OPPENHEIMER MULTI-SECTOR INCOME TRUST
OFFICERS AND TRUSTEES
Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Edmund T. Delaney, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Thomas P. Reedy, Vice President
Ashwin K. Vasan, Vice President
Carol E. Wolf, Vice President
Arthur J. Zimmer, Vice President
George C. Bowen, Treasurer
Lynn M. Coluccy, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISER
Oppenheimer Management Corporation
ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
TRANSFER AGENT AND REGISTRAR
Shareholder Financial Services, Inc.
CUSTODIAN OF PORTFOLIO SECURITIES
The Bank of New York
INDEPENDENT AUDITORS
KPMG Peat Marwick
LEGAL COUNSEL
Gordon Altman Butowsky Weitzen Shalov &
Wein
This is a copy of a report to shareholders of Oppenheimer
Multi-Sector Income Trust. It does not offer for sale or
solicit orders to buy any securities.
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that periodically the Trust may
purchase its shares of beneficial interest in the open market
at prevailing market prices.
RA680/(10/93) M Printed on recycled paper
1993 ANNUAL REPORT
- ---------------
O P P E N H E I M E R
MULTI-SECTOR
INCOME TRUST
OCTOBER 31, 1993
REPORT TO SHAREHOLDERS:
Oppenheimer Multi-Sector Income Trust produced an annualized dividend yield of
8.85% for the month ended October 31, 1993.(1) During the past twelve
months, the Trust's total return at net asset value was 15.11%.(2)
The Trust seeks high current income consistent with preservation of capital
and has a secondary emphasis on capital appreciation. In keeping with its
flexible investment strategy, the Trust's managers seek high yields in
different economic environments by shifting assets among the various fixed
income sectors described below. As of October 31, 1993, the Trust's portfolio
was allocated as follows:(3)
8.2% U.S. government obligations
49.1% Corporate bonds, notes and stocks
22.4% Foreign fixed income securities
14.6% Mortgage-backed securities
1.3% Convertible securities
1.3% Municipal securities
3.1% Money market instruments
U.S. interest rates continued to decline throughout 1993 and the U.S. economy
has remained in a slow growth mode. Many economies overseas appear poised to
rebound from recession, and in Europe, we believe that there is a strong
likelihood that interest rates will fall causing prices of some existing bond
investments to rise.
In addition to offering attractive yields, many of the high yield corporate
bonds in the Trust's portfolio have appreciated in price as the U.S. economic
recovery has helped corporations increase profits and strengthen balance
sheets. In particular, the Trust has increased its holdings in the broadcast
and media sector which we expect will experience rapid growth.
We continue to diversify the Trust's holdings in the foreign sector,
particularly in emerging markets where growth rates in many cases are higher
than in the U.S. The Trust's holdings are distributed across three broad
regions -- Europe, the "Dollar bloc" countries of Australia, Canada and New
Zealand, and emerging markets. We are maintaining a relatively short average
maturity in these investments to help guard against the risks of a rise in
interest rates, which would cause the value of bond investments to fall.
We took advantage of the rise in price of long-term U.S. Treasuries and
sold a portion of the Fund's investments in these securities. This
strategy reduced the average maturity of the Fund's U.S. government
investments, helping to limit the risks associated with a rise in interest
rates.
Thank you for your confidence in Oppenheimer Multi-Sector Income Trust. We will
continue to monitor the market conditions closely to seek out the best
opportunities for the Trust.
Sincerely,
Donald W. Spiro
President -- Oppenheimer Multi-Sector
Income Trust
November 19, 1993
(1) Dividend yield was calculated by annualizing the October dividend of $.083
per share and dividing that amount by the 10/29/93 closing price on The
New York Stock Exchange of $11.25 per share.
(2) Based on the change in net asset value per share from 10/31/92 to
10/31/93, with all dividends reinvested. Brokerage costs and taxes were
not considered. Past performance does not guarantee future results.
(3) Portfolio allocations are subject to change.
