-----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, IH49Q8M/0hjibJ3dfXfTiiRg0B639V9BY9QOxsLswtPnqRb5i7G8e5DrsxgO0DCH TG/KODOafwK/oEig1QVaXg== 0000950146-98-001129.txt : 19980701 0000950146-98-001129.hdr.sgml : 19980701 ACCESSION NUMBER: 0000950146-98-001129 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980630 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER MULTI SECTOR INCOME TRUST CENTRAL INDEX KEY: 0000829801 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133448960 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05473 FILM NUMBER: 98657926 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 SEMIANNUAL REPORT Dear Shareholder: Oppenheimer Multi-Sector Income Trust has delivered relatively strong performance during the six-month period ended April 30, 1998. Although our conservative positioning of the fund caused performance to lag during October and November, we successfully navigated the turbulence of the Asian crisis and took advantage of the related sell-off in emerging markets in late 1997 and early 1998. The Trust's six month cumulative total return, at market value, was 5.24%, and its dividend return was 8.20% as of April 30, 1998.(1) The Trust benefited from strategic moves in three of our investment sectors: U.S. government securities, high-yield domestic corporate bonds and foreign fixed-income securities. Our disciplined strategy of sector diversification, with a focus on relative value, enabled us to help limit risks while sharing in the rewards of a benign U.S. economic environment, which was supportive of the entire bond market. In the U.S. government securities sector, we sought to take advantage of U.S. economic conditions by actively managing our holdings' average duration. Duration is a measure of a bond's sensitivity to changes in interest rates. Generally, the longer a portfolio's average duration, the higher the returns investors are likely to receive in an environment of falling interest rates. In anticipation of continued low inflation, we extended our duration position during the first few months of the period, which enabled us to benefit from falling interest rates. Later in the period, we benefited from our holdings of mortgage-backed securities issued by U.S. government agencies. As interest rates stabilized during the second half of the period, homeowners became less likely to prepay their loans and refinance at lower interest rates. Such prepayments lower the value of mortgage-backed securities. With the risk of loan prepayment held in check, the value of the Trust's mortgage-backed securities rose.(2) Investment Breakdown: Oppenheimer Multi-Sector Income Trust as of 4/30/98:(4) [pie chart] U.S. corporate bonds & notes: 35.5% U.S. Government obligations -- Agency: 17.8% Foreign government obligations: 17.2% U.S. Government obligations -- Treasury: 11.1% Short-term securities: 6.0% Structured notes: 6.0% Foreign corporate bonds & notes: 3.6% Equity securities: 2.8% 1. Total return is based on changes in market value per share from 10/31/97 to 4/30/98 without deducting any sales charges or brokerage costs. Such performance is not annualized and would have been lower if sales charges and brokerage costs were taken into account. Dividend return is determined by annualizing the April 1998 dividend of $0.07 and dividing by the closing market price on the New York Stock Exchange of $10.25 per share on 5/1/98 (payment date). Past performance does not guarantee future results. 2. Mortgage-backed securities involve risks from early prepayment of underlying mortgages that can affect the Trust's income and principal value. 3. Investors in high-yield bonds are subject to greater risk that the issuer will default in its principal or interest payments. 4. Portfolio composition is subject to change. Chart is based on total investments at market value. In the high-yield corporate sector, the Trust benefited from our relatively large holdings in telecommunications bonds, which remained one of the strongest performing areas in the high-yield market. Breakthroughs in technology and an easing regulatory environment continued to fuel the advance of a new generation of telecommunications companies in which we invested. At the same time, we avoided investments in basic industry cyclicals, such as chemicals, paper and metals, all of which underperformed the market. We correctly surmised that the recent economic crisis in Asia would generally lead to excess production capacity and weak pricing in these industries.(3) The third sector in which the Trust focuses--foreign fixed-income securities-- offered the greatest challenges, and opportunities, during the period. In October, as Asian markets and currencies declined sharply, we reacted strongly to help preserve the Trust's capital. Although our actions caused us to suffer some initial losses when these markets began to recover with unexpected speed, we soon took advantage of the buying opportunity. At the end of November and in early December, we staked out significant fixed-income positions in the emerging markets of Latin America, Asia and Eastern Europe, with the exception of Russia, where we believed political and economic risks outweighed the opportunities. From December through the end of April, emerging markets were generally among the best performing fixed-income classes. Our investments in this sector enabled us to provide strong performance for the remainder of the six-month period. Looking ahead, we remain optimistic about the prospects for the fixed-income market. Although U.S. equities appear to be very highly valued at present, economic fundamentals in our opinion remain solid. We believe moderate economic growth, low inflation and low interest rates are likely to persist. As a result, we anticipate a supportive environment for bonds. In the high-yield sector, for example, low interest rates and strong economic performance generally result in low rates of default, which is favorable for the Trust's holdings. Likewise, we expect emerging market bonds to continue their recovery in this generally favorable environment. As always, diversification remains the key to a well-balanced investment program, and diversification among asset classes remains the cornerstone of the Trust's investment strategy. We place each asset class in which the Trust invests under the management of its own sector specialist. In turn, we take advantage of the expertise of these specialists to keep the overall portfolio focused on our goals of returning high income to investors while helping to minimize risks. We believe our disciplined strategy of sector diversification continues to make Oppenheimer Multi-Sector Income Trust part of The Right Way to Invest. Sincerely, /s/ Bridget A. Macaskill Bridget A. Macaskill President Oppenheimer Multi-Sector Income Trust May 21, 1998 2 Statement of Investments April 30, 1998 (Unaudited) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- U.S. Government Sector -- 12.5% U.S. Treasury Bonds: 7.125%, 2/15/23(2) ...................................................... $ 3,297,000 $3,756,523 11.875%, 11/15/03 ....................................................... 2,130,000 2,744,373 STRIPS, 6.933%, 2/15/19(3) .............................................. 11,000,000 3,128,103 U.S. Treasury Nts.: 5.50%, 2/28/03 .......................................................... 10,000,000 9,931,260 5.75%, 11/30/02(2) ...................................................... 715,000 716,788 6%, 8/15/00 ............................................................. 4,155,000 4,190,060 6.125%, 8/31/98 ......................................................... 3,251,000 3,260,145 7%, 4/15/99 ............................................................. 10,955,000 11,105,642 ---------- Total U.S. Government Sector (Cost $38,336,188)........................... 38,832,894 ---------- Shares ----------- Convertible Sector -- 3.1% Preferred Stocks -- 2.9% e.spire Communications, Inc., 12.75% Jr. Redeemable Preferred Stock ...... 415 486,587 American Radio Systems Corp., 11.375% Cum. Exchangeable Preferred, Series B(4) ............................................................. 6,170 729,602 CGA Group Ltd., Preferred Stock, Series A(4)(5) .......................... 32,000 800,000 Crown American Realty Trust, 11% Cum. Non-Vtg. Preferred, Series A ....... 4,000 220,000 Dobson Communications Corp., 12.25% Preferred Stock(6) ................... 514 561,545 Eagle-Picher Holdings, Inc., 0%/11.75% Preferred Stock(4)(5) ............. 4,000 229,000 EchoStar Communications Corp., 12.125% Sr. Redeemable Exchangeable Preferred Stock, Series B(4)(7) ............................ 91 103,057 Gothic Energy Corp., 7.50% Preferred Stock, Series A(4)(7) ............... 299,250 302,242 Hyperion Telecommunications, Inc., 12.875% Sr. Preferred Stock, Series B(7) ............................................................. 309 349,943 Intermedia Communications, Inc.: 13.50% Exchangeable Preferred Stock, Series B(4)(7) ..................... 673 826,108 Depositary Shares Representing one one-hundredth 7% Cum. Cv. Jr. Preferred Stock, Series E, Non-Vtg.(5)(6) .............................. 20,660 699,858 Nebco Evans Holdings Co., 11.25% Nts., 3/1/08(6)(7) ...................... 2,500 260,625 Nextel Communications, Inc., 11.125% Preferred Stock(5)(6) ............... 700 747,250 NEXTLINK Communications, Inc., 14% Sr. Exchangeable Preferred(7) ......... 7,631 464,537
