-----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, M6xJ3tcjPurvGq3zOQXtvbgfBu+r54GVVTAISzykFOhSzJWJhkpl8F6MMPbeDnDI TfTg9RUPcWF5Un8nV407/g== 0000950133-01-000060.txt : 20010123 0000950133-01-000060.hdr.sgml : 20010123 ACCESSION NUMBER: 0000950133-01-000060 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20010109 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: SEC FILE NUMBER: 811-05473 FILM NUMBER: 1504360 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: STE 3400 CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123230200 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CTR STREET 2: STE 3400 CITY: NEW YORK STATE: NY ZIP: 10048 N-30D 1 q64206n-30d.txt OPPENHEIMER MULTI-SECTOR INCOME TRUST 1 2000 ANNUAL REPORT OPPENHEIMER MULTI-SECTOR INCOME TRUST [PHOTO] [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 DEAR SHAREHOLDER: We are pleased to present this annual report for Oppenheimer Multi-Sector Income Trust for the reporting period ended October 31, 2000. During the period, the Trust provided a 2.53% average annual total return, which represents dividend income plus the change in value of the underlying bond portfolio. At market value, the Trust's average annual total return was 6.93%, which includes the change in share price on the New York Stock Exchange. The Trust's dividend return was 10.92%.(1) In light of mixed conditions in the world's various bond markets, we are generally pleased with the Fund's performance over the past 12 months. Our returns were driven primarily by the emerging markets, especially bonds issued by countries in Eastern Europe and Latin America. Conversely, returns from most developed nations' bonds, including corporate bonds in the United States and Europe, lagged because of concerns related to potential inflationary pressures and rising interest rates. INVESTMENT BREAKDOWN: OPPENHEIMER MULTI-SECTOR INCOME TRUST AS OF 10/31/00:(2) [PIE CHART] - - Corporate: 35.0% - - International: 28.3% - - Asset-Backed: 19.0% - - Money Market: 8.3% - - U.S. Government: 7.1% - - Convertible: 2.3%
The emerging markets in Asia, Latin America and Eastern Europe outperformed the developed markets over the past year. That's primarily because the emerging markets began the fiscal year in the midst of a recovery from their lows of 1998, when the global credit and currency crisis hit these regions' fixed-income markets particularly hard. That recovery continued into 2000 as more developing nations adopted long-awaited market reforms and solidified their economic foundations. In contrast, most developed markets began the period enjoying strong economic growth characterized by productivity improvements and low inflation. These factors were already reflected in their bond markets when the fiscal year began. When robust growth later threatened to rekindle long-dormant inflationary pressures, their bond markets declined from relatively high levels. In addition, as its economy has slowed, the U.S. market has recently experienced a deterioration of corporate credit quality. Default rates have risen, as has the number of companies receiving credit-rating downgrades from the major bond-rating agencies. As would be expected, this trend was particularly severe among high-yield bond issuers. We attribute the recent deterioration of credit quality to two primary factors. First, although consumer spending has remained strong, many U.S. businesses have not been able to raise prices to offset higher costs for raw materials. If U.S. companies try to raise prices, they are likely to be undercut by overseas competitors whose exports have benefited from the relative strength of the U.S. dollar. Second, many U.S. companies are encountering greater difficulty obtaining financing as lenders have become more cautious in a slower economy. This is a particularly serious problem for companies that need a regular infusion of cash to complete the capital projects required by their business BECAUSE OF ONGOING MARKET VOLATILITY, THE TRUST'S RETURNS MAY FLUCTUATE AND MAY BE LESS THAN THE RESULTS SHOWN. For quarterly updates on the Trust's performance, please contact your financial advisor or call us at 1.800.647.7374. 1. Total returns are based on changes in net asset value and market value, respectively, per share from 10/31/99 to 10/30/00 without deducting any sales charges or brokerage costs. Such performance would have been lower if sales charges and brokerage costs were taken into account. Dividend return is determined by annualizing the October 2000 dividend of $0.07 and dividing by the closing market price on the New York Stock Exchange of $7.69 per share on 10/27/00 (payment date). Past performance does not guarantee future results. 2. Portfolio composition is subject to change. Chart is based on total market value of investments. 3 plans. Fortunately, we have currently focused primarily on industries that tend not to come to the market for refinancing on a regular basis. Our high-yield bond holdings include wireless telecom companies, which comprised the best-performing sector of the high-yield market over the fiscal year. On the other hand, our U.S. government bonds have been one of the bright spots in the world bond markets over the past year. This is especially true of long-term U.S. Treasury bonds, which have benefited from a federal budget surplus. This is primarily because the government has been using a portion of the budget surplus to buy back higher yielding, seasoned bonds, thereby reducing the available supply of government-guaranteed securities. At the same time, U.S. Treasury bonds have remained in demand by domestic and foreign investors seeking a haven for their assets. As a result, prices of those bonds have remained relatively high. Our holdings of mortgage-backed securities issued by U.S. government agencies have also provided positive returns, although not nearly as attractive as those produced by U.S. Treasury securities. Mortgage-backed securities' yields have basically been stable over the past 12 months, as a reduction in pre-payment risk--the tendency of homeowners to refinance or repay their mortgages early--generally offset the effects of higher interest rates. In this environment, we have managed the Trust by generally reducing our exposure to bonds denominated in the euro, and increasing our exposure to the emerging markets. The former strategy was designed to limit our exposure to adverse changes in exchange rates which effect the euro, the new currency of the European Monetary Union. These changes were caused primarily by lackluster economic growth in Europe, as well as by an imbalance in capital flows: European investors have been investing in U.S. markets to a much greater extent than U.S. investors have been investing in European markets. As for our increased allocation to the emerging markets, we have focused primarily on oil-producing nations such as Russia, Venezuela and Mexico. We believe these nations may benefit from the high price of oil. In addition, we have continued to use our proprietary quantitative models. These models help us analyze interest-rate, currency and credit trends. Over the past year, the models' interest-rate and currency forecasts have been particularly helpful to the portfolio management team. Currently, we believe that we are finding very attractive values, in the U.S. high-yield bond market, which we believe has overreacted to recent economic and credit concerns. We believe that the high-yield bond market will begin to rally before default rates actually peak, as was the case after the 1990 recession. In fact, the best high-yield bond market returns of the 1990s occurred as the market recovered in 1991, which was the same year in which default rates peaked. However, it is important to understand that we manage the Trust for the long term, not just according to prevailing economic and market conditions. Accordingly, we continue to evaluate the way the Trust's assets are allocated among the various regions and sectors of the world's bond markets. Indeed, we believe that participating in such a broad world of opportunity is part of what makes OppenheimerFunds The Right Way to Invest. Sincerely, /s/ BRIDGET A. MACASKILL Bridget A. Macaskill President Oppenheimer Multi-Sector Income Trust November 21, 2000 4 STATEMENT OF INVESTMENTS October 31, 2000 Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 ------------- ------------ U.S. GOVERNMENT SECTOR -- 7.0% U.S. Treasury Bonds: 6.375%, 8/15/27(1) .............................................................. $14,000,000 $14,769,734 STRIPS, 5.99%, 11/15/18(1)(2) ................................................... 1,100,000 376,043 U.S. Treasury Nts.: 5.25%, 5/15/04 .................................................................. 2,000,000 1,960,692 6.50%, 2/15/10 .................................................................. 990,000 1,036,640 ----------- Total U.S. Government Sector (Cost $17,712,549) 18,143,109 ----------- CONVERTIBLE SECTOR -- 2.3% PREFERRED STOCKS -- 2.1% Shares ------------- CGA Group Ltd., Series A(3)(4) .................................................... 48,419 1,210,475 Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. ......................... 4,000 153,000 Dobson Communications Corp.: 12.25% Sr. Exchangeable, Non-Vtg.(3) ............................................ 696 617,700 13% Sr. Exchangeable, Non-Vtg.(3) ............................................... 363 331,237 e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(3)(4) .................................................................. 241 41,874 Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(4)(5) .................................................................. 4,000 66,000 Global Crossing Holdings Ltd., 10.50% Sr. Exchangeable(3) ......................... 4,000 385,000 Intermedia Communications, Inc., 13.50% Exchangeable, Series B(3) ..................................................................... 937 798,792 Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable, Non-Vtg.(3) ....................................................... 3,031 379 Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(3) ..................................................................... 404 378,750 Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(3) ..................................................................... 25 225,625 Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(3)(4) .................. 271 215,784 Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A(6) ....................................................... 5,750 506,000 XO Communications, Inc.: 13.50%, Series B(3) ............................................................. 267 200,918 14% Cum. Sr. Exchangeable Redeemable(3) ......................................... 9,832 400,654 ----------- 5,532,188 -----------