STATEMENT OF INVESTMENTS October 31, 1993
Oppenheimer Multi-Sector Income Trust
Face Market
Amount Value-Note 1
- ----------------- -------------
MONEY MARKET SECTOR--3.0%
$ 9,400,000 Repurchase agreement with J.P. Morgan Securities, Inc., 2.93%, dated 10/29/93 and
maturing 11/1/93, collateralized by U.S. Treasury Bills, 3.16%, 4/14/94, with a value
of $9,597,222 (Cost $9,400,000)........................................................ $ 9,400,000
-------------
U.S. GOVERNMENT SECTOR--7.7%
U.S. Treasury Nts.:
8,000,000 13.125%, 5/15/94......................................................................... 8,424,960
15,000,000 12.625%, 8/15/94......................................................................... 16,078,049
-------------
Total U.S. Government Sector (Cost $24,851,797).......................................... 24,503,009
-------------
CONVERTIBLE SECTOR--1.2%
CORPORATE BONDS AND NOTES--.1%
164,000 Mesa Capital Corp., 0%/12.75% Cv. Disc. Nts., 6/30/98(1)................................. 316,520
-------------
Units
- -----------------
RIGHTS, WARRANTS AND CERTIFICATES--.4%
206,158 Gaylord Container Corp. Wts., Exp. 7/96.................................................. 515,395
3,810 Hollywood Casino Corp. Wts., Exp. 4/98................................................... 685,714
7,797 Purity Supreme, Inc. Wts., Exp. 8/97(3).................................................. 156
20,000 Triangle Wire & Cable, Inc. Wts., Exp. 1/98(3)........................................... 200
-------------
1,201,465
-------------
Shares
- -----------------
PREFERRED STOCKS--.7%
50,000 Unisys Corp., $3.75 Cv., Series A........................................................ 2,381,250
-------------
Total Convertible Sector (Cost $2,502,030)............................................... 3,899,235
-------------
CORPORATE SECTOR--46.5%
COMMON STOCKS--1.6%
73,994 Gillett Holdings, Inc., Cl. 1(3)......................................................... 1,646,367
1,654 Host Marriott Corp....................................................................... 12,198
40,000 Insilco Corp. *.......................................................................... 490,000
74,285 Leaseway Transportation Corp............................................................. 1,114,275
16,450 LFC Holding Corp. *...................................................................... 257,031
1,654 Marriott International, Inc.............................................................. 43,418
152,712 Petrolane, Inc., Cl. B................................................................... 1,527,120
-------------
5,090,409
-------------
Face
Amount
- -----------------
CORPORATE BONDS AND NOTES--44.9%
AEROSPACE/DEFENSE--1.0%
$ 4,000,000 GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98............................................ 3,110,000
-------------
BROADCAST MEDIA/CABLE TV--3.7%
500,000 Cablevision Systems Corp., 10.75% Sr. Sub. Debs., 4/1/04................................. 562,500
3,000,000 Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13................................... 3,375,000
2,600,000 International Cabletel, Inc., 0%/10.875% Sr. Def. Cpn. Nts., 10/15/03(1)................. 1,664,000
7,100,000 Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(1)............ 4,615,000
1,300,000 Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01.......................... 1,423,500
-------------
11,640,000
-------------
2
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
CORPORATE SECTOR (CONTINUED)
CORPORATE BONDS AND NOTES (CONTINUED)
BUILDING MATERIALS--3.5% Market
Face Value-Note
Amount 1
- -------------- ----------
$ 3,000,000 American Standard, Inc., 9.875% Sr. Sub. Nts., 6/1/01.................. $3,045,000
3,000,000 Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03............................ 3,052,500
2,000,000 Triangle Wire & Cable, Inc., 13.50% Sr. Nts., 1/15/02(3)............... 480,000
USG Corp.:
3,000,000 10.25% Sr. Sec. Nts., 12/15/02......................................... 3,086,250
1,500,000 8.75% Debs., 3/1/17.................................................... 1,391,250
----------
11,055,000
----------
CONSUMER GOODS--MANUFACTURING--3.3%
2,000,000 Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97........................... 2,050,000
4,900,000 Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., 5/27/98(3)............. 3,080,875
1,000,000 Interco, Inc., 9% Sec. Nts., Series B, 6/1/04(3)....................... 985,000
750,000 MacAndrews & Forbes Group, Inc., 12.25% Sub. Debs., 7/1/96............. 778,125
750,000 MacAndrews & Forbes Holdings, Inc., 13% Sub. Debs., 3/1/99............. 754,688
3,000,000 Revlon Consumer Products Corp., 10.50% Sr. Sub. Nts., 2/15/03.......... 2,910,000
----------
10,558,688
----------
CONTAINERS--METAL AND GLASS--.9%
3,000,000 Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97.............................. 3,000,000
----------
CONTAINERS--PAPER--2.0%
Gaylord Container Corp.:
2,100,000 11.50% Sr. Nts., 5/15/01............................................... 2,126,250
1,700,000 0%/12.75% Sr. Sub. Disc. Debs., 5/15/05(1)............................. 1,226,125
3,000,000 Sweetheart Cup Co., Inc., 10.50% Sr. Sub. Nts., 9/1/03................. 3,135,000
----------
6,487,375
----------
FINANCIAL/INSURANCE--2.1%
2,000,000 Card Establishment Services, Inc., 10% Sr. Sub. Nts., 10/1/03(3)....... 2,075,000
