-----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, OguT3AAjkVpDxdVJuDN6R/w0OeHwVt/pFxcIGpdmo9xmWodh5G5iwCDmXJcHAcz7 aNMf/ezfjQLoklQIiW+F1Q== 0000950123-95-003883.txt : 19951229 0000950123-95-003883.hdr.sgml : 19951229 ACCESSION NUMBER: 0000950123-95-003883 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951228 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: 95605339 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 1 DEAR SHAREHOLDER: Bond markets both here in the U.S. and abroad have continued to perform well since our May 1995 letter. Leadership during the first half of the year, however, was clearly held by the U.S.-- where steadily falling interest rates and the expectation for low inflation sparked an outstanding rally. However, more recently, we have seen a shift in leadership away from the domestic markets towards overseas markets. During the past 12 months, the Trust's total return at net asset value was 9.51%, with a dividend yield of 9.48% for the month ended October 31, 1995(1) INVESTMENT BREAKDOWN: OPPENHEIMER MULTI-SECTOR INCOME TRUST AS OF 10/31/95(2) [GRAPH] - - U.S. corporate bonds & notes: 32.2% - - U.S. Government Obligations: Agency: 21.5% - - Foreign government obligations: 18.8% - - U.S. government obligations: Treasury: 11.0% - - Short-term securities: 7.6% - - Foreign corporate bonds & notes: 6.1% - - Equity securities: 1.6% - - Structured notes: 1.2% As we've stated previously, one of the key benefits of the Trust is its ability to allocate assets strategically among U.S. government issues, foreign fixed-income securities, and higher- yielding U.S. corporate bonds and, as such, capitalize on world wide investment opportunities. At the same time, allocating the Trust's assets among three distinct fixed-income sectors can provide the diversification necessary to lower risk. As of the last writing, over 70% of the portfolio was invested in domestic bonds--a strategy that served the Trust well during the spring rally...especially our investment in U.S. corporate bonds.(2) Currently, 65% of the portfolio is invested in U.S. bonds, with 35% in U.S. government bonds and 30% in corporate bonds. Within U.S. government bonds, your managers favor short-term bonds because they typically offer most of the income of longer-term bonds, but with lower price fluctuation during interest rate changes. U.S. corporate bonds offer high income, but have returns that tend to have a low correlation to U.S. government bonds; thus, they provide an important level of diversification to the portfolio. 2 In foreign markets, our focus is on government bonds in both developed and emerging markets. Though European bonds have begun to close the gap with U.S. bonds, they're still at premium yields compared to domestic bonds. And emerging market bonds are benefiting from a stronger dollar and the level of stability it offer dollar-linked markets. Of course, foreign investments are always subject to greater expenses and risks, such as adverse currency fluctuations. But over time the long-term returns may more than compensate for temporary risk, especially when these investments are part of a diversified portfolio. High yields relative to both the U.S. and developed foreign markets, plus renewed price stability, are compelling arguments for emerging market bonds. Some of our largest foreign positions are in the United Kingdom, Mexico and Brazil. Though their economies are different in many ways, their bond markets share the characteristics we're looking for--high income and value. Your managers feel confident that this is an excellent environment for fixed-income investors worldwide. Interest rates and inflation are low globally, which has led to prices that have been predominantly stable and rising. And, despite some mixed signals recently, the American economy appears to be maintaining a steady, sustainable growth rate, while the economies of Europe and Latin America are improving. In 1995, the U.S. was the clear winner. Next year it could be Europe or Asia. Or even Latin America. We're confident that by being able to diversify investments throughout the world, we will be positioned to participate in any environment. Thank you for your confidence in OppenheimerFunds, and we look forward to helping you reach your financial goals in the future. Sincerely, /s/ DONALD W. SPIRO -------------------- Donald W. Spiro President Oppenheimer Multi-Sector Income Trust November 21, 1995 1. Total return is based on the change in net asset value per share from 10/31/94 to 10/31/95, without deducing any brokerage costs. Dividend yield is determined by analyzing the October 1995 dividend of $0.078 and dividing by the closing price on the New York Stock Exchange of $9.875 per share on 10/27/95 (payment date). Past performance does not guarantee future results. 2. Portfolio composition is subject to change. Chart is based on total investments at market value rather than net assets. 3 STATEMENT OF INVESTMENTS October 31, 1995 Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ U.S. GOVERNMENT SECTOR -- 11.2% TREASURY -- 11.2% U.S. Treasury Bonds: 8.125%, 8/15/19 (2).............................................. $ 7,893,000 $ 9,501,199 8.75%, 5/15/20................................................... 4,000,000 5,132,500 8.875%, 8/15/17.................................................. 8,020,000 10,313,213 U.S. Treasury Nts., 8%, 5/15/01.................................... 7,300,000 8,039,125 ------------ Total U.S. Government Sector (Cost $30,938,107).................... 32,986,037 ------------
Units -------------- CONVERTIBLE SECTOR -- 1.1% RIGHTS, WARRANTS AND CERTIFICATES -- 0.3% American Telecasting, Inc. Wts., Exp. 6/99......................... 4,750 15,438 Ames Department Stores, Inc.: Excess Cash Flow Payment Certificates, Series AG-7A.............. 40,300 403 Litigation Trust................................................. 128,889 1,289 Becker Gaming, Inc. Wts., Exp. 11/00 (3)........................... 25,000 25,000 Federated Department Stores, Inc. Wts.: Cl. C, Exp. 12/99................................................ 26,963 182,000 Cl. D, Exp. 12/01................................................ 26,963 185,371 Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99..................... 1,000 10,000 Gaylord Container Corp. Wts., Exp. 7/96............................ 50,625 363,867 OSI Specialties Corp. Wts., 4/99 (4)............................... 500 3,250 Purity Supreme, Inc. Wts., Exp. 8/97 (3)........................... 7,797 156 SD Warren Co. Wts., Exp. 12/06 (4)................................. 20,000 140,000 Terex Corp. Rts., Exp. 7/96 (4).................................... 186 9 ------------ 926,783 ------------
3 4 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Shares See Note 1 -------------- ------------ PREFERRED STOCKS -- 0.8% California Federal Bank, 10.625% Non-Cum., Series B................ 1,995 $ 215,460 First Nationwide Bank, 11.50% Non-Cum. ............................ 10,000 1,135,000 SD Warren Co., 14% Sr. Exchangeable Preferred Stock (4)............ 20,000 650,000 SDW Holdings Corp., Units (each unit consists of ten shares of sr. exchangeable preferred stock and one cl. B warrant to purchase one share of common stock) (4)(5)(6)............................. 1,875 543,750 ------------ 2,544,210 ------------ Total Convertible Sector (Cost $2,732,855)......................... 3,470,993 ------------ CORPORATE SECTOR -- 31.8% COMMON STOCKS -- 0.4% Capital Gaming International, Inc. (6)............................. 7,198 1,539 Gaylord Container Corp. (6)........................................ 20,000 152,500 Grand Union Co. (6)................................................ 40,000 430,000 Hollywood Casino Corp. (6)......................................... 40,000 245,000 Kash 'N Karry Food Stores, Inc. (6)................................ 10,000 220,000 Triangle Wire & Cable, Inc. (3)(6)................................. 84,444 168,888 ------------ 1,217,927 ------------