3 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Shares See Note 1 -------------- ------------- Preferred Stocks (Continued) PRIMEDIA, Inc., 8.625% Preferred Stock(5)(6) ........................... 10,000 $ 992,500 SD Warren Co., 14% Cum. Exchangeable Preferred Stock, Series B, Non-Vtg.(4)(5) ........................................................ 25,000 1,231,250 Spanish Broadcasting Systems, Inc., 14.25% Cum. Sr. Exchangeable Preferred Stock, Non-Vtg.(4)(7) ....................................... 187 196,818 ---------- 9,200,922 ---------- Units ---------- Rights, Warrants and Certificates -- 0.2% e.spire Communications, Inc. Wts., Exp. 11/05(4) ....................... 700 130,987 American Telecasting, Inc. Wts., Exp. 6/99(4) .......................... 4,750 47 Ames Department Stores, Inc., Litigation Trust(4) ...................... 128,889 1,289 Becker Gaming, Inc. Wts., Exp. 11/00(4) ................................ 25,000 6,250 CellNet Data Systems, Inc. Wts., Exp. 10/07(4) ......................... 559 2,306 Cellular Communications International, Inc. Wts., Exp. 8/03(4) ......... 2,500 94,062 CGA Group Ltd. Wts., Exp. 12/49(4) ..................................... 32,000 16,000 Clearnet Communications, Inc. Wts., Exp. 9/05(4) ....................... 330 1,572 Concentric Network Corp. Wts., Exp. 6/98 ............................... 600 57,300 Foamex LP/JPS Automotive Corp. Wts., Exp. 7/99(4) ...................... 1,000 20,000 Gothic Energy Corp. Wts.: Exp. 1/03(4) .......................................................... 9,509 95 Exp. 9/04(4) .......................................................... 10,150 21,569 ICG Communications, Inc. Wts., Exp. 9/05(4) ............................ 4,125 91,266 In-Flight Phone Corp. Wts., Exp. 8/02 .................................. 900 -- Orion Network Systems, Inc. Wts., Exp. 1/07(4) ......................... 975 12,919 Price Communications Corp. Wts., Exp. 8/07(4) .......................... 4,300 66,650 Protection One, Inc. Wts., Exp. 6/05(4) ................................ 6,400 64,000 Teletrac, Inc. Wts., Exp. 8/07(4) ...................................... 125 3,750 Wireless One, Inc. Wts., Exp. 10/00(4) ................................. 1,500 15 ---------- 590,077 ---------- Total Convertible Sector (Cost $8,238,411).............................. 9,790,999 ----------
4 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Shares See Note 1 -------------- ------------- Corporate Sector -- 41.6% Common Stocks -- 0.0% Capital Gaming International, Inc.(5) ......... .......................... 18 $ -- Intermedia Communications, Inc.(5) ............ .......................... 258 18,830 Optel, Inc.(4)(5) ............................. .......................... 815 8 ---------- 18,838 ---------- Face Amount(1) ---------------- Corporate Bonds and Notes -- 34.5% Aerospace -- 1.5% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 ..................... $1,000,000 1,092,500 Amtran, Inc., 10.50% Sr. Nts., 8/1/04 .................................... 850,000 909,500 Atlas Air, Inc., 9.25% Sr. Nts., 4/15/08(6) .............................. 675,000 676,687 Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts., Series 1997-1, 1/1/01(4) ................................................ 500,000 514,219 Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Cl. B, 6/15/04(4) .............................................................. 476,348 492,116 Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 ............... 1,000,000 1,047,500 --------- 4,732,522 --------- Chemicals -- 0.9% ICO, Inc., 10.375% Sr. Nts., 6/1/07 ...................................... 475,000 496,375 Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B, 9/15/07 ......... 500,000 500,000 Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 .............. 600,000 603,000 Sovereign Specialty Chemicals, Inc., 9.50% Sr. Sub. Nts., 8/1/07(6) ...... 600,000 625,500 Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06 ........... 685,000 691,850 --------- 2,916,725 --------- Consumer Durables -- 0.1% Holmes Products Corp., 9.875% Gtd. Nts., 11/15/07(6) ..................... 400,000 414,000 ---------
5 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Consumer Non-Durables -- 0.6% Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03(4) .......... $ 550,000 $ 580,250 Phillips-Van Heusen Corp., 9.50% Sr. Sub. Nts., 5/1/08(6) .................... 360,000 360,000 Revlon Consumer Products Corp., 8.625% Sr. Nts., 2/1/08(6) ................... 465,000 466,162 Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., 10.196%, 3/15/01(3) .................................................................. 700,000 540,750 ---------- 1,947,162 ---------- Energy -- 2.6% Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 .......................... 400,000 399,000 Chesapeake Energy Corp.: 9.125% Sr. Unsec. Nts., 4/15/06 ............................................. 240,000 238,200 9.625% Sr. Nts., 5/1/05(6) .................................................. 2,000,000 2,022,500 Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 .......... 845,000 857,675 Dailey International, Inc., 9.50% Sr. Unsec. Nts., 2/15/08(6) ................ 400,000 404,000 Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 ........................... 400,000 400,000 Grant Geophysical, Inc., 9.75% Sr. Nts., 2/15/08(6) .......................... 400,000 399,000 National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06(8) ..................... 90,000 84,600 Parker Drilling Co., 9.75% Gtd. Nts., 11/15/06(6) ............................ 250,000 265,625 Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 .................. 500,000 442,500 Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 ............................. 790,000 812,712 RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 ............................ 500,000 507,500 Statia Terminals International/Statia Terminals (Canada), Inc., 11.75% First Mtg. Nts., Series B, 11/15/03 .................................. 200,000 213,000 Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 ............................. 700,000 724,500 Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(6)(9) ............................................................... 700,000 442,750 ---------- 8,213,562 ---------- Financial -- 0.5% Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., 4/1/08(6) ..... 800,000 804,000 Veritas Capital Trust, 10% Gtd. Debs., 1/1/28(6) ............................. 525,000 547,312 ---------- 1,351,312 ----------
6 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Food & Drug -- 0.6% Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 ............... $1,000,000 $1,057,500 Stater Brothers Holdings, Inc., 9% Sr. Unsec. Sub. Nts., 7/1/04 ............ 700,000 728,000 ---------- 1,785,500 ---------- Food/Tobacco -- 0.8% Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., 12/15/07(6)(9) .............. 500,000 323,750 International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 ............. 500,000 555,000 Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., 2/1/05(6) ....................... 390,000 397,800 Purina Mills, Inc., 9% Sr. Sub. Nts., 3/15/10(6) ........................... 240,000 248,400 SmithField Foods, Inc., 7.625% Sr. Sub. Nts., 2/15/08(6) ................... 400,000 398,000 Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07 .................... 700,000 745,500 ---------- 2,668,450 ---------- Forest Products/Containers -- 0.4% Four M Corp., 12% Sr. Nts., Series B, 6/1/06(4) ............................ 300,000 310,500 Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 ............. 500,000 528,750 U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 .................. 250,000 267,500 ---------- 1,106,750 ---------- Gaming/Leisure -- 2.2% AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(6)(9) ................. 150,000 91,500 Apoca, Inc., 9.25% Sr. Sub. Nts., 3/15/08(6) ............................... 180,000 180,900 Arizona Charlie's, Inc., 12% First Mtg. Nts., Series B, 11/15/00(4)(10) .... 550,000 323,125 Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(10) ..... 5,500 -- Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00(4)(10) ........................................................... 200,000 32,500 Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 ............................ 435,000 453,487 Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05(6) ...................... 550,000 555,500 Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 ........................ 1,000,000 1,072,500 Majestic Star Casino LLC (The), 12.75% Sr. Sec. Nts., 5/15/03 .............. 250,000 273,750 Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts., Series B, 11/15/02 ........................................................ 900,000 1,147,500 Premier Parks, Inc.: 0%/10% Sr. Disc. Nts., 4/1/08(9) .......................................... 380,000 242,725 9.25% Sr. Nts., 4/1/06 .................................................... 200,000 204,000 Rio Hotel & Casino, Inc., 9.50% Gtd. Sr. Sub. Nts., 4/15/07 ................ 600,000 643,500
7 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Gaming/Leisure (Continued) Showboat Marina Casino Partnership/Showboat Marina Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 ............................... $1,000,000 $1,177,500 Six Flags Entertainment Corp., 8.75% Sr. Nts., 4/1/06 .................... 440,000 446,600 ---------- 6,845,087 ---------- Healthcare -- 0.8% Fresenius Medical Care Capital Trust II, 7.875% Gtd. Nts., 2/1/08(6) ..... 500,000 496,250 Integrated Health Services, Inc.: 9.50% Sr. Sub. Nts., 9/15/07 ............................................ 600,000 625,500 10.25% Sr. Sub. Nts., 4/30/06 ........................................... 15,000 16,237 Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08(6) ............. 630,000 633,150 Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(6) ............... 800,000 832,000 ---------- 2,603,137 ---------- Housing -- 0.5% Engle Homes, Inc., 9.25% Sr. Nts., 2/1/08 ................................ 400,000 404,000 Nortek, Inc.: 9.125% Sr. Nts., Series B, 9/1/07 ....................................... 420,000 430,500 9.25% Sr. Nts., Series B, 3/15/07 ....................................... 600,000 618,000 ---------- 1,452,500 ---------- Information Technology -- 2.6% Bell Technology Group Ltd., Units (each unit consists of $1,000 principal amount of 13% sr. nts., 5/1/05 and one warrant to purchase one share of common stock)(6)(11) ....................................... 600,000 618,000 Concentric Network Corp., 12.75% Sr. Nts., 12/15/07(6) ................... 600,000 663,000 Covad Communications Group, Inc., Units (each unit consists of $1,000 principal amount of 0%/13.50% sr. disc. nts., 3/15/08 and one warrant to purchase 6.4792 common shares)(6)(9) ................................. 745,000 411,612 Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 ..................... 600,000 618,000 Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 ............................... 600,000 618,000 ICG Services, Inc., 0%/10% Sr. Disc. Nts., 2/15/08(6)(9) ................. 500,000 317,500 PSINet, Inc., 10% Sr. Nts., 2/15/05(6) ................................... 1,200,000 1,236,000 Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 ................................ 750,000 821,250 Unisys Corp.: 7.875% Sr. Nts., 4/1/08 ................................................. 575,000 576,437 11.75% Sr. Nts., 10/15/04 ............................................... 500,000 579,375