2,000,000 Hellicon Group, 9% Sr. Sec. Nts., 11/1/03(3)........................... 1,925,000
Navistar Financial Corp.:
1,500,000 9.75% Medium-Term Nts., 8/15/95........................................ 1,585,725
1,000,000 9.50% Medium-Term Nts., 6/1/96......................................... 1,057,420
----------
6,643,145
----------
FOOD AND RESTAURANTS--5.5%
2,500,000 American Restaurant Group, Inc., 12% Gtd. Sr. Sec. Nts., 9/15/98....... 2,496,875
2,750,000 Di Giorgio Corp., 12% Sr. Nts., 2/15/03................................ 2,939,063
2,100,000 Flagstar Corp., 10.75% Sr. Nts., 9/15/01............................... 2,155,125
1,350,000 Foodmaker, Inc., 14.25% Sr. Sub. Nts., 5/15/98......................... 1,451,250
Restaurant Enterprises Group, Inc.:
1,350,000 12.25% Sr. Sub. Nts., 12/15/96 *....................................... 1,228,500
4,600,000 12.75% Sub. Nts., 12/15/98 *........................................... 2,150,500
2,500,000 Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00......................... 2,559,375
2,500,000 Specialty Foods Corp., 10.75% Sr. Nts., 8/15/01(3)..................... 2,537,500
----------
17,518,188
----------
3
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
CORPORATE SECTOR (CONTINUED)
CORPORATE BONDS AND NOTES (CONTINUED)
GAMING/HOTELS--1.2% Market
Face Value-Note
Amount 1
- -------------- ----------
$ 750,000 Marriott Corp., 9% Sr. Nts., Series I, 5/24/95......................... $ 761,250
3,200,000 Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03.................... 3,216,000
----------
3,977,250
----------
HEALTHCARE/MEDICAL PRODUCTS--.9%
1,800,000 Eye Care Centers of America, Inc., Units(3)............................ 1,836,000
770,000 Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02............... 885,500
----------
2,721,500
----------
HOME BUILDING/DEVELOPMENT--3.0%
1,000,000 Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02......... 1,086,250
3,000,000 NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03.................................. 3,157,500
3,150,000 Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01................. 3,606,750
1,500,000 UDC Homes, Inc., 11.75% Sr. Nts., 4/30/03.............................. 1,586,250
----------
9,436,750
----------
INFORMATION TECHNOLOGY--.4%
1,200,000 Berg Electronics Holdings Corp., 11.375% Sr. Sub. Debs., 5/1/03........ 1,248,000
----------
MANUFACTURING-DIVERSIFIED--4.0%
2,000,000 Collins & Aikman Group, Inc., 11.875% Sr. Sub. Debs., 6/1/01........... 1,960,000
1,800,000 Foamex LP/Foamex Capital Corp., 11.25% Sr. Nts., 10/1/02............... 1,948,500
1,000,000 Haynes International, Inc., 13.50% Sr. Sub. Nts., 8/15/99.............. 995,000
1,500,000 Hoover Group, Inc., 13% Sr. Sub. Debs., 11/15/98....................... 1,537,500
3,000,000 Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97................... 3,037,500
3,000,000 Insilco Corp., 10.375% Sr. Sec. Nts., 7/1/97........................... 3,030,000
----------
12,508,500
----------
METALS/MINING--1.3%
4,000,000 Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03.................. 4,160,000
----------
OIL AND GAS-EQUIPMENT AND SERVICES--.4%
1,000,000 OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02................ 1,150,000
----------
OIL AND GAS-EXPLORATION AND PRODUCTION--2.5%
Mesa Capital Corp.:
1,003,000 0%/12.75% Disc. Nts., 6/30/96(1)....................................... 832,490
3,894,000 0%/12.75% Sec. Disc. Nts., 6/30/98(1).................................. 3,319,635
Presidio Oil Co.:
1,000,000 11.50% Sr. Sec. Nts., Series A, 9/15/00(3)............................. 1,052,500
2,550,000 13.85% Sr. Gas Indexed Nts., Series A, 7/15/02(2)(3)................... 2,639,250
----------
7,843,875
----------
OIL AND GAS-REFINING--.3%
1,000,000 Wainoco Oil Corp., 12% Sr. Nts., 8/1/02................................ 1,052,500
----------
PUBLISHING--1.2%
6,850,000 Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs., Series B,
3/1/05(1)............................................................ 3,647,625
----------
4
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
CORPORATE SECTOR (CONTINUED)
CORPORATE BONDS AND NOTES (CONTINUED)
RETAIL-FOOD AND DRUG--1.2% Market
Face Value-Note
Amount 1
- -------------- ----------
$ 1,000,000 Grand Union Co., 11.25% Sr. Nts., 7/15/00.............................. $1,060,000
3,000,000 Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99........... 2,895,000
----------
3,955,000
----------
RETAIL-SPECIALTY--3.6%
1,100,000 AnnTaylor, Inc., 0%/14.375% Sr. Sub. Disc. Nts., 7/15/99(1)............ 1,182,500
2,000,000 Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., 9/1/03(3)......... 2,045,000
2,500,000 Cole National Corp., 11.25% Sr. Nts., 10/1/01.......................... 2,493,750
1,000,000 Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05(1)............ 590,000
1,500,000 Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03.................... 1,511,250
410,000 I.C.H. Corp., 16.50% Sr. Sub. Debs., 12/31/94.......................... 422,813
3,000,000 Musicland Group, Inc. (The), 9% Sr. Sub. Nts., 6/15/03................. 3,052,500
----------
11,297,813
----------
SERVICES--1.0%
3,250,000 Envirotest Systems Corp., 9.625% Sr. Sub. Nts., 4/1/03................. 3,306,875
----------
TELECOMMUNICATIONS--1.0%
2,000,000 Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(1)............... 1,300,000
2,500,000 Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375% Sr.