Face Amount(1) -------------- CORPORATE BONDS AND NOTES -- 31.4% BASIC INDUSTRY -- 3.9% Chemicals -- 0.2% NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03................ $ 500,000 532,500 ------------ Metals/Mining -- 1.3% Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03........ 1,000,000 1,072,850 Kaiser Aluminum & Chemical Corp., 9.875% Sr. Nts., 2/15/02......... 2,000,000 2,055,000 UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05.......... 530,000 597,575 ------------ 3,725,425 ------------
4 5 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Paper -- 2.1% Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01.................. $ 500,000 $ 515,000 Repap Wisconsin, Inc.: 9.25% First Priority Sr. Sec. Nts., 2/1/02....................... 2,250,000 2,182,500 9.875% Second Priority Sr. Nts., 5/1/06.......................... 750,000 727,500 Riverwood International Corp., 11.25% Sr. Sub. Nts., 6/15/02....... 650,000 695,500 SD Warren Co., 12% Sr. Sub. Nts., 12/15/04......................... 1,150,000 1,282,250 Stone Container Corp., 10.75% First Mtg. Nts., 10/1/02............. 750,000 787,500 ------------ 6,190,250 ------------ Steel -- 0.3% WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02............ 1,000,000 962,500 ------------ CONSUMER RELATED -- 8.4% Consumer Products -- 0.9% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., Series B, 10.591%, 5/27/98 (14).................................. 1,250,000 998,438 Revlon Consumer Products Corp., 10.50% Sr. Sub. Nts., Series B, 2/15/03................................................ 500,000 516,875 Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05 (4)................ 500,000 481,875 Selmer Co., Inc., 11% Sr. Sub. Nts., 5/15/05....................... 500,000 492,500 ------------ 2,489,688 ------------ Food/Beverages/Tobacco -- 0.7% Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03............. 1,000,000 1,002,500 Di Giorgio Corp., 12% Sr. Nts., 2/15/03............................ 750,000 579,375 Specialty Foods Corp., 11.125% Sr. Nts., Series A, 10/1/02 (4)..... 500,000 477,500 ------------ 2,059,375 ------------ Healthcare -- 2.0% AmeriSource Corp., 11.25% Sr. Debs., 7/15/05 (7)................... 250,000 271,250 Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04............... 1,000,000 1,087,500 Quorum Health Group, Inc., 11.875% Sr. Sub. Nts., 12/15/02......... 1,500,000 1,650,000 Tenet Healthcare Corp., 10.125% Sr. Sub. Nts., 3/1/05.............. 1,500,000 1,623,750 Total Renal Care, Inc., Units (each unit consists of $1,000 principal amount of 0%/12% sr. sub. disc. nts., 8/15/04 and nine shares of non-voting Cl. B common stock) (5)(8).................. 1,150,000 1,155,750 ------------ 5,788,250 ------------
5 6 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Hotel/Gaming -- 3.5% Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 (3).............................................................. $ 550,000 $ 434,500 Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04......................... 500,000 542,500 Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts., 10.901%, 6/15/98 (14)..................................................... 500,000 388,125 Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg. Nts., 3/15/04.......................................................... 500,000 495,625 Boyd Gaming Corp., 10.75% Sr. Sub. Nts., 9/1/03.................... 750,000 793,125 Capital Gaming International, Inc. Promissory Nts. (6)............. 5,500 -- Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00 (3)(6).................................................. 200,000 178,000 Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02... 1,250,000 1,262,500 HMH Properties, Inc., 9.50% Sr. Sec. Nts., 5/15/05 (4)............. 1,000,000 1,007,500 Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., 11/15/02 (4).............................................................. 500,000 526,250 Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 (4)....... 1,500,000 1,470,000 Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03................ 1,700,000 1,644,750 Trump Plaza Funding, Inc., 10.875% Gtd. Mtg. Nts., 6/15/01......... 850,000 799,000 Trump Taj Mahal Funding, Inc., 11.35% Debs., Series A, 11/15/99.... 1,000,000 859,685 ------------ 10,401,560 ------------ Restaurants -- 0.5% Carrols Corp., 11.50% Sr. Nts., 8/15/03............................ 500,000 500,000 Flagstar Corp., 10.75% Sr. Nts., 9/15/01........................... 500,000 466,250 Foodmaker, Inc., 9.25% Sr. Nts., 3/1/99............................ 500,000 463,750 ------------ 1,430,000 ------------ Textile/Apparel -- 0.8% Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03... 1,000,000 945,000 WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05........... 1,500,000 1,507,500 ------------ 2,452,500 ------------ ENERGY -- 2.5% Chesapeake Energy Corp., 10.50% Sr. Nts., 6/1/02................... 500,000 507,500 Crown Central Petroleum Corp., 10.875% Sr. Nts., 2/1/05............ 500,000 523,750 Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01....... 1,000,000 1,052,500 Giant Industries, Inc., 9.75% Sr. Sub. Nts., 11/15/03.............. 250,000 255,000 Kelley Oil & Gas Corp., 13.50% Sr. Nts., 6/15/99................... 850,000 726,750 OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02............ 1,000,000 1,137,500
6 7 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ ENERGY (CONTINUED) Petroleum Heat & Power Co., Inc.: 12.25% Sub. Debs., 2/1/05........................................ $ 750,000 $ 828,750 9.375% Sub. Debs., 2/1/06........................................ 400,000 380,000 Santa Fe Energy Resources, Inc., 11% Sr. Sub. Debs., 5/15/04....... 1,000,000 1,075,000 United Meridian Corp., 10.375% Sr. Sub. Nts., 10/15/05............. 700,000 719,250 ------------ 7,206,000 ------------ FINANCIAL SERVICES -- 1.1% Diversified Financial -- 0.6% GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98...................... 750,000 671,250 Olympic Financial Ltd., 13% Sr. Nts., 5/1/00....................... 1,000,000 1,095,000 ------------ 1,766,250 ------------ Insurance -- 0.5% American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04........... 790,000 825,550 Chartwell Re Corp., 10.25% Sr. Nts., 3/1/04........................ 500,000 502,500 ------------ 1,328,050 ------------ HOUSING RELATED -- 1.2% Building Materials -- 0.9% Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03........................ 1,000,000 945,000 Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01............. 1,500,000 1,657,500 ------------ 2,602,500 ------------ Homebuilders/Real Estate -- 0.3% NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03.............................. 500,000 487,500 Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02........................................................... 500,000 518,750 ------------ 1,006,250 ------------ MANUFACTURING -- 1.5% Aerospace/Electronics/Computers -- 0.5% Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01....................... 500,000 517,500 Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97 (9)............. 1,000,000 1,025,000 ------------ 1,542,500 ------------ Automotive -- 1.0% Aftermarket Technology Corp., 12% Sr. Sub. Nts., Series B, 8/1/04........................................................... 1,350,000 1,434,375 Foamex LP/JPS Automotive Corp., 0%/14% Sr. Disc. Nts., Series B, 7/1/04 (8)............................................. 1,000,000 562,500 JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01........... 1,000,000 1,015,000 ------------ 3,011,875 ------------