8 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Information Technology (Continued) Verio, Inc., 10.375% Sr. Nts., 4/1/05(6) ................................... $405,000 $ 421,200 WAM!Net, Inc., Units (each unit consists of $1,000 principal amount of 0%/13.25% sr. disc. nts., 3/1/05 and three warrants to purchase 6.03 shares of common stock)(6)(9)(11) ......................................... 500,000 322,500 Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 .............................. 800,000 832,000 ---------- 8,034,874 ---------- Manufacturing -- 2.4% Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 ......................... 700,000 738,500 Clark-Schwebel, Inc.: 10.50% Sr. Nts., 4/15/06 .................................................. 250,000 277,500 12.50% Debs., Series B, 7/15/07(7) ........................................ 689,910 734,754 Eagle-Picher Industries, Inc., 9.375% Sr. Sub. Nts., 3/1/08(6) ............. 350,000 355,250 Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08(6) ........................ 315,000 315,000 Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 ......... 950,000 992,750 Indesco International, Inc., 9.75% Sr. Sub. Nts., 4/15/08(6) ............... 200,000 201,000 Insilco Corp., 10.25% Sr. Unsec. Sub. Nts., 8/15/07 ........................ 800,000 844,000 International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 ..... 700,000 773,500 Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(9) ............... 250,000 255,625 Paragon Corp. Holdings, Inc., 9.625% Sr. Nts., 4/1/08(6) ................... 185,000 183,150 Polymer Group, Inc., 8.75% Sr. Sub. Nts., 3/1/08(6) ........................ 500,000 510,000 Roller Bearing Co. of America, Inc., 9.625% Gtd. Sr. Sub. Nts., Series B, 6/15/07(4) ...................................................... 500,000 513,750 Terex Corp., 8.875% Sr. Sub. Nts., 4/1/08(6) ............................... 210,000 208,425 Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(4) ...................... 525,000 548,625 ---------- 7,451,829 ---------- Media/Entertainment: Broadcasting -- 1.3% Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 ........... 900,000 942,750 Chancellor Media Corp., 8.75% Sr. Sub. Nts., Series B, 6/15/07 ............. 700,000 728,000 Jacor Communications Co.: 8% Sr. Sub. Nts., 2/15/10 ................................................. 400,000 398,000 8.75% Gtd. Sr. Sub. Nts., Series B, 6/15/07 ............................... 220,000 227,700 Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(12) ................... 700,000 717,500 Sinclair Broadcast Group, Inc., 8.75% Sr. Sub. Nts., 12/15/07 .............. 500,000 508,750 Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 .................. 475,000 517,750 ---------- 4,040,450 ----------
9 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Media/Entertainment: Cable/Wireless Video -- 2.2% Adelphia Communications Corp.: 8.375% Sr. Nts., Series B, 2/1/08 ........................................... $ 250,000 $ 248,750 9.25% Sr. Nts., 10/1/02 ..................................................... 435,000 451,312 9.875% Sr. Nts., Series B, 3/1/07 ........................................... 565,000 608,788 Cablevision Systems Corp. Holdings, Inc.: 9.875% Sr. Sub. Debs., 4/1/23 ............................................... 350,000 387,625 9.875% Sr. Sub. Nts., 5/15/06 ............................................... 1,000,000 1,095,000 EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02 ................................. 615,000 691,875 EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04(9) .................................................................. 1,000,000 920,000 Falcon Holding Group LP: 0%/9.285% Sr. Disc. Debs., 4/15/10(6)(9) .................................... 250,000 159,375 8.375% Sr. Debs., 4/15/10(6) ................................................ 975,000 964,031 Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts., Series B, 11/1/03(13) ................................................................. 250,000 266,875 Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 ................................. 480,000 538,800 TCI Satellite Entertainment, Inc., 0%/12.25% Sr. Sub. Disc. Nts., 2/15/07(9) .................................................................. 145,000 103,675 United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., 2/15/08(9) .... 600,000 380,250 ---------- 6,816,356 ---------- Media/Entertainment: Diversified Media -- 1.1% Ascent Entertainment Group, Inc., 0%/11.875% Sr. Sec. Disc. Nts., 12/15/04(9) ................................................................. 290,000 185,600 Chancellor Media Corp., 10.50% Sr. Sub. Nts., Series B, 1/15/07 .............. 735,000 828,713 Hollinger International Publishing, Inc., 9.25% Gtd. Sr. Sub. Nts., 2/1/06.... 250,000 261,563 Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07 ...................... 475,000 513,000 Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 ......................... 875,000 892,500 SFX Entertainment, Inc., 9.125% Sr. Sub. Nts., 2/1/08(6) ..................... 600,000 585,000 ---------- 3,266,376 ---------- Media/Entertainment-Telecommunications -- 3.5% e.spire Communications, Inc., 13.75% Sr. Nts., 7/15/07 ....................... 205,000 242,925 DTI Holdings, Inc., Units (each unit consists of $1,000 principal amount of 0%/12.50% sr. disc. nts., 3/1/08 and five warrants to purchase 7.76 ordinary shares)(6)(9)(11) .................................................. 500,000 286,250 Facilicom International, Inc., 10.50% Sr. Nts., 1/15/08(6) ................... 450,000 465,750
10 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Media/Entertainment: Telecommunications (Continued) Firstworld Communications, Inc., Units (each unit consists of $1,000 principal amount of 0%/13% sr. disc. nts., 4/15/08 and one warrant to purchase 7.9002 shares of series B common stock)(6)(9)(11) ............ $1,160,000 $ 591,600 Focal Communications Corp., 0%/12.125% Sr. Disc. Nts., 2/15/08(6)(9) ...... 600,000 357,750 GST Telecommunications, Inc., 12.75% Sr. Sub. Nts., 11/15/07(13) .......... 250,000 281,906 ICG Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 9/15/05(9) .................. 430,000 366,575 Intermedia Communications, Inc.: 0%/11.25% Sr. Disc. Nts., Series B, 7/15/07(9) ........................... 880,000 651,200 8.50% Sr. Nts., Series B, 1/15/08 ........................................ 640,000 659,200 8.875% Sr. Nts., 11/1/07 ................................................. 300,000 312,000 ITC Deltacom, Inc.: 11% Sr. Nts., 6/1/07 ..................................................... 250,000 285,000 8.875% Sr. Nts., 3/1/08(6) ............................................... 500,000 522,500 IXC Communications, Inc., 9% Sr. Sub. Nts., 4/15/08(6) .................... 120,000 120,900 KMC Telecom Holdings, Inc., Units (each unit consists of $1,000 principal amount of 0%/12.50% sr. disc. nts., 2/15/08 and one warrant to purchase .21875 ordinary shares)(6)(9)(11) .................... 920,000 561,200 Level 3 Communications, Inc., 9.125% Sr. Nts., 5/1/08(6) .................. 750,000 742,031 Long Distance International, Inc., Units (each unit consists of $1,000 principal amount of 12.25% sr. nts., 4/15/08 and one warrant to purchase 15.0875 shares of common stock)(6)(11) .......................... 600,000 603,000 McLeodUSA, Inc.: 0%/10.50% Sr. Disc. Nts., 3/1/07(9) ...................................... 255,000 190,613 8.375% Sr. Nts., 3/15/08(6) .............................................. 260,000 265,200 NEXTLINK Communications, Inc.: 0%/9.45% Sr. Disc. Nts., 4/15/08(6)(9) ................................... 1,000,000 625,000 9% Sr. Nts., 3/15/08(6) .................................................. 450,000 461,250 9.625% Sr. Nts., 10/1/07 ................................................. 500,000 526,250 NTL, Inc., 10% Sr. Nts., 2/15/07 .......................................... 250,000 268,125 Qwest Communications International, Inc., 0%/9.47% Sr. Disc. Nts., 10/15/07(9) .............................................................. 1,125,000 810,000 Viatel, Inc., Units: (each unit consists of $1,000 principal amount of 0%/12.50% sr. disc. nts., 4/15/08 and .49 shares of series A preferred stock)(6)(9)(11) ..... 500,000 305,000 (each unit consists of $1,000 principal amount of 11.25% sr. nts., and .483 shares of series A preferred stock)(6)(11) ..................... 195,000 206,700 ---------- 10,707,925 ----------
11 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Media/Entertainment: Wireless Communications -- 3.2% American Mobile Radio Corp., Units (each unit consists of $1,000 principal amount of 12.25% sr. nts., 12/15/07 and one warrant to purchase 3.75749 shares of common stock)(6)(11) ............................ $ 390,000 $ 397,800 CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(9) ............... 709,000 402,358 Crown Castle International Corp., 0%/10.625% Sr. Disc. Nts., 11/15/07(6)(9) ............................................................. 800,000 550,000 Iridium LLC/Iridium Capital Corp., 11.25% Sr. Nts., 7/15/05(6) .............. 250,000 259,375 Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts., Series B, 6/1/06(9) .................................................................. 500,000 373,750 Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(9) ..... 355,000 279,563 Nextel Communications, Inc.: 0%/9.75% Sr. Disc. Nts., 10/31/07(9) ....................................... 1,425,000 933,375 0%/9.95% Sr. Disc. Nts., 2/15/08(6)(9) ..................................... 500,000 321,250 Omnipoint Corp.: 11.625% Sr. Nts., 8/15/06 .................................................. 490,000 535,325 11.625% Sr. Nts., Series A, 8/15/06 ........................................ 1,250,000 1,365,625 ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 .............. 200,000 234,000 Orbital Imaging Corp., Units (each unit consists of $1,000 principal amount of 11.625% sr. nts., 3/1/05 and one warrant to purchase 8.7516 ordinary shares)(6)(11) ............................................. 240,000 258,600 Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(9) ........... 1,275,000 988,125 Pinnacle Holdings, Inc., 0%/10% Sr. Disc. Nts., 3/15/08(6)(9) ............... 800,000 508,000 Price Communications Cellular Holdings, Inc., 0%/13.50% Sr. Disc. Nts., Series B, 8/1/07(9) ........................................................ 1,250,000 868,750 Price Communications Wireless, Inc., 11.75% Sr. Sub. Nts., 7/15/07 .......... 100,000 112,750 SBA Communications Corp., 0%/12% Sr. Disc. Nts., 3/1/08(6)(9) ............... 1,200,000 720,000 Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts., 8/15/06 .................................................................... 500,000 575,000 Teletrac, Inc., 14% Sr. Nts., Series B, 8/1/07 .............................. 125,000 120,625 Winstar Equipment Corp., 12.50% Gtd. Sr. Sec. Exchangeable Nts., 3/15/04 .................................................................... 200,000 225,500 ---------- 10,029,771 ----------