3 5 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Units See Note 1 -------------- ------------ RIGHTS, WARRANTS AND CERTIFICATES -- 0.2% Becker Gaming, Inc. Wts., Exp. 11/15/00(4) ........................................ 25,000 $ -- CellNet Data Systems, Inc. Wts., Exp. 10/1/07(6) .................................. 404 252 CGA Group Ltd. Wts., Exp. 6/16/07(4) .............................................. 32,000 9,600 Clearnet Communications, Inc. Wts., Exp. 9/15/05 .................................. 330 10,826 Concentric Network Corp. Wts., Exp. 12/15/07(4) ................................... 600 258,225 Decrane Aircraft Holdings, Inc. Wts., Exp. 9/30/08 ................................ 800 -- e.spire Communications, Inc. Wts., Exp. 11/1/05(4) ................................ 700 2,522 Equinix, Inc. Wts., Exp. 12/1/07(4) ............................................... 400 60,050 FirstWorld Communications, Inc. Wts., Exp. 4/15/08(6) ............................. 500 5,500 Gothic Energy Corp. Wts.: Exp. 1/23/03 .................................................................... 6,053 -- Exp. 1/23/03(4) ................................................................. 3,455 35 Exp. 9/1/04 ..................................................................... 10,150 -- ICG Communications, Inc. Wts., Exp. 9/15/05 ....................................... 4,125 547 In-Flight Phone Corp. Wts., Exp. 8/31/02 .......................................... 900 -- Insilco Corp. Wts., Exp. 8/15/07(4) ............................................... 720 720 KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(4) .................................. 920 1,898 Leap Wireless International, Inc., Wts., Exp. 4/15/10(4) .......................... 400 4,450 Long Distance International, Inc. Wts., Exp. 4/13/08(4) ........................... 400 40 Loral Space & Communications Ltd. Wts., Exp. 1/15/07(4) ........................... 975 5,058 Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(4) ................................. 700 394 Pathmark Stores, Inc. Wts., Exp. 9/19/10 .......................................... 6,738 30,321 Protection One Alarm Monitoring, Inc. Wts., Exp. 6/30/05(4) ....................... 6,400 640 Republic Technologies International LLC Wts., Exp. 7/15/09(4) ..................... 200 2 WAM!NET, Inc. Wts., Exp. 3/1/05(4) ................................................ 1,500 17,625 ----------- 408,705 ----------- Total Convertible Sector (Cost $7,035,644) 5,940,893 ----------- CORPORATE SECTOR -- 34.7% COMMON STOCKS -- 0.1% Shares -------------- Capital Gaming International, Inc.(5) ............................................. 18 -- OpTel, Inc., Non-Vtg.(4)(5) ....................................................... 815 8 Pathmark Stores, Inc.(5) .......................................................... 9,526 149,439 Purina Mills, Inc.(5) ............................................................. 2,094 15,705 Star Gas Partners LP .............................................................. 220 3,671 WRC Media Corp.(4)(5) ............................................................. 676 7 ----------- 168,830 -----------
4 6 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ CORPORATE BONDS AND NOTES -- 33.5% Aerospace/Defense -- 0.7% BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08............................ $ 500,000 $ 492,500 Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts., Series 1997-1, Cl. 1, 1/1/01(4)............................................ 500,000 485,000 Decrane Aircraft Holdings, Inc., 12% Sr. Unsec. Sub. Nts., Series B, 9/30/08................................................................ 800,000 732,000 Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06......................... 250,000 187,500 ----------- 1,897,000 ----------- Chemicals -- 1.2% Georgia Gulf Corp., 10.375% Sr. Unsec. Sub. Nts., 11/1/07.......................... 325,000 320,125 Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Unsec. Disc. Nts., 13.08%, 12/31/09(2)........................................... 1,150,000 345,000 Lyondell Chemical Co.: 9.625% Sr. Sec. Nts., Series A, 5/1/07........................................... 250,000 243,125 9.875% Sec. Nts., Series B, 5/1/07............................................... 500,000 488,750 Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07........................ 400,000 182,000 Polymer Group, Inc.: 8.75% Sr. Sub. Nts., 3/1/08(4)................................................... 500,000 352,500 9% Sr. Unsec. Sub. Nts., Series B, 7/1/07........................................ 500,000 357,500 Sterling Chemicals, Inc.: 11.75% Sr. Unsec. Sub. Nts., 8/15/06............................................. 350,000 194,250 12.375% Sr. Sec. Nts., Series B, 7/15/06......................................... 750,000 723,750 ----------- 3,207,000 ----------- Consumer Durables -- 0.2% Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08(4)............................................................. 293,000 273,955 Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07............................................................... 400,000 210,000 Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(4)..................... 300,000 100,500 ----------- 584,455 ----------- Consumer Non-Durables -- 0.7% AKI, Inc., 10.50% Sr. Unsec. Nts., 7/1/08.......................................... 600,000 480,000 Consoltex Group, Inc., 11% Sr. Sub. Nts., Series B, 10/1/03........................ 370,000 264,550 Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08(4)(7)........................................................... 400,000 42,000 Revlon Consumer Products Corp., 9% Sr. Nts., 11/1/06............................... 775,000 569,625
5 7 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Consumer Non-Durables (continued) Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05................................ $400,000 $ 390,000 Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(7).................. 400,000 34,000 ----------- 1,780,175 ----------- Energy -- 2.6% Chesapeake Energy Corp., 9.625% Sr. Unsec. Nts., Series B, 5/1/05.................. 550,000 554,812 Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07................ 600,000 424,500 Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08................................. 400,000 362,000 Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09...................................... 600,000 612,000 Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05................... 900,000 949,500 Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08.................. 380,000 218,500 Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07......................... 790,000 770,250 R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06.................................. 400,000 470,000 RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08.................................. 600,000 459,000 RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06........................................ 500,000 571,250 Statia Terminals International NV/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts., Series B, 11/15/03....................................... 200,000 202,500 Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07................................... 535,000 529,650 Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(8)....................................................... 700,000 570,500 ----------- 6,694,462 ----------- Financial -- 0.6% AMRESCO, Inc., 9.875% Sr. Sub. Nts., Series 98-A, 3/15/05.......................... 400,000 218,000 General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04[GBP]............... 245,000 357,668 LaBranche & Co., Inc., 12% Sr. Unsec. Sub. Nts., 3/1/07............................ 250,000 267,500 Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08................................................................. 700,000 603,750 ----------- 1,446,918 ----------- Food & Drug -- 0.5% Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02................................... 300,000 67,500 Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07....................... 600,000 453,000 Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07................................. 775,000 716,875 ----------- 1,237,375 ----------- Food/Tobacco -- 0.5% Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08.......................... 300,000 229,500 Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(4)(8)......................................................... 327,000 245,250 Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05........................ 650,000 542,750 SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08....................... 400,000 362,000 ----------- 1,379,500 -----------
6 8 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Forest Products/Containers -- 1.2% Ball Corp.: 7.75% Sr. Unsec. Nts., 8/1/06.................................................... $300,000 $ 287,250 8.25% Sr. Unsec. Sub. Nts., 8/1/08............................................... 400,000 376,000 Gaylord Container Corp., 9.75% Sr. Unsec. Nts., Series B, 6/15/07.................. 100,000 63,500 Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09.................... 300,000 307,500 Riverwood International Corp.: 10.25% Sr. Nts., 4/1/06.......................................................... 600,000 588,000 10.625% Sr. Unsec. Nts., 8/1/07.................................................. 450,000 443,250 10.875% Sr. Sub. Nts., 4/1/08.................................................... 400,000 363,000 SD Warren Co., 14% Unsec. Nts., 12/15/06(3)........................................ 556,199 610,428 ----------- 3,038,928 ----------- Gaming/Leisure -- 1.7% Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995(4)(5)(7)................................................................ 5,500 -- Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07.................................... 435,000 406,181 HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08............................ 500,000 477,500 Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07................................ 700,000 704,375 Mandalay Resort Group, 10.25% Sr. Unsec. Sub. Nts., Series B, 8/1/07................................................................. 750,000 770,625 Mohegan Tribal Gaming Authority, 8.75% Sr. Unsec. Sub. Nts., 1/1/09........................................................................... 500,000 490,000 Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(8)................................................. 500,000 331,250 9.25% Sr. Nts., 4/1/06........................................................... 300,000 277,500 Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06............................. 440,000 407,000 Station Casinos, Inc.: 9.75% Sr. Sub. Nts., 4/15/07..................................................... 300,000 301,500 10.125% Sr. Sub. Nts., 3/15/06................................................... 200,000 202,000 ----------- 4,367,931 ----------- Healthcare -- 1.0% Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08(4).................... 600,000 559,500 ICN Pharmaceutical, Inc., 9.75% Sr. Nts., 11/15/08(6).............................. 415,000 413,962 Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08.......................... 550,000 363,000 Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05............................ 250,000 273,750 Tenet Healthcare Corp.: 8.125% Sr. Unsec. Sub. Nts., Series B, 12/1/08................................... 250,000 242,187 8.625% Sr. Sub. Nts., 1/15/07.................................................... 750,000 750,000 ----------- 2,602,399 -----------
7 9 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Housing -- 0.6% Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06............................................................... $ 250,000 $ 76,250 D.R. Horton, Inc., 9.75% Sr. Sub. Nts., 9/15/10.................................... 625,000 591,406 Nortek, Inc.: 9.125% Sr. Unsec. Nts., Series B, 9/1/07......................................... 420,000 378,000 9.25% Sr. Nts., Series B, 3/15/07................................................ 600,000 537,000 ----------- 1,582,656 ----------- Information Technology -- 1.7% Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05............................... 400,000 389,500 EchoStar Broadband Corp., 10.375% Sr. Nts., 10/1/07(6)............................. 3,000,000 3,022,500 Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07......................................................... 500,000 492,500 Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08............. 185,000 169,737 Flextronics International Ltd., 9.875% Sr. Sub. Nts., 7/1/10(6).................... 400,000 406,000 ----------- 4,480,237 ----------- Manufacturing -- 1.7% Actuant Corp., 13% Sr. Sub. Nts., 5/1/09(4)........................................ 300,000 295,500 Blount, Inc., 13% Sr. Sub. Nts., 8/1/09............................................ 400,000 340,000 Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07................................. 700,000 227,500 Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08................. 350,000 252,000 Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08................................... 700,000 98,000 Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07................. 600,000 450,000 Insilco Corp., 12% Sr. Sub. Nts., 8/15/07.......................................... 800,000 788,000 International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05............. 700,000 696,500 Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08......................... 280,000 77,000 Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07.......................................................................... 500,000 447,500 Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08(4)................................ 100,000 88,500 Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(1)(4)........................... 525,000 494,813 ----------- 4,255,313 ----------- Media/Entertainment: Broadcasting -- 1.0% Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07.............. 700,000 715,750 Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08.......................... 500,000 402,500 Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09................................................................ 600,000 558,000 Radio One, Inc., 12% Sr. Sub. Nts., Series B, 5/15/04(9)........................... 700,000 728,000 Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07............................ 300,000 271,500 ----------- 2,675,750 -----------