7 8 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Capital Goods -- 0.0% Farley, Inc., Zero Coupon Sub. Debs., 14.167%, 12/30/12 (14)....... $ 198,000 $ 19,107 ------------ MEDIA -- 4.6% Broadcasting -- 1.5% New World Communications Group Holding Corp., Zero Coupon Sr. Disc. Nts., Series B, 11.907%, 6/15/99 (14)............................ 1,250,000 843,750 Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 (4)...................................................... 500,000 492,500 Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05......... 1,600,000 1,652,000 Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01.... 1,300,000 1,417,000 ------------ 4,405,250 ------------ Cable Television -- 2.5% American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts., 6/15/04 (8)...................................................... 1,022,000 666,855 Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05.............. 300,000 302,250 Cablevision Industries Corp., 10.75% Sr. Nts., 1/30/02............. 500,000 545,625 Century Communications Corp., 9.50% Sr. Nts., 3/1/05............... 1,000,000 1,012,500 Comcast Corp., 10.625% Sr. Sub. Debs., 7/15/12..................... 500,000 550,000 Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13............. 800,000 844,000 Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B, 11/1/03 (9)...................................................... 625,000 584,375 International CableTel, Inc., 0%/10.875% Sr. Deferred Coupon Nts., 10/15/03 (8)..................................................... 1,000,000 682,500 Marcus Cable Operating Co. LP/Marcus Cable Capital Corp., 0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04 (8).................. 250,000 175,000 People's Choice TV Corp., Units (each unit consists of $1,000 principal amount of 0%/13.125% sr. disc. nts., 6/1/04 and one warrant to purchase 1.427 shares of common stock) (5)(8)......... 250,000 139,375 PriCellular Wireless Corp., 0%/12.25% Sr. Sub. Disc. Nts., 10/1/03 (8).............................................................. 1,700,000 1,258,000 Wireless One, Inc., Units (each unit consists of $1,000 principal amount of 13% sr. nts. and three warrants to purchase one share of common stock at $11.55) (5)................................... 650,000 674,375 ------------ 7,434,855 ------------
8 9 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Diversified Media -- 0.5% Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03 (8)....................................................... $ 2,000,000 $ 1,605,000 ------------ Publishing/Printing -- 0.1% Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05 (8)............................................. 500,000 315,000 ------------ OTHER -- 0.6% Environmental -- 0.1% Envirotest Systems Corp., 9.125% Sr. Nts., 3/15/01................. 500,000 392,500 ------------ Services -- 0.5% Protection One Alarm Monitoring, Inc., Units (each unit consists of ten $1,000 principal amount of 0%/13.625% sr. sub. disc. nts., 6/30/95 and 32 warrants, each warrant entitles holder to purchase 1 share of Protection One, Inc. common stock) (4)(5)............. 2,000,000 1,430,000 ------------ RETAIL -- 3.9% Drug Stores -- 0.5% Duane Reade, 12% Sr. Nts., Series B, 9/15/02....................... 750,000 691,875 Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03.................... 750,000 798,750 ------------ 1,490,625 ------------ Specialty Retailing -- 1.2% Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B, 9/1/03................................................. 1,000,000 932,500 Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01................ 750,000 746,250 Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03................ 850,000 837,250 United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 (4)..... 1,000,000 1,075,000 ------------ 3,591,000 ------------ Supermarkets -- 2.2% Grand Union Co., 12% Sr. Nts., 9/1/04.............................. 3,100,000 2,999,250 Kash 'N Karry Food Stores, Inc., 11.50% Sr. Nts., 2/1/03 (7)....... 899,600 884,569 Penn Traffic Co., 9.625% Sr. Sub. Nts., 4/15/05.................... 3,000,000 2,190,000 Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04...................... 500,000 503,750 ------------ 6,577,569 ------------
9 10 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ TRANSPORTATION -- 0.9% Railroads -- 0.6% Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03 (8)..................................... $ 2,500,000 $ 1,637,500 ------------ Shipping -- 0.3% Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04.......... 900,000 922,500 ------------ UTILITIES -- 2.8% Electric Utilities -- 0.1% DeepTech International, Inc., 12% Sr. Sec. Nts., 12/15/00.......... 300,000 264,750 ------------ Telecommunications -- 2.7% Cellular Communications International, Inc., Units (each unit consists of $1,000 principal amount of zero coupon sr. disc. nts., 8/15/00 and one warrant to purchase 1.126 shares of common stock) (5)....................................................... 2,500,000 1,425,000 Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (8).......... 2,000,000 1,560,000 Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375% Sr. Sub. Disc. Nts., 10/1/00 (8)................................. 2,000,000 1,710,000 In-Flight Phone Corp., Units (each unit consists of $1,000 principal amount of 0%/14% sr. disc. nts., series A, 5/15/02 and one warrant to purchase one share of common stock) (4)(5)(8)..... 900,000 360,000 IntelCom Group (USA), Inc. (ICG) and IntelCom Group, Inc., Units (each unit consists of ten 0%/13.50% sr. disc. nts., 9/15/05 of ICG and 33 warrants to purchase an equal number of common shares of IntelCom at an exercise price equal to $12.51 per share) (4)(5)(8)........................................................ 1,250,000 706,250 MFS Communications, Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04 (8).... 700,000 542,500 PriCellular Wireless Corp., 0%/14% Sr. Sub. Disc. Nts., 11/15/01 (8).............................................................. 2,000,000 1,700,000 ------------ 8,003,750 ------------ Total Corporate Sector (Cost $92,473,078).......................... 93,802,806 ------------
10 11 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ INTERNATIONAL SECTOR -- 32.0% FOREIGN CERTIFICATES OF DEPOSIT -- 5.4% Bank Pacific CD, Zero Coupon, 17.947%, 3/5/96 (10)(14) (IDR)....... 1,000,000,000 $ 412,373 Citibank, 11.75% CD, 11/8/95 (10) (CLP)............................ 2,483,246,287 5,988,775 CS First Boston, Inc. CD, 15.75%, 6/11/96 (4)(10) (IDR).................................... 4,448,000,000 1,958,608 12.50%, 12/21/95 (4)(10) (ARA)................................... 1,500,000 1,500,191 Indonesia (Republic of) Bank Negara CD, Zero Coupon, 15.909%, 6/17/96 (10)(14) (IDR)........................................... 4,000,000,000 1,582,563 Thai Military Bank Ltd. CD: 11%, 11/30/95 (10) (THB)......................................... 75,000,000 2,980,919 11%, 12/15/95 (10) (THB)......................................... 20,000,000 794,912 10%, 1/31/96 (10) (THB).......................................... 20,000,000 794,671 ------------ 16,013,012 ------------ FOREIGN CORPORATE BONDS AND NOTES -- 6.2% BASIC INDUSTRY -- 0.9% Paper -- 0.9% APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05... 500,000 512,500 QUNO Corp., 9.125% Sr. Nts., 5/15/05............................... 1,500,000 1,507,500 Repap New Brunswick, Inc., 9.25% First Priority Sr. Sec. Nts., 7/15/00 (9)...................................................... 600,000 600,000 ------------ 2,620,000 ------------ CONSUMER RELATED -- 0.6% Textile/Apparel -- 0.6% PT Polysindo Eka Perkasa: 13% Sr. Nts., 6/15/01............................................ 1,000,000 1,045,000 Zero Coupon Promissory Nts., 17.899%, 10/23/96 (14) (IDR)........ 2,000,000,000 704,535 ------------ 1,749,535 ------------ FINANCIAL SERVICES -- 2.7% Banks & Thrifts -- 1.9% Banco Bamerindus do Brasil SA: 10.50% Debs., 6/23/97............................................ 500,000 475,000 11% Unsub. Unsec. Nts., 11/24/97................................. 1,800,000 1,710,000 Banco Ganadero SA, Zero Coupon: Nts., 9.928%, 7/1/96 (4)(14)..................................... 1,000,000 938,636 Sr. Unsub. Unsec. Nts., 9.928%, 6/15/96 (4)(14).................. 500,000 471,338