12 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Metals/Minerals -- 0.9% AK Steel Corp., 9.125% Sr. Nts., 12/15/06 ................................ $ 700,000 $ 742,000 Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 ..................... 250,000 270,000 Keystone Consolidated Industries, Inc., 9.625% Sr. Sec. Nts., 8/1/07 ..... 900,000 933,750 Metallurg, Inc., 11% Sr. Nts., 12/1/07(6) ................................ 675,000 707,063 ---------- 2,652,813 ---------- Retail -- 0.8% Boyds Collection Ltd., 9% Sr. Sub. Nts., 5/15/08(6) ...................... 360,000 363,600 Eye Care Centers of America, Inc.: 9.125% Sr. Sub. Nts., 5/1/08(6) ......................................... 360,000 362,700 12% Sr. Nts., 10/1/03 ................................................... 185,000 199,800 Finlay Enterprises, Inc., 9% Debs., 5/1/08 ............................... 240,000 242,700 Finlay Fine Jewelry Corp.: 8.375% Sr. Nts., 5/1/08 ................................................. 300,000 301,875 10.625% Sr. Nts., 5/1/03(4) ............................................. 250,000 261,875 Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 ....................... 775,000 798,250 ---------- 2,530,800 ---------- Service -- 1.6% Allied Waste Industries, Inc., 0%/11.30% Sr. Disc. Nts., 6/1/07(9) ....... 500,000 371,250 Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 ................ 700,000 780,500 Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(9) ........................ 500,000 406,250 Comforce Operating, Inc., 12% Sr. Nts., Series B, 12/1/07 ................ 200,000 216,000 Fisher Scientific International, Inc., 9% Sr. Sub. Nts., 2/1/08(6) ....... 1,000,000 1,010,000 Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 .......... 400,000 404,000 Newcor, Inc., 9.875% Sr. Sub. Nts., 3/1/08(6) ............................ 500,000 505,000 Protection One Alarm Monitoring, Inc., 0%/13.625% Sr. Disc. Nts., 6/30/05(9) .............................................................. 1,100,000 1,237,500 ---------- 4,930,500 ---------- Transportation -- 2.7% Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 ...... 800,000 832,000 Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., Series B, 7/1/07 ............. 925,000 971,250 Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 ........ 700,000 787,500 Hvide Marine, Inc., 8.375% Sr. Nts., 2/15/08(6) .......................... 320,000 313,600 Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 .............. 775,000 825,375
13 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- -------------- Transportation (Continued) Navigator Gas Transport plc: 10.50% First Priority Ship Mtg. Nts., 6/30/07(6) ......................... $ 1,250,000 $ 1,309,375 Units (each unit consists of $1,000 principal amount of 12% second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(6)(11) ....... 250,000 286,250 Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07 ............ 600,000 636,000 Sea Containers Ltd., 7.875% Sr. Nts., 2/15/08(6) .......................... 500,000 489,375 Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(9) .................................................... 1,500,000 1,385,625 Trico Marine Services, Inc., 8.50% Gtd. Sr. Nts., Series D, 8/1/05 ........ 475,000 477,375 ----------- 8,313,725 ----------- Utility -- 0.7% Calpine Corp., 10.50% Sr. Nts., 5/15/06(4) ................................ 565,000 625,738 El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 ............ 570,000 652,650 ESI Tractebel Acquisition Corp., 7.99% Bonds, 12/30/11(6) ................. 1,000,000 999,301 ----------- 2,277,689 ----------- 107,089,815 ----------- Structured Instruments -- 7.1% Bear Stearns High Yield Composite Index Linked Nts., 9%, 6/5/98-10/13/98 .......................................................... 10,500,000 10,667,400 Lehman High Yield Index Nts.: 7.988%, 7/6/98 ........................................................... 3,000,000 3,007,200 9%, 7/8/98 ............................................................... 3,000,000 2,947,500 Shoshone Partners Loan Trust Sr. Nts.: 5/31/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(4)(14) ................. 500,000 500,000 7.379%, 4/28/02 (representing a basket of reference loans and a total return swap between Chase Manhattan Bank and the Trust)(4)(13) .......... 4,500,000 4,913,253 ----------- 22,035,353 ----------- Total Corporate Sector (Cost $125,202,541)................................. 129,144,006 -----------
14 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- International Sector -- 25.0% Corporate Bonds and Notes -- 4.4% Financial -- 2.0% Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/99(4)(15)IDR ........ 3,160,000,000 $ 98,137 Export-Import Bank of Japan, 4.375% Unsec. Nts., 10/1/03JPY .............. 294,000,000 2,585,266 Hypothekenbank in Essen AG: 4.50% Sec. Nts., Series 478, 5/2/03DEM .................................. 830,000 455,680 5.75% Sec. Nts., Series 447, 10/2/03DEM ................................. 4,960,000 2,874,566 KFW International Finance, Inc., 6.75% Gtd. Bank Nts., 6/20/05DEM ........ 250,000 153,420 PT Polysindo Eka Perkasa, Zero Coupon: Nts., Series 2, 7/15/98(4)(15)IDR ....................................... 1,314,400,000 32,656 Promissory Nts., 3/16/99(4)(15)IDR ...................................... 3,000,000,000 93,168 ---------- 6,292,893 ---------- Food/Tobacco -- 0.2% Sparkling Spring Water Group Ltd., 11.50% Sr. Sub. Nts., 11/15/07(6) ..... 475,000 498,750 ---------- Media/Entertainment: Cable/Wireless Video -- 0.2% Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 .................... 675,000 683,438 ---------- Media/Entertainment: Diversified Media -- 0.3% Imax Corp., 10% Sr. Nts., 3/1/01 ......................................... 1,000,000 1,042,500 ---------- Media/Entertainment: Telecommunications -- 1.0% COLT Telecom Group plc, Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase 7.8 ordinary shares)(9)(11) .................................... 900,000 819,000 Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(9) ............................................................. 1,600,000 1,280,000 Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08(6) ......................... 200,000 204,500 RSL Communications plc, 9.125% Sr. Nts., 3/1/08(6) ....................... 500,000 505,000 TeleWest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(9) .............................................................. 500,000 405,000 ---------- 3,213,500 ----------
15 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Media/Entertainment: Wireless Communications -- 0.4% Cellular Communications International, Inc., 0%/9.50% Bonds, 4/1/05(6)(9)XEU ............................................................ 1,525,000 $1,167,028 ---------- Metals/Minerals -- 0.3% Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 ........................ 700,000 829,500 International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08(6) ..... 200,000 208,000 ---------- 1,037,500 ---------- 13,935,609 ---------- Foreign Government Obligations -- 18.4% Argentina -- 1.5% Argentina (Republic of) Sr. Unsec. Unsub. Bonds, 11%, 10/9/06 ............... 3,570,000 3,900,225 Banco Hipotecario Nacional (Argentina) Medium-Term Nts., 10.625%, 8/7/06(16) ................................................................. 700,000 727,562 ---------- 4,627,787 ---------- Australia -- 0.4% New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04AUD .................... 1,570,000 1,076,322 Queensland Treasury Corp. Exchangeable Gtd. Nts., 8%, 5/14/03AUD ............ 200,000 143,333 ---------- 1,219,655 ---------- Brazil -- 1.9% Brazil (Federal Republic of) Bonds, Series RG, 6.688%, 4/15/12(13) .......... 820,000 652,925 Brazil (Federal Republic of) Debt Conversion Bonds, 6.688%, 4/15/12(13) ................................................................ 6,650,000 5,295,062 ---------- 5,947,987 ---------- Bulgaria -- 0.3% Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.563%, 7/28/24(13) .......... 991,000 810,142 ---------- Canada -- 0.4% Canada (Government of) Bonds, 10.25%, 12/1/98CAD ............................ 1,800,000 1,298,548 ----------
16 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Ecuador -- 0.8% Ecuador (Republic of) Debs., 6.625%, 2/27/15(13) ......................... $ 400,560 $ 252,854 Ecuador (Republic of) Disc. Bonds, 6.625%, 2/28/25(13) ................... 1,910,000 1,401,462 Ecuador (Republic of) Par Bonds, 3.50%, 2/28/25(13) ...................... 945,000 517,388 Ecuador (Republic of) Past Due Interest Bonds, 6.625%, 2/27/15(13) ............................................................. 639,784 403,864 ---------- 2,575,568 ---------- Germany -- 1.7% Germany (Republic of) Bonds: 6.50%, 7/15/03DEM ....................................................... 2,300,000 1,383,335 8.25%, 9/20/01DEM ....................................................... 1,610,000 999,377 Series 98, 5.25%, 1/4/08DEM ............................................. 4,500,000 2,545,031 Series JA07, Zero Coupon, 5.748%, 1/4/07(3)DEM .......................... 95,000 34,623 Series JL07, Zero Coupon, 5.66%, 7/4/07(3)DEM ........................... 510,000 179,900 ---------- 5,142,266 ---------- Great Britain -- 1.2% United Kingdom Treasury Bonds: 8%, 9/25/09GBP .......................................................... 985,000 1,933,587 9%, 10/13/08GBP ......................................................... 915,000 1,902,789 ---------- 3,836,376 ---------- Italy -- 0.8% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali, 8.50%, 1/1/04ITL ........................................................ 3,835,000,000 2,533,725 ---------- Ivory Coast -- 0.4% Ivory Coast (Government of) Past Due Interest Bonds, 2%, 12/29/49(12) ............................................................ 2,630,000 1,111,175 ---------- Jordan -- 0.1% Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5%, 12/23/23(12) ........ 500,000 358,750 ---------- Korea, Republic of (South) -- 0.3% Korea (Republic of) Bonds, 8.875%, 4/15/08 ............................... 850,000 835,948 ----------