8 10 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Media/Entertainment: Cable/Wireless Video -- 1.3% Adelphia Communications Corp.: 8.125% Sr. Nts., Series B, 7/15/03............................................... $250,000 $ 228,750 8.375% Sr. Nts., Series B, 2/1/08................................................ 100,000 82,500 9.875% Sr. Nts., Series B, 3/1/07................................................ 565,000 511,325 10.875% Sr. Unsec. Nts., 10/1/10................................................. 500,000 470,000 Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.: 0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(8)........................................ 850,000 496,188 8.625% Sr. Unsec. Nts., 4/1/09................................................... 500,000 452,500 Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10.................................. 300,000 249,000 EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09................................. 500,000 493,750 United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(8)............................................................. 600,000 369,000 ----------- 3,353,013 ----------- Media/Entertainment: Diversified Media -- 0.6% AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11........................ 500,000 237,500 Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07............................... 500,000 492,500 Mail-Well I Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 12/15/08(4)............... 325,000 242,125 WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp., 12.75% Sr. Sub. Nts., 11/15/09................................................... 500,000 442,500 ----------- 1,414,625 ----------- Media/Entertainment: Telecommunications -- 4.1% Colo.com, Units (each unit consists of $1,000 principal amount of 13.875% sr. nts., 3/15/10 and one warrant to purchase 19.9718 shares of common stock at $.01 per share)(6)(10)................................. 300,000 226,500 Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07......................... 495,000 470,250 Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(8)....................................................................... 300,000 85,500 Equinix, Inc., 13% Sr. Unsec. Nts., 12/1/07........................................ 400,000 320,000 Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08............................... 765,000 715,275 Focal Communications Corp.: 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(8)..................................... 100,000 50,500 11.875% Sr. Unsec. Nts., Series B, 1/15/10....................................... 600,000 465,000 Global Crossing Holdings Ltd., 9.625% Sr. Unsec. Nts., 5/15/08..................... 400,000 384,000 Intermedia Communications, Inc.: 0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(8).................................... 500,000 322,500 8.50% Sr. Nts., Series B, 1/15/08................................................ 500,000 472,500 8.60% Sr. Unsec. Nts., Series B, 6/1/08.......................................... 300,000 284,250
9 11 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Media/Entertainment: Telecommunications (continued) KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(8)....................................................................... $ 700,000 $ 73,500 Level 3 Communications, Inc.: 0%/10.50% Sr. Disc. Nts., 12/1/08(8)............................................. 250,000 136,250 9.125% Sr. Unsec. Nts., 5/1/08................................................... 250,000 203,125 11% Sr. Unsec. Nts., 3/15/08..................................................... 250,000 226,250 11.25% Sr. Unsec. Nts., 3/15/10.................................................. 500,000 452,500 Metromedia Fiber Network, Inc.: 10% Sr. Nts., 12/15/09........................................................... 250,000 223,125 10% Sr. Unsec. Nts., Series B, 11/15/08.......................................... 600,000 534,000 MGC Communications, Inc./Mpower Holding Corp., 13% Sr. Unsec. Nts., 4/1/10...................................................... 600,000 339,000 NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10....................... 300,000 280,500 OpTel, Inc., 13% Sr. Nts., Series B, 2/15/05(4)(7)................................. 250,000 156,250 PSINet, Inc.: 10% Sr. Unsec. Nts., Series B, 2/15/05........................................... 400,000 193,000 10.50% Sr. Nts., 12/1/06(6) [EUR]................................................ 500,000 226,733 RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10........................................ 250,000 171,250 Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts., Series B, 2/15/10................................................................ 400,000 194,000 Teligent, Inc., 11.50% Sr. Nts., 12/1/07........................................... 200,000 87,000 Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08................................... 500,000 445,000 Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08........................................ 195,000 98,475 WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(8)................ 750,000 341,250 Williams Communications Group, Inc., 11.875% Sr. Unsec. Nts., 8/1/10(6)........................................................................ 1,000,000 892,500 Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(6).......................... 300,000 213,000 XO Communications, Inc.: 9% Sr. Unsec. Nts., 3/15/08...................................................... 250,000 203,750 9.625% Sr. Nts., 10/1/07......................................................... 300,000 253,500 10.75% Sr. Unsec. Nts., 11/15/08................................................. 450,000 396,000 10.75% Sr. Unsec. Nts., 6/1/09................................................... 500,000 441,250 ----------- 10,577,483 ----------- Media/Entertainment: Wireless Communications -- 5.4% Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07................................. 100,000 54,500 CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts., 10/1/07(4)(5)(7)(8).............................................................. 554,000 3,463 CFW Communications Co., Units (each unit consists of $1,000 principal amount of 13% sr. nts., 8/15/10 and one warrant to purchase 1.8 shares of common stock at $47.58 per share)(8)(10).................. 500,000 417,500
10 12 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Media/Entertainment: Wireless Communications (continued) Crown Castle International Corp.: 0%/10.375% Sr. Disc. Nts., 5/15/11(8)............................................ $ 550,000 $ 353,375 0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(8).................................... 800,000 612,000 10.75% Sr. Nts., 8/1/11.......................................................... 450,000 463,500 Exodus Communications, Inc., 11.625% Sr. Nts., 7/15/10(6).......................... 1,250,000 1,162,500 Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10....................................... 600,000 333,000 Horizon PCS, Inc., Units (each unit consists of $1,000 principal amount of 0%/14% sr. disc. nts., 10/1/10 and one warrant to purchase 12.9 shares of Cl. A common stock at $5.88 per share)(6)(8)(10)....................................................... 1,000,000 480,000 ICO Global Communications (Holdings) Ltd., Units (each unit consists of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to purchase 19.85 shares of common stock)(4)(5)(7)(10)................... 400,000 240,000 Leap Wireless International, Inc., 12.50% Sr. Nts., 4/15/10........................ 400,000 294,000 Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(8)........................................................................ 205,000 167,075 Nextel Communications, Inc.: 0%/9.75% Sr. Disc. Nts., 10/31/07(8)............................................. 250,000 191,875 0%/10.65% Sr. Disc. Nts., 9/15/07(8)............................................. 250,000 201,875 9.375% Sr. Unsec. Nts., 11/15/09................................................. 750,000 725,625 Omnipoint Corp., 11.50% Sr. Nts., 9/15/09(6)....................................... 200,000 222,750 ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(4)(7).................................................................... 175,000 27,125 Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(4)(8)............... 1,150,000 287,500 Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(8).................. 900,000 517,500 Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07................. 100,000 107,000 Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08...................... 700,000 640,500 SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(8).................. 1,300,000 968,500 Spectrasite Holdings, Inc.: 0%/12% Sr. Disc. Nts., 7/15/08(8)................................................ 600,000 394,500 10.75% Sr. Nts., 3/15/10(8)...................................................... 250,000 231,250 TeleCorp PCS, Inc.: 0%/11.625% Sr. Unsec. Sub. Disc. Nts., 4/15/09(8)................................ 200,000 130,000 10.625% Sr. Unsec. Sub. Nts., 7/15/10............................................ 800,000 802,000 Tritel PCS, Inc., 0%/12.75% Sr. Unsec. Sub. Disc. Nts., 5/15/09(8)................. 400,000 261,000 Triton PCS, Inc., 0%/11% Sr. Unsec. Sub. Disc. Nts., 5/1/08(8)..................... 250,000 190,625 US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B, 11/1/09(8)....................................................................... 1,200,000 591,000