Sub. Disc. Nts., 10/10/00(1)(3)...................................... 1,750,000
----------
3,050,000
----------
TEXTILES/APPAREL--.9%
2,750,000 Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series A, 10/1/03(3).... 2,763,750
115,000 Farley, Inc., 0% Sub. Debs., 12/30/12.................................. 12,650
----------
2,776,400
----------
142,144,484
----------
Total Corporate Sector (Cost $142,269,379)............................. 147,234,893
----------
INTERNATIONAL SECTOR--21.2%
SHORT-TERM FOREIGN GOVERNMENT OBLIGATIONS--2.2%
+23,048,450 United Mexican States Treasury Bills, 0%, 3/3/94....................... 7,030,697
----------
LONG-TERM FOREIGN GOVERNMENT OBLIGATIONS--11.8%
+9,275,000 Canada (Government of) Bonds, Series A37, 10.50%, 3/1/01(5)............ 8,548,767
+5,723,955 First Australia National Mortgage Acceptance Corp. Ltd. Bonds, Series
22, 11.40%, 12/15/01................................................. 4,431,242
+2,000,000,000 Italy (Republic of) Treasury Bonds, 11.50%, 3/1/98(5).................. 1,339,954
+11,080,000 Queensland (Government of) Development Authority Global Transferable
Registered Nts., 10.50%, 5/15/03..................................... 9,366,611
+600,000,000 Spain (Kingdom of) Bonds, 10.25%, 11/30/98(5).......................... 4,835,718
+12,500,000 Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03................. 9,057,338
----------
37,579,630
----------
SHORT-TERM FOREIGN CORPORATE BONDS AND NOTES--3.0%
Citibank:
1,243,500 23% CD, 12/7/93(4)..................................................... 3,017,975
1,429,400 17.35% CD, 7/28/94(4).................................................. 3,469,154
1,228,200 17% CD, 8/10/94(4)..................................................... 2,980,841
----------
9,467,970
----------
5
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
INTERNATIONAL SECTOR (CONTINUED)
LONG-TERM FOREIGN CORPORATE BONDS AND NOTES--4.2% Market
Face Value-Note
Amount 1
- -------------- ----------
$ 2,074,000 Citibank, 17.20% CD, 12/2/94(4)........................................ $5,033,598
+10,000,000 Montreal, Canada (City of) Bonds, 9%, 3/17/03.......................... 8,120,647
----------
13,154,245
----------
Total International Sector ($64,607,623)............................... 67,232,542
----------
MORTGAGE-BACKED SECTOR--13.9%
AGENCY-FULL FAITH AND CREDIT--4.6%
Government National Mortgage Assn.:
857,445 12%, 11/20/13.......................................................... 999,685
585,143 12%, 2/20/15........................................................... 681,656
529,841 12%, 9/20/15........................................................... 617,232
11,362,438 9%, 1/15/22............................................................ 12,138,947
----------
14,437,520
----------
AGENCY-GOVERNMENT SPONSORED--9.3%
Federal Home Loan Mortgage Corp. Certificates of Participation:
1,489,910 12%, 5/1/10............................................................ 1,695,548
863,832 12%, 10/1/11........................................................... 982,842
99,259 12%, 8/1/13............................................................ 112,934
1,675,262 12%, 8/1/14............................................................ 1,904,203
531,917 12%, 10/1/14........................................................... 605,199
648,764 12%, 6/1/15............................................................ 737,177
Federal National Mortgage Assn.:
2,977,784 13%, 6/1/15............................................................ 3,431,807
19,489,048 7%, 8/1/23............................................................. 20,037,177
----------
29,506,887
----------
Total Mortgage-Backed Sector (Cost $42,550,896)........................ 43,944,407
----------
MUNICIPAL SECTOR--1.3%
3,500,000 New York State Environmental Facilities Corp. State Service Contract
Taxable Revenue Bonds, Series A, 9.625%, 3/15/21 (Cost $3,376,250)... 3,976,199
----------
Total Investments, at Value (Cost $289,557,975).............................. 94.8% 300,190,285
Other Assets Net of Liabilities.............................................. 5.2 16,456,217
--------- -----------
Net Assets................................................................... 100.0% $316,646,502
--------- -----------
--------- -----------
+Face amount is reported in foreign currency
*Non-income producing security.
(1)Represents a zero coupon bond that converts to a fixed rate of interest at a
designated future date.
(2)Represents the current interest rate for a variable rate security.
(3)Restricted security--See Note 5 of Notes to Financial Statements.
(4)Indexed instrument for which the principal amount due at maturity is affected
by the relative value of a foreign currency.
(5)Securities with an aggregate market value of $14,724,439 are segregated to
collateralize outstanding forward foreign currency exchange contracts. See
Note 6 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
6
STATEMENT OF ASSETS AND LIABILITIES October 31, 1993
Oppenheimer Multi-Sector Income Trust
ASSETS:
Investments, at value (cost $289,557,975)--see accompanying statement................. $300,190,285
Unrealized appreciation on forward foreign currency exchange contracts--Note 6........ 250,675
Cash.................................................................................. 41,994
Receivables:
Investments sold.................................................................... 12,990,891
Interest and dividends.............................................................. 6,252,601
Other................................................................................. 8,787
-----------
Total assets...................................................................... 319,735,233
-----------
LIABILITIES:
Payables and other liabilities:
Investments purchased............................................................... 2,727,968
Management and administrative fees--Note 4.......................................... 95,982
Other............................................................................... 264,781
-----------
Total liabilities................................................................. 3,088,731
-----------
NET ASSETS............................................................................ $316,646,502
-----------
-----------
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest............................................ $ 288,961
Additional paid-in capital............................................................ 321,060,552
Undistributed net investment income................................................... 2,722,769
Accumulated net realized loss from investment, written option and foreign currency
transactions........................................................................ (18,271,193)
Net unrealized appreciation of investments--Note 3.................................... 13,463,192
Net unrealized depreciation on translation of assets and liabilities denominated in
foreign currencies.................................................................. (2,617,779)
-----------
NET ASSETS--Applicable to 28,896,061 shares of beneficial interest outstanding........ $316,646,502
-----------
-----------
NET ASSET VALUE PER SHARE............................................................. $10.96
-----------
-----------
See accompanying Notes to Financial Statements.