17 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Mexico -- 2.7% Bonos de la Tesoreria de la Federacion, Zero Coupon, 20.342%, 3/11/99(3)MXP .................................................. 15,293,610 $1,532,111 Petroleos Mexicanos Debs., 14.50%, 3/31/06GBP ................... 280,000 599,245 United Mexican States Bonds, 11.50%, 5/15/26 .................... 5,120,000 6,188,800 ---------- 8,320,156 ---------- New Zealand -- 0.3% New Zealand (Government of) Bonds: 8%, 11/15/06NZD ................................................ 450,000 267,254 10%, 3/15/02NZD ................................................ 1,295,000 781,263 ---------- 1,048,517 ---------- Nigeria -- 0.2% Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 ......................................................... 898,476 644,433 ---------- Norway -- 0.9% Norway (Government of) Bonds: 5.75%, 11/30/04NOK ............................................. 17,015,000 2,334,349 9.50%, 10/31/02NOK ............................................. 2,955,000 463,571 ---------- 2,797,920 ---------- Panama -- 0.6% Panama (Government of) Bonds, 8.875%, 9/30/27 ................... 545,000 530,694 Panama (Government of) Past Due Interest Debs., 6.563%, 7/17/16(13) .................................................... 1,702,802 1,417,583 ---------- 1,948,277 ---------- Peru -- 0.6% Peru (Republic of) Front-Loaded Interest Reduction Bonds, 3.25%, 3/7/17(13) ..................................................... 3,115,000 1,942,981 ---------- Philippines -- 0.1% Philippines (Republic of) Bonds, 8.75%, 10/7/16 ................. 310,000 295,275 ---------- Poland -- 0.4% Poland (Republic of) Par Bonds, 3%, 10/27/24(12) ................ 1,655,000 1,064,372 ----------
18 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ------------------ ------------- Russia -- 1.0% Russia (Government of) Debs., Series 19 yr., 6.719%, 12/15/15(13) ........ $ 3,025,000 $2,136,709 Russia (Government of) Interest Nts., 6.719%, 12/15/15(13) ............... 1,260,000 904,050 ---------- 3,040,759 ---------- Turkey -- 0.5% Turkey (Republic of) Treasury Bills, Zero Coupon, 96.514%, 9/2/98(3)TRL ............................................................ 511,000,000,000 1,582,337 ---------- Venezuela -- 0.9% Venezuela (Republic of) Bonds, 9.25%, 9/15/27 ............................ 750,000 661,875 Venezuela (Republic of) Front-Loaded Interest Reduction Bonds, Series A, 6.625%, 3/31/07(13) ........................................... 2,357,138 2,150,889 ---------- 2,812,764 ---------- Sweden -- 0.4% Sweden (Kingdom of) Bonds: Series 1033, 10.25%, 5/5/03SEK .......................................... 6,400,000 1,010,073 Series 1037, 8%, 8/15/07SEK ............................................. 2,200,000 338,596 ---------- 1,348,669 ---------- 57,144,387 ---------- Loan Participations -- 1.0% Algeria (Republic of) Reprofiled Debt Loan Participation: Tranche 1, 6.688%, 9/4/06(13) ........................................... 1,065,272 840,900 Tranche A, 7.375%, 3/4/00(13) ........................................... 710,181 673,119 Morocco (Kingdom of) Loan Participation Agreement: Tranche A, 6.656%, 1/1/09(4)(13) ........................................ 527,000 473,641 Tranche B, 6.656%, 1/1/04(4)(13) ........................................ 705,882 650,735 Trinidad & Tobago Loan Participation Agreement, Tranche B, 1.807%, 9/30/00(4)(13)JPY ....................................................... 71,999,999 506,774 ---------- 3,145,169 ----------
19 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Units See Note 1 ------------------ ------------- Rights, Warrants and Certificates -- 0.0% Australis Media Ltd. Wts., Exp. 5/00(4) .................................. 80 $ 1 Microcell Telecommunications, Inc. Wts., Exp. 6/06(4) .................... 2,800 73,150 ------- 73,151 ------- Face Amount(1) ---------------- Structured Instruments -- 1.2% Lehman Brothers Holdings, Inc.: Greek Drachma/Swiss Franc Linked Nts., Zero Coupon, 3/31/99 ............. $ 1,490,000 1,529,187 Chilean Peso/Japanese Yen Linked Nts., 18%, 7/28/98 ..................... 350,000 350,000 Chilean Peso/Japanese Yen Linked Nts., 17.50%, 7/28/98 .................. 350,000 350,000 Standard Chartered Bank, Korean Won/Japanese Yen Linked Nts., 28.50%, 4/30/99 ......................................................... 1,500,000 1,495,650 ---------- 3,724,837 ---------- Total International Sector (Cost $78,026,655) ............................ 78,023,153 ---------- Mortgage-Backed Sector -- 23.4% Government Agency -- 20.0% FHLMC/FNMA/Sponsored -- 16.2% Federal Home Loan Mortgage Corp., Certificates of Participation, 12%, 5/1/10-6/1/15 ........................................................... 1,659,523 1,907,245 Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates, Series 1343, Cl. LA, 8%, 8/15/22 ................................................................. 1,000,000 1,087,081 Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security, Series 177, C1. B, 6.90%-7.32%, 7/1/26(17) .................... 10,445,830 2,859,547 Federal National Mortgage Assn.: 6.50%, 5/1/13-5/1/28(14) ................................................ 11,700,000 11,682,498 7%, 5/1/13-5/25/27(14) .................................................. 21,970,000 22,236,752 7.50%, 6/1/10 ........................................................... 1,341,625 1,383,847 11%, 7/1/16 ............................................................. 724,360 822,149
20 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- FHLMC/FNMA/Sponsored (Continued) Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates, 13%, 6/1/15 ............................................................. $ 905,573 $1,079,326 Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1992-162, Cl. C, 7%, 10/25/21 ..................................... 5,400,000 5,477,598 Trust 1995-4, Cl. PC, 8%, 5/25/25 ....................................... 664,690 719,882 Trust 1997-25, Cl. B, 7%, 12/18/22 ...................................... 340,000 343,416 Trust 1997-27, Cl. J, 7.50%, 4/18/27 .................................... 534,881 557,272 Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 277-C1, 10.418%, 4/1/27(18) ............................. 212,515 171,872 ---------- 50,328,485 ---------- GNMA/Guaranteed -- 3.8% Government National Mortgage Assn.: 6%, 7/20/27 ............................................................. 715,950 731,165 7%, 5/1/28(14) .......................................................... 6,400,000 6,476,032 7.50%, 2/15/27 .......................................................... 3,478,558 3,574,740 11%, 10/20/19 ........................................................... 530,557 596,044 12%, 11/20/13-9/20/15 ................................................... 563,134 650,012 ---------- 12,027,993 ---------- Private -- 3.4% Commercial -- 2.5% Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates: Series 1996-D3, Cl. A5, 7.224%, 10/13/26(4)(13) ......................... 500,000 533,359 Series 1996-MD6, Cl. A5, 7.224%, 11/13/26(13) ........................... 800,000 821,375 Series 1997-MD7, Cl. A6, 8.243%, 1/13/30(13) ............................ 150,000 157,852 BKB Commercial Mortgage Trust, Commercial Mtg. Obligations, Series 1997-C1, Cl. C, 7.45%, 10/25/00(4) ...................................... 250,000 250,391 Capital Lease Funding Securitization LP, Interest-Only Stripped Mtg.- Backed Security, Series 1997-CT L1, 0.549%, 6/22/24(4)(17) .............. 11,502,462 544,066 Commercial Mortgage Acceptance Corp., Interest-Only Stripped Mtg.- Backed Security, Series 1996-C1, C1. X-2, 0.981%, 12/25/20(4)(17) ....... 12,416,600 322,056
21 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ------------- Commercial (Continued) First Union-Lehman Brothers Commercial Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1, 6.89%, 4/18/27(17) ........ $4,717,186 $ 353,605 General Motors Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1, C1. X, 8.55%, 7/15/27(17) ...................... 3,573,330 343,933 Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates, Series 1996-C1, Cl. D, 7.42%, 4/25/28 .................................... 800,000 815,766 Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates, Series 1996-C1, Cl. D-1, 7.438%, 2/15/28(4)(13) ............ 1,000,000 1,026,562 NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates, Series-DMC: Cl. B, 8.562%, 8/12/11(4) ................................................ 400,000 419,187 Cl. C, 8.921%, 8/12/11(4) ................................................ 400,000 423,375 Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through Certificates, Series 1, Cl. D, 7.683%, 12/21/26(4) ....................... 500,000 517,200 Structured Asset Securities Corp.: Commercial Mtg. Pass-Through Certificates, Series 1997-LLI, Cl. E, 7.30%, 10/20/34 .................................................. 500,000 503,281 Multiclass Pass-Through Certificates, Series 1996-C3, Cl. D, 8%, 6/25/30(4) .............................................................. 650,000 661,578 ---------- 7,693,586 ---------- Residential -- 0.9% CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(4) .................... 710,000 747,133 First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, 8.035%, 7/25/06(4)(13) ................... 800,000 843,360 Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1, 7.132%, 4/25/26 ................................................... 1,320,681 968,225 Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(4) ........ 250,000 265,625 ---------- 2,824,343 ---------- Total Mortgage-Backed Sector (Cost $72,210,784) ........................... 72,874,407 ----------
