $ 26,471,497 Net realized gain........................................................... 4,962,255 7,876,133 Net change in unrealized appreciation or depreciation....................... (7,470,099) 3,026,272 ---------------- ---------------- Net increase in net assets resulting from operations........................ 10,649,552 37,373,902 ---------------- ---------------- DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income........................................ (12,927,529) (26,320,905) Total increase (decrease)................................................... (2,277,977) 11,052,997 ---------------- ---------------- NET ASSETS: Beginning of period......................................................... 306,181,320 295,128,323 ---------------- ---------------- End of period (including undistributed net investment income of $786,828 and $556,961, respectively)................................................... $303,903,343 $306,181,320 ---------------- ---------------- ---------------- ----------------
See accompanying Notes to Financial Statements. 24 FINANCIAL HIGHLIGHTS Oppenheimer Multi-Sector Income Trust
Six Months Ended April 30, Year Ended October 31, 1997 ------------------------------------------------------------ (Unaudited) 1996 1995 1994 1993 1992 ----------- -------- -------- -------- -------- -------- PER SHARE OPERATING DATA: Net asset value, beginning of period... $ 10.52 $ 10.14 $ 10.17 $ 10.96 $ 10.46 $ 10.64 ----------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................ .45 .91 .94 1.00 1.08 1.06 Net realized and unrealized gain (loss)............................. (.09) .37 (.04) (.82) .43 (.08) ----------- -------- -------- -------- -------- -------- Total income from investment operations....................... .36 1.28 .90 .18 1.51 .98 ----------- -------- -------- -------- -------- -------- Dividends and distributions to shareholders: Dividends from net investment income............................. (.44) (.90) (.91) (.84) (1.01) (1.16) Tax return of capital distribution... -- -- (.02) (.13) -- -- ----------- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders.................. (.44) (.90) (.93) (.97) (1.01) (1.16) ----------- -------- -------- -------- -------- -------- Net asset value, end of period......... $ 10.44 $ 10.52 $ 10.14 $ 10.17 $ 10.96 $ 10.46 ----------- -------- -------- -------- -------- -------- ----------- -------- -------- -------- -------- -------- Market value, end of period............ $ 10.13 $ 9.88 $ 10.00 $ 9.50 $ 11.25 $ 11.13 TOTAL RETURN, AT MARKET VALUE(1)....... 6.91% 7.85% 15.62% (7.46)% 11.10% 11.48% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands)........................... $ 303,903 $306,181 $295,128 $295,658 $316,647 $299,368 Average net assets (in thousands)...... $ 307,512 $298,496 $288,884 $306,686 $307,244 $303,773 Ratios to average net assets: Net investment income................ 8.63%(2) 8.87% 9.51% 9.17% 10.13% 9.95% Expenses............................. 1.01%(2) 1.04% 1.05% 1.02% 1.00% 1.11% Portfolio turnover rate(3)............. 126.5% 225.4% 240.1% 187.6% 131.3% 95.9%
(1) Assumes a hypothetical purchase at the current market price on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and a sale at the current market price on the last business day of the period. Total return does not reflect sales charges or brokerage commissions. Total returns are not annualized for periods of less than one full year. (2) Annualized. (3) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended April 30, 1997 were $388,698,434 and $359,491,149, respectively. For the years ended October 31, 1995 and 1994, purchases and sales of investment securities included mortgage 'dollar-rolls.' See accompanying Notes to Financial Statements. 25 NOTES TO FINANCIAL STATEMENTS (Unaudited) Oppenheimer Multi-Sector Income Trust 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Trust's investment objective is to seek high current income consistent with preservation of capital by investments among seven sectors of the fixed income securities market. The Trust's investment adviser is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Trust. Investment Valuation -- Portfolio securities are valued at the close of the New York Stock Exchange on the last day of each week on which day the New York Stock Exchange is open. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term 'non-money market' debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term 'money market type' debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale price on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid is used. Securities Purchased on a When-Issued Basis -- Delivery and payment for securities that have been purchased by the Trust on a forward commitment or when-issued basis can take place a month or more after the transaction date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Trust maintains, in a segregated account with its custodian, assets with a market value equal to the amount of its purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Trust's net asset value to the extent the Trust makes such purchases while remaining substantially fully invested. As of April 30, 1997, the Trust had entered into outstanding when-issued or forward commitments of $42,041,615. In connection with its ability to purchase securities on a when-issued or forward commitment basis, the Trust may enter into mortgage 'dollar-rolls' in which the Trust sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Trust records each dollar-roll as a sale and a new purchase transaction. 