11 13 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Media/Entertainment: Wireless Communications (continued) VoiceStream Wireless Corp., 10.375% Sr. Unsec. Nts., 11/15/09...................... $2,611,885 $ 2,807,776 Williams Communications Group, Inc., 10.875% Sr. Unsec. Nts., 10/1/09.......................................................................... 100,000 84,750 ----------- 13,964,064 ----------- Metals/Minerals -- 1.1% AK Steel Corp.: 7.875% Sr. Unsec. Nts., 2/15/09.................................................. 500,000 455,000 9.125% Sr. Nts., 12/15/06........................................................ 400,000 394,000 Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08.................. 800,000 616,000 Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03..................... 500,000 377,500 Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(8)..................... 500,000 130,000 Metallurg, Inc., 11% Sr. Nts., 12/1/07............................................. 200,000 160,000 National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09.................... 250,000 108,750 P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08................... 600,000 586,500 Republic Technologies International LLC/RTI Capital Corp., 13.75% Sr. Sec. Nts., 7/15/09........................................................... 200,000 31,250 ----------- 2,859,000 ----------- Retail -- 0.5% Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(3).......................... 1,000,000 507,500 Finlay Enterprises, Inc., 9% Debs., 5/1/08......................................... 500,000 452,500 Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08................................. 300,000 274,500 ----------- 1,234,500 ----------- Service -- 1.0% Allied Waste North America, Inc.: 7.625% Sr. Nts., Series B, 1/1/06................................................ 250,000 223,750 7.875% Sr. Unsec. Nts., Series B, 1/1/09......................................... 200,000 173,500 10% Sr. Unsec. Sub. Nts., Series B, 8/1/09....................................... 600,000 516,000 AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(4)(8)......................... 150,000 11,438 Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08(4)................................ 400,000 142,500 Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07(4)....................... 200,000 90,000 Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07......................................... 600,000 462,000 Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09.................... 250,000 228,750 Protection One, Inc., 7.375% Sr. Unsec. Nts., 8/15/05.............................. 600,000 417,000 Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09(4)(7)........................... 50,000 750 United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09................ 500,000 412,500 ----------- 2,678,188 -----------
12 14 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Transportation -- 2.8% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05............................... $1,000,000 $ 965,000 Amtran, Inc., 10.50% Sr. Nts., 8/1/04.............................................. 1,450,000 1,330,375 Atlas Air, Inc.: 9.25% Sr. Nts., 4/15/08.......................................................... 675,000 666,563 9.375% Sr. Unsec. Nts., 11/15/06................................................. 800,000 788,000 Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06................................. 600,000 225,000 Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08.......................................................................... 610,000 613,050 Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(8)....................................................................... 750,000 356,250 Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07.......................................................................... 600,000 477,000 Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08...................................... 500,000 337,500 Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04......................... 600,000 399,000 Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts., Series B, 12/15/03............................................................... 1,000,000 995,000 ----------- 7,152,738 ----------- Utility -- 0.8% Azurix Corp., 10.75% Sr. Unsec. Nts., Series B, 2/15/10............................ 300,000 277,500 CMS Energy Corp., 9.875% Sr. Unsec. Nts., 10/15/07................................. 800,000 808,374 El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11................. 470,000 496,115 ESI Tractebel Acquisition Corp., 7.99% Sec. Bonds, Series B, 12/30/11............................................................... 500,000 451,965 ----------- 2,033,954 ----------- 86,497,664 ----------- LOAN PARTICIPATIONS -- 0.8% Shoshone Partners Loan Trust Sr. Nts., 8.461%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(4)(9)........................... 2,500,000 1,957,402 ----------- STRUCTURED INSTRUMENTS -- 0.3% Alpha Wind 2000-A Ltd. Nts.: 11.25%, 5/23/01(4)(9)............................................................ 250,000 250,000 13.69%, 5/23/01(4)(9)............................................................ 400,000 400,000 ----------- 650,000 ----------- Total Corporate Sector (Cost $104,136,358) 89,273,896 -----------
13 15 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ INTERNATIONAL SECTOR -- 28.0% CORPORATE BONDS AND NOTES -- 7.2% Energy -- 0.6% Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05.............................. $ 1,000,000 $1,020,000 Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08.................................. 700,000 598,500 ----------- 1,618,500 ----------- Financial -- 0.6% Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/1999(4)(5)(7) [IDR]......................................................... 3,160,000,000 50,641 Eurofima, 7.50% Sr. Unsec. Unsub. Nts., 11/4/02[DEM]............................... 770,000 346,693 Hanvit Bank: 0%/12.75% Unsec. Sub. Nts., 3/1/10(6)(8)......................................... 765,000 747,787 0%/12.75% Unsec. Sub. Nts., 3/1/10(8)............................................ 405,000 395,887 PT Polysindo Eka Perkasa: 20% Nts., 3/6/01(5)(7) [IDR]..................................................... 3,000,000,000 41,667 24% Nts., 6/19/03(5)(7) [IDR].................................................... 1,314,400,000 18,256 ----------- 1,600,931 ----------- Food/Tobacco -- 0.2% Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07......................................................................... 565,000 411,037 ----------- Forest Products/Containers -- 0.4% Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04..................................... 750,000 444,375 Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05.......................................................................... 600,000 619,500 ----------- 1,063,875 ----------- Gaming/Leisure -- 0.3% Intrawest Corp., 9.75% Sr. Nts., 8/15/08........................................... 800,000 784,000 ----------- Media/Entertainment: Cable/Wireless Video -- 2.3% Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(8)...................................................................... 1,600,000 1,496,000 Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(4)................................... 200,000 175,000 NTL Communications Corp.: 0%/9.78% Sr. Nts., 11/15/09(6)(8) [EUR].......................................... 750,000 321,029 0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(8)................................. 1,500,000 885,000 9.875% Sr. Unsec. Nts., Series B, 11/15/09[EUR].................................. 500,000 355,992 11.50% Sr. Unsec. Nts., Series B, 10/1/08........................................ 500,000 460,000 NTL, Inc., 10% Sr. Nts., Series B, 2/15/07......................................... 550,000 486,750
14 16 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Media/Entertainment: Cable/Wireless Video (continued) Telewest Communications plc: 0%/9.25% Sr. Disc. Nts., 4/15/09(8).............................................. $ 250,000 $ 113,125 0%/9.875% Sr. Nts., 4/15/09(6)(8) [GBP].......................................... 450,000 280,981 11% Sr. Disc. Debs., 10/1/07..................................................... 500,000 437,500 11.25% Sr. Nts., 11/1/08......................................................... 1,035,000 905,625 ----------- 5,917,002 ----------- Media/Entertainment: Diversified Media -- 0.4% Imax Corp., 7.875% Sr. Nts., 12/1/05(4)............................................ 700,000 395,500 IPC Magazines Group plc, 0%/10.75% Bonds, 3/15/08(4)(8) [GBP]...................... 800,000 714,433 ----------- 1,109,933 ----------- Media/Entertainment: Telecommunications -- 1.8% 360networks, Inc.: 12% Sr. Unsec. Sub. Nts., 8/1/09................................................. 200,000 159,000 13% Sr. Unsec. Nts., 5/1/08[EUR]................................................. 600,000 415,748 COLT Telecom Group plc, 0%/12% Sr. Unsec. Disc. Nts., 12/15/06(8)...................................................................... 1,000,000 910,000 FLAG Telecom Holdings Ltd.: 11.625% Sr. Nts., 3/30/10(4) [EUR]............................................... 200,000 139,854 11.625% Sr. Unsec. Nts., 3/30/10................................................. 200,000 169,000 Global TeleSystems, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06[EUR].................... 500,000 209,781 Jazztel plc, 13.25% Sr. Unsec. Nts., 12/15/09[EUR]................................. 1,250,000 715,163 RSL Communications plc: 10.50% Sr. Unsec. Nts., 11/5/08.................................................. 500,000 91,250 12.875% Sr. Unsec. Nts., 3/1/10.................................................. 1,000,000 205,000 Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09[EUR].................................... 425,000 300,792 United Pan-Europe Communications NV: 0%/13.75% Sr. Unsec. Disc. Nts., Series B, 2/1/10(8)............................. 1,000,000 375,000 10.875% Sr. Nts., 8/1/09[EUR].................................................... 750,000 483,132 Versatel Telecom International NV: 11.25% Sr. Nts., 3/30/10(6) [EUR]................................................ 400,000 246,652 11.875% Sr. Nts., 7/15/09[EUR]................................................... 250,000 158,925 ----------- 4,579,297 ----------- Media/Entertainment: Wireless Communications -- 0.2% Microcell Telecommunications, Inc., 0%/12% Sr. Unsec. Disc. Nts., 6/1/09(8)........................................................................ 750,000 532,500 ----------- Metals/Minerals -- 0.1% International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08(4)............ 200,000 145,000 -----------
15 17 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Service -- 0.1% Petroleos Mexicanos Bonds, 9.50%, 9/15/27.......................................... $ 157,000 $ 159,355 ----------- Transportation -- 0.0% Pacific & Atlantic Holdings, Inc., 10.50% Sec. Nts., 12/31/07(4)................... 122,176 61,088 ----------- Utility -- 0.2% AES Drax Energy Ltd., 11.50% Sr. Sec. Bonds, 8/30/10(6)............................ 600,000 633,000 ----------- 18,615,518 ----------- Shares -------------- PREFERRED STOCKS -- 0.0% Pacific & Atlantic Holdings, Inc., 7.50% Cum. Cv., Series A(3)(5).................. 16,406 90,233 ----------- COMMON STOCKS -- 0.4% COLT Telecom Group plc, ADR(5)..................................................... 7,020 916,988 ----------- Units -------------- RIGHTS, WARRANTS AND CERTIFICATES -- 0.1% Mexico Value Rts., Exp. 6/30/03.................................................... 779,000 -- Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(6)............................ 2,800 161,876 ----------- 161,876 ----------- Principal FOREIGN GOVERNMENT OBLIGATIONS -- 18.0% Amount -------------- Argentina -- 1.3% Argentina (Republic of) Bonds: 11.375%, 3/15/10................................................................. $ 545,000 456,437 11.75%, 6/15/15.................................................................. 305,000 260,165 12.125%, 2/25/19................................................................. 165,000 141,075 Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas: Series PRO1, 2.735%, 4/1/07(9) [ARP]............................................. 2,596,987 1,763,034 Series PRO2, 6.62%, 4/1/07(3)(9)................................................. 227,796 183,327 Argentina (Republic of) Par Bonds, 6%, 3/31/23(9).................................. 205,000 134,787 Argentina (Republic of) Unsec. Unsub. Nts., 11.75%, 4/7/09......................... 390,000 341,250 Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas, Series PBA1, 2.735%, 4/1/07(9) [ARP].................................. 134,450 87,475 ----------- 3,367,550 ----------- Belgium -- 0.9% Belgium (Kingdom of) Bonds, Series 35, 5.75%, 9/28/10[EUR]......................... 2,800,000 2,401,759 -----------