22 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount(1) See Note 1 ---------------- ---------------- Money Market Sector -- 6.7% Repurchase agreement with Zion First National Bank, 5.52%, dated 4/30/98, to be repurchased at $21,003,220 on 5/1/98, collateralized by U.S. Treasury Nts., 7.25%, 8/15/07, with a value of $20,526,660, and U.S. Treasury Bills maturing 10/8/98, with a value of $922,348 (Cost $21,000,000) ................................................ $ 21,000,000 $ 21,000,000 ------------ ------------- Total Investments, at Value (Cost $343,014,579) .................... 112.3% 349,665,459 Liabilities in Excess of Other Assets .............................. (12.3) (38,420,478) ------------ ------------- Net Assets ......................................................... 100.0% $ 311,244,981 ============ =============
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: AUD--Australian Dollar MXP--Mexican Peso CAD--Canadian Dollar NOK--Norwegian Krone DEM--German Mark NZD--New Zealand Dollar GBP--British Pound Sterling SEK--Swedish Krona IDR--Indonesian Rupiah TRL--Turkish Lira ITL--Italian Lira XEU--European Currency Units JPY--Japanese Yen 2. Securities with an aggregate market value of $91,145 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 3. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 4. 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 $40,376,307 or 12.97% of the Trust's net assets as of April 30, 1998. 7. Interest or dividend is paid in kind. 8. A sufficient amount of securities has been designated to cover outstanding forward foreign currency exchange contracts. See Note 5 of Notes to Financial Statements. 9. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 10. Non-income producing--issuer is in default of interest payment. 11. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units which represent debt securities, face amount disclosed represents total underlying principal. 12. Represents the current interest rate for an increasing rate security. 13. Represents the current interest rate for a variable rate security. 14. When-issued security to be delivered and settled after April 30, 1998. 15. Issuer is in default. 23 Statement of Investments (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust 16. A sufficient amount of securities have been designated to cover outstanding written options, as follows:
Contracts Expiration Exercise Premium Market Value Subject to Call Date Price Received See Note 1 ----------------- ------------ ------------ ---------- ------------- Banco Hipotecario Nacional (Argentina) Medium-Term Nts., 10.625%, 8/7/06 Call Opt. $700 8/7/00 100.00% $6,440 $28,000
17. 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. 18. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. See accompanying Notes to Financial Statements. 24 Statement of Assets and Liabilities April 30, 1998 (Unaudited) Oppenheimer Multi-Sector Income Trust ASSETS: Investments, at value (cost $343,014,579) -- see accompanying statement............. $349,665,459 Receivables: Interest, dividends and principal paydowns ........................................ 4,671,908 Investments sold and options written .............................................. 3,250,202 Daily variation on futures contracts -- Note 6 .................................... 311,848 Closed forward foreign currency exchange contracts ................................ 157,994 Other .............................................................................. 40,062 ------------ Total assets ..................................................................... 358,097,473 ------------ LIABILITIES: Bank overdraft ..................................................................... 1,472,906 Unrealized depreciation on forward foreign currency exchange contracts -- Note 5 ... 44,369 Options written, at value (premiums received $6,440) -- see accompanying statement -- Note 7 .............................................. 28,000 Payables and other liabilities: Investments purchased (including $40,812,801 purchased on a when-issued basis) -- Note 1 ........................................................................... 44,434,427 Daily variation on futures contracts -- Note 6 .................................... 304,159 Dividends ......................................................................... 168,568 Trustees' fees -- Note 1 .......................................................... 160,862 Management and administrative fees ................................................ 69,922 Closed forward foreign currency exchange contracts ................................ 53,208 Transfer agent and accounting services fees ....................................... 1,343 Other .............................................................................. 114,728 ------------ Total liabilities ................................................................ 46,852,492 ------------ NET ASSETS ......................................................................... $311,244,981 ============ COMPOSITION OF NET ASSETS: Par value of shares of beneficial interest ......................................... $ 291,161 Additional paid-in capital ......................................................... 313,688,210 Overdistributed net investment income .............................................. (1,151,658) Accumulated net realized loss on investments and foreign currency transactions ..... (8,002,960) Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies ................................................. 6,420,228 ------------ NET ASSETS -- applicable to 29,116,068 shares of beneficial interest outstanding ... $311,244,981 ============ NET ASSET VALUE PER SHARE .......................................................... $ 10.69 ============
See accompanying Notes to Financial Statements. 25 Statement of Operations For the Six Months Ended April 30, 1998 (Unaudited) Oppenheimer Multi-Sector Income Trust INVESTMENT INCOME: Interest (net of foreign withholding taxes of $63,621)...................... $ 12,693,581 Dividends .................................................................. 201,497 ------------ Total income ............................................................. 12,895,078 ------------ EXPENSES: Management fees -- Note 4 .................................................. 998,961 Administrative fees -- Note 4 .............................................. 307,270 Shareholder reports ........................................................ 89,999 Trustees' fees and expenses -- Note 1 ...................................... 43,662 Custodian fees and expenses ................................................ 42,996 Transfer agent and accounting services fees -- Note 4 ...................... 42,205 Legal and auditing fees .................................................... 23,212 Registration and filing fees ............................................... 12,837 Other ...................................................................... 7,368 ------------ Total expenses ........................................................... 1,568,510 ------------ NET INVESTMENT INCOME ...................................................... 11,326,568 ------------ REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments ............................................................... 1,431,074 Closing of futures contracts .............................................. (1,084,144) Closing and expiration of options written -- Note 7 ....................... 240,090 Foreign currency transactions ............................................. (94,724) ------------ Net realized gain ........................................................ 492,296 ------------ Net change in unrealized appreciation or depreciation on: Investments ............................................................... 3,715,762 Translation of assets and liabilities denominated in foreign currencies ... (1,033,044) ------------ Net change ............................................................... 2,682,718 ------------ NET REALIZED AND UNREALIZED GAIN ........................................... 3,175,014 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................... $ 14,501,582 ============
See accompanying Notes to Financial Statements. 26 Statements of Changes in Net Assets Oppenheimer Multi-Sector Income Trust
Six Months Ended Year Ended April 30, 1998 October 31, (Unaudited) 1997 ---------------- ---------------- OPERATIONS: Net investment income ........................................... $ 11,326,568 $ 26,006,984 Net realized gain ............................................... 492,296 6,185,833 Net change in unrealized appreciation or depreciation ........... 2,682,718 (3,663,440) ------------- ------------- Net increase in net assets resulting from operations ........... 14,501,582 28,529,377 ------------- ------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (12,228,747) (25,738,551) ------------- ------------- NET ASSETS: Total increase .................................................. 2,272,835 2,790,826 Beginning of period ............................................. 308,972,146 306,181,320 ------------- ------------- End of period (including overdistributed net investment income of $1,151,658 and $249,479, respectively).......................... $ 311,244,981 $ 308,972,146 ============= =============
See accompanying Notes to Financial Statements. 27 Financial Highlights Oppenheimer Multi-Sector Income Trust