11 12 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Banks & Thrifts (Continued) Banco Mexicano SA, 8% Sr. Unsub. Unsec. Exchangeable Medium-Term Nts., 11/4/98.................................................... $ 1,000,000 $ 861,250 Morgan Stanley Group, 14.25% Indian Rupee Indexed Nts., 6/26/96 (INR).................................................... 15,705,000 459,210 Rabobank Nederland, 11.05% Sr. Unsec. Debs., 12/12/97 (ITL)........ 1,175,000,000 742,598 ------------ 5,658,032 ------------ Diversified Financial -- 0.8% Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98.................. 1,250,000 1,043,750 KfW International Finance, Inc., 11.625% Gtd. Nts., 11/27/98 (ITL)............................................................ 2,175,000,000 1,393,356 ------------ 2,437,106 ------------ MEDIA -- 1.4% Cable Television -- 1.1% Bell Cablemedia PLC, 0%/11.95% Sr. Disc. Nts., 7/15/04 (8)......... 1,250,000 854,688 Diamond Cable Communications PLC, 0%/13.25% Sr. Disc. Nts., 9/30/04 (8).............................................................. 750,000 513,750 TeleWest Communications PLC, 0%/11% Sr. Disc. Debs., 10/1/07 (8)... 2,000,000 1,170,000 Videotron Holdings PLC, 0%/11% Sr. Disc. Nts., 8/15/05 (8)......... 1,000,000 596,250 ------------ 3,134,688 ------------ Entertainment/Film -- 0.3% Imax Corp., 7% Sr. Nts., 3/1/01 (11)............................... 1,000,000 967,500 ------------ OTHER -- 0.6% Services -- 0.6% Acetex Corp., 9.75% Sr. Sec. Nts., 10/1/03 (4)..................... 1,750,000 1,802,500 ------------ FOREIGN GOVERNMENT OBLIGATIONS -- 19.0% Argentina -- 1.3% Argentina (Republic of): Medium-Term Nts., 8%, 8/9/97 (NLG)............................... 5,800,000 3,597,154 Sr. Unsec. Unsub. Bonds, 13.45%, 10/21/97 (ITL).................. 450,000,000 284,576 ------------ 3,881,730 ------------
12 13 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Australia -- 1.4% First Australia National Mortgage Acceptance Corp. Ltd. Bonds, Series 22, 11.40%, 12/15/01 (AUD)................................ 3,877,320 $ 3,173,724 South Australia Government Finance Gtd. Bonds, 12.50%, 10/15/00 (AUD)........................................... 1,150,000 1,016,120 ------------ 4,189,844 ------------ Brazil -- 1.3% Banco do Estado de Sao Paulo SA Nts., 9.25%, 10/4/96............... 1,000,000 960,000 Banco Estado Minas Gerais, 8.25%, 2/10/00.......................... 1,000,000 820,000 Brazil (Federal Republic of) Eligible Interest Bonds, 6.812%, 4/15/06 (9)...................................................... 3,000,000 1,995,000 ------------ 3,775,000 ------------ Bulgaria -- 0.8% Bulgaria (Republic of) Interest Arrears Bonds, 6.75%, 7/28/11 (9).............................................................. 5,500,000 2,440,625 ------------ Costa Rica -- 0.4% Central Bank of Costa Rica Principal Bonds, Series A, 6.25%, 5/21/10.......................................................... 1,900,000 1,111,500 ------------ Ecuador -- 0.2% Ecuador (Republic of) Disc. Bonds, 6.812%, 2/28/25 (9)............. 1,500,000 750,000 ------------ Great Britain -- 1.2% United Kingdom Treasury Nts., 12.50%, 11/21/05 (GBP)............... 1,800,000 3,597,315 ------------ Ireland -- 0.3% National Treasury Management Agency (Irish Government) Bonds, 9%, 7/15/01 (IEP).................................................... 575,000 993,529 ------------ Jamaica -- 0.2% Jamaica (Government of) 1990 Refinancing Agreement Nts., Tranche A, 6.75%, 10/16/00 (3)(9)........................................... 875,000 783,125 ------------ Jordan -- 0.1% Hashemite Kingdom of Jordan Par Bonds, 4%, 12/23/23 (11)........... 500,000 233,750 ------------
13 14 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Mexico -- 1.9% Banco Nacional de Comercio Exterior SNC, Zero Coupon, 11.310%, 12/5/95 (4)(14).................................................. $ 1,500,000 $ 1,488,000 Banco Nacional de Obras y Servicios Publicos SA Nts., 10.75%, 8/16/96.......................................................... 500,000 504,375 United Mexican States: Combined Facility 3, Loan Participation Agreement, Tranche A, 6.75%, 9/20/97 (3)(9).......................................... 413,723 287,020 Nacional Financiera SNC Nts., 13.60%, 4/2/98 (ESP)............... 100,000,000 803,681 Petroleos Mexicanos Gtd. Medium-Term Nts., 7.60%, 6/15/00........ 1,000,000 862,500 Petroleos Mexicanos Gtd. Sr. Unsec. Nts., 6.875%, 3/8/99 (9)..... 2,000,000 1,770,000 ------------ 5,715,576 ------------ Morocco -- 1.5% Morocco (Kingdom of) Loan Participation Agreement: Tranche A, 6.688%, 1/1/09 (9).................................... 6,000,000 3,626,250 Tranche B, 6.688%, 1/1/04 (9).................................... 1,000,000 676,250 ------------ 4,302,500 ------------ New Zealand -- 1.6% New Zealand (Republic of) Bonds, 10%, 7/15/97 (NZD)................ 6,800,000 4,669,442 ------------ Norway -- 1.0% Norwegian Government Gtd. Bonds, 9.50%, 10/31/02 (NOK)............. 15,700,000 2,905,074 ------------ Panama -- 1.0% Panama (Republic of) Debs., 7.25%, 5/10/02 (9)..................... 3,500,000 2,870,000 ------------ Philippines -- 0.3% Philippines (Republic of) Front-Loaded Interest Reduction Bonds, Series B, 5%, 6/1/08 (11)........................................ 1,000,000 765,625 ------------ Poland -- 0.6% Poland (Republic of): Disc. Bonds, 6.875%, 10/27/24 (9)................................ 2,000,000 1,532,500 Treasury Bills, Zero Coupon, 24.957%, 4/17/96 (14) (PLZ)......... 1,000,000 364,614 ------------ 1,897,114 ------------
14 15 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ Portugal -- 1.0% Portugal (Republic of) Gtd. Bonds, Obrigicion do tes Medio Prazo, 11.875%, 2/23/00 (PTE)........................................... 410,000,000 $ 2,859,533 ------------ Spain -- 2.0% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 (ESP)............................................ 683,000,000 5,904,248 ------------ Sweden -- 0.9% Sweden (Kingdom of) Bonds, Series 1028, 11%, 1/21/99 (SEK)......... 15,800,000 2,519,647 ------------
Date Strike Contracts ------- ------ --------- PUT OPTIONS PURCHASED -- 0.1% Brazil (Federal Republic of) Eligible Interest Bonds, 6.812%, 4/15/06, Put Opt...................................... Jan. 96 $64.75 3,000 44,100 Morocco (Kingdom of) Loan Participation Agreement, Tranche A, 6.688%, 1/1/09, Put Opt....................................... Jan. 96 60.25 6,000 161,610 ------------- 205,710 -------------
Face Amount(1) -------------- STRUCTURED INSTRUMENTS -- 1.3% Canadian Imperial Bank, 10% Certificate of Deposit British Pound Sterling Maximum Rate Linked Nts., 11/8/96 (indexed to the 3-month GBP LIBOR, multiplied by 9) (3).......................... $ 750,000 762,300 Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts., 13.471%, 12/14/95 (indexed to the Nota Do Tesouro Nacional, Zero Coupon, 12/13/95) (14)........................................... 1,500,000 1,477,392 Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts., 11.245%, 2/15/96 (indexed to the Nota Do Tesouro Nacional, Zero Coupon, 2/15/96) (14)............................................ 1,500,000 1,452,954 ------------ 3,692,646 ------------ Total International Sector (Cost $94,485,900)...................... 94,445,906 ------------ MORTGAGE-BACKED OBLIGATIONS -- 23.0% GOVERNMENT AGENCY -- 21.8% FHLMC/FNMA/Sponsored -- 9.6% Federal Home Loan Mortgage Corp.: Certificates of Participation, 12%, 5/1/10-6/1/15................ 3,050,721 3,453,450
15 16 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust
Face Market Value Amount(1) See Note 1 -------------- ------------ FHLMC/FNMA/Sponsored (Continued) Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, 6.65%, 4/15/21..................... $ 4,700,000 $ 4,648,582 Gtd. Multiclass Mtg. Participation Certificates, 8%, 8/1/24........ 4,525,714 4,638,857 Federal National Mortgage Assn.: 11%, 7/1/16...................................................... 1,279,171 1,438,269 7.50%, 8/1/25.................................................... 3,179,759 3,212,543 Certificates of Participation, 13%, 6/1/15....................... 1,724,607 2,019,395 Interest-Only Stripped Mtg.-Backed Security, Trust 222, Cl. 2, 9.23%, 6/1/23 (12)............................................. 27,415,219 8,211,715 Interest-Only Stripped Mtg.-Backed Security, Trust 240, Cl. 2, 11.315%, 9/1/23 (12)........................................... 1,999,445 611,081 ------------ 28,233,892 ------------ GNMA/Guaranteed -- 12.2% Government National Mortgage Assn.: 12%, 11/20/13-9/20/15............................................ 941,201 1,070,024 6%, 11/15/25 (13)................................................ 8,500,000 8,515,938 7.50%, 8/15/25-9/15/25........................................... 12,228,164 12,362,654 8%, 5/15/24-9/15/24.............................................. 13,550,481 13,944,264 ------------ 35,892,880 ------------ PRIVATE -- 1.2% Commercial -- 1.2% Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates, Series 1992-CHF, Cl. E, 8.25%, 12/25/20.......................... 3,735,857 3,594,011 ------------ Total Mortgage-Backed Obligations (Cost $67,771,931)............... 67,720,783 ------------ MONEY MARKET SECTOR -- 2.2% Repurchase agreement with Zion First National Bank, 5.85%, dated 10/31/95, to be repurchased at $6,601,073 on 11/1/95, collateralized by U.S. Treasury Nts., 4.375%-7.25%, 8/15/96-5/15/97, with a value of $6,741,230 (Cost $6,600,000).... 6,600,000 6,600,000 ------------ Total Investments, at Value (Cost $295,001,871).................... 101.3% 299,026,525 Liabilities in Excess of Other Assets.............................. (1.3) (3,898,202) -------------- ------------ Net Assets......................................................... 100.0% $295,128,323 ============== ============
16 17 STATEMENT OF INVESTMENTS October 31, 1995 (Continued) Oppenheimer Multi-Sector Income Trust (1) Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARA -- Argentine Austral AUD -- Australian Dollar CLP -- Chilean Peso ESP -- Spanish Peseta GBP -- British Pound Sterling IDR -- Indonesian Rupiah IEP -- Irish Punt INR -- Indian Rupee ITL -- Italian Lira NLG -- Netherlands Guilder NOK -- Norwegian Krone NZD -- New Zealand Dollar PLZ -- Polish Zloty PTE -- Portuguese Escudo SEK -- Swedish Krona THB -- Thai Baht
(2) A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
FACE AMOUNT MARKET SUBJECT TO EXPIRATION EXERCISE PREMIUM VALUE CALL DATE PRICE RECEIVED SEE NOTE 1 - --------------------------------------------------------------------------------------------------------------------------------- Call Option on Bulgaria (Republic of) Interest Arrears Bonds, 6.75%, 7/28/11.................................... $5,500,000 1/22/96 $45.00 $78,650 $ 64,350 Call Option on Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00................... 271,000,000ESP 11/24/95 105.47ESP 12,797 17,069 ------- --------- $91,447 $ 81,419 ======= =========
(3) Identifies issue considered to be illiquid -- See Note 6 of Notes to Financial Statements. (4) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $17,523,157 or 5.94% of the Fund's net assets, at October 31, 1995. (5) 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. (6) Non-income producing security. (7) Interest or dividend is paid in kind. (8) Denotes a step bond: a zero coupon bond that converts to a fixed rate of interest at a designated future date. (9) Represents the current interest rate for a variable rate security. (10) Indexed instrument for which the principal amount and/or interest due at maturity is affected by the relative value of a foreign currency. (11) Represents the current interest rate for an increasing rate security. (12) Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. (13) When-issued security to be delivered and settled after October 31, 1995. (14) For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. See accompanying Notes to Financial Statements. 17 18 STATEMENT OF ASSETS AND LIABILITIES October 31, 1995 Oppenheimer Multi-Sector Income Trust ASSETS: Investments, at value (cost $295,001,871) -- see accompanying statement................. $299,026,525 Net unrealized appreciation on forward foreign currency exchange contracts -- Note 7.... 350,436 Receivables: Interest and principal paydowns....................................................... 6,686,995 Investments sold...................................................................... 5,452,532 Other................................................................................... 143,783 ------------ Total assets........................................................................ 311,660,271 ------------ LIABILITIES: Bank overdraft.......................................................................... 568,379 Options written, at value (premiums received $91,447) -- Note 4......................... 81,419 Payables and other liabilities: Investments purchased................................................................. 15,357,437 Dividends............................................................................. 244,262 Deferred trustees' fees -- Note 1..................................................... 113,074 Management and administrative fees -- Note 5.......................................... 60,548 Transfer agent and accounting services fees........................................... 15,161 Other................................................................................. 91,668 ------------ Total liabilities................................................................... 16,531,948 ------------ NET ASSETS.............................................................................. $295,128,323 ============ COMPOSITION OF NET ASSETS: Par value of shares of beneficial interest.............................................. $ 291,161 Additional paid-in capital.............................................................. 315,440,767 Overdistributed net investment income................................................... (113,075) Accumulated net realized loss from investment, written option and foreign currency transactions.......................................................................... (24,865,208) Net unrealized appreciation on investments, written options and translation of assets and liabilities denominated in foreign currencies..................................... 4,374,678 ------------ NET ASSETS -- Applicable to 29,116,068 shares of beneficial interest outstanding........ $295,128,323 ============ NET ASSET VALUE PER SHARE............................................................... $10.14 =======
See accompanying Notes to Financial Statements. 18 19 STATEMENT OF OPERATIONS For the Year Ended October 31, 1995 Oppenheimer Multi-Sector Income Trust INVESTMENT INCOME: Interest (net of foreign withholding taxes of $193,536)................................. $30,316,133 Dividends............................................................................... 160,706 ----------- Total income................................................................... 30,476,839 ----------- EXPENSES: Management fees -- Note 5............................................................... 1,877,737 Administrative fees -- Note 5........................................................... 577,765 Shareholder reports..................................................................... 150,863 Custodian fees and expenses............................................................. 142,278 Transfer agent and accounting service fees -- Note 5.................................... 66,926 Legal and auditing fees................................................................. 46,702 Trustees' fees and expenses............................................................. 44,903 Registration and filing fees............................................................ 33,875 Other................................................................................... 77,493 ----------- Total expenses................................................................. 3,018,542 ----------- NET INVESTMENT INCOME................................................................... 27,458,297 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY: Net realized gain (loss) on: Investments........................................................................... (9,572,176) Closing of futures contracts.......................................................... 69,120 Closing and expiration of options written -- Note 4................................... (86,336) Foreign currency transactions......................................................... (258,123) ----------- Net realized loss.............................................................. (9,847,515) ----------- Net change in unrealized appreciation or depreciation on: Investments and options written....................................................... 10,663,948 Translation of assets and liabilities denominated in foreign currencies............... (2,066,211) ----------- Net change..................................................................... 8,597,737 ----------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY... (1,249,778) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $26,208,519 ===========