16 18 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) Brazil -- 1.6% Brazil (Federal Republic of) Bonds: 12.25%, 3/6/30................................................................... $ 285,000 $ 248,805 12.75%, 1/15/20.................................................................. 280,000 258,300 Brazil (Federal Republic of) Debt Capitalization Bonds, 8%, 4/15/14...................................................................... 123,141 91,894 Brazil (Federal Republic of) Eligible Interest Bonds, 7.625%, 4/15/06(9)............................................................... 274,560 250,536 Brazil (Federal Republic of) Gtd. Disc. Bonds, 7.625%, 4/15/24(9).................. 515,000 395,262 Brazil (Federal Republic of) Par Bonds, 6%, 4/15/24(9)............................. 595,000 388,981 Brazil (Federal Republic of) Unsec. Unsub. Bonds, 11%, 8/17/40..................... 2,081,400 1,587,068 Brazil (Federal Republic of) Unsub. Bonds, 14.50%, 10/15/09........................ 705,000 751,883 ----------- 3,972,729 ----------- Bulgaria -- 0.2% Bulgaria (Republic of) Disc. Bonds, Tranche A, 7.75%, 7/28/24(9)................... 510,000 383,775 Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 3%, 7/28/12 (9)......................................... 145,000 104,219 ----------- 487,994 ----------- Canada -- 0.4% Canada (Government of) Bonds, Series J24, 10.25%, 2/1/04[CAD]...................... 1,500,000 1,106,953 ----------- Colombia -- 0.3% Colombia (Republic of) Bonds, 9.75%, 4/23/09....................................... 93,000 74,633 Colombia (Republic of) Unsec. Unsub. Bonds, 7.625%, 2/15/07........................ 430,000 326,263 Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06(4)......................... 570,000 451,725 ----------- 852,621 ----------- Ecuador -- 0.3% Ecuador (Republic of) Bonds, 4%, 8/15/30(6)(9)..................................... 802,000 305,161 Ecuador (Republic of) Unsec. Bonds: 4%, 8/15/30(9)................................................................... 778,000 296,029 12%, 11/15/12(6)................................................................. 105,000 71,400 12%, 11/15/12.................................................................... 75,000 51,000 ----------- 723,590 ----------- Finland -- 0.9% Finland (Republic of) Bonds, 5.75%, 2/23/11[EUR]................................... 2,700,000 2,342,003 ----------- France -- 0.6% France (Government of) Bonds, Obligations Assimilables du Tresor, 5.50%, 4/25/07[EUR].............................................................. 1,750,000 1,505,683 -----------
17 19 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) Germany -- 0.4% Germany (Republic of) Bonds: 5.375%, 1/4/10[EUR].............................................................. 1,130,000 $ 968,515 Series 95, 6.50%, 10/14/05[EUR].................................................. 799 717 ----------- 969,232 ----------- Great Britain -- 1.4% United Kingdom Treasury Bonds, 8%, 6/10/03[GBP].................................... 2,300,000 3,516,841 ----------- Greece -- 0.2% Hellenic (Republic of) Bonds, 8.60%, 3/26/08[GRD].................................. 207,200,000 597,687 ----------- Italy -- 1.0% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali: 5.25%, 12/15/05[EUR]............................................................. 300,000 253,339 5.50%, 11/1/10[EUR].............................................................. 2,800,000 2,370,195 ----------- 2,623,534 ----------- Ivory Coast -- 0.0% Ivory Coast (Government of) Past Due Interest Bonds, Series F, 1.90%, 3/29/18(7) [FRF]................................................ 4,569,500 84,877 ----------- Japan -- 1.7% Japan (Government of) Bonds, Series 187, 3.30%, 6/20/06[JPY]....................... 429,000,000 4,338,326 ----------- Mexico -- 0.7% United Mexican States Bonds, 11.375%, 9/15/16...................................... 1,520,000 1,725,200 ----------- Norway -- 0.5% Norway (Government of) Bonds, 5.50%, 5/15/09[NOK].................................. 11,970,000 1,214,915 ----------- Panama -- 0.2% Panama (Republic of) Bonds, 8.875%, 9/30/27........................................ 347,000 293,215 Panama (Republic of) Interest Reduction Bonds, 4.50%, 7/17/14(9)................... 265,000 210,675 ----------- 503,890 ----------- Peru -- 0.6% Peru (Republic of) Front-Loaded Interest Reduction Bonds, 3.75%, 3/7/17(9)................................................................. 3,090,000 1,645,425 ----------- Philippines -- 0.2% Philippines (Republic of) Nts., 10.625%, 3/16/25................................... 470,000 359,550 Philippines (Republic of) Unsec. Bonds, 9.875%, 1/15/19............................ 85,000 63,538 ----------- 423,088 -----------
18 20 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) Portugal -- 0.1% Portugal (Republic of) Obrig Do Tes Medio Prazo Unsub. Nts., 5.85%, 5/20/10[EUR].............................................................. 305,000 $ 263,314 ----------- Russia -- 2.6% Russian Federation Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03......................... 300,000 287,156 Russian Federation Unsec. Unsub. Nts.: 8.75%, 7/24/05................................................................... 1,134,000 893,025 10%, 6/26/07..................................................................... 160,000 120,200 12.75%, 6/24/28.................................................................. 3,269,000 2,754,133 Russian Federation Unsub. Nts.: 2.50%, 3/31/30(9)................................................................ 7,028,750 2,655,550 8.25%, 3/31/10(4)................................................................ 110,731 71,283 ----------- 6,781,347 ----------- South Africa -- 0.4% South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10[ZAR].................... 7,860,000 998,441 ----------- Spain -- 0.3% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 5.15%, 7/30/09[EUR].............................................................. 815,000 675,127 ----------- Turkey -- 0.1% Turkey (Republic of) Bonds, 11.75%, 6/15/10........................................ 254,000 246,221 ----------- Venezuela -- 1.1% Venezuela (Republic of) Bonds, 9.25%, 9/15/27(11).................................. 737,000 488,263 Venezuela (Republic of) Collateralized Par Bonds: Series W-A, 6.75%, 3/31/20....................................................... 1,310,000 975,950 Series W-B, 6.75%, 3/31/20....................................................... 125,000 93,125 Venezuela (Republic of) Debs., Series DL, 7.875%, 12/18/07(9)...................... 1,590,719 1,334,216 ----------- 2,891,554 ----------- 46,259,901 ----------- LOAN PARTICIPATIONS -- 0.4% Algeria (Republic of) Trust III Nts., Tranche 3, 2.387%, 3/4/10(4)(9) [JPY]........ 129,496,000 800,529 Morocco (Kingdom of) Loan Participation Agreement, Tranche A, 7.75%, 1/1/09(4)(9)................................................... 363,611 317,251 ----------- 1,117,780 -----------
19 21 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ STRUCTURED INSTRUMENTS -- 1.9% Citibank NA (Nassau Branch), Mexican Nuevo Peso Linked Nts.: 18.70%, 3/3/03[MXN].............................................................. 6,658,621 $ 662,209 19.75%, 6/27/02[MXN]............................................................. 3,600,000 374,727 20.90%, 6/23/03[MXN]............................................................. 3,540,000 368,740 21.20%, 6/16/03[MXN]............................................................. 7,038,000 735,900 21.30%, 6/23/03[MXN]............................................................. 1,775,000 186,059 Deutsche Bank AG, Mexican Nuevo Peso Linked Nts., Zero Coupon, 16.38%, 6/20/03(2) [MXN]......................................................... 8,452,927 582,639 ING Barings LLC, Zero Coupon USD Russian Equity Linked Nts., 4/19/01.......................................................................... 3,400 249,764 Salomon Brothers, Inc., Zero Coupon Brazilian Eligible Interest Linked Nts., 11.24%, 4/9/01(9)................................................... 1,380,000 1,075,986 Salomon Smith Barney, Inc. Turkish Lira Linked Nts., 11%, 1/17/01.................. 768,000 781,455 ---------- 5,017,479 ----------
Date Strike Contracts --------- --------- --------- CALL OPTIONS PURCHASED -- 0.0% European Monetary Unit Call................................ 12/5/00 0.937EUR 2,809,500 2,666 South Korean Won Call...................................... 11/28/00 100.00KRW 740,000 296 ---------- 2,962 ---------- Total International Sector (Cost $78,885,491) 72,182,737 ----------
Principal Amount -------------- ASSET-BACKED SECTOR -- 18.8% ASSET-BACKED SECURITIES -- 0.8% Home Equity Loans -- 0.8% Asset Backed Securities Corp. Long Beach Home Equity Loan Trust, Home Equity Loan Pass-Through Certificates, Series 2000-LB1, Cl. M2F, 8.70%, 3/21/29.......................................................... $1,000,000 1,015,625 Principal Residential Mortgage Capital Trust, Collateralized Mtg. Obligations, Series 2000-1, Cl. B, 8.27%, 6/20/05(4)(9).......................... 1,000,000 1,000,000 ----------- 2,015,625 ----------- GOVERNMENT AGENCY -- 16.1% FHLMC/FNMA/Sponsored -- 15.6% Federal Home Loan Mortgage Corp.: 8%, 11/15/30(12)................................................................. 3,500,000 3,547,040 12%, 5/1/10-10/1/14.............................................................. 671,346 737,333
20 22 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ FHLMC/FNMA/Sponsored (continued) Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 1331, Cl. Z, 8%, 4/15/07...................................................................... $ 2,747,594 $ 2,781,940 Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2054, Cl. TE, 6.25%, 4/15/24................................................................... 534,000 506,964 Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security: Series 194, Cl. IO, 9.41%, 4/1/28(13)............................................ 1,707,718 521,388 Series 197, Cl. IO, 8.85%, 4/1/28(13)............................................ 4,242,346 1,288,613 Series 199, Cl. IO, 21.45%, 8/1/28(13)........................................... 11,792,270 3,696,140 Series 202, Cl. IO, 10.46%, 4/1/29(13)........................................... 1,965,121 618,706 Federal National Mortgage Assn.: 6.50%, 1/1/29.................................................................... 10,640,522 10,233,948 7%, 9/25/29-12/25/29............................................................. 2,998,708 2,938,496 7.50%, 6/1/10-9/1/29............................................................. 12,275,809 12,266,888 11%, 7/1/16...................................................................... 294,847 322,849 Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates, 13%, 6/1/15(14)............................. 571,091 652,472 ----------- 40,112,777 ----------- GNMA/Guaranteed -- 0.5% Government National Mortgage Assn.: 6.75%, 7/20/27................................................................... 246,380 248,383 7%, 1/15/28-3/15/28.............................................................. 734,133 723,856 11%, 10/20/19.................................................................... 196,864 213,598 12%, 11/20/13-9/20/15............................................................ 163,972 179,704 ----------- 1,365,541 ----------- PRIVATE -- 1.9% Commercial -- 1.6% Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates, Series 1995-MD4, Cl. A5, 7.384%, 8/13/29........................... 1,500,000 1,405,430 Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed Pass-Through Certificates, Series 1997-CTL1, 11.31%, 6/22/24(4)(13)........................................................... 10,345,760 378,267 Commercial Mortgage Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 33.19%, 12/25/20(4)(13).................................................................. 9,436,906 117,961 First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, Cl. C, 8.125%, 7/25/06(4)(9)..................... 800,000 762,000
21 23 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust
Principal Market Value Amount See Note 1 -------------- ------------ Commercial (continued) First Union-Lehman Brothers Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 1997-C2, Cl. F, 7.50%, 9/18/15................................................................... $ 600,000 $ 467,437 General Motors Acceptance Corp. Commercial Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1, Cl. X, 8.10%, 7/15/27(13)(14).............. 3,249,847 243,739 NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates: Series DMC, Cl. B, 8.562%, 8/12/11(4)............................................ 400,000 366,375 Series DMC, Cl. C, 8.921%, 8/12/11(4)............................................ 400,000 363,625 ------------ 4,104,834 ------------ Residential -- 0.3% Salomon Brothers Mortgage Securities VII, Commercial Mtg. Pass-Through Certificates, Series 1996-B, Cl. 1, 7.136%, 4/25/26(4).............. 1,253,087 832,520 Structured Asset Securities Corp., Multiclass Pass-Through Certificates, Series 1999-1, 10%, 8/25/28........................................ 22,449 19,980 ------------ 852,500 ------------ 46,435,652 ------------ Total Asset-Backed Sector (Cost $48,450,244) 48,451,277 ------------ MONEY MARKET SECTOR -- 8.2% Short-Term Notes -- 4.2% Eaton Corp., 6.70%, 12/11/00....................................................... 6,000,000 5,955,334 Heller Financial, Inc., 6.60%, 2/15/01............................................. 5,000,000 4,902,833 ------------ 10,858,167 ------------ Repurchase Agreements -- 4.0% Repurchase agreement with Deutsche Bank Securities Inc., 6.51%, dated 10/31/00, to be repurchased at $10,351,872 on 11/1/00, collateralized by U.S. Treasury Nts., 6.125%--6.625%, 7/31/01--8/15/07, with a value of $2,305,649 and U.S. Treasury Bonds, 3.875%--8.875%, 8/15/17--4/15/29, with a value of $8,285,201..................... 10,350,000 10,350,000 ------------ Total Money Market Sector (Cost $21,208,167) 21,208,167 ------------ TOTAL INVESTMENTS, AT VALUE (COST $277,428,453).................................... 99.0% 255,200,079 ----- ------------ OTHER ASSETS NET OF LIABILITIES.................................................... 1.0 2,428,666 ----- ------------ NET ASSETS......................................................................... 100.0% $257,628,745 ===== ============
22 24 STATEMENT OF INVESTMENTS (Continued) Oppenheimer Multi-Sector Income Trust Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP -- Argentine Peso IDR -- Indonesian Rupiah CAD -- Canadian Dollar JPY -- Japanese Yen DEM -- German Mark KRW -- South Korean Won EUR -- Euro MXN -- Mexican Nuevo Peso FRF -- French Franc NOK -- Norwegian Krone GBP -- British Pound Sterling ZAR -- South African Rand GRD -- Greek Drachma
1. Securities with an aggregate market value of $13,662,665 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 2. Zero coupon bond reflects the effective yield on the date of purchase. 3. Interest or dividend is paid in kind. 4. Identifies issues considered to be illiquid or restricted -- See Note 8 of Notes to Financial Statements. 5. Non-income-producing security. 6. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $11,551,083 or 4.48% of the Trust's net assets as of October 31, 2000. 7. Issuer is in default. 8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 9. Represents the current interest rate for a variable or increasing rate security. 10. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units which represent debt securities, principal amount disclosed represents total underlying principal. 11. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:
Principal/Contracts Expiration Exercise Premium Market Value Subject to Call/Put Date Price Received See Note 1 -------------------- ---------- -------- -------- ------------ European Monetary Unit Put $2,566,500 12/5/00 $0.856 $ 26,692 $67,802 Venezuela (Republic of) Bonds 9.25%, 9/15/27 Call 415 11/13/00 68.800% 4,897 261 -------- ------- $ 31,589 $68,063 ======== =======
12. When-issued security to be delivered and settled after October 31, 2000. 13. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. 14. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of Notes to Financial Statements. See accompanying Notes to Financial Statements. 23 25 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 Oppenheimer Multi-Sector Income Trust ASSETS Investments, at value (cost $277,428,453) -- see accompanying statement........................................ $255,200,079 Cash........................................................................................................... 337,984 Unrealized appreciation on foreign currency contracts.......................................................... 60,912 Receivables and other assets: Investments sold............................................................................................. 5,377,960 Interest, dividends and principal paydowns................................................................... 5,069,010 Closed foreign currency contracts............................................................................ 26,498 Other........................................................................................................ 16,617 ------------ Total assets............................................................................................... 266,089,060 ------------ LIABILITIES Unrealized depreciation on foreign currency contracts.......................................................... 49,367 Options written, at value (premiums received $31,589) -- see accompanying statement............................ 68,063 Payables and other liabilities: Investments purchased (including $3,546,521 purchased on a when-issued basis)................................ 7,786,251 Daily variation on futures contracts......................................................................... 166,152 Trustees' compensation....................................................................................... 136,855 Dividends.................................................................................................... 128,085 Management and administrative fees........................................................................... 11,294 Other........................................................................................................ 114,248 ------------ Total liabilities.......................................................................................... 8,460,315 ------------ NET ASSETS..................................................................................................... $257,628,745 ============ COMPOSITION OF NET ASSETS Par value of shares of beneficial interest..................................................................... $ 291,161 Additional paid-in capital..................................................................................... 307,440,476 Overdistributed net investment income.......................................................................... (297,342) Accumulated net realized loss on investments and foreign currency transactions................................. (27,734,618) Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies............................................................................ (22,070,932) ------------ NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding............................... $257,628,745 ============ NET ASSET VALUE PER SHARE...................................................................................... $8.85 =====
See accompanying Notes to Financial Statements. 24 26 STATEMENT OF OPERATIONS For the Year Ended October 31, 2000 Oppenheimer Multi-Sector Income Trust INVESTMENT INCOME Interest (net of foreign withholding taxes of $18,194)......................................................... $ 26,536,943 Dividends (net of foreign withholding taxes of $70)............................................................ 737,697 ------------ Total income............................................................................................... 27,274,640 ------------ EXPENSES Management fees................................................................................................ 1,761,032 Administrative fees............................................................................................ 208,080 Shareholder reports............................................................................................ 76,788 Custodian fees and expenses.................................................................................... 64,702 Transfer agent and accounting services fees.................................................................... 46,108 Accounting service fees........................................................................................ 24,600 Other.......................................................................................................... 90,248 ------------ Total expenses............................................................................................. 2,271,558 Less expenses paid indirectly.................................................................................. (15,245) ------------ Net expenses............................................................................................... 2,256,313 ------------ NET INVESTMENT INCOME.......................................................................................... 25,018,327 ------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments (including premiums on options exercised)........................................................ (5,529,324) Closing of futures contracts................................................................................. (134,909) Closing and expiration of option contracts written........................................................... 74,608 Foreign currency transactions................................................................................ (5,264,512) ------------ Net realized loss.......................................................................................... (10,854,137) ------------ Net change in unrealized depreciation on: Investments ................................................................................................. (5,948,714) Translation of assets and liabilities denominated in foreign currencies...................................... (1,309,957) ------------ Net change................................................................................................. (7,258,671) ------------ Net realized and unrealized loss............................................................................... (18,112,808) ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................................... $ 6,905,519 ============
See accompanying Notes to Financial Statements. 25 27 STATEMENTS OF CHANGES IN NET ASSETS Oppenheimer Multi-Sector Income Trust
Year Ended October 31, 2000 1999 ----------- ---------- OPERATIONS Net investment income.............................................................. $ 25,018,327 $ 25,280,414 Net realized gain (loss)........................................................... (10,854,137) (14,050,016) Net change in unrealized appreciation (depreciation)............................... (7,258,671) 1,481,823 ------------ ------------ Net increase in net assets resulting from operations .............................. 6,905,519 12,712,221 ------------ ------------ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income............................................... (19,768,847) (23,438,435) Distributions from return of capital .............................................. (4,688,650) -- ------------ ------------ NET ASSETS Total decrease..................................................................... (17,551,978) (10,726,214) Beginning of period................................................................ 275,180,723 285,906,937 ------------ ------------ End of period (including overdistributed net investment income of $297,342 and $418,568, respectively).......................................... $257,628,745 $275,180,723 ============ ============
See accompanying Notes to Financial Statements. 26 28 FINANCIAL HIGHLIGHTS Oppenheimer Multi-Sector Income Trust