Six Months Ended April 30, 1998 (Unaudited) ------------------ PER SHARE OPERATING DATA: Net asset value, beginning of period .............. $ 10.61 --------- Income (loss) from investment operations: Net investment income ............................ .39 Net realized and unrealized gain (loss) .......... .11 --------- Total income from investment operations ......... .50 --------- Dividends and distributions to shareholders: Dividends from net investment income ............. (.42) Tax return of capital distribution ............... -- --------- Total dividends and distributions to shareholders ................................... (.42) --------- Net asset value, end of period .................... $ 10.69 ========= Market value, end of period ....................... $ 10.25 TOTAL RETURN, AT MARKET VALUE(1) 5.24% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ................................... $ 311,245 Average net assets (in thousands) ................................... $ 310,523 Ratios to average net assets: Net investment income ............................ 7.36%(2) Expenses ......................................... 1.02%(2) Portfolio turnover rate(3) ........................ 206.9% Year Ended October 31, ---------------------------------------------------------------- 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------- ----------- PER SHARE OPERATING DATA: Net asset value, beginning of period .............. $ 10.52 $ 10.14 $ 10.17 $ 10.96 $ 10.46 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income ............................ .89 .91 .94 1.00 1.08 Net realized and unrealized gain (loss) .......... .08 .37 (.04) (.82) .43 -------- -------- -------- -------- -------- Total income from investment operations ......... .97 1.28 .90 .18 1.51 -------- -------- -------- -------- -------- Dividends and distributions to shareholders: Dividends from net investment income ............. (.88) (.90) (.91) (.84) (1.01) Tax return of capital distribution ............... -- -- (.02) (.13) -- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders ................................... (.88) (.90) (.93) (.97) (1.01) -------- -------- -------- -------- -------- Net asset value, end of period .................... $ 10.61 $ 10.52 $ 10.14 $ 10.17 $ 10.96 ======== ======== ======== ======= ======== Market value, end of period ....................... $ 10.13 $ 9.88 $ 10.00 $ 9.50 $ 11.25 TOTAL RETURN, AT MARKET VALUE(1) 11.40% 7.85% 15.62% (7.46)% 11.10% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ................................... $308,972 $306,181 $295,128 $295,658 $316,647 Average net assets (in thousands) ................................... $308,712 $298,496 $288,884 $306,686 $307,244 Ratios to average net assets: Net investment income ............................ 8.42% 8.87% 9.51% 9.17% 10.13% Expenses ......................................... 0.99% 1.04% 1.05% 1.02% 1.00% Portfolio turnover rate(3) ........................ 258.9% 225.4% 240.1% 187.6% 131.3%
(1) Assumes a hypothetical purchase at the current market price on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and a sale at the current market price on the last business day of the period. Total return does not reflect sales charges or brokerage commissions. Total returns are not annualized for periods of less than one full year. (2) Annualized. (3) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities and mortgage dollar-rolls) for the period ended April 30, 1998 were $607,000,011 and $722,155,196, respectively. Prior to the period ended October 31, 1996, purchases and sales of investment securities included mortgage dollar-rolls. See accompanying Notes to Financial Statements. 28 Notes to Financial Statements (Unaudited) Oppenheimer Multi-Sector Income Trust 1. Significant Accounting Policies Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Trust's investment objective is to seek high current income consistent with preservation of capital. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a summary of significant accounting policies consistently followed by the Trust. Investment Valuation -- Portfolio securities are valued at the close of the New York Stock Exchange on the last day of each week in which the New York Stock Exchange is open. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale price on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid is used. Structured Notes -- The Trust invests in foreign currency-linked structured notes whereby the market value and redemption price are linked to foreign currency exchange rates. The structured notes may be leveraged, which increases the notes' volatility relative to the face of the security. Fluctuations in values of the securities are recorded as unrealized gains and losses in the accompanying financial statements. During the six months ended April 30, 1998, the market value of these securities comprised an average of 8.35% of the Trust's net assets, and resulted in realized and unrealized losses of $1,008,624. Securities Purchased on a When-Issued Basis -- Delivery and payment for securities that have been purchased by the Trust on a forward commitment or when-issued basis can take place a month or more after the transaction date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Trust maintains, in a segregated account with its custodian, assets with a market value equal to the amount of its purchase commitments. The purchase of securities on a when-issued 29 Notes to Financial Statements (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust 1. Significant Accounting Policies (continued) or forward commitment basis may increase the volatility of the Trust's net asset value to the extent the Trust makes such purchases while remaining substantially fully invested. As of April 30, 1998, the Trust had entered into outstanding when-issued or forward commitments of $40,812,801. In connection with its ability to purchase securities on a when-issued or forward commitment basis, the Trust may enter into mortgage dollar-rolls in which the Trust sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Trust records each dollar-roll as a sale and a new purchase transaction. Security Credit Risk -- The Trust invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower-yielding, higher-rated fixed income securities. The Trust may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. At April 30, 1998, securities with an aggregate market value of $579,585, representing 0.18% 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. Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement plan for the Trust's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended April 30, 1998, a provision of $20,577 was made for the Trust's 30 Notes to Financial Statements (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust projected benefit obligations and payments of $7,543 were made to retired trustees, resulting in an accumulated liability of $155,807 at April 30, 1998. 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 fees they are entitled to receive from the Fund. Under the plan, the compensation deferred is periodically adjusted as though an equivalent amount had been invested for the Trustee in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan will be determined based upon the performance of the selected funds. Deferral of Trustees' fees under the plan will not affect the net assets of the Fund, and will not materially, affect the Fund's assets, liabilities or net income per share. Distributions to Shareholders -- The Trust intends to declare and pay dividends from net investment income monthly. Distributions from net realized gains on investments, if any, will be made at least once each year. Classification of Distributions to Shareholders -- Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Trust. Other -- Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 2. Shares of Beneficial Interest The Trust has authorized an unlimited number of $.01 par value shares of beneficial interest. There were no transactions in shares of beneficial interest for the six months ended April 30, 1998 and the year ended October 31, 1997. 31 Notes to Financial Statements (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust 3. Unrealized Gains and Losses on Investments At April 30, 1998 net unrealized appreciation on investments and options written of $6,629,320 was composed of gross appreciation of $10,905,255, and gross depreciation of $4,275,935. 4. Management and Administrative Fees and Other Transactions with Affiliates Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for an annual fee of 0.65% on the Trust's average annual net assets. Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The Trust pays the Administrator an annual fee of 0.20% of the Trust's average annual net assets. The Manager acts as the accounting agent for the Trust at an annual fee of $24,000, plus out-of-pocket costs and expenses reasonably incurred. Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI are based on the number of accounts and the number of shareholder transactions, plus out-of-pocket costs and expenses. 5. Forward Contracts A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Trust uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Trust generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Trust may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Trust will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on outstanding forward contracts are noted in the Statement of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statement of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Trust's Statement of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. 32 Notes to Financial Statements (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust At April 30, 1998, the Trust had outstanding forward contracts as follows:
Contract Expiration Amount Valuation as of Unrealized Date (000s) April 30, 1998 Depreciation - ------------------------------------------------------------------------------------------------------ Contracts to Sell - ----------------- Indonesian Rupiah (IDR) ......... 5/12/98 1,771,200 IDR $217,169 $44,369
6. Futures Contracts The Trust may buy and sell interest rate futures contracts in order to gain exposure to or protect against changes in interest rates. The Trust may also buy or write put or call options on these futures contracts. The Trust generally sells futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Trust may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Trust is required to deposit either cash or securities (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. At April 30, 1998, the Trust had outstanding futures contracts as follows:
Unrealized Expiration Number of Valuation as of Appreciation Date Contracts April 30, 1998 (Depreciation) - -------------------------------------------------------------------------------------------------------- Contracts to Purchase - --------------------- U.S. Treasury Bonds, 30 yr. ......... 6/98 214 $25,726,813 $ (72,875) ---------- Contracts to Sell - ----------------- German Treasury, 10 yr. ............. 6/98 4 331,561 5,350 Standard & Poor's 500 ............... 6/98 24 6,715,200 (41,400) U.S. Treasury Nts., 2 yr. ........... 6/98 200 41,593,750 (4,689) U.S. Treasury Nts., 5 yr. ........... 6/98 128 13,938,000 (41,802) U.S. Treasury Nts., 10 yr. .......... 6/98 98 11,006,625 (8,125) ---------- (90,666) ---------- $ (163,541) ==========