7
STATEMENT OF OPERATIONS For the Year Ended October 31, 1993
Oppenheimer Multi-Sector Income Trust
INVESTMENT INCOME:
Interest............................................................................... $32,387,279
Dividends.............................................................................. 1,804,022
----------
Total income....................................................................... 34,191,301
----------
EXPENSES:
Management fees--Note 4................................................................ 1,997,081
Administrative fees--Note 4............................................................ 614,792
Transfer agent and accounting services fees--Note 4.................................... 124,050
Shareholder reports.................................................................... 122,578
Trustees' fees and expenses............................................................ 66,114
Legal and auditing fees................................................................ 60,433
Custodian fees and expenses............................................................ 11,833
Other.................................................................................. 63,686
----------
Total expenses..................................................................... 3,060,567
----------
NET INVESTMENT INCOME.................................................................. 31,130,734
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments....................................................... 8,167,129
----------
Net change in unrealized appreciation of investments:
Beginning of year.................................................................... 6,536,557
End of year--Note 3.................................................................. 13,463,192
----------
Net change......................................................................... 6,926,635
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................................ 15,093,764
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BEFORE FOREIGN EXCHANGE LOSS...... 46,224,498
----------
REALIZED AND UNREALIZED FOREIGN EXCHANGE GAIN (LOSS):
Net realized loss on foreign currency transactions..................................... (4,523,703)
----------
Net change in unrealized depreciation on translation of assets and liabilities
denominated in foreign currencies:
Beginning of year.................................................................... (4,323,920)
End of year.......................................................................... (2,617,779)
----------
Net change......................................................................... 1,706,141
----------
NET REALIZED AND UNREALIZED FOREIGN EXCHANGE LOSS...................................... (2,817,562)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $43,406,936
----------
----------
See accompanying Notes to Financial Statements.
8
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
Year Ended October 31,
------------------------------
1993 1992
-------------- --------------
OPERATIONS:
Net investment income..................................................................... $ 31,130,734 $ 30,211,615
Net realized gain on investments.......................................................... 8,167,129 2,703,234
Net realized loss from foreign currency transactions...................................... (4,523,703) (1,966,753)
Net change in unrealized appreciation or depreciation of investments...................... 6,926,635 1,838,244
Net change in unrealized appreciation or depreciation on translation of assets and
liabilities denominated in foreign currencies........................................... 1,706,141 (4,825,420)
-------------- --------------
Net increase in net assets resulting from operations.................................... 43,406,936 27,960,920
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME
($1.01 and $1.164 per share, respectively).............................................. (29,034,475) (33,141,489)
BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares issued to shareholders in reinvestment of dividends.................. 2,906,011 2,980,156
-------------- --------------
Total increase (decrease) in net assets............................................... 17,278,472 (2,200,413)
NET ASSETS:
Beginning of year......................................................................... 299,368,030 301,568,443
-------------- --------------
End of year (including undistributed net investment income of
$2,722,769 and $626,510, respectively).................................................. $ 316,646,502 $ 299,368,030
-------------- --------------
-------------- --------------
See accompanying Notes to Financial Statements.
9
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
Year Ended October 31,
----------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988+
------------ ------------ ------------ ------------ ------------ ------------
PER SHARE OPERATING DATA:
Net asset value, beginning of period... $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 $ 11.16
------------ ------------ ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income................ 1.08 1.06 1.11 1.15 1.12 .64
Net realized and unrealized gain
(loss) on investments, options
written and foreign currencies..... .43 (.08 ) .82 (.78 ) (.52 ) .05
------------ ------------ ------------ ------------ ------------ ------------
Total income from investment
operations....................... 1.51 .98 1.93 .37 .60 .69
------------ ------------ ------------ ------------ ------------ ------------
Dividends and distributions to
shareholders:
Dividends from net investment
income............................. (1.01 ) (1.16 ) (1.07 ) (1.10 ) (1.13 ) (.59 )
Distributions from net realized gain
on investments, options written and
foreign currencies................. -- -- (.10 ) (.02 ) (.01 ) (.06 )
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and distributions
to shareholders.................. (1.01 ) (1.16 ) (1.17 ) (1.12 ) (1.14 ) (.65 )
Offering costs......................... -- -- -- -- -- (.03 )
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period......... $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Market value, end of period............ $ 11.25 $ 11.13 $ 11.13 $ 9.38 $ 10.13 $ 11.50
TOTAL RETURN, AT MARKET VALUE***....... 11.10 % 11.48 % 33.05 % 4.09 % (1.86 )% 6.08 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................ $ 316,647 $ 299,368 $ 301,568 $ 278,511 $ 299,673 $ 314,656
Average net assets (in thousands)...... $ 307,244 $ 303,773 $ 289,681 $ 290,533 $ 307,735 $ 311,254
Number of shares outstanding at end of
period (in thousands)................. 28,896 28,625 28,347 28,194 28,194 28,162
Ratios to average net assets:
Net investment income................ 10.13 % 9.95 % 10.80 % 11.16 % 10.28 % 9.80 %*
Expenses............................. 1.00 % 1.11 % 1.16 %++ 1.03 % 1.03 % 1.01 %*
Portfolio turnover rate**.............. 131.3 % 95.9 % 59.7 % 85.7 % 162.0 % 60.1 %
* Annualized.