Year Ended October 31, -------------------------------------------------------------------- 2000 1999 1998 1997 1996 --------- --------- --------- --------- -------- PER SHARE OPERATING DATA Net asset value, beginning of period.................. $9.45 $9.82 $10.61 $10.52 $10.14 ----- ----- ------ ------ ------ Income (loss) from investment operations: Net investment income .............................. .86 .87 .79 .89 .91 Net realized and unrealized gain (loss) ............ (.62) (.43) (.75) .08 .37 ----- ----- ------ ------ ------ Total income from investment operations .......... .24 .44 .04 .97 1.28 ----- ----- ------ ------ ------ Dividend and/or distributions to shareholders: Dividends from net investment income ............... (.68) (.81) (.78) (.88) (.90) Tax return of capital .............................. (.16) -- (.05) -- -- ----- ----- ------ ------ ------ Total dividends and/or distributions to shareholders ................................ (.84) (.81) (.83) (.88) (.90) ----- ----- ------ ------ ------ Net asset value, end of period ....................... $8.85 $9.45 $ 9.82 $10.61 $10.52 ===== ===== ====== ====== ====== Market value, end of period .......................... $7.88 $8.06 $ 9.38 $10.13 $ 9.88 ===== ===== ====== ====== ====== TOTAL RETURN, AT MARKET VALUE(1) ..................... 6.93% (6.64)% 0.17% 11.40% 7.85% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) ............. $257,629 $275,181 $285,907 $308,972 $306,181 Average net assets (in thousands) .................... $269,849 $285,213 $304,773 $308,712 $298,496 Ratios to average net assets:(2) Net investment income .............................. 9.27% 8.86% 7.56% 8.42% 8.87% Expenses, net of indirect expenses ................. 0.84% 1.03% 1.01%(3) 0.99%(3) 1.04%(3) Portfolio turnover rate .............................. 104% 159% 402% 259% 225%
(1) Assumes a $1,000 hypothetical purchase at the current market price on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and a sale at the current market price on the last business day of the period. Total return does not reflect sales charges or brokerage commissions. (2) Annualized for periods of less than one full year. (3) Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. See accompanying Notes to Financial Statements. 27 29 NOTES TO FINANCIAL STATEMENTS Oppenheimer Multi-Sector Income Trust 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company. The Trust's investment objective is to seek high current income consistent with preservation of capital. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Trust. Securities Valuation -- Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Trust's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). Structured Notes -- The Trust invests in foreign currency-linked structured notes whose market value and redemption price are linked to foreign currency exchange rates. The structured notes are leveraged, which increases the notes' volatility relative to the principal of the security. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. As of October 31, 2000, the market value of these securities comprised 2.2% of the Trust's net assets and resulted in unrealized losses in the current period of $62,454. The Trust also hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5. Securities Purchased on a When-Issued Basis -- Delivery and payment for securities that have been purchased by the Trust on a when-issued basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Trust may, from time to time, purchase securities whose settlement date extends beyond six months and possibly as long as two years or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Trust maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Trust's net asset value to the extent the Trust makes such purchases while remaining substantially fully invested. As of October 31, 2000, the Trust had entered into net outstanding when-issued or forward commitments of $3,546,521. In connection with its ability to purchase securities on a when-issued basis, the Trust may enter into mortgage dollar-rolls in which the Trust sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Trust records each dollar-roll as a sale and a new purchase transaction. 28 30 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust Security Credit Risk -- The Trust invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Trust may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of October 31, 2000, securities with an aggregate market value of $699,029, representing 0.27% of the Trust's net assets, were in default. Foreign Currency Translation -- The accounting records of the Trust are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Trust's Statement of Operations. Repurchase Agreements -- The Trust requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Trust may be delayed or limited. Federal Taxes -- The Trust intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers to shareholders. Therefore, no federal income or excise tax provision is required. As of October 31, 2000, the Trust had available for federal income tax purposes an unused capital loss carryover as follows:
EXPIRING - -------- 2003 $ 7,982,990 2006 1,509,541 2007 11,561,894 2008 5,450,403
Trustees' Compensation -- The Trust has adopted an unfunded retirement plan for the Trust's independent Board of Trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended October 31, 2000, a credit of $66,070 was made for the Trust's projected benefit obligations and payments of $7,859 were made to retired trustees, resulting in an accumulated liability of $131,613 as of October 31, 2000. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of annual compensation they are entitled to receive from the Trust. Under the plan, the compensation deferred is periodically adjusted as though an equivalent amount had been invested for the Board of Trustees in shares of one or more Oppenheimer funds selected by the trustee. The amount paid to the Board of Trustees under the plan will be determined based upon the performance of the selected funds. Deferral of trustees' fees under the plan will not affect the net assets of the Trust, and will not materially affect the Trust's assets, liabilities or net investment income per share. Dividends and Distributions to Shareholders -- Dividends and distributions to shareholders, 29 31 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Classification of Dividends and Distributions to Shareholders -- Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Trust. The Trust adjusts the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended October 31, 2000, amounts have been reclassified to reflect a decrease in paid-in capital of $4,688,940, a decrease in undistributed net investment income of $439,604, and a decrease in accumulated net realized loss on investments of $5,128,544. Net assets of the Trust were unaffected by the reclassifications. As noted in the Statement of Changes in Net Assets, the Trust realized a tax return of capital of $4,688,650. Expense Offset Arrangements -- Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Trust. Other -- Investment transactions are accounted for as of trade date and dividend income is recorded on the ex-dividend date. Discount on securities purchased is accreted over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and options written and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 2. SHARES OF BENEFICIAL INTEREST The Trust has authorized an unlimited number of $.01 par value shares of beneficial interest. There were no transactions in shares of beneficial interest for the year ended October 31, 2000. 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended October 31, 2000, were $257,933,020 and $274,428,757, respectively. As of October 31, 2000, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $278,030,580 was: Gross unrealized appreciation $ 4,215,321 Gross unrealized depreciation (27,045,823) ------------ Net unrealized depreciation $(22,830,502) ============
30 32 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management Fees -- Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for an annual fee of 0.65% of the Trust's average annual net assets. Administration Fees -- Mitchell Hutchins Asset Management Inc. served as the Trust's Administrator. The Trust paid the Administrator an annual fee of 0.20% of the Trust's average annual net assets. Effective March 11, 2000, Mitchell Hutchins Asset Management Inc. no longer served as the Trust Administrator. Accounting Fees -- The Manager acts as the accounting agent for the Trust at an annual fee of $24,000, plus out-of-pocket costs and expenses reasonably incurred. Transfer Agent Fees -- Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI are based on the number of accounts and the number of shareholder transactions, plus out-of-pocket costs and expenses. 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Trust may enter into foreign currency contracts for operational purposes and to seek to protect against adverse exchange rate fluctuations. Risks to the Trust include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Trust and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities. The Trust may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. Securities denominated in foreign currency to cover net exposure on outstanding foreign currency contracts are noted in the Statement of Investments where applicable. As of October 31, 2000, the Trust had outstanding foreign currency contracts as follows:
Contract Amount Valuation as of Unrealized Unrealized CONTRACT DESCRIPTION Expiration Date (000s) October 31, 2000 Appreciation Depreciation - -------------------------------------------------------------------------------------------------------------------------- CONTRACTS TO SELL - ----------------- British Pound Sterling (GBP)........ 11/13/00-11/27/00 2,140 GBP $3,108,738 $ 7,039 $25,972 Canadian Dollar (CAD) .............. 11/30/00 1,710 CAD 1,120,364 -- 594 Euro (EUR) ......................... 11/20/00 3,090 EUR 2,621,618 21,259 -- Japanese Yen (JPY) ................. 11/30/00-9/10/01 321,300 JPY 2,993,013 32,614 -- South African Rand (ZAR) ........... 1/22/01 7,437 ZAR 975,216 -- 16,655 ------- ------- 60,912 43,221 ------- ------- CONTRACTS TO PURCHASE - ---------------------- Japanese Yen (JPY) ................. 12/11/00-12/12/00 289,600 JPY 2,672,189 -- 6,146 ------- ------- Total Unrealized Appreciation and Depreciation $60,912 $49,367 ======= =======
31 33 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 6. FUTURES CONTRACTS A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date at a negotiated price. Futures contracts are traded on a commodity exchange. The Trust may buy and sell futures contracts that relate to broadly-based securities indices "financial futures" or debt securities "interest rate futures" in order to gain exposure to or to seek to protect against changes in market value of stock and bonds or interest rates. The Trust may also buy or write put or call options on these futures contracts. The Trust generally sells futures contracts to hedge against increases in interest rates and decreases in market value of portfolio securities. The Trust may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Trust is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Trust each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Trust recognizes a realized gain or loss when the contract is closed or expires. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of October 31, 2000, the Trust had outstanding futures contracts as follows:
Valuation as of Unrealized Expiration Number of October 3l, Appreciation CONTRACT DESCRIPTION Date Contracts 2000 (Depreciation) - ----------------------------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE - ---------------------- Crude Oil ............................................ 11/17/00 1,000 $ 2,943,000 $ 24,560 DAX Index ............................................ 12/15/00 25 603,830 38,958 Euro-Bundesobligation ................................ 12/7/00 100,000 893,879 2,331 Japan (Government of) Bonds, 10 yr. .................. 12/11/00 100,000,000 1,221,174 11,173 Standard & Poor's 500 Index .......................... 12/14/00 250 3,600,500 197,125 United Kingdom Long Gilt ............................. 12/27/00 100,000 329,975 349 U.S. Treasury Nts., 2 yr. ............................ 12/28/00 200,000 32,420,250 44,859 U.S. Long Bond ....................................... 12/19/00 100,000 11,382,188 (5,930) -------- 313,425 -------- CONTRACTS TO SELL - ----------------- New Financial Times Stock Exchange 100 Index ......... 12/15/00 10 (94,241) (726) NASDAQ 100 Index ..................................... 12/14/00 100 (1,980,000) (26,700) U.S. Treasury Nts., 10 yr. ........................... 12/19/00 100,000 (4,028,125) (18,750) U.S. Treasury Nts., 5 yr. ............................ 12/19/00 100,000 (6,444,000) (56,563) -------- (102,739) -------- $210,686 ========