26 NOTES TO FINANCIAL STATEMENTS (Unaudited) (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. At April 30, 1997, securities with an aggregate market value of $34,000, representing 0.01% 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 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. Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement plan for the Trust's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended April 30, 1997, a reduction of $2,505 was made for the Trust's projected benefit obligations and payments of $5,021 were made to retired trustees, resulting in an accumulated liability of $142,606 at April 30, 1997. Distributions to Shareholders -- The Trust intends to declare and pay dividends from net investment income monthly. Distributions from net realized gains on investments, if any, will be made at least once each year. Classification of Distributions to Shareholders -- Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that 27 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust the income or realized gain was recorded by the Trust. Other -- Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends in kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 2. SHARES OF BENEFICIAL INTEREST The Trust has authorized an unlimited number of $.01 par value shares of beneficial interest. There were no transactions in shares of beneficial interest for the six months ended April 30, 1997 and the year ended October 31, 1996. 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At April 30, 1997 net unrealized depreciation on investments and options written of $166,149 was composed of gross appreciation of $5,469,502, and gross depreciation of $5,635,651. 4. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for an annual fee of 0.65% on the Trust's average annual net assets. Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The Trust pays the Administrator an annual fee of 0.20% of the Trust's average annual net assets. The Manager acts as the accounting agent for the Trust at an annual fee of $24,000, plus out-of-pocket costs and expenses reasonably incurred. Shareholder Financial Services, Inc. (SFSI), a wholly owned subsidiary of the Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI are based on the number of accounts and the number of shareholder transactions, plus out-of-pocket costs and expenses. 5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Trust uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Trust 28 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Trust may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Trust will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statement of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statement of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Trust's Statement of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At April 30, 1997, the Trust had outstanding forward contracts to purchase and sell currencies as follows:
Valuation Contract as of Expiration Amount April 30, Unrealized Unrealized Contracts to Purchase Dates (000s) 1997 Appreciation Depreciation - ----------------------------------------- ----------- ------------- --------------- ------------ ------------ Japanese Yen (JPY)....................... 5/6/97 127,716 JPY $ 1,006,926 $ 96 $ -- Spanish Peseta (ESP)..................... 5/7/97 266,924 ESP 1,827,312 -- -- --------------- ------------ ------ $ 2,834,238 96 -- --------------- ------------ ------ --------------- Contracts to Sell - ----------------------------------------- Indonesian Rupiah (IDR).................. 5/15/97 1,263,000 IDR $ 519,347 $ -- $1,087 Italian Lira (ITL)....................... 5/7/97 3,105,499 ITL 1,813 -- 112 Malaysian Ringgit (MYR).................. 5/13/97 2,600 MYR 1,035,414 -- 258 Swiss Franc (CHF)........................ 7/24/97 8,150 CHF 5,584,178 44,819 -- --------------- ------------ ------ $ 7,140,752 44,819 1,457 --------------- ------------ ------ --------------- Total Unrealized Appreciation and Depreciation......................................... $ 44,915 $1,457 ------------ ------ ------------ ------
6. FUTURES CONTRACTS The Trust may buy and sell interest rate futures contracts in order to gain exposure to or protect against changes in interest rates. The Trust may also buy or write put or call options on these futures contracts. The Trust generally sells futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Trust may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Trust is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are 29 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust 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. At April 30, 1997, the Trust had outstanding futures contracts to purchase and sell debt securities as follows:
Valuation Number of as of Unrealized Expiration Futures April 30, Appreciation Contract to Purchase Dates Contracts 1997 (Depreciation) - --------------------------------------------------------- ---------- --------- ----------- -------------- U.S. Treasury Bonds...................................... 6/97 180 $19,254,375 $102,188 Contract to Sell - --------------------------------------------------------- U.S. Treasury Bonds...................................... 6/97 10 1,092,813 (12,170) -------------- $ 90,018 -------------- --------------
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 footnote to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Trust gives up the opportunity for profit if the market price of the security increases and the option 30 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust is exercised. The risk in writing a put option is that the Trust may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Trust pays a premium whether or not the option is exercised. The Trust also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the six months ended April 30, 1997 was as follows:
Call Options Put Options --------------------------- -------------------------- Number Amount Number Amount of of of of Options Premiums Options Premiums ------------ ----------- ----------- ----------- Options outstanding at October 31, 1996............ 9,277,500 $ 107,323 -- $ -- Options written.................................... 137,092,335 373,955 12,845,500 96,569 Options closed or expired.......................... (128,288,405) (302,955) (594,250) (21,917) Options exercised.................................. (6,154,000) (49,408) (11,700,440) (65,534) ------------ ----------- ----------- ----------- Options outstanding at April 30, 1997.............. 11,927,430 $ 128,915 550,810 $ 9,118 ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
8. ILLIQUID AND RESTRICTED SECURITIES At April 30, 1997, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Trust intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed from time to time) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limit. The aggregate value of illiquid or restricted securities subject to this limitation at April 30, 1997 was $18,018,798, which represents 5.93% of the Trust's net assets. Information concerning restricted securities is as follows:
Valuation Per Acquisition Cost Unit as of Security Dates Per Unit April 30, 1997 - ------------------------------------------------------------------- ------------ --------- -------------- Bonds: Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00..................................................... 11/18/93 100.00% 52.00% Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00..................................................... 11/18/93 87.50 17.00 Stocks and Warrants: Becker Gaming, Inc. Wts., Exp. 11/00........................... 11/18/93 $2.00 $ .25 Triangle Wire & Cable, Inc..................................... 5/2/94 9.50 1.00
31 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. 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 will be considerations in the allocation of assets among such sectors. The Trust may invest in a number of different kinds of 'derivative investments' and may also engage in certain special investment techniques, including repurchase transactions, when-issued and delayed delivery transactions and hedging. The investment adviser to the Trust is OppenheimerFunds, Inc. (the Manager). The Portfolio Managers of the Trust are Robert E. Patterson, Thomas P. Reedy, David A. Rosenberg, Ashwin K. Vasan, Carol E. Wolf and Arthur J. Zimmer and who also serve as Vice Presidents of the Trust and of the Manager, and are officers of certain mutual funds managed by the Manager (Oppenheimer funds). Messrs. Reedy, Rosenberg and Vasan have been the persons principally responsible for the day-to-day management of the Trust's portfolio since August 1993, June 1994 and August 1993, respectively. During the past five years, Mr. Reedy served as a securities analyst for the Manager, and, prior to joining the Manager, Mr. Rosenberg served as an officer and portfolio manager for Delaware Investment Advisers and one of its mutual funds, Mr. Vasan served as a securities analyst for Citibank, N.A. and Mr. Zimmer served as a Vice President of Hanifen Imhoff Management Company. Dividend Reinvestment and Cash Purchase Plan -- Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust (Shares) not registered in nominee name, all dividends and capital gains distributions (Distributions) declared by the Trust will be automatically reinvested in additional full and fractional Shares unless a shareholder elects to receive cash. If Shares are registered in nominee name, the shareholder should consult the nominee if the shareholder desires to participate in the Plan. Shareholders that participate in the Plan (Participants) may, at their option, make additional cash investments in Shares, semiannually in amounts of at least $100, through payment to Shareholder Financial Services, Inc., the agent for the Plan (the Agent), accompanied by a service fee of $0.75. Depending upon the circumstances hereinafter described, Plan