** The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended October 31, 1993 were $363,636,354
and $371,093,886, respectively.
*** 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.
+ For the period from March 31, 1988 (commencement of operations) to October
31, 1988.
++ Includes $.01 per share of federal excise tax expense. The expense ratio,
exclusive of federal excise tax expense, was 1.10%.
See accompanying Notes to Financial Statements.
10
NOTES TO FINANCIAL STATEMENTS
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's investment adviser is Oppenheimer
Management Corporation (the Manager). The following is a summary of significant
accounting policies consistently followed by the Trust.
INVESTMENT VALUATION--Portfolio securities are valued at 4:00 p.m. (New York
time) on the last day of each week on which day the New York Stock Exchange is
open. Listed and unlisted securities for which such information is regularly
reported are valued at the last sale price of the day or, in the absence of
sales, at values based on the closing bid or asked price or the last sale price
on the prior trading day. Long-term debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Long-term debt securities
which cannot be valued by the approved portfolio pricing service are valued by
averaging the mean between the bid and asked prices obtained from two active
market makers in such securities. Short-term 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. Securities for
which market quotes are not readily available are valued under procedures
established by the Board of Trustees to determine fair value in good faith.
Forward foreign currency contracts are valued at the forward rate on a daily
basis.
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 October 31, 1993, securities with an
aggregate market value of $3,379,000, representing 1.06% of the Trust's total
assets, were in default.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Trust are maintained
in U.S. dollars. Prices of securities denominated in non-U.S. currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The net gain or loss resulting from changes in the foreign currency exchange
rates is reported separately in the Statement of Operations.
The Trust generally enters into forward foreign currency exchange 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. A
forward exchange contract is a commitment to purchase or sell a foreign currency
at a future date, at a negotiated rate. Risks may arise from the potential
inability of the counterparty to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
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. 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 INCOME 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 tax provision is required. At October 31, 1993, the Trust had
available for federal income tax purposes an unused capital loss carryover of
11
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
approximately $9,200,000, $6,700,000 of which will expire in 1998 and $2,500,000
in 1999.
TRUSTEES' FEES AND EXPENSES--The Trust has adopted a nonfunded retirement plan
for the Trust's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
October 31, 1993, a provision of $18,391 was made for the Trust's projected
benefit obligations, resulting in an accumulated liability of $117,741 at
October 31, 1993. No payments have been made under the plan.
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.
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 on the ex-date.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
Year Ended
October 31,
--------------------
1993 1992
--------- ---------
Net increase in shares from
dividends reinvested........... 271,391 277,602
--------- ---------
--------- ---------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1993, net unrealized appreciation of investments of $13,463,192
was composed of gross appreciation of $16,008,690, and gross depreciation of
$2,545,498.
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 .65% on
the Trust's net assets.
Mitchell Hutchins Asset Management Inc. serves as theTrust's Administrator. The
Trust pays the Administrator an annual fee of .20% of the Trust's 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.
12
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
5. RESTRICTED SECURITIES
The Trust owns securities purchased in private placement
transactions, without registration under the Securities Act of 1933
(the Act).The securities are valued under methods approved by the
Board of Trustees as reflecting fair value. The Trust intends to
invest no more than 10% of its net assets (determined at the time of
purchase) in restricted and illiquid securities, excluding
securities eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Trustees or by the
Manager under Board-approved guidelines. Restricted and illiquid
securities amount to $3,111,723, or .98% of the Fund's net assets,
at October 31, 1993.
Valuation Per Unit
Acquisition as of October 31,
Security Date Cost Per Unit 1993
- ------------------------------------------------------ -------------- ------------- -------------------
Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts.,
9/1/03+.............................................. 8/20/93 $ 99.22 $ 102.25
Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
10/1/03+............................................. 10/5/93-10/28/93 101.68 103.75
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts.,
5/27/98+............................................. 7/15/93-8/18/93 60.54 62.88
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series
A, 10/1/03+.......................................... 9/23/93 100.00 100.50
Eye Care Centers of America, Inc., Units+............. 9/28/93 100.00 102.00
Gillett Holdings, Inc., Cl. 1 Common Stock............ 12/1/92 10.50 22.25
Hellicon Group, 9% Sr. Sec. Nts., 11/1/03+............ 10/20/93 95.01 96.25
Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/10/00+............ 9/24/93-10/4/93 64.52 70.00
Interco, Inc., 9% Sec. Nts., Series B, 6/1/04......... 10/14/92 91.50 98.50
Presidio Oil Co.:
11.50% Sr. Sec. Nts., Series A, 9/15/00+............ 8/3/93 100.00 105.25
13.85% Sr. Gas Indexed Nts., Series A, 7/15/02+..... 2/23/93 80.00 103.50
Purity Supreme, Inc. Wts., Exp. 8/97.................. 7/29/92 -- .02
Specialty Foods Corp., 10.75% Sr. Nts., 8/15/01+...... 8/10/93 100.00 101.50
Triangle Wire & Cable, Inc., 13.50% Sr. Nts.,
1/15/02.............................................. 1/13/92 100.00 24.00
Triangle Wire & Cable, Inc. Wts., Exp. 1/98........... 1/13/92 -- .01
+ Transferable under Rule 144A of the Act.