32 34 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 7. OPTION ACTIVITY The Trust may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Trust generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Trust receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Trust will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Trust gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Trust may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Trust pays a premium whether or not the option is exercised. The Trust also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended October 31, 2000 was as follows:
CALL OPTIONS ----------------------------------------------------- NUMBER OF CONTRACTS AMOUNT OF PREMIUMS ---------------------- ------------------ Options outstanding as of October 31, 1999................. -- $ -- Options written ........................................... 143,001,748 33,993 Options closed or expired.................................. (143,000,705) (20,094) Options exercised.......................................... (628) (9,002) ------------ ---------- Options outstanding as of October 31, 2000 ................ 415 $ 4,897 ============ ==========
PUT OPTIONS ------------------------------------------------------ NUMBER OF CONTRACTS AMOUNT OF PREMIUMS --------------------- ------------------- Options outstanding as of October 31, 1999 ................ 3,388,275 $ 56,100 Options written ........................................... 5,697,205 71,944 Options closed or expired.................................. (4,018,275) (58,882) Options exercised.......................................... (2,500,705) (42,470) ---------- --------- Options outstanding as of October 31, 2000 ................ 2,566,500 $ 26,692 ========== =========
33 35 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 8. ILLIQUID OR RESTRICTED SECURITIES As of October 31, 2000, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Trust intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of October 31, 2000, was $15,784,530, which represents 6.13% of the Trust's net assets, of which $1,220,075 is considered restricted. Information concerning restricted securities is as follows:
Valuation Per Unrealized Acquisition Cost Unit as of Appreciation SECURITY Date Per Unit October 31, 2000 (Depreciation) - -------------------------------------------------------------------------------------------------------------------------- STOCKS AND WARRANTS - ------------------- Becker Gaming, Inc. Wts., Exp. 11/15/00............... 11/18/93 $ 2.00 $ 0.01 $(50,000) CGA Group Ltd., Series A.............................. 6/17/97 25.00 25.00 -- CGA Group Ltd. Wts., Exp. 6/16/07..................... 6/17/97 -- 0.30 9,600
34 36 INDEPENDENT AUDITORS' REPORT Oppenheimer Multi-Sector Income Trust The Board of Trustees and Shareholders of Oppenheimer Multi-Sector Income Trust: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer Multi-Sector Income Trust as of October 31, 2000, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers; and where confirmations were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Multi-Sector Income Trust as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Denver, Colorado November 21, 2000 35 37 FEDERAL INCOME TAX INFORMATION (Unaudited) Oppenheimer Multi-Sector Income Trust In early 2001 shareholders will receive information regarding all dividends and distributions paid to them by the Trust during calendar year 2000. Regulations of the U.S. Treasury Department require the Trust to report this information to the Internal Revenue Service. Dividends paid by the Trust during the fiscal year ended October 31, 2000, which are not designated as capital gain distributions should be multiplied by 3.73% to arrive at the net amount eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Trust to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 36 38 OPPENHEIMER MULTI-SECTOR INCOME TRUST GENERAL INFORMATION CONCERNING THE TRUST Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end diversified management investment company with a primary investment objective of seeking high current income consistent with preservation of capital. The Trust's secondary investment objective is capital appreciation. In seeking its objectives, the Trust may invest any percentage of its assets in at least three of the following seven fixed-income sectors: U.S. Government, Corporate, International, Asset-Backed, Municipal, Convertible and Money Market. Current income, preservation of capital and, secondarily, possible capital appreciation may be considerations in the allocation of assets among such sectors. The Trust can invest in a number of different kinds of "derivative investments" and can also engage in certain special investment techniques, including repurchase transactions, when-issued and delayed delivery transactions and hedging. Although the Trust is not required to invest in any of these types of securities at all times. The investment advisor to the Trust is OppenheimerFunds, Inc. (the Manager). The Portfolio Managers of the Trust are Arthur Steinmetz and Caleb Wong. Mr. Steinmetz is a Vice President of the Trust and a Senior Vice President of the Advisor and Mr. Wong is an Assistant Vice President of the Advisor. Messrs. Steinmetz and Wong have been the persons principally responsible for the day-to-day management of the Trust's portfolio since February 1, 1999. Prior to February 1999, Mr. Steinmetz served as a portfolio manager and officer of other Oppenheimer funds. Mr. Wong worked on fixed-income quantitative research and risk management for the Advisor since July 1996, prior to which he was enrolled in the Ph.D. program for Economics at the University of Chicago. Other members of the Advisor's fixed-income portfolio department, particularly portfolio analysts, traders and other portfolio managers provide the Trust's Portfolio Managers with support in managing the Trust's portfolio. Dividend Reinvestment and Cash Purchase Plan--Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust (Shares) not registered in a nominee's name, all dividends and capital gains distributions (Distributions) declared by the Trust will be automatically reinvested in additional full and fractional Shares unless a shareholder elects to receive cash. If Shares are registered in a nominee's name, the shareholder should consult the nominee if the shareholder desires to participate in the Plan. Shareholders that participate in the Plan (Participants) may, at their option, make additional cash investments in shares, semi-annually in amounts of at least $100, through payment to Shareholder Financial Services, Inc., the agent for the Plan (the Agent), accompanied by a service fee of $0.75. Depending upon the circumstances hereinafter described, Plan Shares will be acquired by the Agent for the Participant's account through receipt of newly issued Shares or the purchase of outstanding Shares on the open market. If the market price of Shares on the relevant date (normally the payment date) equals or exceeds their net asset value, the Agent will ask the Trust for payment of the Distribution in additional Shares at the greater of the Trust's net asset value determined as of the date of purchase or 95% of the then-current market price. If the market price is lower than net asset value, the Distribution will be paid in cash, which the Agent will use to buy Shares on The New York Stock Exchange (the NYSE), or otherwise on the open market to the extent available. If the market price exceeds the net asset value before the Agent has completed its purchases, the average purchase price per Share paid by the Agent 37 39 OPPENHEIMER MULTI-SECTOR INCOME TRUST General Information Concerning the Trust (Continued) may exceed the net asset value, resulting in fewer Shares being acquired than if the Distribution had been paid in Shares issued by the Trust. Participants may elect to withdraw from the Plan at any time and thereby receive cash in lieu of Shares by sending appropriate written instructions to the Agent. Elections received by the Agent will be effective only if received more than ten days prior to the record date for any Distribution; otherwise, such termination will be effective shortly after the investment of such Distribution with respect to any subsequent Distribution. Upon withdrawal from or termination of the Plan, all Shares acquired under the Plan will remain in the Participant's account unless otherwise requested. For full Shares, the Participant may either: (1) receive without charge a share certificate for such Shares; or (2) request the Agent (after receipt by the Agent of signature guaranteed instructions by all registered owners) to sell the Shares acquired under the Plan and remit the proceeds less any brokerage commissions and a $2.50 service fee. Fractional Shares may either remain in the Participant's account or be reduced to cash by the Agent at the current market price with the proceeds remitted to the Participant. Shareholders who have previously withdrawn from the Plan may rejoin at any time by sending written instructions signed by all registered owners to the Agent. There is no direct charge for participation in the Plan; all fees of the Agent are paid by the Trust. There are no brokerage charges for Shares issued directly by the Trust. However, each Participant will pay a pro rata share of brokerage commissions incurred with respect to open market purchases of Shares to be issued under the Plan. Participants will receive tax information annually for their personal records and to assist in federal income tax return preparation. The automatic reinvestment of Distributions does not relieve Participants of any income tax that may be payable on Distributions. The Plan may be terminated or amended at any time upon 30 days' prior written notice to Participants which, with respect to a Plan termination, must precede the record date of any Distribution by the Trust. Additional information concerning the Plan may be obtained by shareholders holding Shares registered directly in their names by writing to the Agent, Shareholder Financial Services, Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1.800.647.7374. Shareholders holding Shares in nominee name should contact their brokerage firm or other nominee for more information. Shareholder Information--The Shares are traded on the NYSE. Daily market prices for the Trust's shares are published in the New York Stock Exchange Composite Transaction section of newspapers under the designation "OppenMlti." The Trust's NYSE trading symbol is OMS. Weekly net asset value (NAV) and market price information about the Trust is published each Monday in The Wall Street Journal and each Sunday in The New York Times and each Saturday in Barron's, and other newspapers in a table called "Closed-End Bond Funds." 38 40 (This page has been intentionally left blank.) 41 OPPENHEIMER MULTI-SECTOR INCOME TRUST Officers and Trustees Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees Bridget A. Macaskill, Trustee and President Robert G. Galli, Trustee Phillip A. Griffiths, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Clayton K. Yeutter, Trustee Arthur P. Steinmetz, Vice President Caleb Wong, Vice President Andrew J. Donohue, Secretary Brian W. Wixted, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary Investment Advisor OppenheimerFunds, Inc. Transfer Agent and Registrar Shareholder Financial Services, Inc. Custodian of Portfolio Securities The Bank of New York Independent Auditors KPMG LLP Legal Counsel Mayer, Brown & Platt For more complete information about Oppenheimer Multi-Sector Income Trust, please refer to the Prospectus. To obtain a copy, call your financial advisor, or call OppenheimerFunds Distributor, Inc. at 1.800.525.7048. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203 (C) Copyright 2000 OppenheimerFunds, Inc. All rights reserved. RA0680.001.1000 Printed on recycled paper -----END PRIVACY-ENHANCED MESSAGE-----