See accompanying Notes to Financial Statements. 19 20 STATEMENTS OF CHANGES IN NET ASSETS Oppenheimer Multi-Sector Income Trust
Year Ended October 31, ---------------------------- 1995 1994 ------------ ------------ OPERATIONS: Net investment income.................................................... $ 27,458,297 $ 28,123,352 Net realized loss on investments, options written and foreign currency transactions........................................................... (9,847,515) (7,693,213) Net change in unrealized appreciation or depreciation on investments, options written and translation of assets and liabilities denominated in foreign currencies.................................................. 8,597,737 (15,068,472) ------------ ------------ Net increase in net assets resulting from operations................. 26,208,519 5,361,667 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income..................................... (26,608,817) (24,512,388) Tax return of capital distribution....................................... (625,807) (3,638,975) BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares issued to shareholders in reinvestment of dividends -- Note 2.................................................... 496,299 1,801,323 ------------ ------------ Total decrease in net assets............................................. (529,806) (20,988,373) NET ASSETS: Beginning of period...................................................... 295,658,129 316,646,502 ------------ ------------ End of period (including overdistributed net investment income of $113,075 and $3,324,611, respectively)................................. $295,128,323 $295,658,129 ============ ============
See accompanying Notes to Financial Statements. 20 21 FINANCIAL HIGHLIGHTS Oppenheimer Multi-Sector Income Trust
Year Ended October 31, --------------------------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 1990 1989 1988(1) -------- -------- -------- -------- -------- -------- -------- -------- PER SHARE OPERATING DATA: Net asset value, beginning of period................ $ 10.17 $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 $ 11.16 -------- -------- -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income.... .94 1.00 1.08 1.06 1.11 1.15 1.12 .64 Net realized and unrealized gain (loss)................. (.04) (.82) .43 (.08) .82 (.78) (.52) .05 -------- -------- -------- -------- -------- -------- -------- -------- Total income from investment operations........... .90 .18 1.51 .98 1.93 .37 .60 .69 -------- -------- -------- -------- -------- -------- -------- -------- Dividends and distributions to shareholders: Dividends from net investment income...... (.91) (.84) (1.01) (1.16) (1.07) (1.10) (1.13) (.59) Distributions from net realized gain.......... -- -- -- -- (.10) (.02) (.01) (.06) Tax return of capital.... (.02) (.13) -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders......... (.93) (.97) (1.01) (1.16) (1.17) (1.12) (1.14) (.65) Offering costs............ -- -- -- -- -- -- -- (.03) -------- -------- -------- -------- -------- -------- -------- -------- Net asset value, end of period................... $ 10.14 $ 10.17 $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 ======== ======== ======== ======== ======== ======== ======== ======== Market value, end of period................... $ 10.00 $ 9.50 $ 11.25 $ 11.13 $ 11.13 $ 9.38 $ 10.13 $ 11.50 TOTAL RETURN, AT MARKET VALUE(2)................. 15.62% (7.46)% 11.10% 11.48% 33.05% 4.09% (1.86)% 6.08% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands)........... $295,128 $295,658 $316,647 $299,368 $301,568 $278,511 $299,673 $314,656 Average net assets (in thousands)............... $288,884 $306,686 $307,244 $303,773 $289,681 $290,533 $307,735 $311,254 Number of shares outstanding at end of period (in thousands).... 29,116 29,065 28,896 28,625 28,347 28,194 28,194 28,162 Ratios to average net assets: Net investment income.... 9.51% 9.17% 10.13% 9.95% 10.80% 11.16% 10.28% 9.80%(3) Expenses................. 1.05% 1.02% 1.00% 1.11% 1.16%(4) 1.03% 1.03% 1.01%(3) Portfolio turnover rate(5).................. 240.1% 187.6% 131.3% 95.9% 59.7% 85.7% 162.0% 60.1%
(1) For the period from March 24, 1988 (commencement of operations) to October 31, 1988. (2) 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. (3) Annualized. (4) Includes $.01 per share of federal excise tax expense. The expense ratio, exclusive of federal excise tax expense, was 1.10%. (5) 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 October 31, 1995 were $637,018,865 and $644,253,972, respectively. See accompanying Notes to Financial Statements. 21 22 NOTES TO FINANCIAL STATEMENTS Oppenheimer Multi-Sector Income Trust 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Trust's investment advisor is Oppenheimer Management Corporation (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 asked price 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 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 or asked price closest to the last reported sale price is used. 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. At October 31, 1995, the Trust had available for federal income tax purposes an unused capital loss carryover of approximately $22,900,000, $6,700,000 of which will expire in 1998, $2,500,000 in 1999, $4,500,000 in 2002 and $9,200,000 in 2003. 22 23 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement plan for the Trust's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended, October 31, 1995, the Trust's projected benefit obligations were reduced by $2,641. In addition, one retired trustee is eligible for payments under the Trust's retirement plan and a payment of $2,026 was made. The accumulated liability for the Trust's projected benefit obligations was $113,074 at October 31, 1995. 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 the recognition of paydown gains and losses and 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 the income or realized gain (loss) was recorded by the Trust. During the year ended October 31, 1995, the Trust changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended October 31, 1995, amounts have been reclassified to reflect a decrease in paid-in capital of $3,832,676, a decrease in overdistributed net investment income of $2,987,863, and a decrease in accumulated net realized loss on investments of $844,813. 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. 2. SHARES OF BENEFICIAL INTEREST The Trust has authorized an unlimited number of $.01 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
Year Ended Year Ended October 31, 1995 October 31, 1994 ------------------ --------------------- Shares Amount Shares Amount ------ -------- ------- ---------- Net increase from dividends reinvested..... 51,219 $496,299 168,788 $1,801,323
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At October 31, 1995, net unrealized appreciation on investments and options written of $4,034,682 was composed of gross appreciation of $9,659,546, and gross depreciation of $5,624,864. 4. OPTION ACTIVITY The Trust may buy put and call options, or write covered call options on portfolio securities or cash secured put options in order to produce incremental earnings or protect against changes in the value of portfolio securities. 23 24 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 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. In this report, securities designated to cover outstanding call options are noted in the Statement of Investments. 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 is exercised. The risk in writing a put option is that the Trust may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Trust pays a premium whether or not the option is exercised. The Trust also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended October 31, 1995 was as follows:
Call Options -------------------- Number Amount of of Options Premiums ------- --------- Options outstanding at October 31, 1994..... -- -- Options written............................. 38,535 $ 312,206 Options cancelled in closing transactions... (15,932) (137,048) Options expired............................. (6,874) (22,375) Options exercised........................... (7,984) (61,336) ------ --------- Options outstanding at October 31, 1995..... 7,745 $ 91,447 ====== =========
Put Options -------------------- Number Amount of of Options Premiums -------- -------- Options outstanding at October 31, 1994.... -- -- Options written............................ 856,164 $ 8,850 Options expired............................ (856,164) (8,850) -------- ------- Options outstanding at October 31, 1995.... -- $ -- ======== =======
5. 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 .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 .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. 24 25 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 6. ILLIQUID AND RESTRICTED SECURITIES At October 31, 1995, investments in securities included issues that are illiquid or restricted. The 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. The Trust intends to invest no more than 10% of its net assets (determined at the time of purchase) in illiquid or restricted securities. The aggregate value of these securities subject to this limitation at October 31, 1995 was $2,638,989 which represents .89% of the Trust's net assets. Information concerning these securities is as follows:
Valuation Per Acquisition Cost Unit as of Security Date Per Unit October 31, 1995 - ------------------------------ ----------- -------- --------------- Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00..................... 11/18/93 $100.00 $ 79.00 Becker Gaming, Inc. Wts., Exp. 11/00................... 11/18/93 $ 2.00 $ 1.00 Canadian Imperial Bank, 10% Certificate of Deposit British Pound Sterling Maximum Rate Linked Nts., 11/8/96...................... 4/28/95 $100.00 $102.00 Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00.................. 11/18/93 $ 87.50 $ 89.00 Jamaica (Government of) 1990 Refinancing Agreement Nts., 7/12/95- Tranche A, 6.75%, 10/16/00... 8/15/95 $ 88.75 $ 89.50 Purity Supreme, Inc. Wts., Exp. 8/97.................... 7/29/92 -- $ .02 Triangle Wire & Cable, Inc. Common Stock................. 5/2/94 $ 9.50 $ 2.00 United Mexican States, Combined Facility 3, Loan Participation Agreement, Tranche A, 6.75%, 9/20/97.... 10/25/94 $ 89.00 $ 69.38
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. 7. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Trust uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Trust generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Trust may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Trust will realize a gain or loss upon the closing or settlement of the forward transaction. In this report, 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 and unrealized 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. 25 26 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust At October 31, 1995, the Trust had outstanding forward contracts to purchase and sell foreign currencies as follows:
Contract Valuation Unrealized Contracts Exchange Amount as of Appreciation to Purchase Date (000s) October 31, 1995 (Depreciation) - ----------- --------- ------------- ----------- -------- Canadian Dollar (CAD)..... 11/2/95 5,525 CAD $ 4,107,758 $ 75,647 German Deutsche Mark 11/6/95- (DEM)..... 11/30/95 28,240 DEM 20,053,058 41,604 Netherlands Guilder (NLG)..... 11/1/95 1,607 NLG 1,017,098 (2,671) Swedish Krone (SEK)..... 11/2/95 172 SEK 25,923 (69) ---- -------- ------ 35,544 $25,203,837 $114,511 ---- -------- ------ Contracts to Sell - ----------- Canadian Dollar (CAD)..... 11/2/95 5,525 CAD $ 4,107,758 $ 16,115 German Deutsche Mark 11/6/95- (DEM)..... 11/30/95 28,240 DEM 20,053,058 219,808 New Zealand Dollar (NZD)..... 11/3/95 4 NZD 2,702 2 ---- -------- ------ 33,769 $24,163,518 235,925 ------ ----------- -------- Net Unrealized Appreciation.. $350,436 ========
26 27 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 8. QUARTERLY RESULTS OF OPERATIONS: (UNAUDITED)
Net Realized and Unrealized Gain (Loss) Net Increase on Investments, (Decrease) in Net Options and Foreign Assets Resulting from Net Investment Income Currency Transactions Operations Market Price ---------------------- ---------------------- ---------------------- on NYSE Quarter Total Per Total Per Total Per ------------------- ended (000) Share (000) Share (000) Share High Low - ------------- ------- ----- -------- ----- -------- ----- ------- ------- October 31, 1995... $ 6,825 $ .23 $ 454 $ .02 $ 7,279 $ .25 $ 10.00 $ 9.375 July 31, 1995...... 7,054 .24 6,929 .24 13,983 .48 9.875 9.375 April 30, 1995..... 6,516 .23 5,028 .17 11,544 .40 10.00 9.25 January 31, 1995... 7,063 .24 (13,660) (.47) (6,597) (.23) 10.00 8.875 ------- ----- -------- ----- -------- ----- Totals... $27,458 $ .94 $ (1,249) $(.04) $ 26,209 $ .90 ======= ===== ======== ===== ======== ===== October 31, 1994... $ 6,743 $ .23 $ (3,543) $(.12) $ 3,200 $ .11 $10.375 $ 9.125 July 31, 1994...... 7,104 .25 (2,081) (.08) 5,023 .17 10.625 10.00 April 30, 1994..... 7,073 .26 (24,698) (.87) (17,625) (.61) 11.375 10.00 January 31, 1994... 7,203 .26 7,561 .25 14,764 .51 11.375 10.625 ------- ----- -------- ----- -------- ----- Totals... $28,123 $1.00 $(22,761) $(.82) $ 5,362 $ .18 ======= ===== ======== ===== ======== ===== October 31, 1993... $ 7,974 $ .27 $ (3) $ .00 $ 7,971 $ .27 $11.375 $ 11.00 July 31, 1993...... 7,175 .25 4,200 .16 11,375 .41 11.375 11.00 April 30, 1993..... 7,782 .27 9,342 .31 17,124 .58 11.25 10.75 January 31, 1993... 8,200 .29 (1,263) (.04) 6,937 .25 11.00 10.00 ------- ----- -------- ----- -------- ----- Totals... $31,131 $1.08 $ 12,276 $ .43 $ 43,407 $1.51 ======= ===== ======== ===== ======== =====
27 28 INDEPENDENT AUDITORS' REPORT Oppenheimer Multi-Sector Income Trust The Board of Trustees and Shareholders of Oppenheimer Multi-Sector Income Trust: We have audited the accompanying statements of investments and assets and liabilities of Oppenheimer Multi-Sector Income Trust as of October 31, 1995, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the seven-year period then ended and the period from March 24, 1988 (commencement of operations) to October 31, 1988. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995 by correspondence with the custodian and brokers; and where confirmations were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Multi-Sector Income Trust as of October 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the seven-year period then ended and the period from March 24, 1988 (commencement of operations) to October 31, 1988, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Denver, Colorado November 21, 1995 28 29 FEDERAL INCOME TAX INFORMATION (Unaudited) Oppenheimer Multi-Sector Income Trust In early 1996, shareholders will receive information regarding all dividends and distributions paid to them by the Trust during calendar year 1995. Regulations of the U.S. Treasury Department require the Trust to report this information to the Internal Revenue Service. Dividends paid by the Trust during the fiscal year ended October 31, 1995 which are not designated as capital gain distributions should be multiplied by .60% to arrive at the net amount eligible for the corporate dividend received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Trust to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. SHAREHOLDER MEETING (Unaudited) On May 3, 1995, an annual shareholder meeting was held at which the five Trustees identified below were elected and the selection of KPMG Peat Marwick LLP as the independent certified public accountants and auditors of the Trust for the fiscal year beginning November 1, 1994 was ratified (Proposal No. 1). In addition, the terms of office of the following Trustees continued after the meeting: Messrs. Leon Levy, Leo Cherne, Clayton K. Yeutter, Sidney M. Robbins, and Donald W. Spiro and Ms. Elizabeth B. Moynihan and Pauline Trigere. The following is a report of the votes cast:
Withheld/ Nominee/Proposal For Against Abstain Total - ---------------------------------------- --------------- ------------ ------------ --------------- Trustee Robert G. Galli......................... 16,644,292.1176 68,119.7701 194,646.8293 16,907,058.7170 Benjamin Lipstein....................... 16,647,553.0115 68,119.7701 191,385.9354 16,907,058.7170 Kenneth A. Randall...................... 16,656,682.0531 68,119.7701 182,256.8938 16,907,058.7170 Edward V. Regan......................... 16,658,674.9350 68,119.7701 180,264.0119 16,907,058.7170 Russell S. Reynolds, Jr. ............... 16,657,323.4538 68,119.7701 181,615.4931 16,907,058.7170 Proposal No. 1.......................... 16,532,571.8546 112,308.0326 262,178.8298 16,907,058.7170
29 30 OPPENHEIMER MULTI-SECTOR INCOME TRUST GENERAL INFORMATION CONCERNING THE TRUST Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end diversified management investment company with a primary investment objective of seeking high current income consistent with preservation of capital. The Trust's secondary investment objective is capital appreciation. In seeking its objectives, the Trust may invest any percentage of its assets in at least three of the following seven fixed-income sectors: U.S. Government, Corporate, International, Asset-Backed, Municipal, Convertible and Money Market. Current income, preservation of capital and, secondarily, possible capital appreciation 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 advisor to the Trust is Oppenheimer Management Corporation (the Manager). The Portfolio Managers of the Trust are Robert Patterson, Thomas Reedy, David Rosenberg, Ashwin Vasan, Carol Wolf and Arthur Zimmer, who also serve as Vice Presidents of the Trust and are officers of certain mutual funds managed by the Manager (Oppenheimer funds). Messrs. Reedy, Rosenberg, Vasan and Zimmer and Ms. Wolf also serve as Vice Presidents of the Manager and Mr. Patterson serves as Senior Vice President of the Manager. The foregoing persons have been the persons principally responsible for the day-to-day management of the Trust's portfolio since inception (March 1988), August 1993, June 1994 and August 1993, as to Messrs. Patterson, Reedy, Rosenberg and Vasan, respectively, and since July 1990 and October 1990 as to Ms. Wolf and Mr. Zimmer, respectively. During the past five years, such persons also served as an officer and portfolio manager for other Oppenheimer funds and, in addition, 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 Advisors and one of its mutual funds, Mr. Vasan served as a securities analyst for Citibank, N.A. and Mr. Zimmer served as Vice President of Hanifen Imhoff Management Company, a mutual fund investment advisor. Dividend Reinvestment and Cash Purchase Plan -- Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust (Shares) not registered in nominee name, all dividends and capital gains distributions (Distributions) declared by the Trust will be automatically reinvested in additional full and fractional Shares unless a shareholder elects to receive cash. If Shares are registered in nominee name, the shareholder should consult the nominee if the shareholder desires to participate in the Plan. Shareholders that participate in the Plan (Participants) may, at their option, make additional cash investments in Shares, semi-annually in amounts of at least $100, through payment to Shareholder Financial Services, Inc., the agent for the Plan (the Agent), accompanied by a service fee of $.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 30 31 OPPENHEIMER MULTI-SECTOR INCOME TRUST (Continued) purchase price per Share paid by the Agent may exceed the net asset value, resulting in fewer Shares being acquired than if the Distribution had been paid in Shares issued by the Trust. Participants may elect to withdraw from the Plan at any time and thereby receive cash in lieu of Shares by sending appropriate written instructions to the Agent. Elections received by the Agent will be effective only if received more than ten days prior to the record date for any Distribution; otherwise, such termination will be effective shortly after the investment of such Distribution with respect to any subsequent Distribution. Upon withdrawal from or termination of the Plan, all Shares acquired under the Plan will remain in the Participant's account unless otherwise requested. For full Shares, the Participant may either: (1) receive without charge a share certificate for such Shares; or (2) request the Agent (after receipt by the Agent of signature guaranteed instructions by all registered owners) to sell the Shares acquired under the Plan and remit the proceeds less any brokerage commissions and a $2.50 service fee. Fractional Shares may either remain in the Participant's account or be reduced to cash by the Agent at the current market price with the proceeds remitted to the Participant. Shareholders who have previously withdrawn from the Plan may rejoin at any time by sending written instructions signed by all registered owners to the Agent. There is no direct charge for participation in the Plan; all fees of the Agent are paid by the Trust. There are no brokerage charges for Shares issued directly by the Trust. However, each Participant will pay a pro rata share of brokerage commissions incurred with respect to open market purchases of Shares to be issued under the Plan. Participants will receive tax information annually for their personal records and to assist in federal income tax return preparation. The automatic reinvestment of Distributions does not relieve Participants of any income tax that may be payable on Distributions. The Plan may be terminated or amended at any time upon 30 days' prior written notice to Participants which, with respect to a Plan termination, must precede the record date of any Distribution by the Trust. Additional information concerning the Plan may be obtained by shareholders holding Shares registered directly in their names by writing the Agent, Shareholder Financial Services, Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374. Shareholders holding Shares in nominee name should contact their brokerage firm or other nominee for more information. 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." 31 32 OPPENHEIMER MULTI-SECTOR INCOME TRUST Officers and Trustees Leon Levy, Chairman of the Board of Trustees Leo Cherne, Trustee Robert G. Galli, Trustee Benjamin Lipstein, Trustee Bridget A. Macaskill, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Sidney M. Robbins, Trustee Donald W. Spiro, Trustee and President Pauline Trigere, Trustee Clayton K. Yeutter, Trustee Robert E. Patterson, Vice President Thomas P. Reedy, Vice President David Rosenberg, Vice President Ashwin K. Vasan, Vice President Carol Wolf, Vice President Arthur Zimmer, Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary Investment Advisor Oppenheimer Management Corporation Administrator Mitchell Hutchins Asset Management, Inc. Transfer Agent and Registrar Shareholder Financial Services, Inc. Custodian of Portfolio Securities The Bank of New York Independent Auditors KPMG Peat Marwick LLP Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein This is a copy of a report to shareholders of Oppenheimer Multi-Sector Income Trust. It does not offer for sale or solicit orders to buy any securities. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that periodically the Trust may purchase its shares of beneficial interest in the open market at prevailing market prices. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. RA0680.001.1295 [LOGO] Printed on recycled paper 1995 ANNUAL REPORT - ------------------------------------------------------------- OPPENHEIMER MULTI-SECTOR INCOME TRUST OCTOBER 31, 1995 [OPPENHEIMERFUNDS LOGO] -----END PRIVACY-ENHANCED MESSAGE-----