Shares will be acquired by the Agent for the Participant's account through receipt of newly issued Shares or the purchase of outstanding Shares on the open market. If the market price of Shares on the relevant date (normally the payment date) equals or exceeds their net asset value, the Agent will ask the Trust for payment of the Distribution in additional Shares at the greater of the Trust's net asset value determined as of the date of purchase or 95% of the then-current market price. If the market price is lower than net asset value, the Distribution will be paid in cash, which the Agent will use to buy Shares on The New York Stock Exchange (the NYSE), or otherwise on the open market to the extent available. If the market price exceeds the net asset value before the Agent has completed its purchases, the average purchase price per Share paid by the Agent may exceed the net asset value, resulting in fewer Shares being 32 acquired than if the Distribution had been paid in Shares issued by the Trust. Participants may elect to withdraw from the Plan at any time and thereby receive cash in lieu of Shares by sending appropriate written instructions to the Agent. Elections received by the Agent will be effective only if received more than ten days prior to the record date for any Distribution; otherwise, such termination will be effective shortly after the investment of such Distribution with respect to any subsequent Distribution. Upon withdrawal from or termination of the Plan, all Shares acquired under the Plan will remain in the Participant's account unless otherwise requested. For full Shares, the Participant may either: (1) receive without charge a share certificate for such Shares; or (2) request the Agent (after receipt by the Agent of signature guaranteed instructions by all registered owners) to sell the Shares acquired under the Plan and remit the proceeds less any brokerage commissions and a $2.50 service fee. Fractional Shares may either remain in the Participant's account or be reduced to cash by the Agent at the current market price with the proceeds remitted to the Participant. Shareholders who have previously withdrawn from the Plan may rejoin at any time by sending written instructions signed by all registered owners to the Agent. There is no direct charge for participation in the Plan; all fees of the Agent are paid by the Trust. There are no brokerage charges for Shares issued directly by the Trust. However, each Participant will pay a pro rata share of brokerage commissions incurred with respect to open market purchases of Shares to be issued under the Plan. Participants will receive tax information annually for their personal records and to assist in federal income tax return preparation. The automatic reinvestment of Distributions does not relieve Participants of any income tax that may be payable on Distributions. The Plan may be terminated or amended at any time upon 30 days' prior written notice to Participants which, with respect to a Plan termination, must precede the record date of any Distribution by the Trust. Additional information concerning the Plan may be obtained by shareholders holding Shares registered directly in their names by writing the Agent, Shareholder Financial Services, Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374. Shareholders holding Shares in nominee name should contact their brokerage firm or other nominee for more information. 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, each Sunday in The New York Times and each Saturday in Barron's, and other newspapers in a table called 'Closed-End Bond Funds.' 33 (This Page Intentionally Left Blank) (This Page Intentionally Left Blank) OPPENHEIMER MULTI-SECTOR INCOME TRUST Officers and Trustees Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees Bridget A. Macaskill, Trustee and President Robert G. Galli, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Pauline Trigere, Trustee Clayton K. Yeutter, Trustee Robert E. Patterson, Vice President Thomas P. Reedy, Vice President David A. Rosenberg, Vice President Ashwin K. Vasan, Vice President Carol E. Wolf, Vice President Arthur J. Zimmer, Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary Investment Adviser OppenheimerFunds, Inc. Administrator Mitchell Hutchins Asset Management Inc. Transfer Agent and Registrar Shareholder Financial Services, Inc. Custodian of Portfolio Securities The Bank of New York Independent Auditors KPMG Peat Marwick LLP Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein The financial statements included herein have been taken from the records of the Trust without examination by the independent auditors. This is a copy of a report to shareholders of Oppenheimer Multi-Sector Income Trust. It does not offer for sale or solicit orders to buy any securities. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that periodically the Trust may purchase its shares of beneficial interest in the open market at prevailing market prices. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. RS0680.001.0697 [Logo] Printed on recycled paper 1997 SEMIANNUAL REPORT OPPENHEIMER MULTI-SECTOR INCOME TRUST APRIL 30, 1997 [LOGO] -----END PRIVACY-ENHANCED MESSAGE-----