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
At October 31, 1993, the Trust had outstanding forward exchange
currency contracts to purchase and sell foreign currencies as
follows:
Expiration Valuation as of Unrealized Appreciation
Contracts to Purchase: Date Contract Amount October 31, 1993 (Depreciation)
- --------------------------- ------------- --------------- ----------------- ------------------------
Canadian Dollar............ 11/5/93 $12,114,788 $12,108,101 $ (6,687)
--------------- -----------------
--------------- -----------------
Contracts to Sell:
- ---------------------------
Canadian Dollar............ 11/5/93 $25,019,365 $24,443,231 576,134
Italian Lira............... 11/12/93 1,277,217 1,277,225 (8)
Spanish Peseta............. 11/8/93 1,997,658 2,153,098 (155,440)
Spanish Peseta............. 11/16/93 2,114,325 2,277,649 (163,324)
--------------- ----------------- --------
$30,408,565 $30,151,203 $ 250,675
--------------- ----------------- --------
--------------- ----------------- --------
13
INDEPENDENT AUDITORS' REPORT
Oppenheimer Multi-Sector Income Trust
The Board of Trustees and Shareholders of
Oppenheimer Multi-Sector Income Trust:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Multi-Sector Income Trust as of October 31, 1993, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the five-year period then
ended and the period from March 31, 1988 (commencement of operations) to October
31, 1988. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1993 by correspondence with the custodian and
brokers; and where confirmations were not received from brokers, we performed
other auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Multi-Sector Income Trust as of October 31, 1993, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended and the period from March
31, 1988 (commencement of operations) to October 31, 1988, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK
Denver, Colorado
November 19, 1993
14
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer Multi-Sector Income Trust
In early 1994, shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1993. Regulations
of the U.S. Treasury Department require the Trust to report this information to
the Internal Revenue Service.
Dividends paid by the Trust during the fiscal year ended October 31, 1993 which
are not designated as capital gain distributions should be multiplied by 6.41%
to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax adviser for specific guidance.
15
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 will allocate its assets among 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 captial appreciation will be
considerations in the allocation of assets among such sectors. The Trust may
also engage in certain special investment techniques, including repurchase
transactions, when-issued and delayed delivery transactions and hedging. The
investment adviser to the Trust is Oppenheimer Management Corporation (the
"Adviser").
RECENT CHANGES IN INVESTMENT POLICIES, RESTRICTIONS AND TECHNIQUES
The following non-fundamental changes to the Trust's investment policies,
restrictions and special investment techniques were approved by the Trust's
Board of Trustees.
PERCENTAGE OF INVESTMENTS AMONG SECTORS--The Trust may invest any percentage of
its assets among three or more of the investment sectors listed above.
Previously, the maximum assets that could have been allocated at any one time to
specific investment sectors were as follows: U.S. Government--90%; Corporate and
Money Market--50%; and all others--25%. By virtue of eliminating the foregoing
percentage requirements, the Trust may increase its investments in any one or
more sectors, including the International sector which consists of debt
obligations issued by foreign governments, their political subdivisions,
agencies or instrumentalities, including supranational entities, debt
obligations issued by foreign corporations and debt obligations issued by U.S.
corporations denominated in non-U.S. currencies (collectively, "Foreign
Securities"). Investment in Foreign Securities involves considerations and risks
not associated with investment in securities of U.S. issuers. For example,
foreign issuers are not required to use generally accepted accounting
principles, or, if their securities are not registered under the Securities Act
of 1933, comply with the disclosure requirements of the Securities Exchange Act
of 1934. The values of foreign securities investments will be affected by
incomplete or inaccurate information available as to foreign issuers, changes in
currency rates, exchange control regulations or currency blockage, expropriation
or nationalization of assets, application of foreign tax laws, changes in
governmental administration or economic or monetary policy in the U.S. or
abroad, or changed circumstances between nations.
RATINGS OF INVESTMENTS--The Trust is permitted to invest in unrated securities
and securities in any rating category in the International sector and Corporate
sector, which includes non-convertible debt obligations of U.S. corporate
issuers provided, that, investments in securities rated lower than investment
grade ("Baa" by Moody's Investors Service, Inc. ("Moody's") or "BBB" by Standard
& Poor's Corporation ("S&P")) may not exceed 60% of the Trust's total assets,
with no more than 30% of the Trust's total assets being invested in Foreign
Securities rated lower than investment grade. Previously, Foreign Securities
were required to be rated "A" or better by Moody's or S&P or, if unrated, of
comparable quality, at the time of purchase by the Trust, and investments by the
Trust in securities in the Corporate sector rated "C" by Moody's or "D" by S&P
were limited to 5% of the Trust's total assets.