33 Notes to Financial Statements (Unaudited) (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 footnote to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Trust gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Trust may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Trust pays a premium whether or not the option is exercised. The Trust also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the six months ended April 30, 1998 was as follows:
Call Options Put Options --------------------------- -------------------------------- Number Amount Number Amount of of of of Options Premiums Options Premiums ----------- ------------- ---------------- ------------- Options outstanding at October 31, 1997 ......... 720 $ 82,320 705 $ 63,450 Options written ................................. 1,935 217,116 21,210,800 474,150 Options closed or expired ....................... (945) (263,946) (1,505) (535,944) Options exercised ............................... (1,010) (29,050) (21,210,000) (1,656) ------ ---------- ----------- ---------- Options outstanding at April 30, 1998 ........... 700 $ 6,440 -- $ -- ====== ========== =========== ==========
34 Notes to Financial Statements (Unaudited) (Continued) Oppenheimer Multi-Sector Income Trust 8. Illiquid and Restricted Securities At April 30, 1998, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Trust intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limit. The aggregate value of illiquid or restricted securities subject to this limitation at April 30, 1998 was $23,048,967, which represents 7.40% of the Trust's net assets, of which $1,177,875 is considered restricted. Information concerning restricted securities is as follows:
Valuation Per Acquisition Cost Unit as of Security Date Per Unit April 30, 1998 - ------------------------------------------------------------------------------------------------------------------- Bonds - ----- Arizona Charlie's, Inc., 12% First Mtg. Nts., Series B, 11/15/00 11/18/93 100.00% 58.75% Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00 11/18/93 87.50 16.25 Stocks and Warrants - ------------------- Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93 $ 2.00 $ .25 CGA Group Ltd., Preferred, Series A 6/17/97 25.00 25.00 CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .50
9. Shareholder Meeting On April 16, 1998, a special shareholder meeting was held at which the five Trustees identified below were elected and the selection of KPMG Peat Marwick LLP as the independent certified public accountants and auditors of the Trust for the fiscal year beginning November 1, 1997 was ratified (Proposal No. 1) as described in the Trust's proxy statement for that meeting. The following is a report of the votes cast:
Withheld/ Broker Nominee/Proposal For Against Abstain Total Non-Votes - --------------------- ------------------- --------------- ---------------- ------------------- ---------- Trustees - -------- Robert G. Galli 24,869,009.762 0 220,364.347 25,089,374.109 2,261,840 Benjamin Lipstein 24,869,009.762 0 220,364.347 25,089,374.109 2,261,840 Kenneth A. Randall 24,869,009.762 0 220,364.347 25,089,374.109 2,261,840 Edward V. Regan 24,869,009.762 0 220,364.347 25,089,374.109 2,261,840 Russell S. Reynolds 24,869,009.762 0 220,364.347 25,089,374.109 2,261,840 Proposal No. 1 24,756,395.153 78,775.407 254,203.549 25,089,374.109 2,261,840
35 Oppenheimer Multi-Sector Income Trust General Information Concerning the Trust Oppenheimer Multi-Sector Income Trust (the Trust) is a closed-end diversified management investment company with a primary investment objective of seeking high current income consistent with preservation of capital. The Trust's secondary investment objective is capital appreciation. In seeking its objectives, the Trust may invest any percentage of its assets in at least three of the following seven fixed-income sectors: U.S. Government, Corporate, International, Asset-Backed, Municipal, Convertible and Money Market. Current income, preservation of capital and, secondarily, possible capital appreciation will be considerations in the allocation of assets among such sectors. The Trust may invest in a number of different kinds of "derivative investments" and may also engage in certain special investment techniques, including repurchase transactions, when-issued and delayed delivery transactions and hedging. The investment advisor to the Trust is OppenheimerFunds, Inc. (the Manager). The Portfolio Managers of the Trust are Robert E. Patterson, Thomas P. Reedy, Ashwin K. Vasan, Carol E. Wolf and Arthur J. Zimmer and who also serve as Vice Presidents of the Trust and of the Manager, and are officers of certain mutual funds managed by the Manager. Messrs. Reedy and Vasan have been the persons principally responsible for the day-to-day management of the Trust's portfolio since June 1993. Prior to that, Mr. Reedy served as a securities analyst for the Manager and Mr. Vasan served as a securities analyst for Citibank, N.A. Dividend Reinvestment and Cash Purchase Plan -- Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Trust (Shares) not registered in nominee name, all dividends and capital gains distributions (Distributions) declared by the Trust will be automatically reinvested in additional full and fractional Shares unless a shareholder elects to receive cash. If Shares are registered in nominee name, the shareholder should consult the nominee if the shareholder desires to participate in the Plan. Shareholders that participate in the Plan (Participants) may, at their option, make additional cash investments in Shares, semi-annually in amounts of at least $100, through payment to Shareholder Financial Services, Inc., the agent for the Plan (the Agent), accompanied by a service fee of $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 36 Oppenheimer Multi-Sector Income Trust extent available. If the market price exceeds the net asset value before the Agent has completed its purchases, the average purchase price per Share paid by the Agent may exceed the net asset value, resulting in fewer Shares being acquired than if the Distribution had been paid in Shares issued by the Trust. Participants may elect to withdraw from the Plan at any time and thereby receive cash in lieu of Shares by sending appropriate written instructions to the Agent. Elections received by the Agent will be effective only if received more than ten days prior to the record date for any Distribution; otherwise, such termination will be effective shortly after the investment of such Distribution with respect to any subsequent Distribution. Upon withdrawal from or termination of the Plan, all Shares acquired under the Plan will remain in the Participant's account unless otherwise requested. For full Shares, the Participant may either: (1) receive without charge a share certificate for such Shares; or (2) request the Agent (after receipt by the Agent of signature guaranteed instructions by all registered owners) to sell the Shares acquired under the Plan and remit the proceeds less any brokerage commissions and a $2.50 service fee. Fractional Shares may either remain in the Participant's account or be reduced to cash by the Agent at the current market price with the proceeds remitted to the Participant. Shareholders who have previously withdrawn from the Plan may rejoin at any time by sending written instructions signed by all registered owners to the Agent. There is no direct charge for participation in the Plan; all fees of the Agent are paid by the Trust. There are no brokerage charges for Shares issued directly by the Trust. However, each Participant will pay a pro rata share of brokerage commissions incurred with respect to open market purchases of Shares to be issued under the Plan. Participants will receive tax information annually for their personal records and to assist in federal income tax return preparation. The automatic reinvestment of Distributions does not relieve Participants of any income tax that may be payable on Distributions. The Plan may be terminated or amended at any time upon 30 days' prior written notice to Participants which, with respect to a Plan termination, must precede the record date of any Distribution by the Trust. Additional information concerning the Plan may be obtained by shareholders holding Shares registered directly in their names by writing the Agent, Shareholder Financial Services, Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374. Shareholders holding Shares in nominee name should contact their brokerage firm or other nominee for more information. 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." 37 [This Page Intentionally Left Blank] 38 [This Page Intentionally Left Blank] 39 Oppenheimer Multi-Sector Income Trust Officers and Trustees Leon Levy, Chairman of the Board of Trustees Donald W. Spiro, Vice Chairman of the Board of Trustees Bridget A. Macaskill, Trustee and President Robert G. Galli, Trustee Benjamin Lipstein, Trustee Elizabeth B. Moynihan, Trustee Kenneth A. Randall, Trustee Edward V. Regan, Trustee Russell S. Reynolds, Jr., Trustee Pauline Trigere, Trustee Clayton K. Yeutter, Trustee Robert E. Patterson, Vice President Thomas P. Reedy, Vice President Ashwin K. Vasan, Vice President Carol E. Wolf, Vice President Arthur J. Zimmer, Vice President George C. Bowen, Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Andrew J. Donohue, Secretary Robert G. Zack, Assistant Secretary Investment Advisor OppenheimerFunds, Inc. Administrator Mitchell Hutchins Asset Management Inc. Transfer Agent and Registrar Shareholder Financial Services, Inc. Custodian of Portfolio Securities The Bank of New York Independent Auditors KPMG Peat Marwick LLP Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein The financial statements included herein have been taken from the records of the Trust without examination of the independent auditors. This is a copy of a report to shareholders of Oppenheimer Multi-Sector Income Trust. It does not offer for sale or solicit orders to buy any securities. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that periodically the Trust may purchase its shares of beneficial interest in the open market at prevailing market prices. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. RS0680.001.0498 June 29, 1998 [recycle symbol] Printed on recycled paper 1998 Semiannual Report - ---------------------------------------- O P P E N H E I M E R Multi-Sector Income Trust April 30, 1998 [logo] OppenheimerFunds(SM) THE RIGHT WAY TO INVEST -----END PRIVACY-ENHANCED MESSAGE-----