The Trust's ability to increase its investments in high yield securities will
enable it to seek higher investment return. However, high yield securities,
whether rated or unrated, may be subject to greater market fluctuations and
risks of loss of income and principal and may have less liquidity than lower
yielding, higher-rated fixed-income securities. Principal risks of high yield
securities include (i) limited liquidity and secondary market
16
Oppenheimer Multi-Sector Income Trust
support, (ii) substantial market price volatility resulting from changes in
prevailing interest rates, (iii) subordination of the holder's claims to the
prior claims of banks and other senior lenders in bankruptcy proceedings, (iv)
the operation of mandatory sinking fund or call/redemption provisions during
periods of declining interest rates, whereby the holder might receive redemption
proceeds at times when only lower-yielding portfolio securities are available
for investment, (v) the possibility that earnings of the issuer may be
insufficient to meet its debt service, and (vi) the issuer's low
creditworthiness and potential for insolvency during periods of rising interest
rates and economic downturn.
FOREIGN INVESTMENT CONCENTRATION--The percentage concentration by the Trust in
investments in any one country, except the United States, has been set by the
Board. The Trust may not invest more than 15% of its total assets in Foreign
Securities of any one country. Previously, the Trust's investments in Foreign
Securities, in the aggregrate, could not exceed 25% of its total assets.
HEDGING AND INTEREST RATE SWAP TRANSACTIONS--The Trust is permitted to use
certain hedging instruments to attempt to protect against possible declines in
the market value of the Trust's portfolio from downward trends in debt
securities markets (generally due to a rise in interest rates), to protect the
Trust's unrealized gains in the value of its debt securities which have
appreciated, to facilitate selling debt securities for investment reasons, to
establish a position in the debt securities markets as a temporary substitute
for purchasing particular debt securities, or to reduce the risk of adverse
currency fluctuations. One of the hedging instruments the Trust may now employ
is interest rate swaps, which involve the exchange by the Trust with another
party of their respective commitments to pay or receive interest on a security
(e.g., an exchange of floating rate payments for fixed rate payments). The Trust
will not use interest rate swaps for leverage. Swap transactions will be entered
into only as to security positions held by the Trust. The Trust may not enter
into swap transactions with respect to more than 25% of its total assets. The
Trust will segregate liquid assets (e.g., cash, U.S. Government Securities or
other appropriate high grade debt obligations) equal to the net excess, if any,
of its obligations over its entitlements under the swap and will mark to market
that amount daily. There is a risk of loss on a swap equal to the net amount of
interest payments that the Trust is contractually obligated to make. The credit
risk of an interest rate swap depends on the counterparty's ability to perform.
The value of the swap may decline if the counterparty's creditworthiness
deteriorates. If the counterparty defaults, the Trust risks the loss of the net
amount of interest payments that it is contractually entitled to receive. The
Trust may be able to reduce or eliminate its exposure to losses under swap
agreements either by assigning them to another party, or by entering into an
offsetting swap agreement with the same counterparty or another creditworthy
party.
PORTFOLIO MANAGEMENT OF THE TRUST
Robert E. Patterson, Carol E. Wolf, Arthur J. Zimmer, Ashwin K. Vasan and Thomas
P. Reedy, each a Vice President and Portfolio Manager of the Trust, are the
persons principally responsible for the day-to-day management of the Trust's
portfolio. Effective August 19, 1993, Messrs. Vasan and Reedy were appointed
Vice Presidents and Portfolio Managers of the Trust, replacing Arthur P.
Steinmetz and David P. Negri. Messrs. Vasan and Reedy also serve as Vice
Presidents of the Adviser and officers of certain other OpppenheimerFunds. Mr.
Vasan previously served as a securities analyst for the Adviser, prior to which
he was a securities analyst for Citibank, N.A. Mr. Reedy previously served as a
securities analyst for the Adviser.
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
17
Oppenheimer Multi-Sector Income Trust
automatically reinvested in additional full and fractional Shares unless a
shareholder elects to receive cash. If Shares are registered in nominee name,
the shareholder should consult the nominee if the shareholder desires to
participate in the Plan. Shareholders that participate in the Plan
("Participants") may, at their option, make additional cash investments in
Shares, semi-annually in amounts of at least $100, through payment to
Shareholder Financial Services, Inc., the agent for the Plan (the "Agent"),
accompanied by a service fee of $.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional Shares at the greater of the Trust's net asset
value determined as of the date of purchase or 95% of the then-current market
price. If the market price is lower than net asset value, the Distribution will
be paid in cash, which the Agent will use to buy Shares on The New York Stock
Exchange (the "NYSE"), or otherwise on the open market to the extent available.
If the market price exceeds the net asset value before the Agent has completed
its purchases, the average 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
18
Oppenheimer Multi-Sector Income Trust
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 THE NEW YORK TIMES and each Saturday in BARRON'S, and other newspapers in a
table called "Closed-End Bond Funds."
OTHER INFORMATION
Except as set forth above, since February 26, 1993 (the effective date of the
Trust's registration statement), there have been no (i) material changes in the
Trust's investment objectives or policies, (ii) changes in the Trust's
declaration of trust or by-laws that would delay or prevent a change in control
of the Trust, (iii) material changes in the principal risk factors associated
with investment in the Trust and (iv) changes in persons who are primarily
responsible for the day-to-day management of the Trust's portfolio.
19